RiskyBusiness

Autumn 2012

Managing the risks of climate change

Find out MoRe on page 3

in this issue:

Managing the risks of climate change 3Electronic recordkeeping – What you need to know 6eLearning helps VMIA clients’ professional development 7Profile: Shelly Park, CE Southern Health 8

2 | Risky Business autumn 2012 www.vmia.vic.gov.au

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now on our website

managing Clinical Risk Edition 13 www.vmia.vic.gov.au/managingclinicalrisk

Risk Insight: Safer Diagnosis www.vmia.vic.gov.au/riskinsights

Risk Insight: missed test Results www.vmia.vic.gov.au/riskinsights

In early 2012, the VmIA launched V-news – a monthly e-newsletter for all VmIA clients.

V-news provides information and news updates on risk management, insurance, client training and upcoming events.

If you’re not receiving V-news and would like to, please send an email to communications@vmia.vic.gov.au

new Ceo appointed for the VMiamr Warren Hutcheon has been appointed as the VmIA’s CEO and will begin his new position on 13 February 2012.

mr Hutcheon joins the VmIA from CGu Insurance, one of Australia’s oldest and largest general insurance companies. He held several senior management positions across its insurance and risk portfolios over the past 25 years.

Strong risk and insurance background

mr Hutcheon’s wide ranging experience at CGu gives him a unique insight when it comes to managing the VmIA’s significant insurance and risk businesses, and delivering strategic outcomes for the Victorian Government.

Further, his experience in underwriting and Claims, together with the commercial operation of a successful insurance company, means that he understands the management of risk from both an operations and strategic point of view.

Leading and managing

mr Hutcheon has held numerous senior executive roles throughout his career at CGu, the most significant of which was

CGu Executive member and Head of Commercial for four years.

mr Hutcheon has also had considerable experience in strategy development, most recently in his role as Director, Strategic Initiatives.

Initiating and leading culture change

the VmIA is committed to undertaking a significant change management program focusing on improved workplace behaviour and creating a values-based culture. mr Hutcheon was involved in several mergers comprising quite different business cultures, giving him a strong insight into culture and change management.

mr Hutcheon has a Graduate Certificate in management from Deakin university and an mBA, also from Deakin university. He is a Fellow of the Australian and new Zealand Institute of Insurance and Finance.

introducing V-news

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www.vmia.vic.gov.au Risky Business autumn 2012 | 3

Managing the risks of climate change uncertainty about our future climate is a major challenge and opportunity for organisations around the world.

Over the past 40 years, international insured losses attributed to climate or environmental events have jumped from an annual cost of uS$5 billion to uS$27 billion. Some experts estimate that without further investment and consideration, climate and environmental risks could cost some countries up to 19 per cent of their annual GDP by 2030[1].

It is anticipated that global warming will widen climatic ranges, lead to heavier rainfall events and cause more severe droughts. Increasing intensity of tropical cyclones, as observed in recent decades, may be linked to increasing sea surface temperatures. Further encroachment of hazard prone areas is likely to enhance exposure of people and their economic assets to climate-related losses, unless vulnerabilities are addressed and reduced[2].

For governments and their agencies, the job of managing the impacts and risks associated with climate change is especially significant as it combines the objectives of helping to meet community needs and addressing financial, structural and policy realities – both now and into the future.

“One thing we can be sure of is the changing nature of our climate. this has implications for day-to-day service delivery and strategic planning in government,” says Jonathon masom, the VmIA’s Acting manager, Risk Services.

“By definition, organisations in this environment must deal with uncertainty around their own objectives, which includes organisational risks, interagency risks and statewide risks.”

this is consistent with the Victorian Government Risk management Framework which states that, in addition to managing agency risks, inter-agency and statewide risks need to be addressed when developing and implementing risk management frameworks and processes.

Increasingly, the public sector is operating in an environment of shared accountabilities to achieve outcomes that cut across specific departmental and agency responsibilities.

In this context, it is important that risks with the potential to impact across agencies or at a whole of government level (such as climate risks) are communicated or escalated to enable a coordinated, effective and timely approach.

“For government departments and agencies, climate variability will continue to raise challenges and risks that have to be managed,” Jonathon adds. “Some of them are probably still unknown.

“that only underscores the importance of the role of government risk advisers to challenge conventional thinking. We have a special duty of care for our communities and any risk management strategy or initiative around climate change should consider this fact.”

As part of our focus on assisting clients to reduce their total cost of risk, the VmIA recently piloted a climate-focused risk assessment methodology. the workshop put the climate risks that were most relevant to the organisation in the spotlight and assessed their effects on its key stakeholders.

the assessment is designed to help clients to identify specific climate-related risks or emerging themes that may require monitoring or further investigation. the workshop discussions also addressed broader strategic considerations in light of climate uncertainty or change. this demonstrates how climate risk is one part of an integrated enterprise view of risk.

the process can inform an organisation’s risk profile and help them better understand what is a typically difficult topic for many organisations and which government and society are increasingly looking to address proactively.

the strategy includes provision for the low altitude resorts at Lake mountain and Baw Baw (which are more vulnerable to the impacts of climate change) to invest in snow making equipment and to be geared for a quick start-up to take advantage of good winters. mount Hotham, Falls Creek and mount Buller will make further investment in snow-making technology and infrastructure to enhance natural snow cover on ski fields.

the strategy addresses the objectives of sustainable use and management of the alpine resorts. underpinning it is a vision for the future of “four season, vibrant, sustainable resorts.”

View the alpine Resorts 2020 strategy at http://www.dse.vic.gov.au/__data/assets/pdf_file/0007/104947/alpineResortsstrategy2020pt2202.pdf

3. http://www.climatechange.gov.au/community/~/media/publications/local-govt/risk-management.ashx Climate Change Impacts and Risk management Australian Greenhouse Office, Department of Environment and Heritage 2011

Examples of governmental risks arising from climate change [3]

1. For urban planners, more frequent heatwaves may increase the stress on emergency services and hospitals, while more intense storms and rising sea levels may increase the vulnerability of coastal housing and infrastructure.

2. For the agriculture sector, increases in temperature and net reductions in average rainfall across Southern and Eastern Australia could make drought sequences more common, while the impact of increased temperatures would make them more damaging to plant and livestock viability and production.

3. For local government, climate change may create new demands for services, for instance, due to more frequent heatwaves. Local governments may be faced with a reduced ability to raise income accompanied by increased demands for services, ranging from geriatric care to emergency services.

Case study: Victorian Alpine Resorts Commission• the greenhouse effect has the potential to reduce snow

cover in the Australian Alps. However, the large annual variability in snow season characteristics makes it difficult to detect trends.

• to update and improve the understanding of this issue, a partnership consisting of Commonwealth, new South Wales and Victorian government agencies, together with industry (the Australian Ski Areas Association) was formed in 2002 to fund a CSIRO assessment and modelling of climate change impacts on snow conditions in Australia (2003).

• the alpine Resorts 2020 strategy is based on these findings and states its strategic direction as “Resorts will remain committed to a snow tourism industry and proactively plan for the impacts of climate change.”

1. Ivo menzinger, Head of Sustainability and Emerging Risk management at the world’s largest re-insurer, Swiss Re. Speaking at the VmIA Insurance Forum, 2011.2. Food and Agriculture Organisation of the united nations website.

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4 | Risky Business autumn 2012 www.vmia.vic.gov.au

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Case study – Lessons learned

power outage leads to destruction of research samples stored in freezersA chain of events leads to the destruction of key assets of a research institution, including frozen biological samples and animal research specimens. the key risk management issue is ensuring consistent and unbroken power supply to freezers that house important material. the loss demonstrates that emergency and business continuity management programs should consider all potential business interruption scenarios.

Description

A research laboratory was flooded over a weekend and wasn’t discovered until monday morning when staff returned to work.

the rising water level caused power from the main switchboard to be cut off from the lab’s purpose-bought, ultra-low temperature freezers. At the same time, a back-up generator failed to start as it had been turned off for servicing. the freezers’ warning system detected the power loss, but failed to alert anyone. As a result, the lab’s freezers were without power for some 60 hours.

Without power to the freezers, frozen biological materials from scientific experiments were destroyed and years of research were wiped out.

Sequence of events

A laboratory technician arrived at 7.00 am on a monday to find that the laboratory’s freezers were not working. the freezers were specifically designed to store biological samples, each housing more than 200 samples in various forms.

the ambient temperature of the freezers had increased dramatically, from -80ºC to -30ºC. Cell lines, frozen research animals (mostly rats and mice) and samples in the freezers - representing nearly 10 years’ work - were ruined or irreversibly compromised.

the ensuing investigation revealed that a pressurised water pipe had burst in the ceiling on another floor of the laboratory building. the resulting deluge triggered the automatic shut down of power to the main electrical switchboard. At the same time, the emergency generator (located in another part of the building) was offline for lengthy periods as it was undergoing routine servicing. this in turn meant that the freezers’ alarm system wasn’t noticed, so the situation went unattended for more than two days.

As a result of these events, the freezers were without power for an extended period of time and the temperature in the room climbed to a level where frozen materials were ruined.

the contents of these freezers represented important research assets, valued at hundreds of thousands of dollars, given the cost of re-doing the work and the disruption caused.

Claim

the state-owned research organisation made a claim against its Industrial Special Risks (ISR) policy for Accidental Loss or Damage. the policy provided indemnity under Section 1 (material Damage) and Section 2 (Business Interruption). the damaged property included numerous reagents, together with organic databases and other samples. the reagents could be replaced by similar products under Section 1, material Damage; however, the organic material required either replication (of the damaged property) or other options to reinstate the research projects affected.

the loss was established as an Increased Cost of Working to return the Institute to their pre-loss position, including reference to ongoing publication requirements for maintenance of grants.

While some of the damaged property (reagents, serums, etc) could be replaced through normal supply sources, other research items did not have a replacement value. Where the property could not be replaced, assessors considered how the insured could maintain their ‘normal business,’ and what financial losses could be attached to the loss of the research samples. In some cases, this involved so-called breeding and sacrifice programs to replicate the destroyed sample.

In other cases, the policy responded to the cost of grants lost through the inability to provide research articles for publication in science/medicine journals, which was often required to maintain grants and funding.

When research is interrupted as per the claim event, the client establishes what increased resources would be required to continue the research and satisfy grant requirements.

Result

the claim was investigated (cause and possible recovery options) and losses were assessed on a continuing basis and as costs were incurred. Ongoing funding was provided to the Institute to maintain the affected research programs, until the quantum of the overall loss was agreed and the final settlement reached. Following finalisation of the claim, the client performed a comprehensive review of their sub-zero storage protocols. this led to a further review of the value of property at risk, as well as refinement of risk improvement and contingency planning systems.

Risk management issues

A laboratory freezer in a research facility can contain all manner of animal research samples (e.g. DnA, blood, and tissues), soils, seeds and plant research samples (e.g. herb DnA, root nodule bacteria). It is important that these samples are protected as they are not easily replaced or replicated. the key risk management issue is ensuring consistent and unbroken power supply to freezers that house important material.

After the emergency response phase of a business interruption, the focus moves to recovering and resuming business as usual. many businesses in these situations either have developed or are working on a comprehensive Business Continuity Plan (BCP). these are used to develop and support a program for maintaining continuous business operations before, during and after a disruptive event or disaster. Its aim is to make organisations more resilient than they would have been without any such system.

most organisations have It disaster recovery or backup plans, emergency response procedures and communication strategies.

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www.vmia.vic.gov.au Risky Business autumn 2012 | 5

However these alone do not constitute a complete BCP. A BCP is based on the most important things to the business and should be risk-based.

In this example, the issue that mattered most to the organisation was the preservation of the specimens required to undertake vital research. Developing a BCP in this case would involve:

• undertaking a business impact assessment. this would involve identifying which pieces of research and which frozen samples are those of highest criticality and value to the organisation.

• Increasing the level of understanding of the risks by registering the location and business owners of all freezers, and categorising each freezer in terms of contents and protection.

• Identifying a range of plausible scenarios in which power may fail in freezers (e.g. plug pulled out, compressor failure), across the floors of the building (through distribution board failure, pipe rupture etc), or throughout the entire building or complex.

• In light of these scenarios, developing a plan to address deficiencies in current operations.

For example:

- Ensuring better physical security over switches so they can’t be accidentally turned on or off.

- Providing a reliable, frequently tested generator together with communications to staff where the generator may be offline for maintenance.

- Ensuring a backup for the generator (e.g. a carbon dioxide cylinder cooling system with six hours’ supply).

- Ensuring systems are in place to monitor freezer temperatures including audible and dial out alarms in the event of breaching the pre-set temperature limit.

- Considering storage contingencies available in the event of a systems failure, such as splitting storage of valuable/irreplaceable samples across more than one freezer and location.

- Considering duplicating critical samples for storage across multiple locations.

- Ensuring regular and professional freezer maintenance, including periodic cleanup and de-icing of freezers.

- Reviewing and improving handling procedures to minimise risk of contamination.

- Assessing and ensuring adequate security and access controls over critical freezers (e.g. managing non-laboratory staff access).

- Educating and training all staff on the BCP and the scenarios on which it is based (just as organisations normally do with fire drills).

It is important to note that once a BCP is written down, it must be reviewed and tested regularly and modified accordingly as conditions/issues change.

Where there are critical gaps in an organisation’s ability to deal with a plausible scenario, this represents a risk worthy of reporting and monitoring as part of its risk management approach. Critical business interruption is a major risk on risk registers and should be treated seriously by boards and management.

Client perspective

A research facility requires assurances that everything necessary is in place in terms of physical infrastructure and administrative procedures to protect valuable assets and to ensure emergency and business continuity plans are in place.

analysis: Lessons learned1. Develop and test a tailored, practical BCP.

2. Identify vulnerabilities and log these as critical organisational risks for managerial review.

3. Review, improve and monitor protocols for handling and storing of assets below room temperature.

4. Examine insurance policies for appropriate coverage as some elements of the risk may be uninsurable.

For more information on the Risk Management services offered by the VMia, visit www.vmia.vic.gov.au/riskmanagement

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6 | Risky Business autumn 2012 www.vmia.vic.gov.au

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Electronic recordkeeping – Some questions to considerHow can you assure that the full and accurate record has been retained?

How is the ‘signing’ of the record documented?

What is the evidence as to who created and amended the record?

Can access to the records be controlled or locked to prevent tampering?

How will the system be accessed and the relevant documents produced from the system in the event of a claim arising?

Consider processes in the event of ongoing improvements and enhancements or the decommissioning of a system or database.

How will pure digital records that cannot be represented on paper be accessed and presented?

If records will be required beyond standard retention, how will the records be identified as needing to be maintained in accordance with PROV standards and legislative requirements?

electronic recordkeeping – What you need to knowDigitisation of records is a tool used to facilitate information sharing, business continuity and data security. It is also a cost effective means of improving governance, accountability and transparency. As technology develops better ways to capture and store information, public health organisations are moving towards scanned and electronic recordkeeping for both business and clinical operations, particularly records of interactions with and care provided to patients.

A common question asked by the VmIA’s clients is what the implications of electronic recordkeeping are for obligations under their insurance policies.

While there are no legal obstacles to the retention of electronic copies of temporary and permanent public records in place of the paper original, the VmIA’s expectations are that documents and records of our clients’ operations will be recorded and retained in accordance with the Public Record Office of Victoria’s (PROV) guidelines. Where there is a potential for a claim to arise, consideration needs to be given to any additional legislative requirements relating to recordkeeping. Visit www.prov.vic.gov.au for more information.

In moving to electronic recordkeeping, whether it is an electronic version, such as a scan of a hardcopy document, or pure digital records with no paper-based precursor, it

is essential that organisations ensure the authenticity, reliability and accessibility of their record systems and databases.

Northern Health leads the way

Victoria’s northern Health is paving the way in digitisation of both medical and business records, and has developed a practical framework of tools and templates.

northern Health won the large agency category at the Sir Rupert Hamer Records management Awards 2011 for their semi-electronic scanned medical record system

“With four sites under management, including the 429-bed northern Hospital, medical records storage had become an issue,” explains terri Letizia, northern Health’s Chief Health Information manager. “In 2008, we implemented a solution and began scanning all medical record documentation as completed by doctors and other clinicians. this soon developed into our broader Digitisation Framework which covers not only medical records, but HR employee files, financial documents, corporate office documents, important correspondence and other key documents.”

northern Health’s framework adopts the PROV specifications and guidelines, which have been recently updated to include digitisation requirements of the rules of evidence under the new Evidence Act 2008 (Vic) which state that a digitised copy of a document may now be tendered as evidence.

“Our framework aims to ensure that we comply with all of our statutory obligations with respect to the retention and storage of records,” says terri.

“the practical outcomes for northern Health have been very positive. We’ve seen a reduction in physical storage space required to keep paper-based records, improved access to information at all sites at all times, and reduced risk associated with medical records or information not being available immediately.

“the need for electronic storage of business and clinical information will only increase for us and all other health services going forward. One day we may just remove paper altogether!”

For more information regarding Northern Health’s Digitisation Framework, contact Terri Letizia, Northern Health’s Chief Health Information Manager on terri.letizia@nh.org.au

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www.vmia.vic.gov.au Risky Business autumn 2012 | 7

eLearning helps VMia clients’ professional developmentIn August last year, the VmIA launched an innovative program of eLearning training modules to complement the face-to-face client training experience.

sign up for the VMia’s 2012 training essentials the VmIA’s training Essentials Calendar for February to June 2012 has been released, with the theme of “developing the risk and insurance professional”.

“We recognise that skilled risk and insurance professionals are vital to the smooth operation of any organisation,” says David Pearce, VmIA’s manager, Client Learning Services. “In order to have a seat at the executive table, risk and insurance experts need to position themselves as business partners who have value across the whole of their organisation.”

the VmIA’s training Essentials program has been developed to build professional capability so that public sector insurance and risk professionals can learn important skills, network with peers and hear from industry experts.

“the program is designed to provide risk and insurance professionals with practical tools and skills that will help them to support optimal business outcomes,” says David.

“to this end, we have further enhanced our Project Risk program with a new offering: ‘Effective management of Project Governance’. this was identified as an emerging risk through the VmIA’s Roundtable Series in 2011,” he adds.

Clinical risk forums for 2012 will also be a key focus and will provide leading edge information on key aspects of clinical risk, while profiling the VmIA’s risk management partnership projects.

A further innovation will be the Risk management Learning Sets program which will provide participants with the opportunity to interact and engage with a small group of peers.

“We are always researching new topics to bring to our clients, and new ways for them to learn,” says David. “the program we have for the first half of 2012 is practical, timely and relevant, and we look forward to contributing to the professional development of our clients.”

to view the VmIA’s 2012 training Essentials programs and to book training, visit www.vmia.vic.gov.au/trainingessentials

the modules focus on employment practices and aim to help supervisors and managers comply with workplace employment laws that govern recruitment, management, managing people and their performance.

“the online training is free to VmIA clients and provides the opportunity for staff to learn at their own pace in their own environment,” says David Pearce, VmIA’s manager, Client Learning Services. “For these reasons, they are ideal for our smaller clients who might not have the luxury of an HR department or big training budgets.”

Since eLearning was launched, more than 250 users have enrolled in more than 760 different units of study across the five modules, which are:

• Equal Employment Opportunity (EEO)

• OH&S manual handling

• Bullying prevention

• How to manage conflict in the workplace

• Introduction to performance management.

Of these modules, David says that bullying prevention and EEO have been the most popular.

In 2012, the VmIA will launch a new module on unfair dismissal, in response to changes in the Fair Work Act. Later in the year, the curriculum will expand further to include additional risk management and insurance units.

“We’re always looking at more innovative ways to provide client training as well as keeping our existing content fresh and relevant,” says David.

“eLearning is the perfect addition to our traditional training program,” he adds. “While our clients will always have the need for personal interaction and mentoring, for most subjects, a large amount of the instruction can be effectively put online. eLearning is an ideal tool for communicating information, simulating processes, and testing knowledge.”

Clients have their say

“What a great opportunity... Cann River is a long way from anywhere so this method [of training] will certainly save us both time and money.”

Lee Walker, Coordinator, Cann River Community Centre

“We have just scheduled a review of our risk management for the coming new year – what incredible timing your eLearning is ... eliminating travel costs and time is something that will be of enormous help to us.”

Chris Modra, Executive Director, South West Do Care

“We have some arrangements in place regarding compliance, however, this program is a great supplement... and will become part of our L&D strategy.”

Christian thompson, Director of Operations, Parenting Research Centre

eLearning is open to all VMIA clients. To access eLearning training modules, visit www.vmia.vic.gov.au/eLearning

In 2011, the VmIA conducted 76 workshops and forums for 2,151 clients. topics and formats varied from introductory, specialised and master class sessions, to risk leadership seminars, executive breakfasts and healthcare forums.

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© VmIA 2012 www.vmia.vic.gov.au

We value your feedbackPlease provide any feedback to communications@vmia.vic.gov.au or contact us on 03 9270 6900.Visit www.vmia.vic.gov.au for previous editions.the information provided in this document is intended for general use only. It is not a definitive guide to the law, does not constitute formal advice, and does not take into consideration the particular circumstances and needs of your organisation. Every effort has been made to ensure the accuracy and completeness of this document at the date of publication. the VmIA cannot be held responsible and extends no warranties as to the suitability of the information in this document for any particular purpose and for actions taken by third parties.

Risky Business

profile: shelly park – Ce, southern health Business and clinical leader

Shelly Park is the Chief Executive of Southern Health, a VmIA client and the largest metropolitan health service in Victoria. Southern Health provides comprehensive primary, secondary and tertiary healthcare services to a population of over 750,000 residing in melbourne’s South Eastern suburbs.

under Shelly’s leadership since 2006, Southern Health has increased their care funding by 44 per cent, increased the number of patients treated by a third and increased the number of emergency patients seen by more than half.

Last year, Shelly was awarded the 2011 telstra Victorian Business Woman of the Year, in recognition of the significant improvements and cultural changes she has driven at Southern Health, and was also awarded the 2011 Victorian White Pages Community and Government Award.

We asked Shelly about her work at Southern Health.

What improvements have you led at Southern Health?

there have been many, but the ones in recent years of which I am particularly proud are:

• the introduction of a robust clinical governance framework, with strong leadership from our Executive Director of medical Services and Executive Director of nursing and our Director of Allied Health.

• target zero - A target of no patient errors rather than simply a goal of “minimisation”, challenging all of us in our approach to patient safety.

• Patient-centred care - At Southern Health, patient-centred care is an active partnership between patients, family, carers and staff that ensures optimal outcomes for the patient throughout their journey.

• Living within our means - A five-year change management strategy designed to ensure that Southern Health is financially sustainable and continues to deliver the highest level of operational excellence.

• Patient safety walk-arounds – Our executives and senior managers regularly visit clinical areas to discuss patient safety and identify opportunities for improvement.

What does innovation look like at Southern Health?

Innovation is central to driving improved clinical and operational performance, and it is the responsibility of the Executive management team and Senior Leadership team to encourage and support innovation across all areas of the organisation. Within Southern Health, the approach taken to innovation includes a combination of “bottom-up” (encouraging individual staff to create and develop innovative ideas), and “top-down” (providing direction to ensure that the effort applied to innovation is focused on the issues that are important to the organisation). We have invested in resources to assist staff to progress innovative ideas and to develop the capability within the organisation to manage the required change process.

Efficiency versus quality – Can they co-exist?

I have an inherent belief that rather than pulling in opposite directions, efficiency and quality are actually complementary concepts within the environment of public healthcare.

that is to say, ensuring safe, timely and appropriate clinical care is absolutely fundamental to ensuring that an organisation operates efficiently. Examples of this include: reducing medication errors; reducing falls – or any other adverse incidents that not only may harm patients, but cause increased length of stay; and increased (avoidable) resource utilisation.

Fundamental to this approach is strong and effective clinical leadership and governance, across all disciplines.

Why is risk management so important?

Risk management is fundamental to appropriate corporate governance and Southern Health has developed robust systems to measure, monitor and address both clinical and non-clinical risks and to ensure appropriate awareness and overview of these at an executive and board level. Our risk management approach focus is not only on risks, but also on emerging risks and our approach has grown considerably over the last few years. We have developed a substantial set of tools and resources for our staff, including a monthly newsletter focusing on patient safety and clinical risk management issues revolving around a case-based learning exercise that we introduced last year.

What is one of the key achievements you are focused on for the future?

the one big thing that I would like to achieve for Southern Health is to redesign our care delivery so that, where clinically appropriate, patients receive their treatment at, or as close to, their home as possible – thereby avoiding unnecessary admissions and reducing length of stay when an admission is required. I think this is the most significant factor in driving efficient and effective quality patient-centred care – I know as a patient it is what I would want.

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