Directs the office of general services to conduct a study relating to the feasibility and advisability of establishing an office of risk assessment and management.
Ayes (34): DeFrancisco, Bonacic, Farley, Flanagan, Fuschillo, Golden, Grisanti, Hannon, Lanza, Larkin, LaValle, Little, Marcellino, Nozzolio, O'Mara, Ranzenhofer, Robach, Savino, Seward, Young, Valesky, Krueger, Diaz, Dilan, Rivera, Gianaris, Breslin, Parker, Peralta, Stavisky, Squadron, Kennedy, Espaillat, Hassell-Thompson
Ayes W/R (3): Griffo, Montgomery, Perkins
Ayes (60): Adams, Addabbo, Avella, Ball, Bonacic, Boyle, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Espaillat, Farley, Felder, Flanagan, Fuschillo, Gallivan, Gianaris, Gipson, Golden, Grisanti, Hannon, Hassell-Thomps, Hoylman, Kennedy, Klein, Krueger, Lanza, Larkin, Latimer, LaValle, Libous, Little, Marcellino, Marchione, Martins, Maziarz, Montgomery, Nozzolio, O'Brien, O'Mara, Parker, Peralta, Ritchie, Rivera, Robach, Sampson, Sanders, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Tkaczyk, Valesky, Young, Zeldin
Nays (1): Griffo
Excused (2): Perkins, Ranzenhofer
TITLE OF BILL: An act to direct the office of general services to conduct a study to examine, evaluate and make recommendations relating to the feasibility and advisability of establishing an office of risk assessment and management
PURPOSE: The purpose of this bill is to begin the process of strengthening and instituting a formal risk management regiment into normal daily State operations & procedures and in anticipation of the incidence of a natural disaster or other 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 localized basis due to the occurrence of a natural disaster or catastrophic weather event.
SUMMARY OF PROVISIONS:
Section 1: Empowers the Office of General Services (OGS), in consultation with the Department of Law, State Comptroller, State Insurance Fund, Office of Employee Relations and the Division of the Budget to conduct a study to examine, evaluate and make recommendations concerning the feasibility and advisability of establishing an office of risk assessment and management (GRAM), within OGS.
The bill provides for a study on the appointment of a state risk manager and to study the duties and responsibilities that the state Risk Manager should possess. The risk manager is to help anticipate, curtail and minimize 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) which is already within the OGS, BRIM's role maybe expanded to take on the responsibilities of the proposed GRAM. Hence, this may help to minimize the fiscal costs associated with establishing such an office and the upfront costs that will be need to be expended before cost savings from its operations can be realized, The study can look at the financing of this Office by securing risk management consultants.
Under this bill, OGS should study and assess the qualifications that. the proposed risk manager should have to be appointed to that position and how they are to be compensated.
Among the responsibilities that could be studied and determined to be assigned, or not, to the risk manager and the Office include are:
1) conduct an inventory of all state real property and ascertain past, present and future liability exposure due to state operations 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) examine and evaluate 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 and Office could be responsible for making recommendations to alter state operations and capital construction programs to anticipate potential future climatic changes that may be caused by global warming. Under this scenario, various State agencies would be advised on proper risk management techniques and procedures and how alter their operations and capital plans to anticipate future change.
4) to look at financial losses arising from the ownership, control or use of real or personal property 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.
The study should look to how state agencies are to cooperate with the work of the State risk manager. Further, it will evaluate whether it is desirable to allow any public benefit corporation, public authority, or local government to 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.
Section 2: In addition, such study shall examine and determine:
1) the financial benefits to the State that could be realized by establishing the Office.
2) the financial costs and estimate of the size of the workforce needed to staff such an Office.
3) the method or process by which the Office could be established and the manner in which such office's operations could be phased in over a five year period of time.
4) the method of financing such Office, in as much as the initial costs of it may not be offset by cost savings and reduction in liability exposure until the Office has been in existence for some time.
Sections 3 & 4: Provides for an immediate effective date and that such Study shall be submitted to the Governor, Attorney General, State Comptroller and State Legislature within 18 months of this bill's effective date.
EXISTING LAW: There is now no provision for a comprehensive system to assess risks and potential losses for the operation of activities conducted by the State of New York or its political subdivisions.
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 procedures into daily state operations.
Enactment of this measure would help to start the process on how to institute procedures and policies to help bring New York State in line with a majority of states, most larger municipalities, and most large corporate entities that have centralized risk management evaluation procedures and mitigation practices. 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 injuries 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 catastrophic 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 management 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: New bill, but this bill starts the process to begin to study how to establish and finance an Office of Risk Management and Assessment as provided for in S. 2326.The contents of this bill was included and adopted in the Senate Budget Resolution for the fiscal year 2013 - 2014.
FISCAL IMPLICATIONS: To be determined.
LOCAL FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: Immediate.
STATE OF NEW YORK ________________________________________________________________________ 5407 2013-2014 Regular Sessions IN SENATE May 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 direct the office of general services to conduct a study to examine, evaluate and make recommendations relating to the feasibility and advisability of establishing an 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 office of general services, in consultation with the department of law, the department of audit and control, the state insur- ance fund, the office of employee relations and the division of the budget, shall conduct a study to examine, evaluate and make recommenda- tions concerning the feasibility and advisability of establishing, with- in the office of general services, an office of risk assessment and management. The office of general services, in conducting such study, should direct its attention to at least the following: (a) the suggested proposed powers of such office of risk assessment and management, which may include, but not be limited to, the power to: (1) analyze 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 the conduct or actions of its employees or agents; (2) establish and coordinate business continuity programs for essen- tial state functions and services; (3) implement risk management programs to manage the state's exposure to risk in the most cost effective manner including, but not limited to, programs to reduce the likelihood and potential cost of loss events, and the purchase of insurance or other risk sharing arrangements where appropriate; andEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10938-02-3 S. 5407 2
(4) coordinate and support the risk management programs of all state agencies; and (b) the appointment of a risk manager, who shall be appointed and empowered to administer the proposed office of risk assessment and management. With regard to such risk manager, the office of general services should consider: (1) the process for the appointment of the risk manager; (2) the compensation to be paid to the risk manager; (3) the qualifications of the risk manager, which may include, but not be limited to: (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; (B) possessing sufficient experience in identifying, assessing and managing enterprise risk exposures that present the breadth and level of complexity of issues that can reasonably be expected to be raised during the course of state operations; and (C) having acquired his or her qualifications, through appropriate education and relevant risk management experience on behalf of a commer- cial or governmental organization; and (c) the fulfillment of the functions of the proposed office of risk assessment and management by conducting a preliminary examination and evaluation, in consultation with the comptroller, the attorney general, the temporary president of the senate and the speaker of the assembly, of the kinds and scope of risk exposures faced by the state. Such exam- ination and evaluation may include, but not be limited to: (1) the 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; (2) the actions, claim settlements, and claim settlement processes related to actions in the court of claims, and in federal and state courts of competent jurisdiction as they relate to the disposition of matters against the state; (3) the essential operations and service functions of the state, and the kinds of procedures that may be necessary to maintain or restore such operations and functions to the required level following an emer- gency event; (4) the potential future liabilities arising from existing or proposed state operations or functions; (5) a description on how to prepare an inventory of all real property owned or leased, for a period of time of more than ten years, by all state agencies, and to begin to ascertain how to assess past, present and potential future liability exposures and the nature of those expo- sures; and (6) a description of the kinds of appropriate cost effective tech- niques and programs needed 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; and (d) allowing any public benefit corporation, public authority or local government to contract for the services of the proposed risk manager and the office of risk assessment and management in the event that such public benefit corporation, public authority or local government is without internal risk assessment and enterprise risk managementS. 5407 3
services, or wishes to supplement such internal services with the services provided by the risk manager and the office. S 2. In addition to the requirements of section one of this act, the office of general services shall, with particular care, begin to exam- ine, analyze and determine: (a) an estimate of the financial benefits that could be realized by establishing an office of risk assessment and management and the poten- tial reduction in the state's liability exposure; (b) the financial costs and an estimate of the size of the workforce necessary to establish the office of risk assessment and management; (c) the method or process by which the proposed office of risk assess- ment and management could be established and the manner in which such office's operations could be phased in over 5 years; and (d) the method of financing the establishment and operations of the office of risk assessment and management, in as much as the initial costs of such office may not be offset by cost savings and reduction in liability exposure until such office has been in existence for an extended period of time. S 3. Within eighteen months of the effective date of this act, the office of general services shall submit to the governor, the attorney general, the state comptroller, the temporary president of the senate and the speaker of the assembly, a report of its findings, conclusions and recommendations, and shall submit with its report such legislative proposals as it deems necessary to implement its recommendations. S 4. This act shall take effect immediately.