Managing Risk

Everything we do, in the course of every day, involves certain levels of risk. Until a decade ago, most business owners viewed risk management as involving nothing more than job safety issues.

Now, the educated, motivated and profit-directed entrepreneurs of changing times have come to recognize the existence of risk in every aspect of their businesses. The pest control industry is no exception. Here, we’ll examine some of the short-term and long-term risks that will impact our businesses in the new millennium. We must point out that our experience is from our dealings in the United States; however, the topics we have chosen have clearly universal themes.

A WORLD WITHOUT INSURANCE. Do you drive an older car — if you must drive at all — because you cannot afford to repair it if you hit some other vehicle, or if some other vehicle hits yours? Do you insist that your employees not come to the office at all, because you cannot afford one of them possibly getting injured on your property? Have you completely removed all pesticides from your pest management arsenal for fear of the costs involved with a potential chemical spill, accidental misapplication, or inadvertent worker exposure, let alone the cost of legal defense of such matters? Do your employees drive their own vehicles for business use because you do not want the economic risk of them driving your vehicles?

If this sounds like a world of paranoia, it is. In fact, it is a world without insurance.

In some cases, we carry various levels of insurance because laws and/or regulations mandate it. In other cases, we carry insurance because it provides us with a financial cushion on which to fall when we must face certain risks. This concept requires that we analyze our business carefully — and at all levels — in order to identify potential risks. Once they have been identified, all risks should be evaluated as if there were no insurance protection available. Once risks have been identified and evaluated, they must be managed.

When managing risks, several options are available: 1) avoidance of the risk; 2) prevention of the risk; 3) reduction of the risk; 4) segregation of the risk; 5) combining the current risk with other risks; and 6) transfer of the risk. The first five options can be performed within the business. The sixth option requires the collaboration of a third party; for example, an insurance company. Insurance allows us to transfer all or part of the economic risk.

POLLUTION. Throughout the past decade, we have witnessed the evolution of pesticide application swing from broad-spectrum broadcast of large amounts of material to today’s attitude of applying the minimal amount of pesticide necessary. Applicators have embraced Integrated Pest Management (IPM) and have focused more attention on alternative methods of pest control. When a pesticide is deemed necessary for control, the class, formulation, toxicity, environmental impact, re-entry intervals, target site, target pest and the means of application are all considered carefully and thoroughly. As time goes by, and more is learned about target pests, the modes of action of various pesticides and application equipment and control processes will continue to evolve.

Unfortunately, regardless of how little pesticide is actually used, the public’s perceptions of the role of pesticides as an environmental pollutant are a clear and present danger.

When is a pesticide not a pesticide? According to the Environmental Protection Agency (EPA), once a pesticide has been applied to a non-target, non-label specified area or applied in doses greater than allowed by the label, it is a spill. Whether the act was intentional or accidental, in reality is that it is hard to deny EPA’s logic.

Regarding spills, two items must be stressed: spill response and spill protection. Spill response involves controlling the source of the spill, physically containing the spill to keep it from spreading, cleaning the spill site, disposing of any retrieved wastes and following your company’s documented policy regarding whom to notify of the spill.

Employees must receive verifiably documented training in the proper handling, mixing and application of pesticides. Equally important is verifiably documented training in the proper use and maintenance of pesticide application equipment, personal protection equipment and spill control materials and techniques.

Spill control may also involve carrying pollution insurance — if it is available — that can help ease the potential economic burdens of pollution clean up.

It is important that pest control companies have a written spill control policy that outlines the steps that each level of employee must follow in the event of a pesticide spill. Each employee must be familiar with his or her basic functions in such a scenario.

Periodically, review your company’s pesticide practices. Choose pesticides that have a low end-use hazard and train and re-train your personnel in their use.

EMPLOYMENT PRACTICES LIABILITY. We live in a world of shrinking resources — including good employees. In the United States, the unemployment rate has been the lowest it’s been in decades and it has become exceedingly difficult to attract and keep good, qualified help. One of the ways to attract good help is to establish and provide an employee benefits package which should include a competitive salary, comprehensive hospitalization, employee disability insurance, retirement plans, profit sharing, term life insurance, etc.

In the United States, it is possible for an employer to be sued by an employee — or even by a job applicant — if he feels he has been misinformed or in some sense discriminated against. Each phase of an employer’s relationship with an applicant or employee must be documented in such a way as to defend the employer in court. "Help Wanted" print ads must clearly state that the business is an equal opportunity employer, thus indicating that the applicant will not be discriminated against due to sex, age, religion, political affiliation, handicap, etc.

Before filling out a job application, the applicant should be given a copy of the job description for the position, indicating physical and educational prerequisites, as well as listing necessary job skills, licenses, etc. The potential applicant should sign and return a copy and keep one. The applicant should also sign a waiver that indicates that he or she will undergo a physical exam — possibly including testing for controlled substances — that includes a lumbar exam to determine lifting ability and a breathing test to determine ability to operate while wearing a respirator. The potential applicant should also sign a waiver that any offer of employment will be predicated on passing all examinations. If the person will potentially be operating a company vehicle, then a copy of a valid driver’s license and possibly a driving skills test (both oral and written) is in order. Then, the person may fill out the application.

The application should not ask any question that would reveal age, sex, marital status, race, political affiliation, religious affiliation, existence of children, disability, citizenship status, pregnancy, height, weight, smoking or sexual orientation (keep in mind this is a limited list). Along with not asking such questions on the application, you cannot ask such questions during the interview or during the course of the individual’s employment with you.

If the applicant is hired, the training and re-training process must be thoroughly and verifiably documented. For example, keep written records of who taught whom and on what date the training occurred. Put it in writing, get all involved parties to sign it and file it away.

It should be emphasized in your training and re-training, and in your company policy, that discrimination between employees will not be tolerated. In the United States, litigation involving alleged sexual harassment is becoming commonplace.

Your company should have a written company policy outlining all company employee behaviors and responses and the consequences for failing to abide by them. An employee should not be disciplined unless a process pre-existed for such a procedure. Likewise, an employee cannot be terminated without due process and a pre-existing procedure.

When an employee feels that a discriminatory act has been perpetrated against him, he or she may seek legal recourse. If the proper documentation is not in place to protect the employer, the employer may suffer serious economic loss. "Employment Practices Liability Insurance" is a way of transferring the risk of this exposure.

E-MAIL. Electronic mail has been earning widespread praise as the means of communication. Few companies, however, realize that the inherently casual nature of this medium. Particularly where its use is not monitored, e-mail is a litigation time bomb. The e-mailing of sexually tinged jokes to colleagues could spark an allegation from other employees of sexual harassment. E-mail containing ethnic or religious humor could prompt a discrimination suit. An exchange of proprietary information between employees of competing companies could lead to a loss of customers and/or revenues. Even if the messages are quickly deleted from the users’ workstations, e-mail messages may reside on individual hard drives or corporate back-up systems long after that supposed deletion. Such items can be retrieved and some have been successfully used in court.

There are programs available for large and small user groups that allow e-mail messages to be screened for certain content before they can be sent. The offending employee can be confronted and reminded of the company’s e-mail policy. Along with using such a program, pest control companies should think seriously about developing a company e-mail policy and making sure it is enforced. Without such a policy, your screening of e-mail could be interpreted in court as an invasion of an employee’s privacy.

When constructing a written e-mail policy that all employees should be required to sign, include: 1) an explanation that the computer belongs to the company and its functions are for company-related uses only; 2) explain privacy rights regarding the material which employees create, send or receive; 3) explain the company’s monitoring/screening policies; 4) explain the care which must be taken when drafting e-mail, whether it be content or style; and 5) explain the types of content that are forbidden.

CONCLUSION. Whether it’s today (or in the 21st century), risk management should equate with peace of mind. It should be knowing that your interests will be protected. It should be knowing that insurance professionals who have taken the time to understand your business protect your business and your daily risks and who are readily available by phone, fax, or mail.

Risk management should mean that you have taken a giant step back and analyzed every aspect of your business as if you did not carry any insurance, or if no insurance is available for that risk.

Above all, do not overlook any details.

We live in an age of wonder, an age when messages and pictures can be instantaneously transmitted via e-mail halfway around the world — it’s an age of global business alliances for improved market strategies. It’s also an age where the computer you buy was obsolete yesterday. The world is spinning more quickly all the time: it’s our job to stay ahead of it.

When constructing a written e-mail policy, include following:

1) An explanation that the computer belongs to
the company and that its functions are for company-
related uses only

2) Explain the privacy rights regarding the material which employees
create, send, or receive

3) Explain the company’s monitoring/screening policies

4) Explain the care which must be taken when drafting e-mail, whether
it be content or style

5) Explain the types of content that are forbidden