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.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7650
SPONSOR: Englebright (MS) 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 OR GENERAL IDEA OF BILL:
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 States 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 SPECIFIC PROVISIONS:
Section 1: Empowers the Office of General Services (OGS), in consulta-
tion 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 employ-
ees 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 proc-
esses 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 poten-
tial 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 assess-
ment and management services. This could help reduce the cost of provid-
ing 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 estab-
lishing 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 expo-
sure 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 Comp-
troller and State Legislature within 18 months of this bill's effective
date.
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 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, larger municipalities, and most large corpo-
rate entities that have centralized risk management evaluation proce-
dures 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 statewide risk
manager can be found in a report. produced by Senator. Klein entitled.
"Expansion of New York State's Risk Assessment and Management Activ-
ities" 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
fanning 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 boil 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.
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.
PRIOR 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.
LOCAL FISCAL IMPLICATIONS:
None
FISCAL IMPLICATIONS:
To be determined
EFFECTIVE DATE:
Immediate.
