Establishes the office of risk assessment and management within the office of general services

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.