Establishes the office of risk assessment and management within the office of general services to determine the state's potential exposure to liability for its acts and omissions; such office shall also advise state agencies on proper risk management techniques and procedures.
Sponsor: KLEIN / Co-sponsor(s): ADDABBO, CARLUCCI, SAVINO, VALESKY / Committee: FINANCE
Law Section: Executive Law / Law: Add Art 10-A SS204 - 207, Exec L
Sponsor: KLEIN / Co-sponsor(s): ADDABBO, CARLUCCI, SAVINO, VALESKY / Committee: FINANCE
Law Section: Executive Law / Law: Add Art 10-A SS204 - 207, Exec L
- Jan 16, 2013: REFERRED TO FINANCE
BILL NUMBER:S2326 REVISED 2/5/13 TITLE OF BILL: An act to amend the executive law, in relation to estab- lishing the office of risk assessment and management PURPOSE: To strengthen and institute a formal risk management regiment into normal daily State operations & procedures and in anticipation of the incidence of a natural disaster or catastrophic weather event. Instituting a formal risk management regiment to state operations will help to minimize New York State's future losses and liability exposure due to: a) physical injury to state employees and the general public during normal business operations, b) damage to physical property owned and controlled by the State during normal business operations, c) systemic damage or loss to state governmental operations, facilities or infrastructure caused by the occurrence of a natural disaster or catastrophic weather event, and d) systemic damage or loss to this State's local governments (including their facilities, labor force and operations) and to the State's economy either on a state-wide or local- ized basis due to the occurrence of a natural disaster or catastrophic weather event. SUMMARY OF PROVISIONS: Section 1: Adds Executive Law Article 10-A to codify into the law an Office of Risk Assessment and Management (ORAM) to be within the Office of General Services (OGS). The bill provides for the appointment of a risk manager and establishes duties and responsibilities of the state Risk Manager. The risk manager is to help anticipate, curtail and mini- mize future state liabilities due to personal injury of its employees and the general public or the physical damage to property that occurs during the normal course of state operations or as a consequence of a natural disaster or catastrophic weather event. In the end, due to the existence of the Bureau of Risk and Insurance Management (BRIM)that is already within the OGS, BRIM's role will proba- bly be expanded to take on the responsibilities of the GRAM. Hence, there will be no fiscal cost to this bill. Further, in securing risk management consultants, many times, such consultants work on a commis- sion basis, so their costs will be paid for out of the cost savings that they generate for the State of New York. This bill includes qualifications that the risk manager should have to be appointed to that position. Among the responsibilities of the risk manager include: 1) conduct an inventory of all state real property and ascertain past, present and future liability exposure due to state oper- ations on such property. 2) conduct a study of the actions, claims, and claims settlement processes of the court of claims, actions in the New York and Federal Courts, and payment of those claims to ascertain trends in the payment of state claims due to injury of persons or property. 3) conduct a study of current state practices and how those practices could be altered to minimize future claims brought against the state and damage sustained by the State. Under this provision, the risk manager would be responsible for making recommendations to alter state oper- ations and capital construction programs to anticipate potential future climatic changes that may be caused by global warming. This will be done by advising various State agencies on proper risk management techniques and procedures and how alter their operations and capital plans to anticipate future change. 4) adds the ability to look at financial loss- es arising from the ownership, control or use of real or personal prop- erty and to establish business continuity programs for state services in the normal course of business or in case of a natural disaster or catastrophic weather event. State agencies are to cooperate with the work of the State risk manager. Once the risk manager has suggested a risk management technique, the state agency has time to comment on that recommendation. Any public benefit corporation, public authority, or local government can contract with the state risk manager to perform risk management services or supplement already existing internal risk assessment and management services. This could help reduce the cost of providing services for local governments and to anticipate operational changes that may need to be made in response to a natural disaster or catastrophic weather event. In the end, this could help to reduce the increasing cost of real property taxes. The bill also clearly authorizes the state's risk manager to contract with outside vendors or consultants with expertise in risk management, claims management, or safety management. As stated before, it is a common practice for such consultants to be paid on a percentage basis based upon the cost savings that they generate for the State of New York or its municipalities. Section 2: provides for an effective date of 180 days after the bill shall have become law. EXISTING LAW: There is the BRIM, but this bill expands the ability of BRIM to secure additional cost savings for the State of New York. JUSTIFICATION: The State of New York each year faces dramatic exposure and third-party liability both to persons under the care and custody of the state and visitors to state premises. In 2007, the liabilities for workers' compensation alone exceed $1.7 Billion for indemnity claims and 1.2 Billion for medical claims. Further, tort actions adjudicated in the Court of Claims cost $82.5 million last year alone. The expansion of a central Office of Risk Assessment and Management would go far to determine the full extent of the State's exposure to civil tort liability and allow the state to systemically reduce such exposure through the integration of professional risk management proce- dures into daily state operations. Enactment of this measure would also bring New York State in line with a majority of states, most larger municipalities, and most large corporate entities that have centralized risk management procedures. Not only will this bill help reduce the annual payments to satisfy personal and property damage against the state, it will help to reduce personal inju- ries sustained by State employees and members of the general public. Further details on the need to codify and expand the responsibilities and duties of a state-wide risk manager can be found in a report produced by Senator. Klein entitled. "Expansion of New York State's Risk Assessment and Management Activities" stated March 2011. There is a growing concern that global warming may be significantly altering weather patterns in New York State and the entire Atlantic seaboard. Global warming may be altering weather patterns in a manner that is instigating the increasing number of more severe and catastroph- ic weather events in New York, especially along our coastal areas and in farming regions of the State. These seemingly more commonly reoccurring significant or catastrophic weather events, such as hurricanes, storm surges, ice storms, floods and droughts are imposing substantial new costs to operate State and local governments, to reconstruct after such events, and are significantly damaging the State's economy both on a state-wide and localized basis. The institution of a formal risk manage- ment program in New York should help our state & local governments anticipate damages caused by such potential future severe weather events. Further, it can help our State's economy to anticipate such changes in weather patterns, to mitigate damage to such economy, and channel new growth into new industries in a manner that is consistent with potential future weather patterns. LEGISLATIVE HISTORY: 2012 - S. 1029-A - REFERRED TO FINANCE 2010 -S.6885 - REFERRED TO FINANCE FISCAL IMPLICATIONS: No initial cost to the State and in future years, there will be sizable savings in state costs for injuries sustained to persons and property. In financing the work of the new risk manager, many other states and municipal governments appoint an experienced risk management company to conduct the work of risk management and assess- ment. The funds needed to support such risk manager's work is received from a percentage of money that the risk manager saves the participating state or municipality. Preliminary estimates are that this bill will reduce state costs by $150 Million in the first year. LOCAL FISCAL IMPLICATIONS: None. EFFECTIVE DATE: 180 days after its enactment into law.
S T A T E O F N E W Y O R K
2326 2013-2014 Regular Sessions I N SENATE January 16, 2013
Introduced by Sens. KLEIN, ADDABBO, CARLUCCI, SAVINO, VALESKY -- read twice and ordered printed, and when printed to be committed to the Committee on Finance AN ACT to amend the executive law, in relation to establishing the office of risk assessment and management THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM BLY, DO ENACT AS FOLLOWS:
Section 1. The executive law is amended by adding a new article 10-A to read as follows:
ARTICLE 10-A OFFICE OF RISK ASSESSMENT AND MANAGEMENT SECTION 204. DEFINITIONS. 205. OFFICE OF RISK ASSESSMENT AND MANAGEMENT; QUALIFICATIONS OF RISK MANAGER. 206. FUNCTIONS AND DUTIES OF THE OFFICE. 207. BOARD OF RISK ASSESSMENT AND MANAGEMENT.
S 204. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE:
1. "ENTERPRISE RISK MANAGEMENT" SHALL MEAN A STRATEGIC DISCIPLINE THAT SUPPORTS THE ACHIEVEMENT OF THE STATE'S OBJECTIVES BY ADDRESSING THE FULL SPECTRUM OF ITS RISKS AND MANAGES THE COMBINED IMPACT OF THOSE RISKS AS AN INTERRELATED RISK PORTFOLIO. 2. "LOCAL GOVERNMENT" SHALL MEAN ANY COUNTY, CITY, TOWN, VILLAGE, SUPERVISORY DISTRICT, SCHOOL DISTRICT, FIRE DISTRICT, IMPROVEMENT DISTRICT OR SPECIAL DISTRICT. 3. "OFFICE" SHALL MEAN THE OFFICE OF RISK ASSESSMENT AND MANAGEMENT ESTABLISHED PURSUANT TO SECTION TWO HUNDRED FIVE OF THIS ARTICLE. 4. "RISK MANAGER" SHALL MEAN THE RISK MANAGER OF THE OFFICE. 5. "STATE AGENCY" SHALL MEAN ANY DEPARTMENT, DIVISION, BOARD, COMMIS SION, BUREAU, OFFICE OR OTHER AGENCY OF THE STATE.
S 205. OFFICE OF RISK ASSESSMENT AND MANAGEMENT; QUALIFICATIONS OF RISK MANAGER. 1. THERE SHALL BE ESTABLISHED WITHIN THE OFFICE OF GENERAL EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD04372-01-3
S. 2326 2 SERVICES, AN OFFICE OF RISK ASSESSMENT AND MANAGEMENT. THERE SHALL BE APPOINTED BY THE COMMISSIONER OF GENERAL SERVICES THE RISK MANAGER OF THE OFFICE, WHO SHALL BE CHARGED WITH THE DUTY OF ADMINISTERING THE OFFICE. THE COMMISSIONER OF GENERAL SERVICES SHALL FIX COMPENSATION OF THE RISK MANAGER WITHIN THE AMOUNTS APPROPRIATED THEREFOR. 2. THE RISK MANAGER SHALL HAVE THE FOLLOWING QUALIFICATIONS:
(A) AN UNDERSTANDING OF AND THE ABILITY TO APPLY THE GENERALLY ACCEPTED PRINCIPLES, STANDARDS AND TECHNIQUES UTILIZED FOR THE IDENTIFI CATION, ASSESSMENT AND MANAGEMENT OF ENTERPRISE RISK; AND (B) SUFFICIENT EXPERIENCE IN IDENTIFYING, ASSESSING AND MANAGING ENTERPRISE RISK EXPOSURES THAT PRESENT THE BREADTH AND LEVEL OF COMPLEX ITY OF ISSUES THAT CAN REASONABLY BE EXPECTED TO BE RAISED DURING THE COURSE OF STATE OPERATIONS. 3. EVERY RISK MANAGER SHALL HAVE ACQUIRED HIS OR HER QUALIFICATIONS, AS REQUIRED BY SUBDIVISION TWO OF THIS SECTION, THROUGH APPROPRIATE EDUCATION AND RELEVANT RISK MANAGEMENT EXPERIENCE ON BEHALF OF A COMMER CIAL OR GOVERNMENTAL ORGANIZATION.
S 206. FUNCTIONS AND DUTIES OF THE OFFICE. 1. THE FUNCTION OF THE OFFICE SHALL BE:
(A) TO DETERMINE THE POTENTIAL EXPOSURE OF THE STATE TO LIABILITY AND FINANCIAL LOSS ARISING FROM ITS ACTS AND OMISSIONS, FROM THE OWNERSHIP, CONTROL OR USE OF ITS REAL AND PERSONAL PROPERTY, OR CONDUCT OR ACTIONS OF ITS EMPLOYEES OR AGENTS; (B) TO ESTABLISH AND COORDINATE BUSINESS CONTINUITY PROGRAMS FOR ESSENTIAL STATE FUNCTIONS AND SERVICES; (C) TO IMPLEMENT RISK MANAGEMENT PROGRAMS TO MANAGE THE STATE'S EXPO SURE TO RISK IN THE MOST COST EFFECTIVE MANNER INCLUDING, BUT NOT LIMIT ED TO, PROGRAMS TO REDUCE THE LIKELIHOOD AND POTENTIAL COST OF LOSS EVENTS, AND THE PURCHASE OF INSURANCE OR OTHER RISK SHARING ARRANGEMENTS WHERE APPROPRIATE; AND (D) TO COORDINATE AND SUPPORT THE RISK MANAGEMENT PROGRAMS OF ALL STATE AGENCIES. 2. THE RISK MANAGER AND OFFICE SHALL FULFILL THEIR FUNCTIONS AND DUTIES BY:
(A) CONDUCTING A STUDY OF THE STATE'S RISK EXPOSURES ON AN ONGOING BASIS. SUCH STUDY SHALL INCLUDE:
(I) PRACTICES AND PROCEDURES OF ALL STATE AGENCIES, AS THEY PERTAIN TO, IMPACT UPON, CAUSE OR DETER DAMAGE OR LOSS TO: PHYSICAL PROPERTY OWNED OR CONTROLLED BY THE STATE, OR PHYSICAL INJURIES SUSTAINED BY STATE EMPLOYEES, PERSONS RECEIVING SERVICES FROM THE STATE OR MEMBERS OF THE GENERAL PUBLIC; (II) THE ACTIONS, CLAIM SETTLEMENTS, AND CLAIMS SETTLEMENT PROCESSES RELATED TO ACTIONS IN THE COURT OF CLAIMS, AND IN FEDERAL AND STATE COURTS OF COMPETENT JURISDICTIONS AS THEY RELATE TO THE DISPOSITION OF MATTERS AGAINST THE STATE. FURTHERMORE, FOR THE PURPOSE OF DETERMINING PAST, PRESENT AND FUTURE EXPOSURES TO LIABILITY, THE NATURE AND MAGNI TUDE OF SUCH EXPOSURES, AND THE TECHNIQUES FOR REDUCING THE COST OF MANAGING AND SETTLING CLAIMS ARISING FROM SUCH EXPOSURES; (III) THE ESSENTIAL OPERATIONS AND SERVICE FUNCTIONS OF THE STATE, AND THE PROCEDURES NECESSARY TO MAINTAIN OR RESTORE SUCH OPERATIONS AND FUNCTIONS TO THE REQUIRED LEVEL FOLLOWING AN EMERGENCY EVENT; (IV) THE POTENTIAL FUTURE LIABILITIES ARISING FROM EXISTING OR PROPOSED STATE OPERATIONS OR FUNCTIONS; (V) THE PREPARATION OF AN INVENTORY OF ALL REAL PROPERTY OWNED OR LEASED, FOR A PERIOD OF TIME OF MORE THAN FIVE YEARS, BY ALL STATE AGEN S. 2326 3 CIES, AND TO ASCERTAIN PAST, PRESENT AND POTENTIAL FUTURE LIABILITY EXPOSURES AND THE NATURE OF THOSE EXPOSURES; AND (VI) THE DESIGN AND IMPLEMENTATION OF APPROPRIATE COST EFFECTIVE TECH NIQUES AND PROGRAMS TO REDUCE THE COST OF THE STATE'S EXPOSURE TO LIABILITY AND FINANCIAL LOSS ARISING FROM ITS OPERATIONS OR THE OWNER SHIP, CONTROL OR USE OF REAL AND PERSONAL PROPERTY, INCLUDING RECOMMEND ING STEPS AND PROCEDURES TO BE IMPLEMENTED BY INDIVIDUAL STATE AGENCIES. THE RISK MANAGER, IN THE PERFORMANCE OF SUCH STUDY, SHALL ENJOY THE FULL COOPERATION AND ASSISTANCE OF STATE AGENCIES AND THE COURT OF CLAIMS; AND (B) RECOMMENDING AND IMPLEMENTING THE APPROPRIATE RISK MANAGEMENT AND BUSINESS CONTINUITY PROGRAMS AS SHALL BE NECESSARY. 3. SUCH STUDY AND RECOMMENDATIONS SHALL BE COMPLETED AND SENT TO THE GOVERNOR, COMPTROLLER, ATTORNEY GENERAL, EXECUTIVE OFFICER OF EACH STATE AGENCY INCLUDED THEREIN, TEMPORARY PRESIDENT OF THE SENATE, SPEAKER OF THE ASSEMBLY, MINORITY LEADER OF THE SENATE AND MINORITY LEADER OF THE ASSEMBLY NO LATER THAN EIGHTEEN MONTHS AFTER THE EFFECTIVE DATE OF THIS ARTICLE. THE STUDY AND RECOMMENDATIONS SHALL BE REVISED AND UPDATED AS IS PERIODICALLY DEEMED APPROPRIATE BY THE RISK MANAGER; PROVIDED, HOWEV ER, THAT SUCH STUDY AND RECOMMENDATIONS SHALL BE REVISED AND UPDATED NOT LESS THAN ONCE EVERY FIVE YEARS. 4. THE OFFICE SHALL ADVISE THE VARIOUS STATE AGENCIES ON PROPER ENTER PRISE RISK MANAGEMENT TECHNIQUES AND PROCEDURES, AND THE IMPLEMENTATION THEREOF, FOR THE PURPOSE OF REDUCING EXPOSURES TO LIABILITY AND FINAN CIAL LOSS, OR THE DISRUPTION OF ESSENTIAL STATE OPERATIONS AND FUNC TIONS, AS WELL AS ALL RESPONSIBILITIES AND DUTIES OF THE BUREAU OF INSURANCE IN THE OFFICE OF GENERAL SERVICES. THOSE AGENCIES INVOLVED IN OR RESPONSIBLE FOR THE CONSTRUCTION OR MAINTENANCE OF STRUCTURES OR ROADWAYS, THE CARE AND CUSTODY OF PERSONS MORE THAN IN TEMPORARY QUAR TERS, THE PROVISION OF SERVICES OF THE GENERAL PUBLIC, AND THOSE AGEN CIES WITH VEHICLES ASSIGNED FOR THEIR USE, SHALL UNDERGO DETAILED ENTER PRISE RISK MANAGEMENT ANALYSIS AND, WHEREVER PRACTICABLE AND AFTER THE AGENCY IS GRANTED AN OPPORTUNITY TO REVIEW AND APPEAL THE FINDINGS AND RECOMMENDATIONS OF SUCH ANALYSIS, IMPLEMENT THE RECOMMENDATIONS OF THE RISK MANAGER WITHIN ONE HUNDRED EIGHTY DAYS OF THE DATE THAT SUCH RECOM MENDATIONS ARE AGREED TO BY THE EXECUTIVE OFFICER OF SUCH AGENCY. 5. THE RISK MANAGER SHALL FILE AN ANNUAL REPORT ON THE ACTIVITIES OF THE OFFICE WITH THE GOVERNOR, COMPTROLLER, ATTORNEY GENERAL, TEMPORARY PRESIDENT OF THE SENATE, SPEAKER OF THE ASSEMBLY, THE MINORITY LEADERS OF THE SENATE AND ASSEMBLY, SENATE FINANCE COMMITTEE AND ASSEMBLY WAYS AND MEANS COMMITTEE, NO LATER THAN ONE HUNDRED EIGHTY DAYS AFTER THE COMPLETION OF THE CALENDAR YEAR TO WHICH THE REPORT REFERS. 6. ANY PUBLIC BENEFIT CORPORATION, PUBLIC AUTHORITY OR LOCAL GOVERN MENT MAY CONTRACT FOR THE SERVICES OF THE RISK MANAGER AND THE OFFICE IN THE EVENT THAT SUCH PUBLIC BENEFIT CORPORATION, PUBLIC AUTHORITY OR LOCAL GOVERNMENT IS WITHOUT INTERNAL RISK ASSESSMENT AND ENTERPRISE RISK MANAGEMENT SERVICES, OR WISHES TO SUPPLEMENT SUCH INTERNAL SERVICES WITH THE SERVICES PROVIDED BY THE RISK MANAGER AND THE OFFICE. 7. THE RISK MANAGER MAY REVIEW, STUDY AND ENTER INTO A RELATIONSHIP WITH: (A) OUTSIDE VENDORS OR CONSULTANTS WITH EXPERTISE IN RISK MANAGE MENT, CLAIMS MANAGEMENT OR SAFETY MANAGEMENT, AND (B) CAPTIVE INSURANCE COMPANIES, AS DEFINED IN SUBSECTION (C) OF SECTION SEVEN THOUSAND TWO OF THE INSURANCE LAW, OR OTHER RISK SHARING ENTITIES TO REDUCE PERSONAL INJURY OR PROPERTY DAMAGE LIABILITY CLAIMS AND PAYMENTS, EITHER ON AN ANNUAL BASIS OR OVER A LONGER PERIOD OF TIME, FOR ALL STATE AGENCIES, OR S. 2326 4 AN INDIVIDUAL STATE AGENCY, PUBLIC BENEFIT CORPORATION, PUBLIC AUTHORITY OR LOCAL GOVERNMENT.
S 207. BOARD OF RISK ASSESSMENT AND MANAGEMENT. 1. THERE IS HEREBY ESTABLISHED, WITHIN THE OFFICE, A STATE BOARD OF RISK ASSESSMENT AND MANAGEMENT. THE BOARD, TO BE COMPRISED OF THE RISK MANAGER, THE COMMIS SIONER OF GENERAL SERVICES, THE CHAIR OF THE STATE INSURANCE FUND, THE PRESIDENT OF THE STATE CIVIL SERVICE COMMISSION, THE DIRECTOR OF THE OFFICE OF EMPLOYEE RELATIONS, THE DIRECTOR OF THE DIVISION OF THE BUDG ET, AND A REPRESENTATIVE OF EACH OF THE PUBLIC EMPLOYEE ORGANIZATIONS WITH THE THREE LARGEST MEMBERSHIPS. SUCH BOARD SHALL MEET QUARTERLY FOR THE PURPOSE OF EXAMINING CURRENT METHODS OF ENTERPRISE RISK MANAGEMENT AND CONTROL DEPLOYED BY THE STATE, AND REVIEW INSTANCES OF DIFFICULTY IN DEPLOYING SOUND RISK ASSESSMENT AND ENTERPRISE RISK MANAGEMENT PROCE DURES. 2. A SUMMARY OF THE PROCEEDINGS OF THE BOARD, WITH RECOMMENDATIONS FOR IMPROVEMENT OF THE STATE'S RISK MANAGEMENT PRACTICES AND PROCEDURES, SHALL BE INCLUDED IN THE ANNUAL REPORT OF THE RISK MANAGER. THE RISK MANAGER SHALL TAKE INTO CONSIDERATION THE RECOMMENDATIONS PERIODICALLY MADE BY THE BOARD IN CONDUCTING HIS OR HER MANAGEMENT AND ABATEMENT OF POTENTIAL LIABILITY ACTIVITIES.
S 2. This act shall take effect on the one hundred eightieth day after it shall have become a law, except that any rules and regulations neces sary for the timely implementation of this act on its effective date shall be promulgated on or before such date.