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Moore: Silent Risk Management Mistakes Stay Under The Radar

By James Moore

Tuesday, May 2, 2017 | 914 | 1 | min read

These five silent risk management mistakes in workers' comp never show up on a graph, chart or in a report. After all the RIMS buzz last week, I decided to cover the mistakes I have seen in my 27 years in the insurance business from a risk management standpoint.   

James Moore

James Moore

These mistakes are from live files and projects I have reviewed or worked on in the last few years.  

  1. A cheaper deal will usually cost more in the long run. This is especially true in the vendor choice area. A vendor that performs a job at 40% less may cost more on the claims in the long run. One can still see the lowest bidder win a large project he should have never attempted whatsoever.
  2. Having adjusters check with the risk manager on everything means 80% obtaining permission and 20% of the time working on the file. I call this situation the “permission death spiral.” Let the experts be the experts and do their job. Set reasonable authority levels for contact. You will sleep better at night.  
  3. Bundled services are on their way out. Unbundling services creates nightmares at first. In the long run, your organization saves working capital or budget. This suggestion causes many debates between myself and risk managers.
  4. Ignore the Six Keys To Saving on Workers Comp Costs and prepare to get out the proverbial checkbook. I wrote those keys over the last 27 years. They have not changed in that time. I added the last two recently. 
  5.  Risk management mistakes do happen. I have made and seen other risk managers make mistakes — even major ones. All the predictive modeling and number wizardry never results in a 100% perfect choice. Accept that you have made a mistake and move on. A few risk managers have harmed their careers trying to prove an unprovable point.  
  6. Bonus — for self-insured risk managers — not knowing your loss development factor) — or not having one prepared, or at least a SynthMod. How can your risk management program go anywhere without knowing where you are now?

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at


Frances Ford May 2, 2017 12:17 PM

This is so smart and so true! As an independent, single service RTW vendor, we have seen our share of clients make huge mistakes by trying to find the cheapest vendors. It always comes back to expertise, experience, service and value. One bad mistake on a claim can wipe out savings on hundreds of claims for being short-sided on price and inexperience of a new vendor. It's no wonder why #3 on your Six Keys list is RTW. I spoke At 2017 RIMS on the true value of RTW Costs and it's pretty straight forward that Risk Managers should include all the HR costs of keeping and losing employees in the equation in addition to the Ex-mod for WC claims. The costs today for companies to attract, hire, train, replace and retain one person's job is too big to ignore and reduce to per claim savings. Great article!

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