Managing Risk in 2019: The Lessons We'll Take Into 2020

2020 is a brand-new year, and with it comes brand-new opportunities to grow your business. But in order to make the most of the next 366 days (it is a leap year after all), it's important to reflect on the lessons of 2019. So, without further ado, here are a few of the things we've learned about managing risk that we'll be carrying into the '20s.

Set Boundaries for Cannabis in the Workplace

Forty-six states have legalized cannabis in some form, and the list of states legalizing medical and recreational marijuana is growing each year. This has created a number of challenges for employers, leaving them dazed and confused as to what is, and isn't, allowed. What disciplinary actions can you take for those under the influence on the job? Will testing help to prevent a claim or create one? How do you manage hiring or firing users? See our brief list of do's and don'ts for cannabis.

DO NOT allow marijuana in the workplace. THC—the chemical that causes a “high” when consumed—can distort depth perception, slow reaction time, and impair coordination. This is a recipe for disaster, leading to dangerous situations, decreasing productivity, and potentially damaging your company's reputation. In short, treat it like alcohol and forbid use when on the job.

DO NOT assume that a positive test means that an employee is using marijuana while at work. These tests may show a positive result up to a month after use, making them unreliable indicators of whether employees are showing up high. Depending on the state, firing employees for a positive result, especially if they are using it for medicinal purposes, could result in a legal battle.

DO clearly communicate your policies to everyone in your company and train your managers to recognize the warning signs of someone under the influence. Make it clear that safety is a priority for your business and marijuana usage on the job puts everyone, from customers to coworkers, in danger of an accident. Also establish how you intend to enforce the rules, handle post-accident testing, and what you'll do in the event of an employee's arrest. Most importantly, ensure that your policies are compliant with your state's law.

DO check with a lawyer to verify what your state law permits in terms of marijuana use and employee drug testing. Marijuana is still illegal at the federal level, but some states have precedent stating that firing an employee for medical use is a violation of their non-discrimination laws. Others have forbid rejecting a job candidate if they test positive on a pre-employment test. Some states side with the employer in these cases, allowing you to hire and fire at your discretion. Everywhere is different, which is why we recommend bringing in an expert, not a lawsuit.

Take Social Inflation Into Account

American society has become extremely litigious in nature, and the influence of numerous social factors have resulted in harsher judgements and higher payouts in the court of law than ever before. This has a particularly big impact on providers in the healthcare industry who require Professional Liability insurance. It's more important than ever before for providers to take active steps to understand and manage their risks, and ensure they are adequately protected in case of a claim. Consider these influences when looking for an insurance solution.

Tort Costs: Many people have developed a line of thinking that if something goes wrong, it must be someone's fault. Now we know that's not true, but that hasn't stopped the courts from handing out hefty awards for damages. Fortunately, over the last 25 years, many states have enacted tort reforms leading to fewer claims. Unfortunately, it's completely in the hands of the courts. With recent additions to the Supreme Court and a number of cases being reviewed this year, only time will tell if this trend continues.

Media Coverage: Media narratives shape public perception. This in turn can shape a jury's verdict. We often hear stories of frivolous lawsuits reaching into the millions, if not tens of millions, of dollars as the press turns an open-and-shut case into a high-profile news story. Class action abuse has also become problematic, forcing companies to settle or face a costly legal battle. The more coverage a lawsuit receives from the media, the bigger your price tag can be.

Medical Expenses: Adding to further social inflation is medical costs. Modern medical science can perform miracles when it comes to helping those in critical condition. However, rising medical costs in the U.S. can lead to greater rewards for a plaintiff. If you're a provider in the healthcare industry, keep a close eye on what you need to do to prepare for medical expenses should a lawsuit occur. What may seem like more than enough coverage now can quickly vanish when medical costs become involved.   

Cyber Threats Are Very, Very Real

Yes, we are still talking about cybersecurity! It continues to be a major concern for many businesses, and it will be well into the future. The threat of a cyberattack is more real than ever, and attacks are becoming more and more prevalent. This is especially concerning for healthcare providers due to the highly sensitive (and valuable) patient information they're privy to. Ransomware in particular continues to be a key threat.

A ransomware attack holds your business hostage, locking access to everything on your company's computers until the hacker is paid. Worse yet, even if you pay the hacker, they may steal information, leave themselves a way to access your system again, or just take the money and run without unlocking anything at all. Costs to unlock an affected system have also risen steeply from just a few years ago. All of these reasons and more are why ransomware attacks are rising in popularity for cybercriminals around the world—but you don't have to be a victim.

As the saying goes, “An ounce of prevention is worth a pound of cure.” That couldn't be more true when it comes to cybersecurity. Investing in these resources now can save you from a costly payout to a hacker, and fines from the government, should your business be compromised.

Train your employees to identify threats. Teach them what they need to look for to avoid phishing emails and dangerous downloads.

Evaluate your business partners. If you work closely with another company, you may be exposing yourself to cyber threats should they be attacked. Ensure they're taking cybersecurity seriously.

Have a plan. You don't want to be trying to figure out what your next steps should be in the middle of a ransomware attack. Develop a strategy to handle these threats now.

Hire a security firm if necessary. Don't be afraid to turn to a reputable third party to help keep your company safe. They're fee is significantly less than the costs you'll face if hit by a successful ransomware attack.

Explore insurance options. If you do get hit with a cyberattack, it could shutter your doors as costs mount. Check with your insurance provider to see what solutions you need to adequately protect your business.

Start 2020 off on the right foot. Familiarize yourself with your state's cannabis laws, begin taking steps to handle the effects of social inflation, and buffer your cybersecurity to avoid ransomware attacks. If you follow these steps, you can dramatically lower your risks for both the new year and the new decade.

Bill Wilson is vice president of sales and marketing for VGM Insurance Services. For more information about VGM Insurance's risk management resources, get in touch with us today at 800-362-3363 or info@vgminsurance.com.