By Kevin McPoyle, CIC, president and cofounder, KMRDPartners, Inc.

It seems so simple: Execute each task with care andconsideration, and unintended consequences can be anticipated. Thisrule can be applied across a broad spectrum of actions—from backinga car down the driveway to picking up a pallet with a forklift andmoving it across a warehouse floor.

But such everyday events are often far from simple. Otherwise,property and casualty insurance agencies wouldn't routinely processclaims resulting from a disregard for common safety procedures.

To say these claims have far-reaching consequences is anunderstatement. At the agency level, they burn up staff hours andenergy but are truly where the value of a policy is manifested. Atthe underwriter level, they drain staff resources, call intoquestion pricing and coverage considerations and dig into corporaterevenues in the form of surplus. Most importantly, at the insured'slevel, they can result in organizational disarray, a loss of focuson revenue, lost man-hours, and perhaps even litigation. Andthose who are injured can suffer potentially devastatingconsequences.

Sometimes a disaster serves as a catalyst. After such an event,an organization will implement procedures that raise awareness ofthe consequences that can follow from even the simplest actions.For the nation's largest corporation, such a disaster occurred in1989when the Exxon Valdez ran aground on a reef in Prince William'sSound.

Read related: “BP Oil Spill: The Bigger Picture.”

As anyone born before 1970 will recall, this environmentaldisaster was catastrophic. More than 200,000 barrels of oil spilledinto the water, resulting in widespread damage to a pristine,unspoiled ecosystem. The fact that the vessel's captain had beendrinking and left the bridge proved to be a public relationsdisaster. Although the captain was in clear violation of companypolicy, ExxonMobil suffered a significant setback in the court ofpublic opinion.

While ExxonMobil took vigorous action to repair the environmentand its reputation through lengthy clean-up efforts, reparationsand image management, it also instituted a set of internal controlsto guard against similar occurrences in the future. Althoughmanagement could not physically audit the actions of each employeeworking across the company's international footprint, it could putinto place what we in our agency call “a culture of preparedness.”

Because ExxonMobil initiated a culture shift, change waswidespread and deep-rooted throughout the organization. Ifmanagement had responded to the disaster by simply publishing ahandbook or policy guidelines, personnel would have addressed onlythe issues outlined in the guide. Change would have been specificand limited rather than generalized and widespread. Instead,as recently reported in a New Yorker magazine article, positivechange was affected in even the most basic ways:

• At company headquarters, employees backed their cars intoparking spaces in order to see clearly as they pulled away during apotential emergency.
• A written reprimand might result from simple acts that couldhave hazardous consequences. Potentially hazardous acts includedfailing to turn off a coffee burner and not wiping up after aspill.
• Departments organized safety meetings and competitions. In someinstances, prizes were awarded to clerks who made sure file drawerswere closed. During these safety meetings, employees mightshare stories of near misses or catastrophes that had been narrowlyaverted. It was as if these were safety consciousness awarenesssessions.

The culture shift was so pervasive, it even spread to employees'personal lives. Along with addressing what could potentially happenin the workplace, group safety meetings might also cover the properuse of a ladder when cleaning gutters. After all, an employeewho is injured in a household accident will be unable to show upfor work.

Read related: “Risk Management Critical to DeepwaterSafety.”

Although it came at great cost to the environment, thecorporation's reputation and revenue, the Valdez oil spillmotivated ExxonMobil management to create and promulgate a cultureof preparedness throughout all levels of the organization. While nodollar sign has been assigned to the economic and human savingsthat have been realized, they are certain to be significant.

Of particular interest is ExxonMobil's decision to go beyondrelying on the obvious response of publishing manuals andguidelines. Benefits would have been limited to theparticular subjects that were addressed there. Maybe because thedisaster was so overwhelming, management chose a course of actionthat would overwhelm the horrible reality that disaster couldstrike at any time, in any place and in any number of differentways. ExxonMobil opted for a culture shift rather than a policyshift, and so sent a message of safety and preparedness through allchannels of the firm's operating structure. In the vernacularof our culture, when change was required, “they didn't mail it in.”They did the work.

Any other organization—from mom-and-pop retail stores toconstruction companies to software companies—can learn from thisexample by creating and promulgating its own culture ofpreparedness. Claims will be reduced. Lawsuits will be reduced.Lost man-hours will be reduced. Human misery will be reduced.

By communicating this important message to our clients, we whomake a living in the property-casualty insurance business mayperform our greatest service: fewer claims submissions, potentiallylower premiums and a safer more productive organization.

By helping our clients instill a culture of preparedness, wewill serve our own interests, underwriters' interests, our clients'interests, and perhaps most importantly, the families of the menand women who work for our clients.