CASE STUDY #1

In Gainesville, Ga., RM Sees Expansion OfResponsibilities

Cindy Mallett, incoming president for the Public Risk ManagementAssociation (PRIMA) and risk manager for the City of Gainesville,Ga., says she has been fortunate. In some respects, the downsizingendured by the city as a result of budget cuts actually has helpedher department.

“I have more on my plate than I used to,” says Mallett, who nownot only manages risk management but also oversees payroll andhuman resources.

This increase in responsibilityhas given her a broader view of the city's total risk picture.“Before, when I was responsible for risk and not these otherpieces, I didn't have as complete a picture as I would have liked,”Mallett explains.

Despite this perhaps unexpected upside, the economic situationcontinues to present plenty of challenges. “We were talkingrecently about preventive maintenance on our vehicles andequipment—and how deferring maintenance [to help the budget] canhave risk-management implications,” Mallett says.

Drivers could be injured—“if you have vehicles with faulty brakesystems, as an example”—which could lead to liability claims.

She adds that there has to be a balance between aggressivelylooking to cut costs “while, at the same time, realizing the impactsome of those [reductions] could have on our organizations.”

One area that has taken a big hit, she says, is staff training.“In times like this, we do a lot more reading, a lot moreself-development” as opposed to attending paid educationalevents.

She adds, however, “For us and most [of my peers I've spokenwith], risk management is not being impacted more than any otherdepartment—all shoulder the directive, whether to reduce yourbudget by a certain percentage or to hold the line steady.”

DEMONSTRATING VALUE

As in the private sector, it's important that public-entity riskmanagers take steps to ensure that the “profession and the practiceof risk management are recognized and valued in our organizationand that our decision makers recognize the value in allowing therisk manager to have input,” Mallett says. “Otherwise, when ourdecision makers are looking at places to cut, they may be lookingat us.”

In her entity, she says, risk management is fortunate to have aseat at the decision-making table. “Often risk managers don't.”

The fact that risk management has been often cited in theoutpouring of news about the failures leading to the financialcrisis “has helped the discipline,” Mallett believes, increasingthe “appreciation of risk management and [encouraging] a buy-in onthe function of risk management.”

In days past, people had never heard of risk management, shesays. “Risk management is an area where, when things go right,nobody notices. Now people understand more the wide variety ofresponsibility areas that risk management covers.”

She adds, however, “We have more educating to do, which we tryto do through PRIMA. There is more of our story that needs to betold. Employees are having to do more with less in someorganizations and it's had an impact.”

CASE STUDY #2

Despite Painful Cuts, Montgomery County, Md., StaysPrepared

Terry Fleming, director since 1988 of the division of riskmanagement of Montgomery County, Md., and a former president of theRisk and Insurance Management Society, reports that the impact ofthe economic crisis is “ongoing,” noting that “it will be a whilebefore we recover.”

In Montgomery County, which isself-insured, the ramifications have meant layoffs. “We have to payclaims, so there is little room to cut there. Personnel is the onlyplace left,” Fleming says, noting that he had 12 employees and isnow down to 10—which means added work for everyone.

“The cut we're taking this year is in our loss-control,occupational-safety section,” he says. As a result, employees willsee heavier workloads, which means “we'll be less responsive andless customer-service oriented because we'll have fewer people todo the work.”

Benefits also have been reduced.

In the county overall, about 400 public-sector positions wereeliminated, diminishing library services and expanding classroomsizes. “A $300 million gap had to be closed,” Fleming says.

Some programs, such as capital improvements and buildingprojects, have been curtailed. Upkeep on structures has also takena hit. “The windows aren't washed as often; the buildings aren'tcleaned as often,” Fleming says.

KEEPING PRIORITIES STRAIGHT

Nevertheless, despite these cuts, the county has not sufferedwhen it comes to preparedness, Fleming observes. Montgomery Countyhas an emergency-operations center, primarily run by police andfire, the first responders in any catastrophe. “Just last week wedid a hurricane exercise. We do terrorist attacks, nuclear attacks;we've done train wrecks and plane wrecks,” he says.

An emergency-operations center in the northern part of thecounty is the base for scenario testing. “We all have a stationthere, and we have a public information office. Everything is setup the way it would be in an actual disaster,” he says.

 The 911 call center is located there, and all trafficlights can be controlled from the location. “We even have threemobile headquarters—two for the police department and one for fireand rescue—that we can take onsite,” he says.

Montgomery County bolsters its own emergency resources byparticipating in a mutual-aid program with other counties in theregion, including Fairfax County and Washington, D.C. “Ourfirefighters, for example, responded to the Pentagon on Sept. 11,2001,” he says.

The county also has a search-and-rescue team “that goes all overthe country and the world if needed.” The team responded toOklahoma City after the bombing of the federal building and to theOlympics in Atlanta when there was a bomb scare, as well as anumber of tornado incidents.

In light of the catastrophes worldwide, he says, the county isplanning more exercises. And these practice runs are criticallyimportant, Fleming says, because without them, things can getoverlooked, like the amount of fuel needed to keep a generatorrunning for a certain period of time.

Keeping contingency plans updated is “our job; it's part of whatwe do,” Fleming says. “I buy the commercial insurance to protectour buildings, so I think we're pretty well protected and wellorganized. Of course, something always throws a monkey wrench intothe mix.”