Risk Management Strategies

Gordon Graham here and hello again. Here we are in February and all I know is that we have about two more months of “weather” issues that negatively impact travel and I spend a lot of time on planes and in airports so looking forward to April.

But there is a “silver lining” in every dark cloud – and getting stuck in airports gives me some extra time to read, and Mrs. G was kind enough to get me a Kindle a couple of years ago – and like the people who invented luggage with wheels – this Kindle idea will put the chiropractors out of business. No longer do I have to carry multiple books and magazines with me – I can carry 1500 texts on one device and read at will.

So let me tell you about a book and a magazine I have recently read – how they apply to each other – and how they apply to the world we live in today. The first one caught my eye when I was scanning books on “risk management” on the Amazon.com site simply because of the title – “The Failure of Risk Management”.

If you have been to any of my live programs over the years, most of the talks I give surround the topic of “Risk Management” and I am convinced that this discipline is the answer to everything. My belief is that if more people understood the breath and depth of real risk management – we would be a lot better off.

When I saw the title of the book – it was like the injured fish floating on the surface and I bit on this in a heartbeat. Douglas W. Hubbard is the author and I went into this book with a bias – but after reading it I must agree with him. So many of the approaches to the discipline are very complex and unproven and cannot answer the basic question that all risk managers must ask every day – “how do you know it works?” If the only answer you can come up with is “well, other people are doing it” – I am not convinced that this response proves anything.

What the author does a good job of is distinguishing between what I call “probabilistic risk management” and “actuarial risk management”. While my training covered both of these approaches, I stay away from the former and embrace the latter. Where the stock market will be in one month, what the price of Gold will be in one year, what will be the amount of increased risk if we outsource pharmaceutical production to China – the questions all require a lot of calculations and considering multiple variables – and remember they are variables and thus uncertain in nature. When you multiply one uncertainty by another uncertainty you get a big UNCERTAINTY!

As I studied the discipline decades ago my preference was on the “actuarial” side – taking a look at a given profession and identifying how problems have occurred in the past – and what control measures can be put into place to prevent similar tragedies from occurring again. When I was in Graduate School circa 1975 I was also on the occupational safety committee at my CHP office. I was always looking for “data” on when we got hurt – and looking for ways to fix it.

In 1976 the CHP started hiring women cops – and when the women showed up in the field – back injuries went through the roof. We had a rate of back injuries that I have long since forgotten – but let’s call it “X” and all of a sudden the back injury rate goes to “3X”. Oh by the way, before you send me the hate mail about being sexist – the back injuries were not occurring to women cops – but rather men cops – and the injury was occurring when the cop was getting into the car.

Women cops on average are shorter than men cops – and when their shift was over they would leave the patrol car seat in a forward position – and male cops would not be paying attention and try to get in the car and…. Boom – you have the sprained back!

So after studying the “data” I came up with a control measure – a policy that said at the end of shift each officer should move the seat all the way back on the tracks – and back injuries went down to nothing. You have done similar things in the fire service. If you look at the recent data, you had 93 LODD events in 2009 and 87 in 2010 and that is a substantial reduction – and I think a lot of it got down to taking a look at past LODD events and putting together control measures (and assuring these control measures are taken seriously) to address that specific issue.

Law enforcement is trying to do something to reduce the LODD frequency – which shot up dramatically from 2009 to 2010. I spoke about this effort several months ago – but it is a tough one because of the “variable” of intentional violence directed against police personnel and the difficulty in addressing this external intentional misconduct.

Now onto the magazine article. Automobile Magazine (Jean Jennings is the Editor of this periodical and I knew a guy who used to date her but that is an entire different story) had a piece on NASCAR in this months issue. I was never a big NASCAR fan but when they hired me to do some “risk” work regarding track issues years ago – I became more familiar with their operations – and I can assure you that the “good old boys” who run this organization are (for the most part) about as sharp a bunch of businesspeople you will ever meet in your life.

Here is some data for you. In 1960 the top qualifying speed was 151 mph and in 2010 that speed is now 191 mph. Cars cost $5000 in 1960 and in 2010 they run $250,000. The margin of victory fifty years ago was 23 seconds – and today it is .119 seconds. So their world is constantly changing – and the speeds are now through the roof.

The death of Dale Earnhardt should not have been a surprise to anyone. The year prior to his death, “no fewer than three NASCAR drivers were killed in accidents that were eerily similar to his. Essentially, each of these tragedies were written off as ‘one of them racing deals’”. But after the public outcry when Dale died – they had to make some changes.

Here are the changes. Full face helmets must be worn by all drivers. Head and neck restraints (HANS) must be worn by all drivers. SAFER barriers (softer walls) were installed at all major NASCAR tracks. Six point racing harnesses replaced traditional five point restraints. Each of these is a “control measure”.

And what was the impact of these “risk management” strategies? Prior to Dale’s death there were 22 fatalities at Daytona International. Subsequent to his death the number of fatal wrecks at Daytona is… ZERO!

I wish that someone would have done all the fancy number stuff and factored in the higher speeds and the g-forces and the probabilities of collisions and deceleration rates and fuel cell protection projections and addressed the wall issue and all the rest – and made these dramatic changes prior to the death of Mr. E. In that respect – there was a failure. But from an actuarial view of things – risk management worked and it worked well.

What does all of this have to do with you? We know how firefighters get hurt and killed. The “causes” have not changed substantially over the years. There is a ton of “actuarial data” available for your perusal.

You also know the control measures that your profession has in place to prevent these deaths and injuries. I help support the popular site www.firefighterclosecalls.com (no profit is made on this site and Chief Goldfeder spends a lot of time keeping the data and the available control measures up to date). So the “answers” are there. It all gets down to implementation. Please review the safety stuff regularly with all your people – and everyone else in your profession. That is all for now. Take care and work safely.

Gordon Graham

President, Lexipol