Handling 50,000 employees and 345,000 students in the fourth-largest school system in the U.S. is all in a day’s work for Scott Clark, the risk and benefits officer of the Office of Risk and Benefits Management for the Miami-Dade County School Board. The former president and current board member of RIMS—and CLM member since 2011—discusses the job he’s done for 26 years.
Q. What is your approach to risk management?
A. My overall approach to risk management is basically what is now in vogue: enterprise risk management. I have always believed that risk managers must know as much or more about their organizations than anyone else. Having a good working knowledge of what your company does provides a great roadmap for identifying risks and deciding how to deal with them. Getting employees to understand that risk management is something they should all do on a daily basis is key.
Q. How did your RIMS presidency affect you?
A. Being involved in RIMS for over 20 years—the past 10 as a member of the board of directors—has given me access to the greatest risk practitioners in the business. Besides learning better how to delegate and deal with critical issues when not in the office, my one takeaway from my RIMS presidency is that, especially in these difficult economic times, effective risk management practices are mission critical for companies on a worldwide basis.
Q. Describe some of the risks you manage.
A. Our risks are diverse and immense. They include risk to $8 billion of property from hurricanes; management of a self-insured healthcare program with revenues in excess of $400 million; human capital risks affecting our 50,000 employees, and more. The number one risk that must be managed on a daily basis, and of course is the most important, is our 345,000 students. We must be successful in getting those children to and from our 350+ schools safely while providing each of those students a safe and effective learning environment so they possess appropriate skills to make them competitive in a worldwide economy.
Q. What kinds of claims do you encounter?
A. As the largest employer in the county and the second-largest employer in Florida, we see all types of claims. Workers’ compensation claims are mostly slip and falls; however, because we do have our own commissioned police force and a fully staffed maintenance/capital projects group with all trades, we do see our fair share of more severe accidents. Liability claims typically involve student injuries, most of which are not serious. Unfortunately, over the past 26 years there have been fatal student accidents. With the size of our student population, we also have a significant transportation exposure because we transport 64,500 children twice daily.
Q. What are your premiums and deductibles like?
A. As most large employers do, we self insure most of our risks and purchase excess coverage for those lines in which we need to insulate the district from liability. Our largest premium expenditure is for property insurance, which exceeds $22 million. Self-insured workers’ compensation/liability claims run approximately $35 million annually, and self-funded healthcare claims are in excess of $400 million. Annual premiums for excess workers’ compensation/liability/surety/builder’s risk coverages are approximately $8-$10 million.
In Florida, we enjoy limited sovereign immunity for tort claims; the district cannot be sued for more than $200,000 per individual/$300,000 incident. There is a relief valve for excess liability, which involves passing an actual bill before the Florida legislature, known as a Legislative Claims Relief Act. Over my 26 years, the district has had 10 claims that were severe enough to result in the passage of a Claims Relief Act, which allowed the district to settle claims/lawsuits in excess of the sovereign immunity thresholds.
Q. You were in Japan during last year’s earthquake and tsunami. What did it teach you?
A. What I learned from being in Tokyo last year was that the old saying is true: “If it can go wrong, it will go wrong.” It is apparent that the Japanese people were never fully informed as to the risks of nuclear power plants and that risk models had never been fully developed to show what would occur if an earthquake resulted in a tsunami. I find this strange because most nuclear power plants are built on large bodies of water, so why was there not a contingency plan in place? Also, the entire idea of contingent business interruption as a risk/coverage issue played out as worst-case scenario.