On the opening day of the 69th Annual Workers' CompensationEducational Conference and 26th Annual Safety and HealthConference, I will have the pleasure of presenting a session withMichele Adams of Walt Disney World Resort and David Stills ofWalmart. Entitled “Risk Management, Measuring Performance,” thesession will underscore the importance of measuring programeffectiveness and spotlight how two iconic organizations measurethe quality and performance of their risk management programs.While the approach is unique for every company, I have found thereare some common themes and techniques that have surfaced andevolved through the years that benefit most organizations.

Customization rules

The key to ensuring favorable outcomes in risk management is todesign programs tailored for each employer's specific business andto customize performance metrics according to their needs. Tocreate a successful program, several variables must be considered,such as culture, process and overall business strategy; however, Ihave observed several overarching components that hold true acrossbusinesses. Some of these important similarities include:

• The most successful risk management strategies are integratedwith the employer's overall corporate objectives.
• There is a shift towards a more holistic approach to riskmanagement. In this movement, equal weight is given tofinancial outcomes, cultural awareness, enhancing the employeeexperience through quality healthcare, and considering customerloyalty and brand reputation efforts throughout the claimsmanagement continuum.
• To be successful, employers must communicate with and engagemultiple parties who understand the organization's objectives,challenges, and priorities. Your TPA partner should understand yourobjectives, your challenges, your priorities and most importantly,these goals need to be understood and measured at the desk level.The essential steps in this process include:

- Leveraging all available resources,internally and externally.

­- Fostering collaboration effortswith other departments within the organization, includingoperations, safety, human resources, marketing, legal and finance –each of these areas can and will impact the program's success.

­- Establishing strong, effectivepartnerships with service providers, including carriers, brokers,third party administrators, consultants, actuaries, attorneys,medical providers and others who service the program. Each of theseparties offers a degree of expertise that can be harnessed andmanaged for the benefit of the program. Carefully defining servicestandards and communication expectations can improve the odds ofsuccessful performance.

• When setting goals and determining key performance indicators,it is necessary to balance macro and micro objectives:

­- Macro – Thisincludes long-term, big picture objectives (i.e. build safetyawareness throughout the organization and develop a strongreturn-to-work culture).

­- Micro – Thisencompasses claim file details and standard metrics, such asfrequency, lost time to medical only ratios, production, disabilitydurations, individual medical cost trends and ultimate claim costs;as well as immediate opportunities to control costs and improveproductivity.

Leveraging technology to improve results

Technology has advanced at light speed in recent years. Effective use of technology can improve decision-making, producemore positive outcomes and increase communications among allstakeholders. Some areas that offer valuable benefits include:

• Predictive modeling – The underlying data on which the modelingis based coupled with the action that is taken after the analysisis completed are key factors. Being able to drill down to thedepartment or division level is very important, but going one stepfurther and utilizing the data to reveal trends can offer valuableinsight and ultimately improve outcomes. It is the combination ofdata, technology and industry expertise that enables employers touncover trends that lead to successful claims resolution. Mostcurrent predictive modeling techniques try to identify patternsthat, if not acted upon, will repeat. Using an employer's own datato provide a richer and more meaningful analysis of the claiminformation can be invaluable in these types of assessments.
• Outcomes-focused approach to quality – This goes beyondconventional compliance principles to proactively review claimswith audits scheduled earlier in the claims lifecycle. Employers can reduce costs and drive better results byconcentrating on claim-level performance as well as conventionalcompliance principles.
• Customized scorecards – These can provide in-depth details anda high level summary to share with others within your organization.Dynamic real-time measurement is key to successful and progressingrisk management programs

Key rules for measuring performance

For each program to be successful, employers must developcustomized performance metrics with the following essentialcharacteristics:

• Simple to understand at all levels of the organization
• Provides information that is meaningful and valuable to theC-suite
• Offers consistent information across all variables to producean accurate picture
• Conducted on an ongoing basis to improve outcomes and maximizeopportunities for early intervention

Conclusion

The well-known expression, “if you can't measure it, you can'tmanage it,” is anything but trivial. A good risk management programcan only become great if quality and performance are effectivelymeasured and managed. Today, access to claim data, quantitativeexpertise and advanced technology give employers an edge like neverbefore. Measuring performance is not only important to riskmanagement success; it is essential.