It seems like everywhere we look – in the media, journals, classrooms, and the business world – we hear about climate change and its impact on living creatures, the environment, the economy, and business. Because of this, it can be easy to “tune out” (as we tend to do when satiated), so it is vital we keep the conversation current and dynamic.

Given the alarming statistics (of which we will touch on below), based on collaboration with governmental agencies and businesses nationwide, The Risk Institute explores this topic annually – bringing together experts across industries to engage in conversation, review data, share information, and take a deeper dive into the impacts and potential solutions.

The Risk Institute’s September 23, 2021, Eighth Annual Conference: Weather & Climate Risk and Business Resilience (register here), will explore the impact weather and climate change have on business, including supply chains, fleets, financial markets, and more. In connection, the Institute will explore ways businesses can adopt more sustainable practices and build resiliency.

In the first half of 2021 (as of July 9), the U.S. has experienced eight weather/climate disaster events, each with losses exceeding $1 billion: one drought, two floods, four severe storms, and one winter storm. These events, collectively, have resulted in 331 deaths and significant economic impacts on the areas affected.

These events are happening more often and becoming exponentially more impactful. In fact, in recent years, the frequency of these events has more than doubled: from 1980–2020, the annual average was 7.1 events (CPI-adjusted); in comparison, the annual average for the most recent five years (2016–2020) is 16.2 events (CPI-adjusted).

Here is a look at a few events that have happened over just the past few weeks that are currently having major impacts on countries worldwide, including the U.S., our neighbors, and our allies.

Temperature/Heat

According to the Washington Post, the all-time high of 121 degrees Fahrenheit set in British Columbia this past Tuesday, July 1, has left weather and climate experts all over the world “shocked, speechless, and deeply concerned about the future of the planet.”

This recording is higher than any temperature recorded in the Lower 48 states – outside the Desert Southwest (only four states have seen a higher temperature). It is four degrees above Las Vegas’s all-time high of 117 and just one degree from Phoenix’s all-time high of 122.

It is the most extreme high temperature observed north of 45 degrees latitude and is hotter than any temperature observed in Europe or South America, according to world weather records expert Maximiliano Herrera. Only 26 countries on the planet have been as hot or hotter, they say.

Wildfires

As per NBC News, the National Interagency Fire Center (NIFC) reported recently that more than 2.25 million acres have been burned since the beginning of the year, compared to 1.7 million acres in the same period in 2020. In connection, over 70 wildfires across a dozen states have incinerated a combined area larger than Rhode Island.

These fires take their toll on communities and businesses alike and exert considerable pressure on firefighting resources, firefighters, and support personnel.

Fire seasons “are lasting longer. Fires are more intense … we’re seeing a sustained level of fire activity year-round, but certainly, this is the height of it for us this year,” said NIFC spokesperson Stanton Florea.

“The need for action to protect our climate, and to mitigate the effects of climate change, becomes clearer with each passing year and each round of devastating fires,” Colville Tribal Chairman Andrew “Badger” Joseph Jr. said

Flooding

According to NPR , within the last ten days, Germany and Belgium have been devastated by the worst flooding experienced in that area of Europe for decades. The floods have killed at least 120 people to date, and German officials report that search and rescue efforts continue for over a thousand people who are still unaccounted for.

Officials were quick to express that they attribute global warming to be at least partially to blame for this catastrophe, with Environment Minister Svenja Schulze adding that “climate change has arrived in Germany.”

In parallel with leaders worldwide, the country’s President, Frank-Walter Steinmeier, is focusing their attention on strategies and actions that need to be taken to prevent this type of disaster in the future.

“Only if we take up the fight against climate change decisively, will we be able to prevent extreme weather conditions such as those we are experiencing,” Steinmeier said.

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The Risk Institute’s upcoming September 23, 2021, Eighth Annual Conference: Weather & Climate Risk and Business Resilience, will provide an opportunity to hear expert perspectives on a wide variety of climate-related disasters as they collaborate to highlight the data and consider proactive options going forward.

Click here to sign up for the conference which, like last year’s, will be hosted virtually.

The Institute will be adding more speakers to the lineup in the coming weeks. Details about the speakers (as well as the topics of their discussions) will be revealed soon.

Current speakers (as of July 26) include:

• Jon Davis & David Shillingford, Everstream Analytics
• Carter Brandon, World Resources Institute
• Carsten Luetzenkirchen, DHL
• Sandra Nessing & Lisa Groff, AEP
• Jim Nerger, Roanoke Insurance
• George Gonczar, Huntington National Bank
• Joseph Fiksel, OSU
• Bob Litterman, Chairman of the Risk Committee; Kepos Capital
• Matt Eichmann, Greif
• Samantha Batey, Palantir Technologies
• NiSource

As the pandemic winds down and people are returning to the roads, data shows us that increasing numbers of drivers are engaging in risky behaviors leading to an increase in crashes. The Risk Institute’s June 23 session brought together leaders in the road safety space to discuss recent trends and research and what actions are being taken to address these unsafe driving behaviors.

Speakers included:

Ohio Governor Mike DeWine 

Tom Stickrath: Director, Ohio Department of Public Safety

Michelle May: Highway Safety Program Manager, Ohio Department of Transportation

Dr. Woon Kim: Traffic Safety Senior Analyst, AAA Foundation for Traffic Safety

Noah Budnick: Senior Director of Programs & Operations, Together for Safer Roads

Brittany Shoots-Reinhard, Ph.D.: Research Assistant Professor, The Ohio State University

Pankaj Risbood: Chief Technology Officer, Zen Drive

Dr. Morgan Wurtz, MD: Nationwide Children’s Hospital, Trauma Liaison

Kellie O’Riordan: Program Manager, AAA Traffic Safety

“We’re in an epidemic. This isn’t getting better,” said Risk Institute Executive Director Phil Renaud. We’ve seen significant challenges on the roads pre-COVID, which, in many instances, have increased throughout the past sixteen months. These include:

• A clear increase in speed
• A ~25% increase in road fatalities in the state of Ohio
• An increase in aggressive behavior on our roadways
• Decreased enforcement (in some locales)
• A decrease in safe driving skills

These changes in driving behavior impact everyone on the roads – from novice drivers to experienced drivers, said Renaud.

Ohio Governor Mike DeWine, the keynote speaker and a strong advocate for making Ohio’s roads safer, opened the session with some alarming statistics: 4,600 distracted driving crashes have occurred on Ohio’s roadways this year, and the Ohio State Highway Patrol (OSHP) has issued over 7,000 distracted driving violations.

He drew the audience’s attention to OSHP’s new Distracted Driving Dashboard, a resource devoted to curbing risky behavior and distracted driving enforcement and education. The Dashboard provides a valuable and detailed real-time view of distracted driving crashes and violations across the state by date, road, and route. It also provides insight into the work that troopers around the state are engaging in to reduce the impact of distracted driving.

“It is critical that all public and private traffic safety partners collaborate and make recommendations to address behavioral and educational methods to increase traffic safety,” DeWine said.

Dom Tiberi, beloved local sports anchor and distracted driving advocate, the session’s master of ceremony, reminded attendees that car crashes are the leading killer of children in this country. Behind heart disease and cancer, car crashes are the third leading killer of adults.

“We have an epidemic,” Tiberi says, and the best way to impact that is to educate our children better. “We need to change the culture and change the dialog.” As parents, we are not off the hook; our kids grow up watching us model unsafe driving behavior, he says. “We need to set a better example.”

In recent years, Tiberi has personally spoken to over one hundred thousand young Ohioans at hundreds of high schools and counting. To highlight and inform about the distracted driving epidemic, Tiberi shares the emotional and tragic story about the loss of his daughter Maria to a car crash in 2013.

As part of Tiberi’s mission, the Maria Tiberi Foundation has partnered with Tolles Career &

Technical Center to build the Maria Tiberi Foundation Driving Simulator Lab. This first-in-the-nation lab features 25 state-of-the-art driving simulators. The simulators, built by California-based Virtual Driver Interactive, guide students through a 16 module driving simulation course that takes about 4 ½ hours to complete. The modules allow students to hone their defensive driving skills and practice real-world driving applications, such as the dangers of driving too close, how to make quick stops, and techniques for driving in hazardous weather.

Tom Stickrath, Director of the Ohio Department of Public Safety (ODPS), echoed Tiberi’s words with a sense of urgency, adding that July and August 2020 saw the highest consecutive months of fatalities on Ohio’s roads in nearly 20 years. Despite an 18% drop in traffic during the pandemic, fatal crashes were up 18%, and serious injury crashes up 3%. These tragic statistics served as a backdrop for DeWine’s creation of the Ohio Traffic Safety Council (OTSC) in September of last year.

The OTSC is a collaboration between ODPS, the Ohio Department of Transportation (ODOT), the Ohio Turnpike Commission, the Public Utilities Commission of Ohio, along with many other community traffic safety partners and advocates who are all dedicated to making Ohio’s roadways safer.

The Council serves to identify the leading causes of motor vehicle crashes, serious injuries, and fatalities on Ohio’s roadways and take action to save lives. To do this, they address the challenge using a four-pillared approach: Emergency Response, Education, Enforcement, and Engineering.

They use a data-driven approach to guide action, including:

• Predictive modeling to assign a probability that a new driver will be involved in a crash
• Education for schools, parents, and students in the form of specific information/data to enable drivers to focus on potentially risky target behaviors prior to testing
• Identify general trends and address gaps in driver training schools and curriculums
• Public awareness campaigns

Michelle May, Highway Safety Program Manager, ODOT, discussed Ohio travel and safety trends during the pandemic.

She points out that traffic deaths should have dropped during COVID due to lower volumes of traffic. And that while average urban interstate speeds are lower in 2021 than they were in 2020, they remain about five MPH higher than in 2019; people seem to be more comfortable driving at higher speeds. This, coupled with an increase in distracted driving – which has not been curbed despite ever-improving in-car safety measures (lane-keeping assist, braking assist) – adds to the growing concern for road safety.

Dr. Woon Kim, Traffic Safety Senior Analyst, AAA Foundation for Traffic Safety, shared data obtained from 3,000 Ohio drivers over the age of 16. The study looked at perceptions, attitudes, and engagement related to speeding, with some of the major trends being:

• People are less likely to perceive speeding as dangerous, which affects their decision on how fast to drive; this being opposed to impaired driving, which drivers see as dangerous and are therefore less likely to engage in.
• Consistent public awareness and education campaigns highlighting the danger of speeding and the importance of speed limit compliance are And that greater consideration of safety is needed when setting maximum speed limits.
• Even small increases of speed (5 to 10 MPH) can affect the likelihood of severe injury and result in occupant compartment integrity being severely compromised and exponentially increase the likelihood of severe injury.

Video of a 40 MPH crash test with dummies compared to a 56 MPH crash illustrates just how dangerous speeding, even by just a few MPH, is to drivers.

Noah Budnick, Vision Zero; Together for Safer Roads (TSR), contributed to the conversation through a unique lens as he discussed Building Safety Culture in Small Fleets.

TSR is a corporate social accelerator that leverages private-sector technology, data, and expertise to prevent traffic crashes, injuries, and fatalities worldwide. Purpose-driven members are active participants in their programs, which Budnick argues is imperative for success. There is no greater influence on a person’s on-the-job behavior than the organizational culture in which they are embedded, he says.

Vision Zero recognizes that small and midsize fleets are more risky than the larger fleets – which have fleet safety managers, compliance managers, training, and onboarding resources. TSR addresses this issue by focusing on leadership, training and development, and technology, operating on the understanding that data alone cannot drive positive change; it needs to be understood, interpreted, and communicated effectively.

Brittany Shoots-Reinhard, Ph.D., Research Assistant Professor, The Ohio State University, shared research on speed and risk-taking behaviors by Ohio drivers, which demonstrated that:

• Ohio counties with more people staying at home had lower accident rates.
• Historically, counties with more conservative voters have lower crash rates, being more rural. Still, during the pandemic, these counties had lower stay-at-home rates, which indirectly led to higher crash rates.
• Drunk driving is rare. Only 9% of N=1,100 young Ohio drivers reported recently drinking and Alcohol was a factor in 5% of fatal and serious (KSI) crashes among 16 to 24-year-olds from 2016-2019.
• Whereas speeding is more common. 94% reported recent speeding of 5 MPH or more above the limit, and speeding was a factor in 32% of KSI crashes.

Shoots-Reinhard and her team made several recommendations to reduce risky driving behaviors, which included:

• Revisiting existing laws, for example, those relating to open containers in a vehicle, and lowering speed limits.
• High visibility enforcement (sobriety checkpoints) combined with public information campaigns.
• Improved new driver education.

She adds that leaders in the road safety space are continuously collaborating and working on all of these issues, and more, but unfortunately, there is no magic bullet to increase road safety.

Pankaj Risbood, Chief Technology Officer, Zen Drive, shared his company mission: to make mobility safer by using Artificial Intelligence (AI) and Machine Learning (ML) algorithms to turn raw sensor data from cell phones into critical insights.

Risbood and his team found a strong correlation between mobility and the rates of new COVID cases: the total miles driven for personal and commercial sectors in the U.S dropped about 50%. They plateaued the week of March 23, 2020, shortly after the first stay-at-home orders were issued.

The company analyzed data from five weeks prior to the first stay-at-home orders (February 6, 2020 – March 15, 2020) and compared it with data generated over the course of the next five weeks, a time frame in which most of the lockdowns were announced (March 15, 2020 – April 19, 2020). The data indicated:

• A 27% increase in speeding
• A 38% increase in phone usage
• A 25% increase in hard braking
• A 63% increase in collisions per million miles during the pandemic as a whole

Based on their data, with the goal of improving road safety, Zen Drive recommends that state and city governments start by taking the following steps:

• Introducing legislation that targets preventing phone usage while driving
• Identifying what he refers to as ‘risky routes’ with big data and AI and taking action such as signage to mitigate risk
• Providing behavioral coaching to drivers: analysis shows that feedback can reduce collision risk by 49%
• Rewarding behavioral improvements through safety competitions
• Using campaigns to increase awareness of the hazards of distracted driving

Dr. Morgan Wurtz, MD, Nationwide Children’s Hospital, Trauma Liaison, coordinates the pediatric level one trauma center that cares for patients up to 22 years of age and typically up to 16 years of age for severe traumas.

Over the pandemic period, Wurtz reported a decrease in overall Emergency Department volume and a decrease in the number of children seen for evaluation after motor vehicle collisions. This trend is perceived to be related to, one, concerns about hospital visitors contacting COVID, and, two, children were less likely to be in motor vehicles over this period given that school, sporting events, and community activities were curtailed.

This data was found to vary depending on the location nationwide. For example, National Safety Council data indicated a 14% increase in hospital admissions for children involved in motor vehicle collisions, but the State of California saw a 50% reduction in casualties. This is perceived to relate to varying demographics as well as rules about mobility (including lockdowns), as different areas of the country saw outbreaks at different times throughout the year.

While a decrease in motor vehicle collisions affected the number of children who were seen in the ER for evaluation post vehicle collision, the numbers balanced out due to an increase in the number of penetrating injuries, burns, and critical injuries overall. Wurtz associates these numbers with increased drug and alcohol use, increased stress, increased speeding, and increased distractions on the road.

Kellie O’Riordan, AAA, Traffic Safety Program Manager, studied novice and experienced driver reactions and concerns related to driving or learning to drive during the pandemic.

Some novice drivers were unable to amass adequate practice time due to the lack of opportunities to drive alongside other drivers on the road. Others forgot what they had learned in class and had to retake driver education because of closures. When novice drivers were involved in crashes, many were found to be single-car crashes that involved speeding, overcorrection after going off the road, and distractions relating to passengers, phone use, eating, and stress.

Even experienced drivers felt like they had “forgotten how to drive,” and others shared concerns that other drivers (given heightened emotions during the pandemic) would be aggressive towards them. Interestingly, these fears led to an uptick in experienced drivers taking advantage of AAA skills assessment and training courses to better prepare themselves for returning to the roads.

In addition to these training courses, and coupled with a plethora of resources provided by ODOT, the Ohio Traffic Safety Council, and other state and local Risk Institute partners, AAA provides alternate resources for teen and novice drivers as well as senior and experienced drivers.

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September 23 is The Risk Institute’s 8^th annual conference, Weather and Climate Change Risk: Building Resilience for Business. The session will explore the impact weather and climate change has on business, including on supply chains, fleets, financial markets, and more. The Institute and speakers will also explore ways businesses can adopt more sustainable practices and build resiliency.

Speakers include: Jon Davis & David Shillingford, Everstream Analytics; Carter Brandon, World Resources Institute; Carsten Luetzenkirchen, DHL; Sandra Nessing & Lisa Groff, AEP; George Gonczar, Huntington National Bank; Matt Eichmann, Greif; Jim Nerger, Roanoke Insurance and more.

To register for the event, or learn more about the agenda, click here.

The Risk Institute’s June 16, 2021 webinar, The Effects of the Wave of Bankruptcies and Consolidations, featured guest speakers Karen Wruck (The Ohio State University, Fisher College of Business, Finance Professor, Dean’s Distinguished Chair in Finance) and Ted Stenger (AlixPartners, Managing Director).

Along with moderator and Risk Institute Executive Director Phil Renaud, Wruck and Stenger spoke on the impact of the COVID-19 pandemic on small and large companies, took a deep dive into how 2020 looked compared to previous years, and considered what the impact might look like moving into a post-pandemic world.

Financial Distress and Bankruptcy – Karen Wruck

Wruck shared an alarming statistic to kick things off: 1/3 of all small businesses shut down in 2020. The question is, which of these will reopen? Have large companies fared better than smaller companies? Can smaller players make a comeback? Read on to hear expert perspectives on these topics and more.

Wruck’s presentation began with a look at re-contracting. A re-contracting event consists of a re-examination of financial structures and a re-examination of strategies and management effectiveness. With this, current contracts are determined to be either non-viable or validated to be viable with an agreement as to how to move forward. To understand this re-contracting, Wruck says, one must consider the firm’s value and the potential for conflicts of interest between stakeholders (creditors, shareholders, and employees).

Just last week, it was revealed that Washington Prime Group (owners of Polaris shopping center and dozens of other malls) are filing for Chapter 11 bankruptcy protection: but Wruck says re-contracting can be a productive process for firms (such as WPG) that cannot keep their agreements.

General Trends

In May 2019, almost a year before the pandemic, Chairman of the Federal Reserve Jerome Powell said that “business debt has clearly reached a level that should give businesses and investors reason to pause and reflect.” But, as one might imagine, the situation has only gotten worse in the past two years, with U.S. corporate debt as a percentage of GDP reaching an all-time high of 55% at the end of last year.

Furthermore, it is not just the amount of debt that matters, but the quality. In the years since the 2008/2009 financial crisis, BBB-rated bonds – those that sit at the very bottom of investment-grade corporate debt – have exploded 200%, according to S&P Global. In fact, BBB-rated bonds grew to more than $3 trillion last year and now represent 53% of the entire investment-grade market.

This percentage will only increase as the two largest rating agencies, S&P and Moody’s Investors Service, are currently downgrading U.S. companies at the fastest pace since the 2008/2009 financial crisis, with downgrades outpacing upgrades three to one.

As for bankruptcies, at the end of 2020, the number of corporate bankruptcies was not that different from the 2008/2009 financial crisis. However, the industry composition was quite different, as this time, energy and retail companies were hit the hardest. The good news is that bankruptcies started to trend downwards in 2021.

Small Business

As per a survey of more than 5,800 small businesses between March 28 and April 4, 2020, several themes emerged which demonstrate that small to medium-sized companies were hit the hardest during the pandemic:

• Mass layoffs and closures had already occurred just a few weeks into the crisis.
• The risk of closure was negatively associated with the expected length of the crisis; moreover, businesses had widely varying beliefs about the likely duration of COVID-related disruptions.
• Many small businesses are financially fragile: the median business with more than $10,000 in monthly expenses had only about two weeks of cash on hand at the time of the survey.
• The majority of businesses planned to seek funding through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. However, many anticipated problems with accessing the program, such as bureaucratic hassles and difficulties establishing eligibility.

Also of note is that small to medium-sized companies “failed silently,” said Wruck. This wave of silent failures goes uncounted in part because real-time data on small business is notoriously scarce and because owners of small firms often have no debt and thus no need for bankruptcy court.

“Probably all you need to do is call the utilities and tell them to turn off and close your door,” said William Dunkelberg, who runs a monthly survey as Chief Economist for the National Federation of Independent Business.

According to Yelp, at least 80,000 businesses were permanently shattered from March 1 to July 25, 2020. Within this, about 60,000 were local businesses (or firms with fewer than five locations). In connection, firms with fewer than 500 employees account for about 44% of U.S. economic activity and employ almost half of all American workers. Will these entrepreneurial individuals reinvent themselves? Is this damage temporary or permanent? asks Wruck.

Influx of aid

The pandemic resulted in the permanent closure of roughly 800,000 U.S. establishments in the first year of the outbreak – this being about 200,000 more than historical levels (at about 600,000 permanent closures per year).

Federal Reserve economists suggest that small business failures were fewer than some predicted. This is likely due to extensive government aid, including the paycheck protection program (PPP), which provided $525 billion in forgivable loans to small businesses last year, and reopened in January with an additional $284 billion in funding.

Before the pandemic, U.S. companies were borrowing heavily at low interest rates; when COVID-19 lockdowns triggered a recession, they did not pull back, borrowing even more. Non-financial companies issued $1.7 trillion of bonds in the last year, nearly $600 billion more than the previous high.

The torrent of inexpensive money has benefited all types of businesses:

• Cruise operators, airlines, and movie theaters weathered the pandemic by replacing some lost revenue with cash raised from bond sales.
• It allowed businesses to stock up on cash and save money by refinancing older debt.
• It permitted companies that were struggling before the pandemic to ease the threat of bankruptcy by issuing new long-term debt.

The question now is whether companies have merely delayed a reckoning, Wruck says. For all their current enthusiasm, many CFOs and investors acknowledge that businesses could still be punished for a normal downturn that raises borrowing costs for a longer period and does more serious damage to household finances.

The Disruptive Impact of COVID-19 – A Coming Wave in Bankruptcies? – Ted Stenger

Throughout the pandemic, the federal government injected trillions of dollars into the economy to address the crisis. To kick off his presentation, Stenger shared a few points:

• Leveraged loan default rates spiked with the virus but have since declined thanks to this aforementioned injection of cash and, in turn, an economy in the process of recovering.
• Issuances have gone up drastically over the last 10-12 years, but really spiked in 2020. This was driven by the fact that everybody who could tapped into the capital markets. Because future prospects were uncertain, management stockpiled as much cash as possible to weather the storm.
• COVID in itself might accelerate some of the M&A activity, but it will not be the primary driver. There are lots of other disruptions (like retail and commercial real estate) that will drive M&A activity moving forward.

Chapter 7 trends were stable for the four years leading up to the pandemic but dropped last year because of alternatives like Uniform Commercial Code (UCC); in other cases, businesses simply shut off the lights and locked the doors. Next year, Stenger says, Chapter 7 filings will likely return to quasi-historic levels, with the caveat being that these alternatives (like UCC) may be used more frequently.

The liquidity and cash that has been pumped into the system by the federal government have kept the number of Chapter 13 filings down. Another factor that kept bankruptcies down is the mortgage default rate that – while it has gone up – has not spiked, as expected. And due to lockdowns and restrictions on travel, personal savings rates have gone up substantially.

AlixPartners Disruption Index:

The AlixPartners Disruption Index looks at forces that displace existing businesses, markets, and value networks in favor of newer models and relationships. The index, as reported by over 3,000 senior executives, accounts for overall disruption levels as well as the number of destructive forces confronting their organizations.

It is equated by multiplying the magnitude of disruption (an assessment of how disruptive organizations have been over the last year) by the complexity of disruption (the number of simultaneous forces impacting organizations over the last year).

The results (based on the percentage who selected “very/extremely” impacted) revealed that COVID-19 was not a top concern of the C-suite for most businesses, at 25%.

Of the most concern were:

• New or evolving business competition (34%)
• Technological advances in materials and processes (33%)
• Data privacy and security related issues (33%)
• Pervasive connective infrastructure (32%)
• Automaton artificial intelligence robots (32%)

The industries that were the most disrupted and expect an increased frequency of disruption include: Financial Services, Retail, and Aerospace.

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Written by Jack Delahunty in association with The Risk Institute at Ohio State’s Fisher College of Business

May 18, 2021, saw The Risk Institute’s most recent session, “Exploring the Change in Business & Consumer Behavior.” This “fireside chat” was hosted by Executive Director Phil Renaud and Risk Institute partners at CBUS Retail, David Cherry (Cherry Advisory) and Angela Thompson (Thompson Marketing and Consulting).

Panelists included:

• Lara Koslow, Boston Consulting Group, Managing Director & Senior Partner
• Selin Malkoc, The Ohio State University, Fisher College of Business, Associate Professor, Marketing
• Chetan Kandhari, Nationwide, SVP, Chief Innovation & Digital Officer
• Joseph Goodman, The Ohio State University, Fisher College of Business, Associate Professor Chair, Marketing & Logistics

The Pandemic and Consumer Behavior 

Renaud opened the conversation by asking panelists about their observations regarding changing behavior among consumers as it relates to COVID-19. How much is people’s concern affecting their activity and actions? How is this changing over time?

According to Koslow, when it comes to personal risk, about 20% of people fear actually contracting COVID-19, but the greater concern is how it will influence their lives and activities. Over the last few months we are seeing that people are generally more likely to feel more comfortable dining at a restaurant, attending an event, or visiting the store.  But data indicates that to date, 14 months into the pandemic, approximately 40% of people still do not feel safe eating out or attending large events. Consequently, this change in behavior has a big impact.

Goodman adds that the issue is “perception of risk” that guides behavior. And despite the fact that we are seeing more cars on the road with multiple passengers, groups gathering in bars and restaurants, this perception of risk varies by individual, industry, and specific businesses. This perceived comfort level of “going back to normal” is a long way from being across the board.

From a business perspective we are seeing that historically successful market-leaders who relied on consistent behavior (and subsequent financial benefits) from their customers prior to the pandemic have not welcomed the disruption. By contrast, for companies that historically had a much smaller market share, this bounce-back is a huge opportunity, as consumers’ habits have been disrupted.

Take for example a small business here in central-Ohio that produces building materials out of reclaimed wood. The disruption has produced a massive increase in demand for their product, as prices for lumber at companies such as Lowe’s and Home Depot have skyrocketed (and product has become scarce).

Post-pandemic: Winners and Losers

Koslow identified five post-pandemic trends that impact retail –now and down the line:

1. We’re seeing an uneven recovery: mid to high-income households have saved more and, in turn, have pent up demand to spend. These consumers are also more likely to have regained employment losses. On the other hand, lower-income households, who are more likely to have experienced (and continue to experience) employment and wage challenges and income insecurity, are likely to spend less.
2. There has been a shift of time and money spent at and on the home. And while there will be a return to work, employers are likely to continue this hybrid work model.
3. We have seen an E-commerce acceleration: consumers will partially return to brick and mortar, but there will be a permanent shift to more online and app-based shopping.
4. With more of a focus on health, wellness, and mindfulness (as well as cleanliness), products and services related to those segments are seeing – and will continue to see – a boom.
5. The pandemic has accelerated a population shift: housing demand and population is moving from dense, urban city centers to the suburbs (especially with the continuing work from home model). In turn, retailers will need to reexamine store footprints and retail trends based on these changes.

As we emerge from the pandemic, while there are a number of different archetypes, we are seeing certain “winners” and “losers” in retail.

Winners include E-commerce, electronics, and grocery – the industry has welcomed a shift from a decades-long decline on in-home food spend during the pandemic. Retailers in suburban areas (that are closer to home) are going to attract more consumers back than those in urban environments.

The fashion industry has seen a downshift that relates to people working from home. And we will see a decline in footfall at shopping centers and retail locations based near office buildings.

Retail Footprint 

Moving forward, if companies want to succeed, they will have to be more creative and think about product innovation differently: shifting from more incremental changes to things outside their normal comfort zone. This could also mean reconsidering where companies decide to locate their business and how they operate as a whole.

Companies have been forced to pivot. We’re seeing an increase in omnichannel retail: buy online and pick up in-store or buy online and get the product delivered. Goodman says Home Depot (which struggled at first) and Target realized that consumers expect to access their purchases immediately. To meet this need, and avoid losing customers to more reactive competitors, these companies are changing their sales processes and utilizing geolocation as a tool.

Cherry believes that companies like Target, Walmart and Kohls, are better suited for this model. As opposed to smaller, strip mall-situated shops like Victoria’s Secret, where it’s harder logistically to make curbside work seamlessly for the consumer. With regards to footfall, Cherry uses the old adage “location, location, location.”

Work/Life Balance

In the current climate, the topic of work/life balance is at the forefront of the conversation. But Malkoc says what people want and what makes them happy is not always the same.

For example, while people ask for flexibility, it can make the work/life balance harder by creating a conflict of choice: “do I work or do I relax?” When clearer boundaries are set, and, for example, people have to commute, there are perceived benefits in helping people transition from work-life to home-life and visa versa.

Cherry highlights a survey from Columbus Business First, where employees were asked whether they would prefer a $30k raise or permanent work from home. An astonishing 64% said they would choose permanent work from home. He notes that retail has been reinvented itself over the past 20 years; the workplace is now being reinvented, too.

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The Risk Institute’s next session, to be held June 16, 2021, is “The Effects of the Wave of Bankruptcies and Consolidations.”

The Zoom webinar will feature guest speakers Ted Stenger, Managing Director, AlixPartners, and Karen Wruck, Professor of Finance, Fisher College of Business.

Further details and registration is available here.

Written by Jack Delahunty in association with The Risk Institute at Ohio State’s Fisher College of Business

April 27, 2021, saw The Risk Institute’s fourth Risk Series event of 2021: “The Short and Long Term Impacts of the Pandemic on the Labor Market.” The timely, informative, and thought-provoking session was moderated by Executive Director Phil Renaud, and featured guests Dr. Bruce Weinberg, Professor of Economics and Public Affairs at The Ohio State University, and Dr. Bill LaFayette, author, and owner of Regionomics LLC.

Renaud opened up the session by sharing data that illustrates a clear disparity relating to the effects of the pandemic on the current labor market. Specifically, inequality related to gender, race, age, and type of industry.

Dr. Bruce Weinberg reminded attendees that it is important not to look at the economy in isolation, as it coevolves with the nation’s health, brought to a halt by the coronavirus pandemic. In his research, Dr. Weinberg considers the historic and unprecedented disruption of the labor market – paired with skyrocketing unemployment rates – which dwarf anything that we have seen before, even during the Great Depression or the recession of 2007-2009.

Racial, ethnic, gender, and family composition disparities were identified, as were specific industries and occupations. Understandably, unemployment was less likely if individuals were in a role that enabled them to work remotely, and/or did not require them to operate face to face.

Emerging data highlights other disparities such as younger workers and older workers being more adversely affected by job loss; the most educated and least educated workers were least affected; and lower-income workers were placed at higher health risk, but a reduced risk of losing employment. Another disparity is location. Consider Amazon fulfillment jobs, which are often at warehouses situated in remote locations and, in turn, not serviced by public transport. This creates a challenge for potential employees who do not have cars.

In 2021’s wave to return to work, the disparities mentioned above are only being reinforced:

• Age: the groups most likely to be unemployed (the older and the younger employees) are also least likely to be reemployed.
• Gender: women are more likely to have lost their jobs but are less likely to be recalled.
• The same applies to racial disparities, thereby demonstrating the depths of inequality whereby the disadvantaged groups are hurt the most.

When looking at returning to work post-pandemic, Dr. Weinberg’s research indicated that the majority of people who are returning to work with ease are those being rehired by the same companies. In connection, it is also clear that the more time that passes, the ability for these employers to call in former employees declines. This, of course, is easy to understand: organizations cannot expect employees they let go in early-2020 to sit around and wait for a (potentially never coming) callback.

Dr. Weinberg concluded his presentation by pointing out that with the tremendous churn in the labor market, unprecedented numbers of people losing their jobs, and half a million people getting new positions with new companies, the potential for disparity only increases. The economy is recovering well, and economic stimulus has helped, but these incongruities are likely to continue to grow.

According to Dr. Bill LaFayette, the economy is improving rapidly: the gross domestic product (GDP) loss experienced last year, if economists are correct, will be recovered by this coming fall. This is good news, considering the losses felt locally over the last year. In Columbus alone, 160,000 people lost their jobs – almost triple the number of jobs lost during the 2007-2009 recession.

While the recovery has been steady in the city, state, and country as a whole, Dr. LaFayette believes that (despite the strong forecast growth) when we reach December this year, employment will remain at a lower level than its pre-pandemic starting point. In fact, 60% of the forecasters in a survey by the National Association for Business Economics (NABE) don’t expect employment to return to pre-pandemic levels until 2023 or later.

Dr. LaFayette argued that the pandemic has served to accelerate trends in the labor market that were present beforehand – not only immediately prior to the pandemic, but, in some cases, for decades. We have seen, and will continue to see, an increase in virtual offices and working from home – which has worked out better than employers expected and is preferred by many employees. Many companies and employees are expressing a preference for a hybrid office/home mode. According to a survey by PwC released in January, part of the reason behind this is that 87% of employees think that spending at least part of their time in the office environment promotes a positive company culture. Still, the flexibility of working at home creates a better work/life balance.

One potential advantage for a company that enables its employees to work remotely is the opportunity to cast a bigger net when looking for staff. Many highly skilled potential employees have been restricted from contributing to the workforce for a number of reasons, such as: family commitments, transport, accessibility, and hesitancy to relocate. These barriers are more likely to be overcome if an employee is allowed the flexibility of working from home and provided the tools to do so.

These smaller-scale elements that affect the labor workforce contribute to a major shift in the world economy: from an industrial economy to a knowledge economy. Dr. LaFayette explains that over the past seventy years, the economy has transformed from one based on industrial production, to one based on knowledge production – a transformation accelerated by automation and artificial intelligence.

In this knowledge economy, knowledge becomes as much a factor of production as the traditional factors of land, labor, and capital. It applies everywhere – not just to high-skill and technical fields – and is shaped by places and local economies.

In his 2020 book Knowledge Economies and Knowledge Work, Dr. LaFayette (and his co-authors Wayne Curtis, Denise Bedford, Seema Iyer) address the concept that people believe that artificial intelligence, in particular, will result in a wholesale loss of jobs that we will need to remedy through measures like universal basic income. LaFayette et al. cite and discuss two recent studies that argue the opposite — that these trends are more likely to result in an eventual net job gain.

One of these studies, undertaken by The World Economic Forum, predicted that 75 million jobs that existed in 2018 may be displaced worldwide by 2022, while 133 million new jobs may be created over that period. And it’s worth noting this prediction came before the pandemic accelerated the pace of change.

Dr. LaFayette reminds attendees that these labor force changes may evoke a sense of dislocation and pain, as the majority of jobs will change fundamentally and require a whole new set of skills. But just because certain jobs could be, for example, automated, it doesn’t mean that they will be. It depends – as always – on the cost and effectiveness of machines, versus the cost and effectiveness of people, he says.

These changes, in turn, affect how we look at education and its role in making this knowledge economy a success. Generally speaking, workplace skills are crucial – like teamwork, leadership, critical thinking, personal responsibility, attention to detail, basic math skills, engagement, and, especially, oral and written communication (skills that are far too often lacking, says Dr. LaFayette).

Moving forward, rather than looking through a lens of simply preparing an individual for a career, changes in the way we educate in general will need to be considered:

• The pace of change will demand the support of ongoing learning that all individuals will need to remain relevant and solve real-world problems.
• Educational programs geared to so-called “nontraditional” students will have to be far more common
• Educational institutions will need to stay on top of the skills required by employers and will have to offer programs geared to the schedules and needs of workers.

Register today for The Risk Institute’s May 18, 2021 session, “Exploring the Change in Business and Consumer Behavior.”

This webinar will feature Lara Koslow (Boston Consulting Group, Managing Director & Senior Partner), Selin Malkoc (The Ohio State University, Fisher College of Business, Associate Professor, Marketing), Chetan Kandhari (Nationwide, SVP, Chief Innovation & Digital Officer), and Joseph Goodman (The Ohio State University, Fisher College of Business, Associate Professor Chair, Marketing & Logistics). The fireside chat will be moderated by Phil Renaud, Executive Director, and Risk Institute partners at CBUS Retail, David Cherry & Angela Thompson.

Written by Jack Delahunty in partnership with The Risk Institute at Ohio State’s Fisher College of Business

Across the world, people are being challenged like never before by COVID-19, and the pandemic’s impact on mental health and psychosocial well-being is significant. The Risk Institute’s most recent session on March 17, 2021, Managing the Exacerbation of Mental Health Issues, took the opportunity to engage in what Executive Director Phil Renaud refers to as a “fireside chat” between four experts in the field. At this pivotal time in the history of mental health, they discussed best practice strategies that individuals, employees, and employers can take to build resilience; the importance of understanding the impact that uncertainty and significant life changes can have on mental health; and the necessity that businesses work towards creating a “culture of care.”

Dr. Anne Wilson, Clinical Assistant Professor at the Department of Psychology at The Ohio State University, believes that companies need to work hard(er) to eliminate the stigma associated with mental health challenges. And could begin by normalizing taking care of one’s mental health in conjunction with one’s physical health. Mental health is part of our physical health, says Dr. Wilson. She reminds attendees that a mental illness isn’t something that has to impact someone forever, and that taking the steps to address it and learning strategies to cope with it can prevent it from happening in the future.

Companies need to introduce proactive mental health initiatives and when necessary allow employees to take time off, just as they would if presented with a physical health challenge. Dr. Wilson also highlighted how people could play a part in supporting their colleagues’ mental health. For example, if you notice a change in a colleagues’ behavior, you might, in a non-judgmental way, express concern and open up a conversation. You are then in a better position to provide relevant resources, and, in time, follow up with said colleague.

Dr. Jennifer Cheavens, Director of Clinical Training at the Department of Psychology at The Ohio State University, identified how companies can develop a “culture of care” and talked about how that might look. For example, building checking-in into our daily interactions and holding weekly mindfulness table chats. She believes proactive strategies like these, that help build and foster more empathic relationships, will help prevent unexpected issues arising out of the blue. She advises attendees to keep an eye out for disruptions that come with mental health challenges such as changes in behavior, attitude, and how people interact with others.

Dr. Cheavens stresses the significance of building a sense of belonging and promoting a sense of competence in people’s roles within the company. She believes that demonstrating “care” should come from the top, in the form of adequate resources that are promoted by the company, such as: company-wide climate surveys, accommodations for those who need it, and by modeling self-care. Often, people aren’t motivated to seek help from providers until the crisis stage, so practicing wellness – exercise programs, surveys, speakers, book clubs, and the like – can supplement or even divert the need for acute care, one-on-one therapy sessions, or similar more-involved steps.

Jonathan Sadlier, Vice President, Market Leader Central Ohio at Oswald Companies, recognizes that mental health can sometimes require immediate, easily accessible attention and resources. He highlights new technological innovations, such as apps that provide next-level mental health solutions that can reduce wait time.

He stresses the importance of communication, voicing that it’s “one size fits one” when looking at resources for mental health. Employers need to recognize that it is a priority to have a benefit plan in place that is well thought out, easily accessible, and structured in a way that considers the financial implications on employees seeking mental health resources. In relation, it needs to be a plan that does not hinder and/or prevent employees from seeking help, as barriers for seeking care for any type of mental health issue are counterproductive. Sadlier suggests that one strategy companies could consider would be to marry mental health treatment with Employee Assistance Programs where the first three visits are covered free of charge.

Julie Frischkorn, Director of Behavioral Health and Mindfulness at Empower360, a practitioner in the field, reminds us that a silver lining with the pandemic is that a greater awareness, understanding, and acceptance of mental health challenges has evolved. This is coupled with considerable innovation in technology making self-care strategies more widely accessible to greater numbers of people. She points out that even pre-pandemic, generally speaking, much of the workforce felt burnt out and overwhelmed. Frischkorn believes this is related to not only high expectations externally, but also people having high expectations of themselves. She joins the rest of the panel in expressing the importance of taking proactive steps to recognize and address this.

Frischkorn reminds attendees that self-care – or “mental health first aid” – isn’t about practicing one thing that will make us feel better. It’s about holistic strategies that bolster us, scaffold us, and better equip us to face challenges. As of late, the physical distance has created a social and emotional distance, reminding people that they are not alone and having transparent and trust-building conversations – what Frischkorn calls “courageous conversations” –  more important than ever. We all have mental health in the same way we have physical health. And Frischkorn says it’s important we learn to use the right language to talk about mental health challenges.

In connection, when people don’t feel seen, it’s particularly important to recognize them; making eye contact and saying thank you, whether with associates at work or frontline workers at home, is the least we can do. Rather than connecting one on one, connecting in smaller groups has a lot of value too. To foster this in a Zoom setting, use the feature of a breakout room, so even in large meetings people can make smaller, more intimate connections with their colleagues.

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Register today for The Risk Institute’s April 27, 2021 webinar The Short and Long Term Impacts of the Pandemic on the Labor Market. This webinar will feature Dr. Bruce Weinberg, Professor of Economics and Public Affairs at The Ohio State University, and Dr. Bill LaFayette, Owner of Regionomics® LLC.

Further down the line, on May 18, 2021, is Exploring the Change in Business and Consumer Behavior, and on June 16, 2021, The Effects of the Wave of Bankruptcies and Consolidations. Further details on these sessions will be announced in the near future.

Written by Jack Delahunty in partnership with The Risk Institute at Ohio State’s Fisher College of Business

The Risk Institute’s January 27, 2021 webinar, Change Management in Today’s Evolving Business Landscape, focused on the following question: What are the timeless elements of success that are going to endure, and where do we need to be open to change, to ensure that our organization emerges stronger from the pandemic, not weaker? One thing is certain, the pandemic has made it increasingly clear that the great companies of tomorrow are not going to look like the great companies of yesterday.

Executive Director Phil Renaud moderated the session, which featured guest speaker Richard Jolly, a consultant at Stokes & Jolly Ltd and professor at the London Business School. Jolly provided research-based insights into how organizations need to evolve and predictable mistakes that can prevent them from adapting. What do we need to do in the short term to cope? And what are the considerations in the longer-term, to ensure we emerge from this once-in-a-lifetime experience more robust and more resilient?

Corporate Inertia

Jolly kicked things off by discussing corporate inertia, a term used to describe an established company that remains rigid in its thinking and actions rather than being open to changing industry and company dynamics. Put simply, it’s easy for company leaders to become complacent when things are going well. In the past decade, this phenomenon has led to the demise of companies like Blockbuster and Kodak. Despite having strong teams, capital, and the capacity for new product development, these organizations fell victim to corporate inertia.

To counter this, organizations need to be adaptive and flexible, agile, and open to change – which is complicated but more vital than ever. As Jolly reminds attendees, “we like when we are doing change, but don’t like when change is being done to us.” This is particularly relevant when we consider the business environment that many organizations are operating in today, summarized by VUCA: Volatility, Uncertainty, Complexity, and Ambiguity.

The Elephant and the Rider

To help understand why organizations struggle with behavioral change, especially when times are tough, Jolly framed his discussion around an analogy first introduced by psychologist Jonathan Haidt: The Elephant and the Rider. Haidt argues that we have two sides: the Elephant, which is emotional and visceral, focused on immediate rewards, and motivated by what it wants (the Elephant is also much larger and powerful); and the Rider, which holds the reins and seems to be the leader, is focused on long-term goals, and knows what it should do (the Rider is also rational, calm, and cognitive).

The third component of the analogy is the Path, which can serve to confound both the Elephant and the Rider. The Path, though, can be altered to make the “right” behaviors more likely – the path of least resistance – and the “wrong” behaviors require more effort, therefore less likely to occur. Jolly classifies the Path as an agent for change. It directs the Rider and makes it clear what critical changes in behavior an organization is striving for – a la the direction management wants an organization to take. When shaping the Path, executives need to ask themselves, “what can we tweak in the environment to make change easier?”

All of this is particularly relevant given that, according to Jolly, 70% of change programs fail and some 95% of employees are unaware of or do not fully understand the company strategy. In the same vein, in an anecdote taken from his consulting work, Jolly says that when employees are asked, “what is the one thing your boss wants you to work on?” many can’t give a concrete answer.

The Path, then, also represents sustained, clear, and functional communication – a vital component of change, from the C-suites to the shop-floor. However, with the pandemic and associated changes to routine and daily operation, such as the pivot to remote work, it can be more challenging for associates to maintain that same level of connectedness. The firms that will emerge more successful, Jolly says, will be the ones that find innovative ways to maintain that vital connection between associates.

More to this point, Jolly reminds attendees that what might looks like resistance to change is often a lack of clarity. What might look like a people problem is often a situation problem. And what could be perceived as laziness is actually often emotional exhaustion. The pandemic has only served to heighten fatigue and “brain fog,” two phenomena that, especially in comparison to previous generations, were already prevalent in today’s “always-on” business environment.

The Confidence Spectrum

Moving forward, Jolly, in what he admits is a “slightly provocative” statement, says that strategy is dead as an academic topic because those that fail today often had the right approach but simply couldn’t make it happen. Why? It usually comes down to culture, he says. More specifically, they can’t execute on strategy because of something Jolly calls the Confidence Spectrum.

Great companies are ones that spend more time in the middle of the spectrum, rather than bouncing to the extremes, especially through difficult times – think aforementioned VUCA. Jolly identified seven characteristics of confident organizations:

1. A sense of purpose/shared cause: Inspire people to feel an emotional connection beyond themselves.

2. Leaders model desired behaviors: How you behave defines the culture of the organization. Be the change you wish to see.

3. Everyone feels they can contribute: Employees want a sense of feeling part of the end goal. Play to their strengths. Foster a sense of “we.” 

4. Collaboration/challenge and support: Everyone, regardless of background, has their own capabilities and role to play.

5. Trust/treat people as adults: Be perceived as worthy of trust. Do associates see you as someone they want to follow? 

6. Two-way communication/listen: Cascading information does not work. The best ideas increasingly happen as far as way from the CEO’s office as is possible, where employees can experiment and take risks.

7. Create an energized context: Revitalizing people has less to do with changing people and more to do with changing the context that companies create around their people.

Fostering Human-centric Context

Over a hundred years ago, when business schools were initially developed, their focus was solely business administration, a command and control style of management, basically, how to supervise and manage. Times are changing, says Jolly, and organizations are evolving into more human-centered environments, where people are honored for bringing their whole hearts and minds to the job. Now, more than ever, organizations need to create a context where everyone is working together towards the goal and driving the change collectively.

Jolly advises that changes in behavior do not come from a purely transactional relationship. And while change performance metrics and KPIs are necessary, he says, the answer is increasingly less cut and dry. Executives do need to pay attention to the technical aspects, but they also need to pay attention to the emotional ones, the human metrics.

Ask yourself: What does it feel like working for you? What do we need to do today to make us successful in the future? Thinking back to the Elephant and the Rider, how do you motivate the Elephant? How will you get inside people’s identities and passions to make them feel the change?

Traditionally in risk management and decision making, we are told not to take unnecessary risks. But Jolly reminds attendees that organizations are more resilient than one might think. He likens them to gardens, that are likely to flourish under the right conditions. In fact, in the second half of their career, executives are more likely to fail because they are being too careful or trying too hard to avoid making mistakes, rather than the other way around.

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the boat lines. Sail away from the safe harbor.” – Mark Twain

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The next Risk Institute webinar, Data Ethics and Emerging Trends, is scheduled for February 17, 2021. This webinar will feature discussions with Dennis Hirsch, Professor of Law and Faculty Director of the Program on Data and Governance, and Aravind Chandrasekaran, Associate Dean of Executive Education at Fisher College of Business.

Written by Jack Delahunty in partnership with The Risk Institute at Ohio State’s Fisher College of Business

The Ohio State University Risk Institute’s 2020 theme of tackling society’s toughest topics continued with the web session “How the fresh surge in inequality impacts your business”. The session was an all-star panel session led by Cynthia Turner, Assistant Dean at the Ohio State University Fisher College of Business. Leaders from the Fisher College of Business, banking, and automotive provided a 360-degree view of the social upheaval we have seen concerning inequality in 2020.

Our panel shared both deeply personal experiences from their challenges with inequality and evidence from research and work at the progressive fronts of their respective fields. It was encouraging to see the awareness and leadership by so many organizations. However, we all recognized that there was still far to go and that it will take consistent, conscious effort to create a more equal world. A world where we may see the full potential of individuals, and consequentially organizations, be realized.

As a student, seeing the work and knowledge of Dr Menon and Dr Esper in this session has motivated me to take their courses in my studies, where I can. It’s truly exciting for me to be taking one of Dr Esper’s classes next semester in light of this session. I feel very fortunate that as students we have access to these professors and can study under their instruction. The real-world examples presented by our panel assuredly will be brought to the classroom, by both our faculty colleagues and students in attendance like myself.

The power of the voices on our panel was strong and credit goes to those organizing and supporting the Risk Institute creating such a rich and rewarding session. I, and I’m confident many others, left the session feeling a new sense of motivation to help create the equal world we seek. Equipped with new knowledge and the words of our panelists, each of us can return to our individual lives and make the small impacts that add up to create our shared societal vision.

by Trevor Stohr, MBA Candidate at OSU Fisher College of Business 

The Risk Institute Distracted Driving Initiative is a nationwide collaboration among dozens of companies, organizations, and government entities focused on how we can predict and curb distracted driving behaviors. Ohio Governor Mike DeWine opened this year’s forum by drawing attention to the fact that although our daily lives have significantly changed due to the coronavirus pandemic, even with fewer people on the roads, crashes are up. More Ohioans were killed on Ohio roads this past July than any single month since 2007.

One of DeWine’s focuses for his term is to make Ohio roads safer, and he identified a number of strategies and programs introduced to address this issue. This includes Ohio – Ready, Test, Drive!, further discussed by Ohio Department of Public Safety (ODPS) Director Thomas J. Stickrath. Other initiatives introduced include the Ohio Traffic Safety Council, the Work Zone Enforcement initiative, and a grant program for advanced driver training. DeWine also takes time to highlight the importance of the Hands-Free Ohio bill (SB 285), which will significantly strengthen Ohio’s laws for hands-free driving laws and, in turn, save lives.

The Risk Institute was delighted to include OSU President Dr. Kristina M. Johnson in their lineup of speakers. The president spoke on the importance of three necessary elements to help make Ohio roads safer: responsible policy, urban design, and changes in behavior. Johnson urged that through collaboration and collective action between educators, lawmakers, and private industry, we can tackle this issue and strive for transformational change. In closing, the president brought our attention to a statistic that we should all keep in mind: 40% of accidents involve drivers who enter an intersection first.

ODPS Director Stickrath went into more detail about the initiatives touched on by the governor. Ohio – Ready, Test, Drive! is a statewide virtual driver assessment program that will better equip Ohio’s new drivers with the critical skills to safely navigate the roads. As part of the program, the state is installing 400 customized virtual driving assessment systems in Ohio’s 57 driver examination locations and many of Ohio’s driver training schools. These systems will scientifically examine student driver preparedness and help Ohio make data-driven improvements to its driver’s education curriculum.

With more than 9,000 work zone crashes in Ohio between 2019 and 2020, the Ohio Department of Transportation (ODOT) is collaborating with the Ohio State Highway Patrol (OSHP) to make work zones safer through the Work Zone Enforcement initiative. Because enforcing traffic laws from the ground can be a challenge inside work zones, State Troopers will be taking to the sky. ODOT and the OSHP Aviation Section have identified nearly a dozen locations where troopers will target crash-causing violations like speeding, following too close, and failure to move over.

Stickrath also discussed the new grant program for advanced driver training, introduced by DeWine in September. The program will award juvenile courts with $20,000 through the Youthful Driver Safety Fund to provide access to advanced, hands-on driver training for juvenile traffic offenders and other young drivers to improve driving skills and reduce at-fault fatal car crashes.

The last initiative Stickrath highlighted was the newly formed Ohio Traffic Safety Council. The group includes representatives from state agencies, including ODOT, ODPS, Sheriff’s departments, county engineers, Mothers Against Drunk Driving, Students Against Destructive Decisions, and more. Established through an executive order from the governor, the Council will analyze data to coordinate a response strategy to keep Ohio drivers safe utilizing four pillars:

• Education: the Council will develop and support education efforts directed at risky road users, motivating drivers to change behavior.
• Enforcement: Promote consistent and highly visible enforcement of traffic laws and identify and fill gaps in Ohio’s current traffic safety laws.
• Engineering: Invest in engineering countermeasures and infrastructure improvements that have the most significant impact on public safety.
• Emergency: Ensuring that responses to critical crashes are fast, efficient, and coordinated.

Preventative steps are possible through predictive models that can assign a probability that a new driver will be involved in a crash after obtaining their license, based on target behaviors exhibited during the assessment. Schools, parents, and students will be provided with specific information to affect targeted behaviors prior to testing. Data will permit the state to identify and address gaps in driver training schools, update driver training curriculum, determine trends, and inform public awareness campaigns.

ODOT Director Dr. Jack Marchbanks shared data that shows Ohio has experienced five years of rising traffic deaths, despite safer in-car technologies becoming more readily available. With the ability to do so much on our smartphones, distractions behind the wheel are on the rise. Drivers are redirecting their focus away from the roads, thereby slowing reaction times to potential hazards. And people underestimate the danger of distracted driving, Marchbanks says, despite more than a decade of research that indicates that cell phone use significantly increases the risk of being involved in an accident.

In attempts to change this trajectory, Senate Bill 285 Hands-Free Ohio will make driving while handling any electronic wireless device a primary offense. This includes, but is not limited to, writing, sending, or reading text-based communications; watching or recording videos; taking photos or looking at images; live streaming; using apps; entering information into GPS navigation programs; dialing phone numbers; or holding a device for a phone call.

Research from other states demonstrates that this kind of legislation works. 12 out of the 15 states (including D.C.) experienced a decrease in fatality rates within two years of the passage of hands-free laws, and six of these states saw a +20% decrease in fatality rates. Marchbanks concluded by saying that to help change driver behavior, there needs to be a focus on improving education, more targeted laws and enforcement, and a commitment to lead by example. It’s not about writing tickets, he says, it’s about saving lives.

Dr. Brittany Shoots-Reinhard, Research Assistant Professor, The Ohio State University Psychology Department, an expert in judgment and decision making, attitudes and persuasion, and motivation, highlighted a study conducted by the OSU CAIDe Psychology Research Lab. The study was based on responses from 1,176 young Ohio drivers regarding dangerous driving behavior, perceived risk and benefits, estimates of behaviors in others, and resistance to warnings. Findings indicate that:

• 45% of respondents have been involved in a crash as the driver, and 31% of those crashes were in the past year.
• Cellphone use while driving was the only self-reported behavior that consistently predicted crash rates.
• These younger drivers engage in cellphone use while driving at high speeds.
• The most dangerous of these drivers are also the most reluctant to change.

Shoots-Reinhard explains that changing beliefs that predict unsafe behavior should change that behavior. One technique that appears particularly effective is messaging on highway signs. The study found that the language used in this type of messaging should be carefully chosen to reduce reactance. For example, rather than a sign indicating “you must turn off notifications,” it should read, “you should consider turning off notifications,” thereby giving drivers a perceived choice.

Michelle May, Program Manager for Highway Safety (ODOT), provided details about the Ohio Strategic Highway Safety Plan, used to identify the greatest causes of fatalities and serious injuries on Ohio roads. In Ohio, young drivers ages 15 to 25 represent almost 30% of deaths and 35% of serious injuries each year. A major concern is cognitive distractions that occur in the process of using cellphones, navigation systems, or changing the radio. These distractions force the brain to shift between two tasks, which slows reaction time and narrows the field of vision. It may seem obvious, but taking your eyes off the road or a distraction that may last only a second substantially increases crash risk.

Chad Wilson, Nationwide Insurance Associate Vice President, Office of the Chief Legal Office – Government Relations, discussed the company’s commitment to reducing distracted driving and hailed a call to action. Data collected from 54 million trips across the U.S. shows that in 2017, 41% of all car trips between the hours of 7:00 AM and 7:00 PM involved significant phone distraction, up from 26% in 2016. By 2025, smartphone ownership will be at record highs. Nationwide predicts that, based on the current statistics, 4,000 people will lose their lives annually and 500,000 crashes will be associated with cell phone distraction (CMT) unless we make changes. Wilson drives home the fact that we need to move swiftly on Senate Bill 285, Hands-Free Ohio. “The time to act is now,” he says, to push lawmakers to pass the bill.

Kimberly Schwind, AAA Ohio Auto Club Senior Manager – Public Affairs, expanded on this premise, adding that inexperience is one of the main reasons young drivers crash. To address this, she discussed the necessity of implementing Graduated Drivers Licensing (GDL) in Ohio. GDL requires six months with a learner’s permit and a provisional license until the age of 18, where full licensure can occur. This not only provides learner drivers with more time on the road but allows them to experience driving in all four seasons. AAA and the Ohio GDL Coalition also recommend night restrictions, which ban driving between 9:00 PM and 5:00 AM for at least the first six months of licensure, and implementing standard seat belt laws for all vehicle occupants.

Schwind and her associates believe that Ohio’s current young driver licensing system does not reflect the latest research on teen driver crashes and how to prevent them. She urges the audience to engage with lawmakers and encourage them to pass Ohio House Bill 106, which would require teenagers to have a learner’s permit for a full year (not just six months like the current law requires) and more practice driving at night.

Dom Tiberi, 10TV Sports Anchor and co-founder of the Maria Tiberi Foundation and Maria’s Message, reminded attendees that car crashes are the leading killer of young people, and just behind heart disease and cancer across all age groups. He shared a personal and moving message about his daughter Maria who was killed tragically in an automobile accident in 2013. In connection, the Maria Tiberi Foundation has partnered with Tolles Career & Technical Center Superintendent Emmy Beeson, with help from other sponsors, to build the Maria Tiberi Foundation Driving Simulation Lab. The lab contains 25 state-of-the-art driving simulators that feature a 16 module Distracted Driving Simulation course.

Lessons allow students to practice their driving skills in a safe environment that reflects real-world challenges such as distracted driving, driving too close, how to make quick stops, and avoid unexpected hazards. The simulators collect data and identify trends, which are shared with the state and the BMV. The goal being that when problematic trends are identified, they can be incorporated into Ohio’s driver’s education curriculum. Tiberi and Beeson both see the lab as a model and hope to replicate the concept at the other career centers across the state.

Further details regarding this innovative partnership and the Maria Tiberi Foundation Driving Simulation Lab will be shared in a follow-up piece later this month.

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The Risk Institute will be sponsoring more virtual webinars in the coming months on topics pertinent to the industry, Institute members, and the community at large.

“How the Fresh Surge in Inequality Impacts Your Business,” a moderated discussion about the impacts of inequality and social division on business and culture, will take place on November 10, 2020, at 12:00 PM EST. Interested parties can register for the webinar here.

Written by Jack Delahunty, in association with The Risk Institute at The Ohio State University

Norman Bertke, National Director of Operations for Global Workplace Solutions at CBRE, a leading real estate service provider, kicked off The Risk Institute’s “Returning to the Workplace in Times of COVID-19,” webinar on October 6, 2020.

Bertke’s presentation revolved around CBRE’s Workplace Sentiment Survey, undertaken to ascertain how the American workforce is thinking and feeling about remote work during the pandemic and office work in the future. The survey, with 10,000 respondents from 32 companies in 18 countries, provides insights into the perspectives and expectations of company leaders, managers, and employees. While these insights reflect a moment in time, they are a relevant gauge of workforce expectations and industry sentiment and will help real estate executives create strategies to redefine the work experience with the needs of everyone in mind.

Five Key Takeaways:

1. Remote work looks and feels productive to most: 90%+ of employees and company leaders feel productivity is the same or greater while working remotely.
2. Remote work is here to stay: 85% of employees prefer to work remotely at least two to three days a week in the future.
3. The office is here to stay: 60% of respondents will return to the office in the future for community and collaboration.
4. Real estate portfolios might look different: 43% of respondents would consider working for a company-provided location nearer their home, at least a few times a week.
5. There is no one-size-fits-all for remote policies: 54% of company leaders prefer a hybrid arrangement for their team that combines working remotely and from the office.

In closing, Bertke highlighted the following points to consider, as we try to figure out what this new normal looks like. From an employee perspective, COVID-19 hasn’t impacted productivity, but it has certainly shifted sentiment toward the future. For many, the amount of time spent in the office may never return to pre-COVID levels, as employees have not only embraced remote work but have become accustomed to the autonomy that comes with it. However, with a renewed focus on the quality of both workplace experience and design, it is clear the role of the office as a destination for employees is still important for companies to maintain.

The long-term outcome of COVID-19 will be a combination of changes to workplaces, policies, and real estate portfolios, and each company will establish its own stance on remote work and the role of the office. Regardless of the destination, the road to this future should start with culture and be paved by a data-driven and people-centric approach to change.

Tim Spencer, Chief Financial Officer at Safelite, the nation’s leading auto glass specialist, expressed that the pandemic prompted his company to challenge conventional wisdom about the way they operate. And although it is difficult to predict the future, he said, we’re now in a unique position of reimaging how it might look.

Safelite does business in 34 countries on five continents, and when the pandemic led to the closures of France, Spain, and Italy, the company took notice and immediate action, developing a plan to protect both, first and foremost, its liquidity and its associates and customers.

Among the strategies they used were furloughing 8,000 non-essential staff, eliminating advertising, and renegotiating supplier payment terms and rents. Steps to protect customers and staff included increased cleaning and sanitization, implementing the use of PPE and social distancing, and providing touchless drop-off. The steps had some unexpected and positive outcomes. These included an increase in productivity while maintaining a high service level, achieving a higher Net Promotor Score, the acceleration and use of new forms of communication, and an increased share of the market.

Despite this enormously positive response in performance from associates, there were challenges that arose. The company experienced withdrawal in engagement from and with associates across the board. This is particularly difficult, notes Spencer, when engagement has always been a focal point of the company and building the culture with new hires a vital part of onboarding. In connection, the lack of face-to-face communication and collaboration onsite with peers has made it more difficult to establish and build relationships, potentially limiting creativity and innovation.

Technology plays a central role in how Safelite operates. With this new normal, associates have to be more resourceful and self-motivated to learn new technical skills and problem solve. In conjunction, inherent in remote work is the increased likelihood of hacks and/or cyberattacks.

Looking to the future, Safelite and other companies are compelled to weigh up the benefits/opportunities and the concerns/risks of a hybrid work model. While there are many considerations, benefits might include improved cost flexibility and responsiveness and increased flexibility for associates. Concerns relate to maintaining culture, brand, sense of identity, and required investment for long term technology solutions.

Spencer identifies four areas for measuring Safelite’s success in the future, specifically:

1. People: Continuing to drive engagement to attract top talent by making purposeful investments in physical environments in order to address associates’ evolving needs and expectations.
2. Place: Create a flexible and agile physical environment that supports innovation, reflects the company’s values and brand, and can evolve as business needs and people change over time.
3. Technology: Integrate consistent technology across the workplace to provide effortless collaboration regardless of location.
4. Savings: Achieve fixed cost reductions and increased cost flexibility by reducing the amount of square footage leased.

The ability of many organizations to respond effectively to the post-COVID environment will be critically linked to planning and flexibility. Safelite is continually evolving and making decisions based on data with their team, and Spencer believes the company will come out of this experience a better organization.

John Mark Tichar, Vice President, Sales Leader at Oswald Companies, one of the nation’s largest independent insurance brokerage firms, provided attendees with insights into the current state of the insurance industry. As if the pandemic wasn’t challenging enough, he said, last year the industry started to go into a correction, following ten years of a soft market. This hard market, and with it a continued correction of pricing and terms, will continue through 2021. For the insureds, this means rate increases, reduced capacity, and higher attachments and deductibles.

COVID-19 brings with it its own set of real estate challenges related to business interruption insurance. States including NY, NJ, PA, OH, MA, and SC have been retroactively attempting to change policy language to cover communicable disease and/or pandemics. This despite the fact that in 2006 ISO successfully worked with states to get Virus Exclusions approved on policies. At the time, Tichar said, it was a risk that was not being rated, let alone changed for, but the industry wanted to make sure they didn’t get pulled into this exposure.

Since the onset of the pandemic, 1,000+ lawsuits have been filed against insurers for Business Interruption claims, the majority from retailers, and foodservice + dining places. While Tichar claims COVID-19 and other communicable diseases do not meet the definition of direct physical loss, by and large court is in favor of ruling as such. The takeaway being that Business Interruption Coverage continues to be tied to direct physical loss.

Pollution Exclusions are generally in all liability coverage, but in Ohio, for example, case law makes it difficult for carriers to deny coverage and exercise this exclusion. Ohio Bill 606, which grants immunity to essential workers who transmit COVID-19, compounds this problem insurers are facing in the state. In light of all this, many insurers are attempting to limit their liability by confronting circumstances that may excuse or delay their obligations to perform under existing contracts due to the occurrence of a force majeure event, or events that are “reasonably foreseeable.”

To date, the cancelation of sporting events like Wimbledon and the 32^nd Olympic Games, and concerts from the likes of Sir Paul McCartney have cost $200+ billion. Germany’s Allianz, for example, is $794 million in the hole due to event cancelations.

The Risk Institute will be sponsoring more virtual webinars in the coming months on topics pertinent to the industry, Institute members, and the community at large.

Register here for The Risk Institute’s Annual Distracted Driving and Teen Driver Safety Forum, scheduled for Wednesday, October 21, 2020, from 9:00 am to 12:00 pm EST.

Written by Jack Delahunty, in association with The Risk Institute