HomeMy WebLinkAbout10.b. Receive FY 2019-20 Risk Management Annual Report Page 1 of 45
Item 10.b.
CENTRALSAN
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CENTRAL CONTRA COSTA SANITARY DISTRICT
November 5, 2020
TO: HONORABLE BOARD OF DIRECTORS
FROM: SHARI DEUTSCH, RISK MANAGEMENT ADMINISTRATOR
REVIEWED BY: PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
ROGER S. BAILEY, GENERAL MANAGER
SUBJECT: RECEIVE FISCAL YEAR 2019-20 RISK MANAGEMENT ANNUAL REPORT
Attached is the Fiscal Year 2019-20 Risk Management Annual Report and presentation.
Strategic Plan Tie-In
GOAL TWO: Environmental Stewardship
Strategy 1—Achieve 100% compliance in all regulations
GOAL THREE: Fiscal Responsibility
Strategy 1—Maintain financial stability and sustainability
GOAL FIVE:Infrastructure Reliability
Strategy 3—Protect personnel and assets from threats and emergencies
GOAL SEVEN:Agility andAdaptability
Strategy 2—Plan ahead for scenarios of direct adverse impacts
ATTACHMENTS:
1. FY 2019-20 Risk Management Annual Report
2. Presentation
November 5, 2020 Regular Board Meeting Agenda Packet- Page 72 of 150
Page of
CENTRAL SANCENTRAL CONTRA COSTA SANITARY DISTRICT
Risk
Annual Report
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November 5, 2020 Regular Board Meeting Agenda Packet- Page 73 of 150
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Page 3 of 45
INTRODUCTION
I am pleased to present the Risk Management Division Fiscal Year (FY) 2019-20
Annual Report. Risk Management's role is to protect Central San from unexpected loss
or damage, and to minimize the impact of adverse events that occur. This requires Risk
Management staff to be proactive and to maintain a constant state of readiness. The
following report details some of the ways we've met that challenge.
Risk Management also plays a role in helping Central San meet its strategic goals.
Each section of this report references the FY 2018-20 Strategic Plan goals that it
supports. Further, Risk Management also coordinates the Enterprise Risk Management
effort that became an ongoing process in 2020
In addition to the items discussed in this report, Risk Management does a number of
things to protect Central San that aren't as apparent. Examples of these services
include pre-bid risk assessments of capital projects, insurance and indemnity reviews
for both capital and operational contracts, coordination with excess insurers for both
underwriting and claims management, evaluation of insurance and other risk financing
measures to manage the risks of new programs and providing litigation support to
District Counsel as needed.
Our ability to manage risk at Central San has, and will always, depend on our ongoing
partnership with management and staff. These partnerships help us to identify new and
emerging risks, to improve how Central San accepts and transfers risk, and to control
and reduce risks to our employees and our operations.
Thank you all for your continued support and commitment to these efforts.
Shari Deutsch
Risk Management Administrator
Risk Management Division Annual Report FY 2019-20 1
November 5, 2020 Regular Board Meeting Agenda Packet- Page 74 of 150
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Table of Contents
ExecutiveSummary ------------------------------------------------------------------------------------------------------------ 3
Insurance and Risk Financing --------------------------------------------------------------------------------------------5
Workers' Compensation Claims --------------------------------------------------------------------------------------- 7
LiabilityClaims ---------------------------------------------------------------------------------------------------------------------17
OtherRisks and Exposures -------------------------------------------------------------------------------------------- 23
Enterprise Risk Management ----------------------------------------------------------------------------------------- 26
Security -------------------------------------------------------------------------------------------------------------------------------- 27
EmergencyManagement --------------------------------------------------------------------------------------------------28
Total Cost of Risk 33
StrategicPlan Metrics---------------------------------------------------------------------------------------------------------35
Risk Management Division Annual Report FY 2019-20 2
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Executive Summary
Workers' Compensation: In FY 2019-20, Central San incurred six medical-only claims,
and four indemnity claims compared to 11 medical-only claims and two indemnity
claims in FY 2018-19. Other significant results include the following:
• Strains and sprains remain the most common types of injuries that result in
Workers' Compensation claims;
• Slips, trips, and falls remain the most common causes of injury;
• Adverse loss development for injuries occurring in FY 2017-18 has resulted in an
increased Experience Modifier (ExMod), which will increase premium costs until
claims from that year are removed from the ExMod calculation.
Overflow Claims: Central San has seen a reduction in overflow claims from a high of 27
in FY 2001-02 to generally less than 10 claims per year since FY 2010-11.
In FY 2019-20 there were 7 overflow claims, one fewer than the preceding year. The
incurred cost of these newer claims is higher because we still have open reserves for
claims that have not yet settled. As a result, the average cost per overflow claim falls
just above our benchmark of $25,000 average cost per overflow claim.
Overflow Claims i i i2019-20
Number 9 4 8 7
Total Cost $123,993 $102,557 $155,545 $184,110
Average Cost $13,777 $25,639 $19,443 $26,158
Other Liability Claims: Claims in this category increased in both frequency and severity,
raising the average cost per claim from $4,245 in FY 2018-19 to $10,117 in FY 2019-20.
This is discussed in more detail later in this report.
Property Losses: Central San incurred 5 property losses in FY 2019-20 but recovered
money from other parties on four of them, leaving a net loss of $2,696.
The following table summarizes claims costs for FY 2019-20 as compared to the
preceding year.
Risk Management Division Annual Report FY 2019-20 3
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Claim . Cost IFY 2018-19 Cost IFY 2019-20
-
Liability—Auto $7,470 $1,000
Liability- Overflows $155,545 $184,110
Liability— Plumbing $3,134 $244
Liability—Other $38,205 $91,056
Property $3,584 $8,600
Auto Physical Damage $11,912 $10,516
Enterprise Risk Management (ERM): establishes a more systematic and organization-
wide process to identify, evaluate, mitigate and monitor risk. The ERM team developed
a strategic risk register, prioritized those risks and identified potential mitigations to
reduce or control those risks. Risk Management presented the initial results to the
Board in January 2020. The ERM team now meets twice per year to review and update
the risk register and mitigations. Results of these meetings are presented to the Board
shortly thereafter.
Security: Staff continued to work toward implementation of the Security Master Plan
and, with the assistance of the Security Committee, made additional improvements to
security systems, procedures and practices.
Emergency Management: Central San responded to four emergency events in FY
2019-20: power shutoffs, fire, earthquake, and the COVID-19 pandemic. Staff response
to all events was timely and effective, demonstrating the importance of continuous
training, even when emergencies (used to) occur infrequently.
Total Cost of Risk: The Total Cost of Risk (TCOR) is a risk management industry
benchmark that allows an organization to evaluate the cost of its Risk Management
program over time. TCOR includes the cost of Central San's Safety program, as well as
Risk Management program administration, claims, and insurance premiums. This total
is reduced by any revenue accrued by the Self-Insurance Fund.
The TCOR for FY 2019-20 was $3,018,588, an increase of over $360,000 from the
previous year. This increase was the result of higher insurance premiums.
Risk Management Division Annual Report FY 2019-20 4
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Insurance and Risk Financing
Goal 3: Be a Fiscally Sound and Effective Water Sector Utility
Liability Insurance Coverage
Central San purchases commercial liability insurance for Workers' Compensation,
Employers' Liability, Excess General Liability, Pollution Legal Liability, Employment
Practices Liability, and Fiduciary Liability.
Workers' Compensation: Central San participates in the California Sanitation Risk
Management Authority (CSRMA) Workers' Compensation insurance pool, a joint
powers authority comprised of over 50 sanitary districts within California. Risk
Management staff serves as Central San's representative on the Authority's Board of
Directors. Insurance Premium Cost - $776,996.
Excess General Liability: This policy covers claims in excess of Central San's $500,000
retention up to $15 million. Coverage includes defense and indemnification for inverse
condemnation. Insurance Premium Cost - $366,308.
Pollution Legal Liability: This policy covers claims and losses arising from the collection
and disposal of household hazardous waste. It applies only to the Household
Hazardous Waste Collection Facility and non-owned disposal sites. It does not cover
claims alleging pollution conditions arising from the operation or maintenance of the
collections system. Insurance Premium Cost - $67,854.
Employment Practices Liability: This is a gap policy that reduces the self-insured
retention for employment-related claims from $500,000 to $35,000 per occurrence. The
policy is limited to $500,000 in coverage as the Excess General Liability policy will
respond to claims that exceed this amount. Insurance Premium Cost - $16,751.
Fiduciary Liability: This policy protects Central San from claims filed by participants in
District-maintained retirement and other post-employment benefit funds. Insurance
Premium Cost - $4,223.
Property Insurance Coverage
Central San purchases property insurance, and crime insurance.
Property Insurance: Central San is self-insured for damage to its property and facilities
up to $250,000 per occurrence. Insurance coverage for losses in excess of this
retention is purchased through the Alliant Property Insurance Program (APIP), a group
purchasing program administered by Alliant Insurance Services. The APIP policy
includes Boiler and Machinery coverage, and Cyber Liability coverage.
Risk Management Division Annual Report FY 2019-20 5
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This program includes Identity Theft coverage for all Central San employees. Insurance
Premium Cost - $181 ,000.
Crime Insurance: This policy covers losses caused by employee theft, forgery or
alteration, funds transfer fraud and certain types of computer fraud. It does not cover
cyber-attacks or loss of data. Insurance Premium Cost - $1,869.
All Central San insurance policies renew on July 1 of each year.
Self Insurance Fund
Central San has at least partially self-insured most of its liability and some of its property
risks since July 1, 1986, when the Board approved the establishment of the Self-
Insurance Fund (SIF).
In 1994, the Government Accounting Standards Board issued Statement No. 10
(GASB-10) which established requirements on how public agencies must fund their self-
insured risks. To comply with GASB-10, Central San segregated reserves for certain
types of liability risks into a sub-fund that must be actuarially reviewed at least every two
years. The next actuarial study will use loss data through June 30, 2020.
In 2014, the Board established a reserve policy to maintain reserves for losses covered
by excess liability insurance of at least three times the amount of Central San's self-
insured retention. With the current retention of $500,000, this reserve is $1.5 million.
Retained losses and claims expenses are paid from this fund during the year. The fund
is replenished annually after the Board adopts the Self Insurance Fund budget via
transfer from the Operations and Maintenance Fund. During October 2020, the Board
directed $0.1 million from FY 2019-20 O&M variances to replenish this fund to the policy
required level in advance of the budget process.
The Board also wanted to reserve funds for catastrophic losses or emergency response
and sought to simplify reserving for all risks that do not require GASB-10 compliance by
consolidating other liability claim reserves and property loss reserves into a single fund.
In order to meet these goals, the balance of the SIF has been consolidated into a single
sub-fund with a $5 million reserve.
Other claims and program expenses are paid from this fund during the year. The fund
is replenished annually after the Board adopts the Self Insurance Fund budget via
transfer from the Operations and Maintenance Fund.
Risk Management Division Annual Report FY 2019-20 6
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Workers' Compensation Claims
Goal 3: Be a Fiscally Sound and Effective Water Sector Utility
Claim Types
Workers' Compensation claims are classified as either Medical Only (MO) or Indemnity
(IND) claims.
MO claims are those where employees only need medical treatment to cure or relieve
their injuries. In these circumstances injured employees did not lose any time from work
and fully recovered.
IND claims are those where injured employees received ongoing medical treatment
and:
• were taken off work by their treating physician,
• were given permanent physical restrictions and/or,
• suffered some permanent disability or physical limitation as a result of their injury.
Summary of Recent Claims
The following table shows the distribution of Workers' Compensation claims for
FY 2019-20, and the two prior years. The Claim Count column indicates the number of
claims occurring during the year. The Claim Costs column shows the total cost of those
claims to date.
FY i i
Claim Claim Claim Claim Claim Claim
Count Costs Count Costs Count Costs
Medical Only 8 $187,175 11 $27,072 6 $30,053
Indemnity 4 $472,025 2 1 $98,046 4 $134,290
Total 12 $659,200 13 $125,117 10 $164,342
Risk Management Division Annual Report FY 2019-20 7
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The following tables detail these totals by functional group.
Claims Frequency (number of claims filed per FY)
MO IND MO IND MO IN
FY 2017-18 FY i
ADM - - - 1 - -
CSO 7 3 5 - - 2
ENG 1 - 3 - 1 -
POD - 1 3 1 5 2
Total 8 4 11 2 6 4
Claims Severity (incurred costs for all claims per FY)
MO IND MO IND MO IND
ADM - IF - - $51,027 - -
CSO $79,398 $276,221 $4,431 - - $5,038
ENG $107,777 - $2,001 - $1,162 -
POD - $195,804 $20,639 $47,019 $28,891 $129,251
Total $187,175 $472,025 $27,027 $98,046 $30,053 $134,290
Trends and Analysis
Since Central San has very few Workers' Compensation claims in any single year. It is
also difficult to identify loss trends with such a small data set. As a result, the following
analysis incorporates Workers' Compensation claims data from the last five years.
Medical Only NO) Claims: The chart below shows the total number and cost of MO
claims by functional group for the last five years. The following table shows the average
cost per MO claim for each group during that same period.
Risk Management Division Annual Report FY 2019-20 8
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Medical Only Claims - Last 5 Years
$180,000 - 35
$160,000 -
30
$140,000 -
25
$120,000
$100,000 20
$80,000 15
$60,000 13
10
$40,000
$20,000 5
2
$- 0
ADM CSO ENG POD
ENG includes HHWCF and Environmental Compliance
• ADM CSO ENG POD
5 Yr • $1,761 $3,790 $20,079 $4,092
Collection System Operations (CSO) has the highest number of MO claims (30) over
this period but also had relatively low average cost per MO claim. Overall, CSO has
more frequent, but generally less serious, injuries than other groups.
CSO is also the most active participant in Central San's Return to Work Program, which
is discussed later in this section. CSO's active participation allows their employees to
recover and to return to work faster, which improves recovery time and reduces the cost
of these claims.
Indemnity (IND) Claims: The following chart shows the total number and cost of
Indemnity claims by functional group for the last five years. The costs include medical
expenses and other payments made by the program (i.e. temporary disability payments
to employees while off work). The following table shows the average cost per IND claim
for each group during that same period.
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Indemnity Claims - Last 5 Years
$700,000 9
$600,000 8
$500,000
6 6
$400,000 — 5
$300,000 4
3
$200,000 i
2
$100,000 1
1
$- 0
ADM CSO ENG POD
• ADM CSO ENG POD
• 1. $51,027 $47,918 - $82,037
These results further illustrate the limitations of a small data set when looking for trends.
The single Administration (ADM) claim was relatively minor when compared to the
overall population of IND claims. During this same time, CSO had six claims averaging
over $18,619 each while POD had eight IND claims at an average cost of over $11,307
each.
Staff in POD has worked hard to increase the number of Temporary Modified duties
opportunities among its work groups. POD Management and Risk Management are
hopeful this will lead to a reduction in the average cost per IND claim over time.
When all IND claims over the last five years are consolidated, the average cost per
claim remains just under $14,000. In contrast, the consolidated average cost of a MO
claim over the last five years is just over $1,200.
Improving Outcomes
In FY 2019-20 Central San implemented two new tools designed to improve outcomes
for injured employees.
On-Call Nurse: Central San implemented a Nurse First Call Program which allows a
nurse to triage non-emergency injuries over the phone before medical treatment can be
provided. Employees now get direction from an objective medical professional
Risk Management Division Annual Report FY 2019-20 10
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regarding their immediate and ongoing treatment needs. This service also routes
detailed injury information to the clinic to inform subsequent treatment.
Medical Provider Network (MPN): Central San joined a MPN to provide employees
greater access to medical specialists. After seeing a doctor at the clinic, an injured
employee can follow up with any doctor in the network rather than wait for a referral to
be approved. Treatment modalities are still subject to review as defined by law but
doctors in the MPN should be well versed in the procedural aspects of Workers'
Compensation.
Over time, these programs may also reduce overall claims costs but for now we are
confident that faster treatment and a wider selection of providers will improve services
to injured employees.
Cost Drivers
Even with a small data set, it is clear that IND claims are significantly more expensive
than MO claims, as shown in the following chart.
Total Incurred Cost
Last 5 Years - Medical Only vs. Indemnity
$700,000
$600,000 - $656,300
$500,000
$400,000
$300,000
$51,027 $287,505 ----
$200,000
__$200,000
$100,000
$- $113,707 $160,629
ADM
CSO ENG $53,192
POD
This illustrates the differential costs between MO and IND claims. IND claims account
for 75% of total claim costs yet only make up 22% of claims filed.
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The above chart highlights the differential claims cost between MO and IND claims.
Since IND claims usually include time away from work, there are additional costs
associated with these injuries that cannot be captured by claims data. These include
lost productivity, overtime for other staff needed to fill in while an injured employee is off
work, paid time off to attend medical appointments, and supplemental benefit costs
including salary continuation provided to augment temporary disability payments.
Expert opinions vary on the scope of these soft costs but estimates range from three to
five times the claims cost. Considering that indemnity claim costs for the last five years
exceeded $990,000, this equates to $3 million to $5 million in soft costs incurred by
Central San.
Since IND claims are so costly, Risk Management, Safety and Human Resources staff
work collaboratively with injured employees and their supervisors to reduce the amount
of time employees lose from work, to ensure employees receive ongoing and proper
medical treatment, and to help employees recover as soon as possible. In many cases,
these efforts prevent MO claims from becoming IND claims.
Indemnity Claims Classification
As noted above, IND claims constitute the most severe injuries and are the primary cost
driver in Workers' Compensation. Safety staff works with managers and supervisors to
identify the root causes of injuries and accidents to reduce the frequency and severity of
injuries to employees. These loss control activities are addressed more fully in the
Safety Annual Report provided after the end of each calendar year. The following
charts provide an overview of the most severe IND claims by injury type, cause, and
affected body parts.
Risk Management Division Annual Report FY 2019-20 12
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Most Common Types of Injury By Year
2019-20
2018-19
Pain
2017-18 ■Strain/Sprain
■Irritation/Burn
2016-17
■Cut/Bruise
2015-16
0 2 4 6 8 10
Strains and sprains remain the most common type of IND claim.
Selected IND Claims by Type of Injury
Last 5 Yrs & Last 10 Yrs
Other
Cut/Bruise _
■Last 10 Yrs
Fracture Last 5 Yrs
Strain/Sprain
0 5 10 15 20
The high frequency of strain/sprain injuries is more evident over the 10-year time span.
Risk Management Division Annual Report FY 2019-20 13
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Selected IND Claims by Cause of Injury
Last 5 Yrs & Last 10 Yrs
Slip/Trip/Fall/Jump
Repetitive Motion
■Last 10 Yrs
Pushing/Pulling ■Last 5 Yrs
Lifing/Reaching
0 1 2 3 4 5 6 7 8
Repetitive Motion used to be the most frequent cause of IND claims over the last 10
years, but there has only been one such claim in the last five years. Pushing / Pulling is
now the most common causes of injury.
Selected IND Claims by Injured Body Part
Last 5 Yrs & Last 10 Yrs
Shoulder
- ■Last 10 Yrs
Knee
■Last 5 Yrs
Arm -
Back
0 2 4 6 8 10 12
As with the preceding charts, data from the last five years demonstrates some
improvement, with no new shoulder or knee injuries. Backs are still the most commonly
injured body part, and 80% of back injuries affect the lower back.
Return to Work
In 2007, Risk Management implemented a Return to Work Program to facilitate
employees' recovery from work-related injuries and to help reduce the number and cost
Risk Management Division Annual Report FY 2019-20 14
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of IND claims. In many cases, Central San's ability to provide temporary modified duty
(TMD) can prevent a MO claim from becoming an IND claim. This makes the Return to
Work Program an essential component of both employees' recovery and cost control.
The program incorporates use of the interactive process which is required for
compliance with the Fair Employment and Housing Act (FEHA) and the Americans with
Disabilities Act Amendments Act (ADAAA).
It is not easy to compare Return to Work metrics from year to year as each potential
TMD assignment depends on the nature of each employee's physical restrictions, and
Central San's ability to offer TMD within those restrictions. In FY 2019-20, Central San
provided TMD assignments to over 90% of employees who were allowed to return to
some form of modified duty.
Experience Modification Factor (ExMod)
One of several factors used to calculate Central San's annual Workers' Compensation
premium is the Experience Modification factor (ExMod). CSRMA calculates each pool
member's ExMod by comparing its loss data from the preceding three prior years to the
entire pool's combined loss data for that same period. Members' ExMods are then
adjusted to align a portion of the members' premium with its' relative loss experience.
Because the pool determines members' ExMod using a rolling three-year period of loss
data, no member is penalized for poor performance (higher than average claims
frequency or severity) in a single year indefinitely.
Workers' Comp ExMod - Last 10 Years
1.20
1.00 1.06
0.90
0.80 0.74 0.74
.71
0.60 0.67
0.61
0.40 —
0.20 —
0.00 —
11 12 13 .1� 15 .16 �'.11 .1$ .19 .213
,L�10' 2p11 2012' 2013 2p1� Zp15 ,Lp1 ,Lp1� ,Lp1$ ,Lp19
Risk Management Division Annual Report FY 2019-20 15
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As mentioned earlier in this report, Workers' Compensation claims costs for FY 2017-18
were much higher than other years. Because of the rolling three year loss calculation,
claims costs from that bad year are now included in our formula, resulting in a
significant increase in our ExMod. Since these costs will also be included in upcoming
ExMod calculations, staff anticipates similar ExMods for the next two years.
Overall Performance
Regardless of future ExMod impacts, staff continues to embrace Central San's
proactive approach to safety. Risk Management staff remains focused on active case
management, and other staff, supervisors and managers continue to participate in the
Return To Work Program.
Risk Management Division Annual Report FY 2019-20 16
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Liability Claims
Goal 3: Be a Fiscally Sound and Effective Water Sector Utility
Claims Philosophy
Central San's focus on customer service informs its claims management process.
Claimants are contacted immediately, their claims are investigated thoroughly, and
when damages are found to be Central San's responsibility, claims are settled promptly
and fairly. This approach has resulted in satisfied claimants and in reduced cost.
Liability Claim Types
We categorize self-insured liability claims into four types; Auto Liability, Plumbing
Reimbursements, Sanitary Sewer Overflows, and Other Liability claims. These claims
are all paid from the Self Insurance Fund and would be covered by Central San's
excess liability insurance if the losses exceeded the self-insured retention.
Claim costs include emergency response expenses, settlements, legal expenses and
reserves for open claims. It does not include staff time to adjust and settle claims.
Auto Liability Claims
Auto Liability claims are those filed by third parties for damages they believe Central
San personnel caused while operating its vehicles. This includes claims for injuries to
persons or damage to others' property.
These claims do not include costs to repair or replace damaged Central San vehicles
from such events. Repairs to these vehicles are paid from a different Self-Insured Fund
and discussed under the Auto Physical Damage section of this report.
The chart below shows the total number and cost of Auto Liability claims for the last five
years. There were only two minor Auto Liability claims in FY 2019-20.
Risk Management Division Annual Report FY 2019-20 17
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Auto Liability Claims
$10,000 3
$9,000 $8'777 $8,385
$8,000 $7,470
$7,000 - 2
$6,000
$5,000
$4,000
$3,000 1
$2,000
$1,000 $1,000
$ -M 0
2015-16 2016-17 2017-18 2018-19 2019-20
FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Avg $ per $4,388 $4,192 $0 $3,735 $500
Claim
Plumbing Reimbursement Claims
Plumbing reimbursements are small claims usually made by homeowners after they
have called a plumber for service, only to learn that the problem was in Central San's
main sewer line. In most cases, CSO staff provide the homeowner with a claim form
while they are on site. This facilitates a simple reimbursement process where Risk
Management receives the claim, confirms the call out and the findings, then processes
reasonable reimbursements.
Plumbing reimbursements do not include reimbursement requests arising out of an
overflow or any event where sewage escaped from the collection system. These
circumstances involve additional expenses and are often included as part of a larger
claim. Claims arising from these situations are considered overflow claims, which are
discussed in the following section.
The chart below shows the total number and cost of plumbing reimbursement claims for
the last five years, followed by a table showing the average cost per plumbing
reimbursement claim for each of those years.
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Plumbing Reimbursements
$3,500 8
$3,000 7
$2,500 6
$2,000 5
4
$1,500
3
$1,000
2
$500 1
$- 0
2015-16 2016-17 2017-18 2018-19 2019-20
� Total Cost Number
Year FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
Avg ,o per $379 $449 $495 $1,045 $224
L Claim
The unusually high amount in FY 2018-19 resulted from a single claim with multiple
plumbing bills over a period of time before the problem was identified.
Sanitary Sewer Overflow Claims
Sanitary Sewer Overflow claims are filed by customers who claims their property has
been damaged by a sewer overflow. CSO staff respond to the overflow and contact
Risk Management when they become aware of an overflow that causes property
damage. This allows Risk Management staff to:
• respond immediately to begin coordination of emergency clean up and
remediation as needed;
• provide for affected customers' immediate needs;
• work with the customers to define damages;
• help customers prepare their claims; and
• settle the claims in a timely and reasonable manner.
This process has evolved into a partnership between CSO and Risk Management staff
that benefits both Central San and the customer.
The following chart shows the total number and cost of overflow claims for the last five
years, followed by a table showing the average cost per overflow claim for each year.
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Overflow Claims
$350,000 12
� $304,518
$300,000 10
$250,000
8
$200,000 $183,110
6
$150,000
$100,000 4
$50,000 2
$- 0
2015-16 2016-17 2017-18 2018-19 2019-20
� Total Cost Number
FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
$16,904 $13,777 $25,639 $19,443 $26,546
Staff benchmarks sanitary sewer overflow claims costs against the average cost per
overflow claim incurred by the CSRMA general liability insurance pool. Although
Central San does not participate in this pool, its loss data presents a relevant
benchmark for comparison. As of the last available data, CSRMA's average cost per
overflow claim hovers around $20,000. Central San has outperformed this benchmark
three of the last five years.
Thanks to the partnership with CSO and the ongoing support of management and the
Board, Risk Management staff often resolves sanitary sewer overflow claims at a lower
cost than that of Central San's peers.
Large overflow claims occur infrequently but any overflow claim can develop into a
significant loss, even when addressed in a timely, thoughtful and professional manner.
Other Liability Claims
Other liability claims include losses arising from Central San's operations that don't
readily fit in the preceding categories. Examples of these claims include damage to
homeowners' property caused by sewer cleaning activities, damages alleged to arise
from field work, damage to other utilities' infrastructure from maintenance or
construction activities and other claims where the damaged party believes Central San
caused their loss.
Risk Management Division Annual Report FY 2019-20 20
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Page 23 of 45
All such claims are investigated and, if found to be Central San's responsibility, promptly
settled for reasonable amounts. Claims found not to be Central San's responsibility are
either denied or tendered to the at-fault party.
Because these claims defy any ready classification, claims within this group fluctuate in
frequency and severity over time. A claim filed today might settle for $500 while one
filed tomorrow could exceed the self-insured retention. This makes annual comparisons
difficult.
We group these claims into a catch-all Other Liability Claims category. There is little
similarity among the claims in this group, but occasionally litigated or complex claims
that take longer to settle and may incur reserves and legal expenses.
The chart below shows the total number and cost of these other liability claims for the
last five years, followed by a table showing the average cost per claim for each year.
Other Liability Claims
$250,000 10
9
$200,000 8
7
$150,000 6
5
$100,000 4
3
$50,000 2
1
$- 0
2015-16 2016-17 2017-18 2018-19 2019-20
� Total Cost Number
FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20
$1,085 $10,535 $968 $4,245 $10,117
Claim
Risk Management Division Annual Report FY 2019-20 21
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Page 24 of 45
Liability Claims Overall
The following chart combines the preceding liability claim types and compares claim
costs by fiscal year and type of liability claim over the last five years.
Cost of Liability Claims by Type
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
15/16 16/17 17/18 18/19 19/20
■AL ■OL ■PL ■SSO
From this perspective, plumbing reimbursements and auto liability claims comprise a
very small portion of Central San's claim costs. Overflow claims have a more noticeable
impact but the annual aggregate cost appears somewhat stable. As indicated earlier,
other liability claims, shown above as 'OL', fluctuate widely in both frequency and
severity from year to year.
Risk Management Division Annual Report FY 2019-20 22
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Page 25 of 45
Other Risks and Exposures
Goal 3: Be a Fiscally Sound and Effective Water Sector Utility
Goal 5: Maintain a Reliable Infrastructure
Property Losses
Central San is self-insured for damage to its property and facilities up to $250,000 per
occurrence. Insurance coverage for losses in excess of this retention is purchased
through the Alliant Property Insurance Program (APIP), a group purchasing program
administered by Alliant Insurance Services. The APIP policy includes Boiler and
Machinery and Cyber Liability coverage. There were 5 small property losses in
FY 2019-20 totaling $2,696.
As the chart below shows, the FY 2019-20 total cost for property losses exceeds this
amount. The balance of expenses allocated here arise from the supplemental cleaning
and sanitizing services required to maintain essential functions during the COVID-19
quarantine and beyond. This was done for convenience as Central San plans to submit
a request for Public Assistance to FEMA in FY 2020-21. The total supplemental
cleaning and sanitizing cost through June 30, 2020 was $41,312, with spending on such
activities anticipated to continue into FY 2020-21.
Self-Insured Property Losses
$50,000 $44,008 7
$45,000
6
$40,000
$35,000 5
$30,000 4
$25,000
$20,000 3
$15,000 2
$10,000
$5,000 1
$- 0
2015-16 2016-17 2017-18 2018-19 2019-20
� Total Cost Number
Earthquake and Flood Risks
The APIP policy does not include coverage for damages arising out of flood or
earthquake. Risk Management staff periodically evaluate the cost of insuring these
risks through the commercial insurance market. This evaluation considers recent
hazard modeling results and Central San's implementation of mitigation projects that
Risk Management Division Annual Report FY 2019-20 23
November 5, 2020 Regular Board Meeting Agenda Packet- Page 96 of 150
Page 26 of 45
reduce the potential impact of earthquake and flood damage against available
insurance coverage and pricing.
In March and June 2017, staff presented the Administration Committee with an analysis
of earthquake insurance pricing, and the results of FEMA's 2017 update to HAZUS, its
hazard model using multiple earthquake and flood scenarios. After some discussion,
the Committee decided against purchasing flood or earthquake insurance at that time.
Staff will continue to monitor hazard models and the insurance market and report back
to the Committee when more favorable options emerge.
As a result, Central San is essentially self-insured for flood and earthquake risks. To
finance this risk, the Board approved and funded a $5 million catastrophic loss fund
within the Self-Insurance Fund (SIF) to pay for emergency repairs after a natural
disaster. Central San has not suffered any catastrophic losses to date.
Auto Physical Damage
Central San is self-insured for Auto Physical Damage. Damage to other parties'
vehicles is insured by the Excess Liability policy, but the cost to repair or replace
Central San vehicles is not. If a Central San vehicle is damaged by a third party, the
SIF pays for repairs and Risk Management staff pursues cost recovery from the at-fault
party. When damage is caused by Central San staff, the SIF pays repair costs in
excess of$1,000. All vehicle repairs are coordinated through Central San's Vehicle
Shop.
The following chart shows the number and cost of Auto Physical Damage losses for the
last five years.
Auto Physical Damage Losses
$30,000 6
$25,000 5
$27,129
$20,000 4
$15,000 3
$10,000 2
$10,516
$5,000 1
$_ ■ 0
2015-16 2016-17 2017-18 2018-19 2019-20
� Total Cost Number
Risk Management Division Annual Report FY 2019-20 24
November 5, 2020 Regular Board Meeting Agenda Packet- Page 97 of 150
Page 27 of 45
Five vehicles were damaged during FY 2019-20. Although total repair costs were not
excessive, all five accidents were determined to be the fault of the driver.
Household Hazardous Waste Claims
Central San purchases a separate Pollution Legal Liability insurance policy to cover
losses arising out of the collection and disposal of household hazardous waste. No
claims have been filed since the Household Hazardous Waste Collection Facility
opened in 1997.
Pollution Risks
Central San has chosen to self-insure pollution-related risks other than those arising
from providing the Household Hazardous Waste Facility. Coverage for such pollution
losses is either not available or extremely expensive. Claims costs arising from an
alleged pollution condition would be paid from the SIF's Catastrophic Loss Fund. No
pollution claims have been filed in over ten years.
Risk Management Division Annual Report FY 2019-20 25
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Page 28 of 45
Enterprise Risk Management
Goal 3: Be a Fiscally Sound and Effective Water Sector Utility
Introduced in 2004 by the Committee of Sponsoring Organizations Treadway
Commissions (COSO), Enterprise Risk Management (ERM) is a process used to
identify, assess, and respond to strategic risks that may affect an organization's ability
to meet its goals and objectives. Utilities and very large public agencies began
implementing ERM over a decade ago.
Since then, smaller public entities have gradually implemented some form of ERM.
They had enough success with the process that use of ERM has become a best
practice in public sector risk management.
ERM requires that agencies continuously identify their risks, rank and prioritize those
risks for oversight, mitigation or elimination, and periodically report progress to key
stakeholders.
Central San's ERM team includes the Executive Team, Risk Manager and Internal
Auditor. This group meets at least twice per year to review risk rankings, to review
mitigations and risk reduction priorities, and to identify any new risks or opportunities
that may affect Central San's ability to meet its objectives.
Staff presents the results of the meeting to the Board twice per year. The first report of
the year is a brief status report regarding the top risks as defined and ranked by the
ERM Team. The second report discusses developments on all strategic risks since the
preceding year.
The following chart is Central San's top strategic risk ranking as of June 2020, where
the axis represents assigned points (out of ten) for four factors including frequency,
severity, speed of onset and remaining mitigation work to be performed.
Top Strategic Risks - June 2020
40 -
30
20
10
0
A". '�e\�` °��cr�e`�`\J Q�°a���. \°yyo a�\`� �\�`•� �Pyye�. °thQ�� `a��et
eot�\O
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rJ5 ,�` c°o °k a`
0
45
Risk Management Division Annual Report FY 2019-20 26
November 5, 2020 Regular Board Meeting Agenda Packet- Page 99 of 150
Page 29 of 45
Security
Goal 5: Maintain a Reliable Infrastructure
Strategy 3 — Protect District Personnel and Assets from Threats and Emergencies
Risk Management is responsible for the physical security of Central San's facilities.
Day-to-day security operations includes oversight of, and coordination with, the security
guards, issuance of badges and keys to staff and the maintenance and support of the
electronic security systems including security cameras, panic buttons, burglar alarms
and related software.
Risk Management staff partners with other work groups to accomplish a variety of tasks
and projects to secure Central San property, and protect its employees and the public
from security breaches.
Major security initiatives this year included:
• Worked with a consultant to assist in implementing recommendations from
the Security Master Plan;
• Re-keyed various locks throughout the treatment plant;
• Added access control devices throughout the facilities;
• Added additional security guard hours due to increased plant activity;
• Implemented video analytic software to allow for remote monitoring and
improved review of recorded activities where necessary.
The Information Technology Division has implemented software and tools to identify
and control unauthorized access to Central San's networks, and has developed an
education and training program to increase employee awareness and reporting of
potential threats.
Risk Management staff is also working on longer term projects including updates to
information security protocols, electronic security systems, and facility hardening
measures to protect employees and further restrict access to Central San facilities from
unauthorized parties.
Risk Management Division Annual Report FY 2019-20 27
November 5, 2020 Regular Board Meeting Agenda Packet- Page 100 of 150
Page 30 of 45
Emergency Management
Goal 5: Maintain a Reliable Infrastructure
Strategy 3 — Protect District Personnel and Assets from Threats and Emergencies
This section of the Annual Report is usually dedicated to an overview of Central San's
Emergency Management Program components with updates regarding activities and
accomplishments occurring over the fiscal year. However, during FY 2019-20 staff
responded to a number of real emergencies, each of which illustrate elements of the
program in real life. A brief discussion of each event and staff's response follows.
Public Safety Power Shutoffs (PSPS): In order to limit injury and damage from wildfires
caused by electrical system infrastructure, Pacific Gas & Electric (PG&E) activated its
PSPS program. Although Central San did not receive its first notice of potential power
shutoff until October 2019, staff had been planning for this eventuality since late spring
of 2019. By the end of October PG&E had shut down power in areas with essential
Central San assets three times. Given advance planning and readiness efforts, Central
San continued essential operations without interruption.
Pleasant Hill Earthquake: A 4.5 magnitude earthquake occurred at 10:33 pm on
October 14, 2019. The epicenter was less than five miles away from Central San's
main campus, resulting in significant shaking. Operations staff conducted damage
assessments of the treatment plant and collections systems. The Public Information
Officer kept major stakeholders up to date as events developed and others documented
the actions and decisions taken during the response. While the earthquake caused only
minimal damage to Central San facilities, off-site emergency response personnel self-
activated and were on the job within 4 minutes of the earthquake.
EOC Activation: On October 27, 2019 a fire broke out in Lafayette and threatened
collection system assets stored at the Walnut Creek facility. As the fire expanded
during sustained heavy winds, the General Manager activated the EOC. Staff for
required EOC positions were contacted and the EOC was operational within 30
minutes. Responding staff monitored weather and fire boundaries and prepared to
evacuate essential assets if needed while the communications team monitored
traditional and social media. Once the fire was contained the EOC was deactivated.
While Central San staff conducts EOC activation exercises annually, this was the first
actual activation of the EOC in over 15 years.
COVID-19 Pandemic: Once COVID-19 reached California, Central San had only a few
days to implement changes to work sites in order to comply with new public health
orders. This included implementing a work from home program for most engineering
and administrative personnel. Human Resources took responsibility for communicating
changes to payroll reporting, available leaves and other benefits available to employees
as their circumstances dictated. IT staff facilitated most of the Work From Home effort,
Risk Management Division Annual Report FY 2019-20 28
November 5, 2020 Regular Board Meeting Agenda Packet- Page 101 of 150
Page 31 of 45
rapidly acquiring more laptops, installing software and proper security features on them,
and then issuing them to staff by appointment.
Shortly after the County Department of Public Health issued the quarantine order, the
Board proclaimed a local emergency and management activated a virtual EOC.
Risk Management staff reviewed the pandemic response segment of the Continuity of
Operations plan with the Virtual EOC team, then updated and presented it as a
standalone Pandemic Response Plan one week after the quarantine began.
Central San is considered essential infrastructure and some personnel involved in direct
operations were unable to work from home. Purchasing staff located and purchased
additional personal protective equipment (PPE), Operations managers made changes
to work schedules, and Safety staff developed and implemented procedures to maintain
social distancing and employed other administrative and engineering controls required
to maintain a safe working environment. These actions have and will continue beyond
FY 2019-20.
Since earthquake and fire are known hazards in central Contra Costa County, Central
San regularly trains on emergencies arising from these events. Power shutoffs are not
as common but the PSPS events were effectively managed until power was restored.
Had restoration taken longer, additional actions would have been required. Pandemics
were not high on most entities radar until late in 2019 and even then, very few people
had sufficient experience to meaningfully improve a standard plan. We continue to
update the Pandemic Response Plan, anticipating its use during a future public health
hazard.
These events tested Central San's emergency responders. After the three events in
October 2019, management conducted an after action debriefing with the responding
teams to identify what worked well, what needed improvement and what could be done
to facilitate future responses.
From Readiness to Resilience
Readiness - a condition where most personnel are sufficiently trained and
equipped to respond to most kinds of emergencies. (FEMA)
Resilience - the capacity of people, organizations or systems to adapt to
changing conditions and to withstand, and rapidly recover from, disruption arising
from emergencies. (FEMA)
Resilience is demonstrated by a seamless blend of continuity operations and
emergency operations from the onset of an emergency to its conclusion.
Risk Management Division Annual Report FY 2019-20 29
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Page 32 of 45
Management and staff responses to the FY 2019-20 emergencies indicated that Central
San has evolved from being ready to respond to an emergency to an organization that
operates in a steady state of resilience.
Program Components
The following sections detail the elements of Central San's Emergency Management
Program. This framework lays the groundwork that can produce employees who can
respond to an emergency in under 4 minutes, who can mobilize quickly to protect the
organization's assets, and who can modify the working conditions of the entire staff in
under two weeks.
Plan Development and Maintenance
Risk Management is responsible for developing, maintaining and continuously
improving the Emergency Operations Plan, Local Hazard Mitigation Plan, and the
Continuity of Operations Plan.
Emergency Operations Plan: The California Emergency Services Act requires all public
entities to prepare and maintain an Emergency Operations Plan (EOP) that complies
with the Standardized Emergency Management System (SEMS). Risk Management
released and the Board adopted a major EOP update in 2010 to reflect changes in the
EOC staffing structure and to comply with the federal National Incident Management
System (NIMS).
Since then, Risk Management staff reviews the EOP at least annually and posts needed
updates to the intranet. Hard copies of the EOP are kept in the primary and backup
Emergency Operations Centers (EOCs). Additional hard copies of the plan are stored
in the emergency supplies cache.
Local Hazard Mitigation Plan: FEMA requires local governments to update their plans
every five years as a prerequisite to seek grants under the Hazard Mitigation Grant
Program and the Pre-Disaster Mitigation Program. Central San's first plan was adopted
in 2011 , and accepted by FEMA in 2012. FEMA acceptance is valid for five years.
After that, an updated plan must be submitted to maintain program compliance.
In keeping with its commitment to coordinate emergency planning and responses with
other agencies, Central San joined with 35 other agencies to prepare a multi-
jurisdictional update to the 2012 Local Hazard Mitigation Plan. Staff served on the
Steering Committee managing this process.
The Board adopted Central San's portion of the updated plan on March 1, 2018. The
update was submitted to FEMA for review and was approved on April 19, 2018.
Continuity of Operations Plan: Staff spent considerable time in FY 2018-19 working on
a major update to the Continuity of Operations Plan (COOP). Staff completed the
update by the end of 2019.
Risk Management Division Annual Report FY 2019-20 30
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Page 33 of 45
Emergency Action Plan: The Emergency Action Plan (EAP) is required by CalOSHA
and details the specific responsibilities and procedures to follow if Central San staff
need to evacuate or shelter in place. Since the EAP is part of the Safety Directive
catalog, responsibility for EAP maintenance, testing and exercises resides with the
Safety Division.
Training and Exercises
Risk Management usually offers training classes and conducts exercises for emergency
response staff throughout the year. The annual EOC activation exercise was scheduled
for mid-October 2019 but was cancelled to allow key staff to prepare for and respond to
the anticipated PG&E's Public Safety Power Shutdowns (PSPS). The exercise was
rescheduled for March 2020 but the onset of COVID-19 effectively scuttled that attempt,
as staff focused instead on an effective response to an actual emergency.
Supplies and Equipment
Primary and Backup EOC: The Multi-Purpose Room is Central San's primary
Emergency Operations Center (EOC). The Crew Room at the CSO facility in Walnut
Creek serves as Central San's backup EOC. Both locations are designed as 'warm'
sites, meaning that all needed supplies and equipment are stored on site, but must be
set up before the EOC becomes operational.
These facilities must be continuously stocked with the necessary supplies and
equipment to enable immediate set up and operation of the EOC. Risk Management
staff conducts inventory audits of each location to ensure that the necessary items were
available on site, secured as needed and maintained in an operable condition, including
replacement of any outdated or non-operational items. During these audits, staff also
tests the analog phones, satellite television service and the satellite internet service to
ensure continued operability.
Communications: Contra Costa and Alameda Counties are partners in the East Bay
Regional Communications System Authority (EBRCSA), a Joint Powers Authority (JPA)
that developed and maintains an interoperable radio communications infrastructure
using the national P25 standard. Central San became a member of the Authority in
2014. In FY 2019-20 CSO started replaced their old emergency radios with new P25
compliant radios.
During FY 2019-20 staff acquired four Iridium GO! Devices which connect regular smart
phones to communications satellites, effectively converting smart cell phones into
satellite phones. Operations staff has been testing these devices. If they perform as
expected, we will acquire more to deploy at various locations.
Risk Management Division Annual Report FY 2019-20 31
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Page 34 of 45
Central San maintains Handheld Amateur (HAM) radios at both the Walnut Creek and
Martinez campuses. In FY 2019-20 two additional employees passed the Amateur
Radio Technician License test, bringing the number of SanHAMs up to four.
Coordination with Other Agencies
As a single-service agency, Central San must coordinate its emergency response with
first responders in other local governments within its service area. All local
governments in the County report incidents, damage and resource requests to the
Operational Area EOC. The Operational Area EOC is housed at the Contra Costa
County Sheriff's Office of Emergency Services (OES). The County EOC analyzes and
forwards local status reports and unfilled resource requests to the regional, state and
federal emergency management coordinators.
Risk Management staff continues to serve on the Operational Area Council, a group of
emergency managers from within the County who meet quarterly to share information
and best practices, coordinate multi-agency drills and training opportunities, and
facilitate coordinated area emergency planning. The Council is sponsored by the
Contra Costa County Sheriff's OES.
As the Operational Area point of contact, County OES also works with state and federal
agencies to collaborate on projects of regional or national concern. Operational Area
Council members are encouraged to participate in these larger group meetings.
Central San is also a member of the California Water and Wastewater Agency
Response Network (CaIWARN), which coordinates the distribution of members'
specialized equipment and trained personnel to other member agencies to help with
disaster and emergency response.
In the early days of the COVID-19 quarantine, Central San requested and received 500
cloth face masks from a cache acquired by CaIWARN.
Risk Management Division Annual Report FY 2019-20 32
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Page 35 of 45
Total Cost of Risk
Goal 3: Be a Fiscally Sound and Effective Water Sector Utility
The Total Cost of Risk (TCOR) is a risk management industry benchmark that allows an
organization to evaluate the cost of its Risk Management program over time. TCOR
includes the cost of Central San's Safety program, as well as Risk Management
program administration, claims and insurance premiums. This total is reduced by any
revenue accrued by the Self-Insurance Fund.
FY 2019-20 TCOR is $3,018,588, an increase of $369,000 (12%) from the preceding
year, resulting from increased insurance premiums.
The following chart shows Central San's TCOR for the last 10 years. The year with the
highest TCOR is shown in yellow while the year with the lowest TCOR is shown in
green.
TCOR Totals and Trend*
$4,500,000 $4,269,743
$4,000,000
$3,500,000
$3,018,588
$3,000,000
$2,525,257
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
titi ti� ti� ti� tih ti� ti1 til 1�
,y0 ,y0 ,y0 ,y0 ,y0 ,ti0 ,y0 ,Lp ,Lp ,ti0
* Totals have been adjusted for inflation
Risk Management Division Annual Report FY 2019-20 33
November 5, 2020 Regular Board Meeting Agenda Packet- Page 106 of 150
Page 36 of 45
TCOR is the sum of the five categories of expenses: personnel, insurance, claims, risk
management program costs and safety program costs. The following chart illustrates
these costs by category for the last 10 years.
TCOR Categories by Fiscal Year
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
yy yL ti'' ti� ti� ti� til yg ti� ti0
■Personnel ■Insurance ■Claims ■RM Program Safety Expenses
Note 1: Chart does not include lost productivity or other soft costs arising from claims.
Note 2: TCOR segment totals have not been adjusted for inflation.
Totals for four of the five categories are determined at the end of each fiscal year.
However, claims costs often include reserves for open claims occurring in specific fiscal
years. This may result in some fluctuation of the total claims costs over time as losses
develop or claims resolve favorably.
Risk Management Division Annual Report FY 2019-20 34
November 5, 2020 Regular Board Meeting Agenda Packet- Page 107 of 150
Page 37 of 45
Strategic Plan Metrics
Central San's Strategic Plan includes six goals with associated strategies, initiatives and
metrics to track performance toward achieving these goals. Risk Management is
responsible for metrics under three of the goals. The tables below summarize Risk
Management's FY 2019-20 performance for the metrics associated with these goals.
Goal 1: Provide Exceptional Customer Service and Maintain an Excellent
Reputation in the Community
Strategy: Maintain a strong reputation in the community
Metric Success Measure —rYear End Result
Continue participation in Provide and receive Mutual Aid Received 500 O
CalWARN to/from sister agencies Cloth Masks
Goal 3: Be a Fiscally Sound and Effective Water Sector Utility
Strategy: Evaluate and implement risk management practices to minimize loss.
WSuccess Measure Year End Result
Develop and present Establish framework rank risks
Enterprise Risk Management and present results to Board Completed
(ERM) Framework to Board
Provide Return to Work Provide Temporary Modified Duty
Program to at least 95% of employees 100%
injured on the job
Manage the Cost of Overflow Average cost per claim
Claims < $25,000 $26,564
Goal 5: Maintain a Reliable Infrastructure
Strategy: Enhance Capability to Mitigate, Prepare, Respond and Recover from
Emergencies
Success Measure Year End Result
Ensure the currency of Expanded Pandemic Section of Ongoing O
Emergency Plans Continuity of Operations Plan
Evaluate and implement Implement the Security Master O
security improvements to Plan Ongoing
meet new or evolving threats
Risk Management Division Annual Report FY 2019-20 35
November 5, 2020 Regular Board Meeting Agenda Packet- Page 108 of 150
Page 38 of 45
ATTACHMENT 2
h
RISK MANAGEMENT DIVISION
ANNUAL REPORT
Board of Directors
November 5, 2020
Shari Deutsch
Risk Management Administrator
4
1
WORKERS' COMPENSATION
Medical Only Claims-Last 5 Years 5-year average cost per MO claim
$180,000 35
$160,000 ,�, 30 •��
$140,000 25 I $1,761 $3,790 $20,079 $4,092
$120,000
$100,000 ' 20
$80,000 15 Engineering average is high from a large
$60,000 1a
$ao,o00
10 claim in 17/18.
$20,000 s 5-year combined average is$6,246 per MO
z
$- o
ADM cso ENG POD
5-year average cost per IND claim Indemnity Claims-Last 5 Years
I• $700,000 9
$600,000 — 8
$51,207 $47,918 $82,037 7
$500,000
6 6
$400,000 5
POD average is high from large claims $300,000 4
in 15/16 and 17/18. $200,000 3
1 2
5-year combined average is$66,322 $100,000 1
per IND $_ o
't''`om• ADM cso ENG POD
I
2
1
November 5, 2020 Regular Board Meeting Agenda Packet- Page 109 of 150
Page 39 of 45
WORKERS' COMPENSATION
Total Incurred Cost
Last 5 Years-Medical Only vs.Indemnity
$700,000
$600,000 $656,300
$500,000
$400,000
$300,000 $51,027 $287,505
$200,000
$100,000
$- $113,707 $160,629
ADM
CSO ENG $53,192
POD
• The combined average cost per IND claim is 962%higher than the
combined average cost of a MO claims.
Shows need to prevent MO claims from becoming IND claims.
1
3
Selected IND Claims by Type of Injury Selected IND Claims by Cause of Injury
Last 5 Yrs&Last 10 Yrs Last 5 Yrs&Last 10 Yrs
Other Slip/rrip/Fall/Jump
Cut/Bruise Repetitive Motion
•Last 30 Yrs ■Last 30 Yrs
Fradure •Last 5 Yrs Pushing/Pulling •Last s Yrs
Strain/Sprain Lifing/11—hing
0 5 1'. 0 2 4 6 8
• Red v Orange bars—over time,no reduction
Selected IND Claims by Injured Body Part in the frequency of strain/sprain injuries
Last 5 Yrs&Last 10 Yrs
• Green v Blue bars—overtime,major
Shoulder reduction in repetitive motion injuries,but
'L..10Yrs an increase in frequency of pushing/pulling
Knee ■La.5Yr: claims.
At.
t Purple v Pink bars—the back(specifically the
BacK low back)is the most commonly injured
0 2 4 6 B 10 12 body part. These are also the most
expensive claims.
4
2
November 5, 2020 Regular Board Meeting Agenda Packet- Page 110 of 150
Page 40 of 45
LIABILITY CLAIMS
Auto Liability Claims Other Liability Claims
$10,000 - 3 $250,000 10
$8,000 2 $200,000 a
$6,000 2 $150,000 6
$4,000 1 $100,000 - 4
$2,000 1 $50,000 — 2
2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20
—Total Cost —Number —Total Cos[ —Number
Plumbing Reimbursements Frequency since FY 2015-16 is much
$3,500 s lower than prior years.
$3,000 7
$2,500 6 Increases in number and cost of
$2,000 5 other liability claims. There is no
4 pattern or repetition among those
$1,500 3 claims—makes trending difficult.
$1,000 2
$500 1 Significant reduction in the number
$ ° of plumbing reimbursements
2015-16 2016-17 2017-18 2018-19 2019-20 p g
—Total Cost —Number I
5
OVERFLOW CLAIMS
Overflow Claims
$350,000 12
$304,518
$300,000
30
$250,000 —
8
$200,000 — $183,110
6
$150,000
4
$ 0,000
$5 1
$50,000 — 2
2015-16 2016-17 2017-18 2018-19 2019-20
—Total Cost —Number
M!,
16,904 $13,771 $25,639 $19,443 $26,546
IT AMU
6
3
November 5, 2020 Regular Board Meeting Agenda Packet- Page 111 of 150
Page 41 of 45
LIABILITY CLAIMS TYPES COMBINED
Cost of Liability Claims by Type
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$ 0,000
$5 -
$50,000
5-
15/16 16/17 17/18 18/19 19/20
MAL MOL ■PL Esso
• Other Liability and Overflow claims drive claims expenses.
• The cost of Other Liability varies with the number and type of claims
occurring with each fiscal year.
• Low frequency of Auto Liability claims may validate safe driving programs.
ENTERPRISE RISK MANAGEMENT
Top Strategic Risks-June 2020
40
30
20
10
o
4,,
`101
s
• Scores are based on four criteria:
Frequency, Severity, Speed of Onset, Mitigation Required
• Maximum score is 40
• Top Risks defined as those that score above 20
19111141 L1r,,1tj!tjL*-
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November 5, 2020 Regular Board Meeting Agenda Packet- Page 112 of 150
Page 42 of 45
SECURITY
Implemented video analytics software
Increased volume of work and contractors on
the treatment plant warranted addition of
another security guard.
Made progress on scoping and planning for
implemented recommendations from the
Security Assessment
EMERGENCY MANAGEMENT
October 2019
Public Safety Power Shutoffs
Earthquake in Pleasant Hill
Fire in Lafayette —Activated EOC
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November 5, 2020 Regular Board Meeting Agenda Packet- Page 113 of 150
Page 43 of 45
EMERGENCY MANAGEMENT
March 2020 — COVID-19
• Quarantine effective March 16, 2020
• Ops maintained essential functions while most office
personnel worked from homes.
• HR initiated contact tracing and other required
responses per County Public Health Orders
• Opportunity to expand the pandemic response
section of the Continuity Plan.
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EMERGENCY NOTIFICATION SYSTEM
Test Only L
Central San Alnrt cnoreply@g erhridge.net> ')RCpky «] ReplyUF i Fore d
To •Shod De tsch rn I0109/20 09A6 AM
Qi You ferwerded tFq message an J,1fi)!009'SL M
plush Alert t G more edd m
The folbwing Is an important message from Central San:
Please click here to acknowledge recelpt of this message
This Is a test ofthe Central San Emergency NotHlcatlon System.No action is required at this time.
I
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November 5, 2020 Regular Board Meeting Agenda Packet- Page 114 of 150
Page 44 of 45
WHAT IS "TOTAL COST OF RISK"?
Elements of Total Cost of Risk(rCoR)
Insurance premiums
TIM firs[amf—1 m♦ylly u,W.•prl t_vmpp"of T M COQ.of fask Is msmhr p iu %.Thy I.,Ck.d S it.,an.w,m a Rrm swer.de w.k,su.anco covpmgp and Inokws'wmmluloru.
Retained losses
Tla nest elprrrarr[is ra 1.I losses-Tlw rs.u.le.wf I—w•.I.w Is[te:,rn ,,[e,f i»unry[hu[a fru.......x
'out IN podiml'for losses Incurred.These are cash Thal are below a<ompony's deductlble.An—m➢le Is a
small mlahap such as dry eManing s ellent's soil due to spllmgg fawn an employee-
Casts to protect employees/customers from injury
rhe next a-Rahla casts may not Iro as easy to track lout are 5014 Important cpm pon,M captured In the
,OoR Cs[ollMion.ThL•gt•nrC 41-cosla..e�114 fo prvtrcl your smploreaa or customary from mj.,r—
I:—1 1ps are L re[y 1-nih.,a[e.Th.cay[s tih,-lrl he[r:u Iwd:.s,,:,rl of
dre TCuR for your buel[.ess InlerralN.
Costs to engage firms for help with risk&insurance issues
The next component is re, a slow.[Mth prefe"onal fir—to help'l handle,In-mme or other risk
aasocfeted Issues.These wwlld include[osis loran atlomey to respo to a complalnl or to roM a
con—Cl's nUrnam,•re-Tln•srx s.,Al ps.i W it.,TC.R cnlr.in[h.0 s.nl sm ronslrinmf
rxaiveuat rak Coalrot co. .
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TCOR COMPONENTS
TCOR Categories by Fiscal Year
$4,500,000
$4,000,000
$3,500,000
$3,000,000 —
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
,�O' ,yti Sti SA' ,1P' Sh 16' 11' ,s0 Sg
ti ti� 1� ti� ti� ti0 ti� ry� ti0 ti�
•Personnel •Insurance ■Claims ■RM Program •Safety Expenses
Segments have not been adjusted for inflation.
w.a
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November 5, 2020 Regular Board Meeting Agenda Packet- Page 115 of 150
Page 45 of 45
PUTTING IT ALL TOGETHER
TCOR Totals and Trend*
$4,500,000 $4,269,743
$4,000,000
$3,500,000
$3,000,000 $3,018,588
Jj2,525,257
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
'Yti 1�' 'Y3 1b 'Yy 16 'Y^ ti0 19 ti�
ryO,yO' vO,y1 ryO,y'L vO,y3 ryO,yP vO,yh �O,yCi O11 O,yO O,yO
ti ti ti
• All costs adjusted for inflation.
• TCOR does not include productivity loss or other soft costs arising from losses.
Yellow bar is the highest TCOR in 10 yrs.Green bar is the lowest TCOR in 10 yrs.
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November 5, 2020 Regular Board Meeting Agenda Packet- Page 116 of 150