This article references “Agility”, which is a new risk management book on Amazon by a colleague (Professor Tilman). Covid-19 created economic uncertainty. The book covers the importance of making tough risk decisions in an uncertain environment.

As part of the CARES Act, the U.S. government has been sending Economic Impact Payment checks to all living and deceased income tax filers that submitted a tax return in 2018. The photo shows the $1,200 check mailed to my deceased relative (Zombie Economic Protection maybe? – haha). This check, together with the tens-of-thousands of similar checks sent to deceased individuals, demonstrates how the U.S. government has once again proven it lacks agility when implementing new programs. I recently wrote about numerous flaws in the Small Business Payroll Protection Program.  The government failed in its execution by relying too much on the SBA and not providing guarantees to a pool of bank loans made by banks to their small business customers with defined risk criteria. I mention this as a warning of what might happen if Medicare-for-All is attempted in one sweeping action.  (I am not sure if this paragraph is humorous or sad.)

How agile are Chief Risk Officers in managing operational risks in company initiatives designed to protect employees from Covid-19 in their workplace?  Many corporations have allowed people to work from home or have furloughed staff, but now many companies want to bring more employees back?  How should they do it, and what are the risks?

Governor DeSantis allowed for some businesses (limits exist on restaurants and other small business segments) to begin opening in Florida on April 26^th.  The reason that Florida is moving forward to open most businesses is the reduced impact from the Coronavirus.  The death toll in Florida is 1,268, and other states (e.g., New York suffered 22,897 deaths) have experienced much higher death rates according to the most recently available data.

I thought it might be useful to look at some of the processes used to reduce operational risk here in Florida when businesses brought workers back to the office.  Hopefully, the processes considered might prove helpful to other companies when deciding how to welcome their employees back to the office.  The two areas of operational risk being addressed by corporations are employee safety and legal risk.  The Chief Operational Risk Officer should be helpful in risk assessment and monitoring procedures given the level of risk tolerance of the corporation.

Legal risk develops from employee lawsuits or process breakdowns from excess Covid-19 contagion at the workplace. The main concern for all businesses is negligence or inadequate controls in processes to protect the employee. The level of employee safety at work depends on the actions and policies adopted by the corporation to protect the worker from Covid-19. Those corporations with agile leaders should be better prepared to restructure the operational process while adjusting to the changing threat from Covid-19.

I have listed actions and policies that Florida businesses have considered as the de facto standard.

• Expanding office access controls (exposure questions, wearing mask and gloves) and temperature testing
• Reducing the number of workers in the office to support social distancing e.g., different shift structures, defining work-at-home roles, and providing video meeting capability for in-house and at-home work.
• Expanding workstation separation
• Enhancing cleaning procedures consistent with OSHA. (OSHA), including Personal Protection Equipment for cleaning workers and appropriate training of cleaning staff.
• Providing disinfecting wipes, gloves, masks, and soap at work
• Discontinuing nonessential travel to locations with ongoing COVID-19 outbreaks (CDC-OSHA). Regularly check CDC travel warning levels at cdc.gov/coronavirus/2019-ncov/travelers.
• Accepting increased rates of worker absenteeism.
• Developing Policies and Procedures for prompt Identification and isolation of sick people (CDC-OSHA).
• Implementing Basic Infection Prevention Measures – Hand washing, stay-at-home, respiratory etiquette, cleansing guidelines (CDC-OSHA)
• Reporting infection rates as required under OSHA (29-CFR-1904) for companies with more than ten employees.

The Operational Risk officer should work with the Human Resources Officer on procedures to monitor the rate and the possible source of infection.  This information can be used to modify procedures going forward to manage the level of operational risk.  Additional risk mitigation procedures that are being explored include:

• Removal of open office workstations that were developed to encourage collaboration and save office space. The use of cubicles with front and side walls creates better airborne virus barriers.
• Expanded digital monitoring: Tracking sources of infection (travel; commutation; meetings; location)
• Updated Privacy policies and procedures needed to manage the collection of personal data and health data
• Review employee protection policies for 3^rd Party vendors, part-time workers, and supply chain
• Consider compensation policies to ensure fairness for work-at-home employees and increases for lower-paid workers that need to buy required protective gear for safe commutation to work.
• Increase the UV-light and humidity levels, which have been shown to reduce the half-life of the virus
• The use of thermal cameras to detect employees with high temperatures (Dastin).

The company will need to decide on the level of protection for employees that is acceptable for the risk appetite of the firm and the risk appetite of the employees.  The measure of the firm’s agility is its ability to plan and execute effectively and timely.  As an example of reputational risk, Amazon has received negative press related to how it treats its employees, which has been compounded by the employee protests that their work environment is not safe.

By Robert Phelan, CFA, GARP

(www.riskdirector.com , 973-2727-3603, bphelan@riskdirector.com)

May 1, 2020

References

“29 CFR 1904: PART 1904—RECORDING AND REPORTING OCCUPATIONAL INJURIES AND ILLNESSES.” Regulations (Standards – 29 CFR) | Occupational Safety and Health Administration, US Department of Labor, Mar. 2020, http://www.osha.gov/laws-regs/regulations/standardnumber/1904.

Beach, Gary. “Now Is the Time to Evaluate Digital Transformation Skills.” The Wall Street Journal, Dow Jones & Company, 29 Apr. 2020, blogs.wsj.com/cio/2020/04/29/now-is-the-time-to-evaluate-digital-transformation-skills/.

Cowan, Tyler. “Employees Go Back to Work and Get Covid-19. What’s the Liability Picture?: Opinion.” Insurance Journal, Wells Media Group, Inc., 27 Apr. 2020, http://www.insurancejournal.com/news/national/2020/04/27/566367.htm.

Dastin, Jeffrey. “Exclusive: Amazon Deploys Thermal Cameras at Warehouses to Scan for Fevers Faster.” Reuters, Thomson Reuters, 18 Apr. 2020, http://www.reuters.com/article/us-health-coronavirus-amazon-com-cameras/exclusive-amazon-deploys-thermal-cameras-at-warehouses-to-scan-for-fevers-faster-idUSKBN2200HT/.

“Guidance on Preparing Workplaces for COVID-19.” OSHA, US Department of Labor, 30 Apr. 2020, http://www.osha.gov/Publications/OSHA3990.pdf.

“Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19).” Centers for Disease Control and Prevention, Centers for Disease Control and Prevention, 9 Apr. 2020, http://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html.

Tilman, Leo M., and Charles H. Jacoby. Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption. Missionday, 2019.