Q&A: Automation for Better Risk Management

In our recent webinar, Leveraging Automation and Operational Efficiency for Better Risk Management, we sat down with industry pros—Bob Marshburn, Erike Young, and David Clovis. From avoiding million-dollar mishaps to implementing automated tools that streamline compliance, this expert panel laid out a practical game plan to manage risk with finesse.

Here’s what they covered:

• COIs and Risk Identification: Why COIs alone aren’t enough and how hidden risks can sneak up and strain operational budgets.
• Contractual Risk Transfer: Why one-size-fits-all contracts don’t cut it, and how tailoring them to specific project risks makes a big difference.
• Due Diligence Best Practices: How continuous assessments help build stronger relationships with third parties and prevent future headaches.
• Technology and Efficiency: The game-changing impact of tools like e-signatures and centralized storage, which simplify processes and cut down on costs.

This practical advice is aimed at helping public sector teams stay on top of their risk management game, avoiding surprises, and getting the most out of their resources.

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Q: What are the key components of a third-party compliance program for public sector risk managers?  

A: Bob Marshburn, CEO of Certified Risk Managers, highlighted that compliance programs must start with clearly identifying risks and ensuring that contracts accurately reflect those risks. Specific language is critical to triggering insurance coverage and protecting against exclusions. Bob emphasized the importance of “deep verification” by reviewing not just insurance certificates but also the policy details to ensure compliance with contract requirements.

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Q: Why is third-party compliance crucial for risk-sharing pools?  

A: Erike Young, Deputy General Manager of the California Intergovernmental Risk Authority, explained that contract compliance allows public entities to transfer risk effectively. He noted an increase in claims tendered to contractors, highlighting the importance of setting adequate insurance requirements. Erike stressed that ongoing compliance reduces financial exposure for members of risk pools, safeguarding public funds.

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Q: What are the risks of relying solely on Certificates of Insurance (COIs)?  

A: Bob Marshburn highlighted caution against trusting COIs at face value, as they are not legally binding policies. He shared examples where COIs misrepresented coverage, leaving public entities exposed. COIs often contain limitations or endorsements that exclude coverage, which may only be discovered through deeper verification of the actual policy documents.

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Q: How can public sector entities select qualified third-party vendors?  

A: David Clovis, Founder of Clovis Consultants, emphasized the need for due diligence. He recommended checking insurance coverage before contracts are signed and working closely with neighboring agencies to align on industry practices. David also stressed the importance of understanding each vendor’s exposure to set the appropriate coverage limits.

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Q: Why is it essential to monitor risk throughout a contract’s life cycle?  

A: Risks don’t end with the signing of a contract. Ongoing assessments ensure that vendors maintain proper insurance coverage, including completed operations insurance. Automated systems can help monitor these contracts and flag any discrepancies or lapses in coverage over time.

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Key Takeaways  

• Automation Enhances Efficiency: Automating insurance verification saves time, reduces errors, and ensures continuous compliance.  
• Centralized Risk Management: Even with decentralized departments, having a shared system for contract and insurance management ensures consistency across public entities.  
• Continuous Monitoring: Risk doesn’t end when the project is complete. Regular assessments and updates help identify potential gaps before they become liabilities.  
• Leverage Pool Resources: Public entities can benefit from the expertise and economies of scale provided by risk-sharing pools like CIRA.

For the full conversation and deeper insights from our expert panel, be sure to watch the webinar on-demand and catch every detail of their discussion.