Do You Excel at Excel?
May 19, 2022

You do? You say you’re the master of Planet Spreadsheet? Well, you may be part of the problem. Allow us to explain. Spreadsheets have become as much a part of doing risk management as the fork is part of doing dinner. We use them all the time. But a recent article in Carrier Management makes some very pointed points about our spreadsheet habit:


The fact is, much of the underlying actuarial modeling that still drives the industry today is built on the good ol’ Excel spreadsheet. That can make integrating new high-powered analytics a bit like installing Formula One parts on an Oldsmobile*.


While the author, Marty Ellingsworth, is talking about what goes on inside carriers, all his observations apply equally to the reciprocal functions inside risk management.


What’s not to love about classic spreadsheets? Let’s take a look:

  • Limitations: a number of more sophisticated analytic tools are now available.
  • Updates: using the same Excel month after month may obscure changes that should be made to underlying formulas.
  • Data sources: It’s not unusual for home-grown spreadsheets to have home-grown, idiosyncratic data sources as well. This may make your analytics incommensurable with other systems.
  • New data: reusing the same spreadsheet may not reflect newer, better, more reliable data sources now available.

One example noted in the article is the rapid changes in depreciation for vehicles. A depreciation formula set up a couple of years ago will not reflect current realities for vehicles, or many other properties. How do you synch up your “personal” spreadsheets with other analytic tools being used across your organization? For example, how do you keep your ERM reporting current with what is probably a rapidly changing organization—especially nowadays? Do material changes come to your reporting systems (push mode) in near real time or do you have to track them down (pull mode) and remind Operations from time to time to let you know what’s going on?


The Excel we all love and overuse has been around for over 40 years now. It’s just possible that you might be a little too comfortable with this old friend. Perhaps the most astute warning against creating your own private “information islands” comes down to us from Queen Victoria’s most unusual prime minister, Benjamin Disraeli: “As a general rule, the most successful man in life is the man who has the best information.” Do your spreadsheets have the best, most current, most complete information? Really, truly?


And keep in mind that you don’t have to invent new analytics yourself. Are you using all the new tools your service vendors can make available? Don’t forget that all the folks you interact with routinely in your risk ecosystem are—in one way or another—in the software business themselves now. Some even offer classes and tutorials on how to use their powerful new tools. Don’t be shy. Ask.


*Yes, my eagle-eyed friend, the last Oldsmobile (a red Alero sedan) rolled off the assembly line way back in 2004. That’s the point.



WFH, ESG, and Thee

Once upon a time, “modeling” had to do with glue, paints, and lots of tiny parts, many of which would dive to the floor and hide*. Modeling today has an importance, a seriousness, and a complexity that make hunting for those tiny parts seem like a walk in the park. Today’s case in point is a number of current valiant attempts to model the impact of working from home on corporate emissions and related carbon footprints. As ESG (Environmental, Social and Governance) disclosures become more visible and important, this otherwise esoteric modeling task takes on both visibility and risk.


Reuters recently surveyed twenty large companies which both report carbon emissions as part of ESG compliance and have significant numbers of employees working from home. What we find in this survey is that results vary. When WFH first blossomed in 2020, most of us assumed that the reduction in commuting alone would result in a significant reduction in overall carbon emissions. Walking across the hall certainly couldn’t be pumping as much carbon into the atmosphere as a forty-minute commute by car, right? More sophisticated modeling suggests the answer is more along the lines of “well, sorta.”


The Reuters report looks at the various ways that different companies are trying to model this question as accurately as they can. Of course, it all depends on the assumptions. Some models show a net carbon reduction of more than half for WFH relative to conventional commuting, but other methodologies come up with much more modest benefits. One of the big questions is the carbon footprint of your “office” at home. Most models assume that your office rig consists of one laptop, a couple of screens, some lighting and, maybe, a convenience printer**. If we just model those components, we look good.


But—what about heating and air-conditioning? Most commercial HVAC installations are far more energy efficient than your home’s climate control. Do you have to heat or cool your whole living unit just to keep your office space livable? Hey, is your employer still running the lights and HVAC at the office, even though you are not in your workspace? Oh, and what about hybrid WFH plans? The list goes on…, and on.


If your organization has a significant proportion of people on long-term WFH, working out a modeling scenario that seems to suit your reality may soon be part of your ESG compliance, if it isn’t already. A quick readthrough of the Reuters report offers a number of ideas for how various organizations are trying to develop defensible models which can then be tweaked as needed when WFH and hybrid arrangements are modified going forward.


Understanding and reporting on our carbon footprints looks to be a long term addition to how we all do business and yet another compliance exposure that we have to account for. ESG reporting is unlikely to be going away. Not long ago, we ran across a serious scientific publication which worked out the carbon footprint of a real, frozen water ice cube and the relative benefits of artificial, reusable ice cubes***. Hey—room temperature, it’s the new trend.


*My first model was a little DC-3 made of wood, wire, decals, and tiny stamped steel propellers. My mother helped me build it back in 1950 when I was recovering from polio. I guess it was therapy. I just thought it was fun.

** Pretty much looks like the set-up here at GB Journal World Headquarters.

***A real thing, check it out at Reusable Ice Cubes: Are They Worth It? - GreenCitizen


Quick Take 1:
Not by a Dam Site  

Back in the day, we occasionally drove through an unusually barren stretch of dirt between two towns. No gas stations, nothing but utility poles. That area had been swept clean years before by a major flood and had not been rebuilt. Close inspection would find an occasional bit of foundation or sidewalk or an odd pipe sticking up. More later.


A new report by the AP carries the suggestive title, “AP analysis finds growing number of poor, high-hazard dams.” The report begins with the story of a very large reservoir in California which is now held at no more than 25% capacity. No, not because of drought. Because the dam is old, upstream from a great many houses and businesses, and very likely to fail if one of California’s notorious earthquakes hits it the wrong way. The AP analysis tallied more than 2,200 high-hazard dams in poor or unsatisfactory condition across the U.S. — up substantially from a similar AP review conducted three years ago. And they helpfully point out that this is a low-ball number since many agencies do not report dam deficiencies publicly.


Here’s the point: “The nation’s dams are on average over a half-century old and often present more of a hazard than envisioned when designed because homes, businesses or highways have cropped up below them.” Our question: how many of the commercial structures sitting innocently below these structurally suspicious dams are on your facilities inventory? Note that dams are being added to the problem list far faster than they are being removed from said list. Have any dams upstream from one of your locations recently moved to the uh-oh list? How do you know?


Dam safety is not static, and our current spate of erratic weather is emptying some reservoirs but overfilling others. Dams are one more piece of aging infrastructure being stressed in ways we haven’t seen before and generating risks we haven’t seen before.


About that stretch of open land? Well, it’s all houses, strip malls, and light industry now. The dam that failed some 90 years ago was small. Its replacement is larger, with a lot more water behind it. Go figure.

Recent dam failure in the Midwest. Thousands evacuated downstream.


Quick Take 2:
So How About Those Comp Claims?

One of our summer jobs during college (1966) was labelling and packing explosives (true). Got to work in splendid isolation in the “explosives hut” off in a far corner of the operation. Found out later that this was the usual assignment for us newbies. Read on to find out why.


Joe Paduda has an excellent summary of new research from Travelers in his Managed Care Matters blog. The new report puts some fresh details around a fact long known to workers’ comp professionals: employees are significantly more liable to have on the job accidents in their first year on a new job. The report provides some stats by major industry types. This is especially useful information now when we are seeing so much “churn” in employment as the Great Resignation leads to an influx of new hires.


The fact that new hires have more (and often more severe) accidents is a drum that needs thumping since a thorough onboarding process and detailed training often get short shrift when lots of folks are being hired. This report is an apt reminder not to allow your line managers to take any shortcuts. Don’t hesitate to point out the obvious. As Joe succinctly puts it, “newer workers are less experienced, have had less training, are likely younger, and don’t know what they don’t know [emphasis added].” Read Joe’s summary and read the Travelers report. Feel free to cite those rather scary stats about first year injuries as needed.


Turned out the explosives hut was a sort of trial by fire. If a newbie could handle that for a few weeks with no issues, it was worthwhile to teach him how to run a forklift. If not, well, they didn’t lose any valuable experienced people*. Got to be pretty good with a forklift. Useful skill in case this risk management stuff doesn’t work out.


*Did I mention that this was a long time ago? In fact, the explosives hut was only one of several high hazard jobs at that sprawling plant—and OSHA was many years in the future.


Say It Isn't So

You know how somedays you just don’t get the time to attend to all the news feeds and publications you have landing in your in-box? Well, we have prepared a nice, simple summary which you can keep handy. It works for every day. Isn’t technology amazing?


Words to Remember:

This is the month that belongs to gardeners*. Not even those of you with questionable green thumbs can miss the utter exuberance of May flowers in full cry.


W.E. Johns is best remembered for his adventure novels, but like many Brits, he could not resist the callin’ o’ the green: "Queer things happen in the garden in May. Little faces forgotten appear, and plants thought to be dead suddenly wave a green hand to confound you." My garden hosts a number of flowering annuals who decided somehow to become perennials instead. I welcome them to a new spring and do not question their intentions.


Tam Mossman, an American writer and editor, takes a more direct and practical approach: "Horticulturally, the month of May is opening night, Homecoming, and Graduation Day all rolled into one."


*A hint for fellow chlorophyll addicts—arrange your plantings not just for appearance and bloom seasonality, but also for scent. I always plant tons of alyssum. It not only fills in around focus plants, it also provides a summer-long heavenly scent background. Add scent highlights like jasmine or especially fragrant hybrid tea roses like Honey Perfume, Fragrant Plum, Heritage, Louise Oder, Madame Plantier, Fragrant Cloud, or a whole hedge of Blaze Improved. Do not hesitate to feast all the senses in your garden.

Now - if we only had smell-o-vision for this blog!


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