Risk Management Report 2011
Presented below is Clackamas County Risk Management’s Annual Report. It contains graphs and statistics spanning the five-year period of July 1, 2006 through June 30, 2011.
The purpose of this report is to provide information, both programmatic and statistical, to help us understand and incorporate risk management measures into the everyday tasks we perform. Some general and unique challenges that have faced Clackamas County will be addressed as well. Knowing there is no crystal ball for forecasting the future needs of the County, we must rely on the experiences and statistics of previous years to project potential areas of future loss.
General Overview
Clackamas County has 381,775 residents living within an area of 1,879 square miles. The county is primarily rural but does include 17 cities and local governments. Clackamas County employs approximately 2,275 full-time, part-time, seasonal and temporary employees, along with many volunteers. County government consists of departments organized to provide the following services: transportation and development, sewer, public safety/law enforcement, tourism, public and governmental affairs, libraries, community health and social services, taxation and assessment, as well as internal administrative services.
It is the intention of Clackamas County to preserve and protect the assets of the County from accidental loss at the most economical cost. Also, just as importantly, the County’s goal is to provide a safe, secure and healthful working environment for its employees. The County has elected to retain exposure to loss primarily through self-insurance and transfer exposure through purchased insurance only when the premium cost has been determined to be cost-efficient compared to the exposure.
The management and control of the County’s risk management program is a function of the Risk and Benefits Division, within the Department of Employee Services. A Risk Management Committee provides oversight of this function with the day to day management provided by the Risk Manager. Our philosophy is that risk management must be so much a part of County culture that it becomes a value rather than merely a priority that shifts as other priorities change. The primary areas managed through this program are: liability, workers’ compensation, vehicles and unemployment claims administration, loss control services, insurance, and contracts.
To compare our program with like entities, we calculate the cost of risk as a percentage of budget and payroll. Costs include: actual claims expenditures, insurance premiums, staff salaries and benefits, materials and supplies, consultants and contractors. From the graph you will see that our cost of risk increased significantly (Budget - .24 and Payroll - .31) in the 10/11 fiscal year compared to the increase the prior year of .004 and .03 respectively. The majority of this increase relates to an increase in claims costs, specifically liability claims. Two large liability settlements accounted for 79% of the increase in liability claims costs. (You may notice that the Summary of Overall Costs graph shows a decrease in claims costs. The reason for this apparent discrepancy is that the claims cost figure used in the cost of risk calculation is the amount paid on claims from all years while the Overall Costs graph figures are the amounts paid on claims filed in each particular fiscal year. We still have claims from older years that continue to generate costs significant enough to cause the cost of risk to increase.)
Services to the Organization
Risk Management staff provides the following services to the organization:
- Internal consulting services for departmental staff on preventing and controlling risks, including risk assessments;
- Workers’ compensation, liability, vehicle, property and unemployment claims administration;
- Marketing, purchasing, and administration of property, excess liability and workers’ compensation, and other miscellaneous insurance policies and bonds;
- Review of County contracts for insurance requirements and indemnification language;
- Employee and supervisory training on risk-related topics, including tort liability, workers’ compensation, loss control and employee safety;
- Coordination of modified duty assignments and physical rehabilitation programs for injured workers;
- Loss control consultative services for employee safety and environmental issues;
- Ergonomic consultations.
Executive Summary
The 2010/11 fiscal year continued to be a challenging year on a number of fronts. The economy is rebounding more slowly than expected with resources continuing to shrink. Shrinking resources impact risk management measures in various areas. Attention to safety is stressed because departments need to continue providing high quality service, even in the face of dwindling resources.
Unemployment costs rose to a new high as people struggle to deal with the economic challenges.
From the graphs below you will see that the number of liability claims went down by 17%, vehicle claims went up by 10% and workers’ compensation claims decreased by 24%. The reasons for these changes will be explained in later sections.
Of perhaps greater interest is how these numbers impacted our costs. The second graph reflects the costs associated with these three areas. All three areas decreased, with liability costs decreasing the most dramatically. This is encouraging. But, keep in mind that claims have long tails and FY 10/11 is still green enough that the cost will grow as the claims mature.
Our focus should continue to be on risk identification, prevention and mitigation. Prevention is the most effective measure in eliminating costs.
Claims data reflects that from FY 09/10 to FY 10/11 costs changed by the following:
- Liability down 95%
- Workers’ Compensation down 28%.
- Vehicle down 8%.
The OSHA Incidence Rate graph shows how we have done in preventing injuries. The OSHA incidence rate has increased each year since 2008 with a 33% increase between CY 2009 and CY 2010 (OSHA statistics are calculated on a calendar year basis). The 19% decrease in FY 10/11 is a welcome reversal of that trend (the current year is noted as fiscal year because it has not concluded yet and in order to have a full 12 months of data we need to use fiscal year data). We are still higher than any calendar year since 2007, except for 2010. Therefore, the challenge is to put into place those actions (e.g. heightened awareness of the risks associated with a certain task) that will focus on prevention.
