| Introduction
All these employees managed to think outside the
box and introduce programs or strategies which
reduced losses and stabilized their companies’
earnings. Innovation and creativity is a much-needed
skill in today’s business world and when
the going gets tough, people like Jeanne Brown
(CSR America), David Hennes (The Toro Company)
and Joseph Spencer (FirstEnergy Corporation) are
exactly what the doctor ordered for the company’s
department of risk management. Brown is CSR’s
national risk manager while Hennes and Spencer
server as directors of risk management for their
respective firms.
Jeanne Brown
When Brown was made in charge of risk management
at CSR America, the chaotic condition of the company
needed to be put in order. Brown managed to set
straight all the various claims systems into one
streamlined program. Since the company wanted
a decentralized operating structure, she worked
hard and came up with a claims system that divided
each location's data on a charge back basis. One
particular area was in complete disarray: the
company’s return-to-work program. There
were 122 reportable lost time injuries so Brown
took it upon herself to launch an effective return-to-work
program which managed to reduce this figure to
an impressive 12. The concept is simply that all
employees return to work even if they have to
be provided transport, or lighter work or special
training. The strategy has proved to be a winning
one for the company ahs employee morale boosts
lead to reduced lost workdays, lower average costs
per claim and lower average days on restricted
duty. Brown’s management is obviously delighted
with the work she has done as it has absolved
the company of a troublesome aspect. The employees
all admire her organization and expertise and
marvel at the significant improvement in loss
statistics. Risk management is definitely a tough
job and the return-to-work program is a difficult
one to frame. With programs like the one Brown
has implemented in CSR, other companies will definitely
catch on and try to reduce their direct/indirect
costs, improve employee morale, reduce workers’
compensation fraud and enjoy all the other benefits
of an efficient return-to-work program (The Hartford
Loss Control Department).
David Hennes
David Hennes was the director of risk management
at The Toro Company, manufacturer of irrigation
systems, snowthrowing equipment and lawnmowers.
His company was faced with an unpredictable predicament
when in the winter of 1997-98, there was very
little snow and hence very little demand for the
company’s snowthrowers. This caused an overstocked
inventory with little room for the summer products.
The first and foremost issue was to rid the dealer
outlets and warehouses of all these snowthrowers.
So, Hennes thought up a plan. His company started
offering consumers a refund on the purchase price
of a snowthrower that was based on the inches
of snowfall in their area. The rebate was appealing
and could go up to 50 percent of what they had
initially paid.
This plan was suitably backed
by insurance which was in a way what led to the
implementation of this plan because Hennes asserted
that without the comfort of insurance, the amount
of risk involved in this plan would have definitely
hindered it. Hennes’ remarkable brilliance
and originality is in large part responsible for
Toro’s emptying of its distribution channels.
The marketing plan was a huge success and the
initial motive of the company was more than fulfilled,
plus, the company has an excellent backup plan
whenever Mother Nature decides to deviate from
its usual course. Also, other companies which
sell weather-specific products know what to do
now in case of a similar dilemma (The Toro Company
official website).
Joseph Spencer
Joseph Spencer is the director of risk management
at the Ohio-based diversified energy company,
FirstEnergy Corporation. The company got caught
up in the midst of a huge crisis when two events
simultaneously invited trouble: the failure of
a transformer at the company's plant outside Cleveland
which disrupted six hundred megawatts of power
and destruction of transmission lines at its Toledo-based
nuclear plant by a tornado resulting in knocking
out of another six hundred megawatts of power.
s Electricity demand spiraled up as temperatures
were high and supply options had come down to
just one: buying power from the spot energy market.
Here, the prices of energy which were normally
around $50 per megawatt hour were now a shocking
$8,000 per. The losses the company suffered were
colossal. Spencer took it upon himself to come
up with a solution to the problem and prevent
it from ever recurring in the future. Spencer
thought that double trigger policies would be
a good idea and he researched his options thoroughly
for months before he finally went along with the
ACE PowerBacker policy, which ensured FirstEnergy
one hundred million dollars in coverage if two
things occurred – a power outage resulting
in more than six hundred megawatts of lost power,
and a spot market power price that exceeds seventy-four
dollars per megawatt hour.
If the company’s losses exceed twenty-five
million dollars, ACE will absorb 90 percent of
the cost. Spencer was the genius behind this solution
and for eliminating the unpredictability which
can lead to huge losses. His company knows that
they have an incredibly talented person at the
helm of affairs and other companies in this industry
have already started purchasing similar programs
after Spencer showed them the way (McNamee, 1999).
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