In the world of risk management, serving the needs of public entities is often considered to be a distinct discipline. Yet, like their counterparts in the private sector, public entities employ people, own property, manage fleets of vehicles, maintain centralized organizational functions like human resources and finance, and are subject to jurisdictional rules and regulations. With many of the same foundations as private companies, what is it about public entities that makes their claims needs so different? Here, I’ll explore some of the distinguishing elements of risk management for the public sector.
Workforce factors
On-the-job risk exposures for many public employees are quite unlike those of most workers. Police and safety officers carry guns and face the threat of violence every day, while firefighters run into burning buildings and other unpredictable rescue scenarios. These dangerous jobs are essential to society but put workers at significant risk of injury and illness. When it comes to workers’ compensation, many public entity organizations see longer temporary disability durations among their employees. Also, people in these high-risk positions have added presumptions, such as cancers presumed to be caused by carcinogenic exposures in the line of duty.
Physical injury and illness are not the only perils facing public employees; they tend to be more susceptible to mental health issues due to the stress and public scrutiny of their jobs. First responders have traditionally been reticent to ask for help in addressing their mental health, but the culture has become more accepting in recent years. Public entities are now working to reshape the narrative around trauma — positioning it as exposure to an mental injury in the course of work, encouraging employees to access quality care however it makes them comfortable (including via school systems or telemedicine), focusing on suicide prevention, and moving toward presumption of compensability for PTSD.
Unlike in the corporate sector, nearly all public entities have at least some unionized employees. The involvement of organized labor can add pressure to the jobs of risk managers overseeing workers’ compensation programs that include union members.
Another important distinction between the private and public sector workforce is employee tenure. Whereas most of today’s workers switch employers several times during their careers, many in the public sector remain with the same employer for the long term. Public entities offer reliable local work and good benefits, and they provide employees with a sense of purpose in serving the community.
Risk factors
The risk landscape for public entities is very different from the environment in which private organizations operate. Whereas a company might own and manage several buildings, public entities are often the largest property owners in their states. The majority of unincorporated land in their jurisdiction is ultimately the responsibility of the state or county. This broad and nebulous purview creates a great deal of risk and can be difficult to quantify.
Public entities are also responsible for large vehicle fleets. In addition to standard cars and trucks, these fleets include specialized vehicles like police cars, fire trucks, school buses and helicopters. Due to the unique nature of these vehicles and the roles they play in public safety, the dynamic of managing the associated risks is quite particular and can result in complex auto and liability claims.
Because of these elevated risks, public entities are difficult to underwrite and insure. They have less access to insurance markets and are therefore more likely to self-insure. This risk financing structure means that the money used to pay out claims comes from taxpaying citizens — and would otherwise be spent on public services. To protect the public good, many states have imposed statutory limits on liability exposure and may not, for example, pay for non-economic damages like pain and suffering. Additionally, public sector workers’ compensation claims often have longer durations; public entities generally resist settling out future liabilities and instead pay them out over time to avoid breaking the budget in a single year.
Operational factors
There are many politics involved in how public entities operate and many interests that have a say in every issue. Democratic governments are, of course, led by elected officials, who bring their own agendas to the table. Public entity risk managers must do their jobs at the will of the officials in office at the time; they also have to work with relevant governing boards to secure approval for everything from claim settlement authority to employee safety and return to work initiatives. Sometimes these items are formally added to public meeting agendas and presented before local councils and boards. And, when there is an administration change, the process may need to start all over again after an election. All these factors slow the pace of change and restrict the freedom of public risk management departments. Private organizations are generally nimbler because of their leadership structures.
There is also the issue of public scrutiny. Public entities are heavily covered by local media, as communities and their citizens are (and should be) invested in how their tax dollars are used. However, that can sometimes lead to cases being tried in the court of public opinion rather than a court of law. The level of scrutiny under which many public employees and agencies operate can directly affect how risks are managed and claims are ultimately settled.
Serving the public good
While not always easy or without its challenges, the work of managing risks for the public sector is meaningful. We protect assets critical to the community by helping public entities control their expenses. Every dollar we save is money that can go toward serving the public good. We get teachers back into classrooms and police back on the streets, and we mitigate the loss of use of damaged public properties. The work we do with our public entity risk management partners translates into benefits for us all and serves a greater purpose. That sense of purpose has fueled my passion for public entity work for over 30 years.
Sedgwick’s approach to public programs offers the best of both worlds: local claims teams entrenched in the communities we serve and deep global resources in data security, technology development, trend analysis and thought leadership that are seamlessly integrated into our services. By balancing the benefits of our scope, thorough understanding of the public sector, and commitment of our homegrown talent, we deliver best-in-class solutions that cater to the distinct needs of public entities of all shapes and sizes.
> Learn more — read about Sedgwick’s claims solutions for U.S. public entities and our commitment to serving the needs of public organizations