Force Majure, Supply Chains, Risk, and Izzard
Jul 23, 2020

Two recent movies and a couple of novels have used the term "force majure" as all or part of their title, including a 2013 alleged comedy "concert" by Eddie Izzard*. Alas, the phrase is becoming ever more common in today's COVID induced supply chain jumble, a phenomenon detailed recently in Industry Week.

About 75% of American companies have experienced at least some supply chain disruptions, according to an early survey by the Institute for Supply Chain Management. Depending on your business, you may be on either end - or both - of some of those disruptions.

A force majure clause in a contract allows a designated party some leeway to decline to provide contracted goods and/or services when external forces beyond their control - like economic lockdowns, say-- deprive them of the ability to deliver. Many states and countries also have similar legal provisions which apply to contracts controlled under those jurisdictions. In recent months we've all seen a number of large, complex supply chains collapse. The aircraft construction ecosystem is a good example. Restaurant food supply chains are another. At least in that case some of the no longer needed food could be diverted to charitable purposes. Not so with airplane parts.

Indeed, a recent global survey by procurement network Procurious revealed that 97% of international supply chain professionals had encountered such issues. Supply chain disruption can be a major risk factor and the Industry Week article provides some good, high level ideas for minimizing the occurrence and damage of force majure related disruptions:


Know the law - in this specific instance. Applicable terms can differ considerably from one contract and one jurisdiction to another.


Maintain "eye contact," and keep an eye out. Are your supply chain relationships transparent?


Don't take a claim at face value. Most cases will be highly fact-specific, and subject to discussion and maneuvering.


Be flexible and creative and anticipate issues, don't wait for a black-edged email to turn up in your inbox.


Be ready for a disruption to get worse and be realistic about recovery potential - yours and theirs.

The longer COVID remains a fact of life, the more ripples it creates, especially in terms of second and third level knock-on effects. Are you and your supply chain colleagues all on the same page for controlling the risks of supply failures? It's a good bet that we will all stagger into 2021 with a much deeper understanding of the whole concept of force majure than we ever wanted to have.

*The concert t-shirts are still available on E-Bay should you wish to announce your terrible tastes in comedy.

A bluray set of Eddie Izzard's comedy series



The Evil That Men Do Lives After Them...
So Let It Be with COVID.

Today's cheerful thought: here are ten COVID-induced challenges that are likely to linger even after the virus itself has faded from the headlines, if it ever does. This list includes a number of what you might first think are HR issues, except that they create new angles of risk as well. The following is just the headlines. The actual article from which I swiped them deserves a closer look if any of the following or their consequences may turn up, wriggling and snarling, on your desk.


Ensuring employee health and safety: sounds obvious, but think it through and contemplate the employer liability issues that cluster around this seemingly innocuous concept.


Monitoring employee health: do you have a robust EHS? Should you?


Responding to employee illness: an employee has a fever and possible COVID symptoms - now what?


Notifying coworkers of potential exposure: this is a touchy one. Know what you should/can do.


Conducting an investigation: OSHA requires employers to record COVID-19 exposure when the illness is a confirmed case of COVID-19, is work-related, and meets the general recording criteria (i.e., inpatient hospitalization or fatality). Got that?


Evaluating availability of leave: the Families First Coronavirus Response Act (FFCRA) may not be as frequently in the news as it previously was, but it is still in effect until the end of 2020 (and could be extended - check for that).


Addressing refusals to return to work: any version of RTW, including comp claims, may present challenges here.


Preventing discrimination: what if an employer knows an employee suffers from a disability that makes the employee more vulnerable to contracting COVID-19 and wants to require the employee to continue working from home or to avoid business travel that may be vital to that person's job? This is a tricky one.


Completing Form I-9: nothing new, but how does it apply nowadays?


Complying with wage and hour laws: this has become even trickier - and riskier.

This is, of course, just a starter kit but the point should be clear. Even what used to be routine HR or RTW processes now have new wrinkles and risks. Perhaps the most overlooked and underrated aspect of COVID is the premature aging of risk managers.


Quick Take 1:
How to Turn a Solution into a Problem

It's really easy to make a solution into a problem. Just use it in workers' comp. Telemedicine has been around for a while in group medical plans with few fraud issues bubbling to the surface - so far. Now that COVID has pushed the use of telemedicine techniques in comp related medicine up by large increments*, the fraud fears are following right along behind. A new look at the subject published in offers an overview of what's right - and what might be going wrong.

After an excellent survey of the current growth in telemedicine - which features a quote from my esteemed colleague, Jennifer Cogbill, so I know it's good stuff - the writer pivots to the less than cheering news, quoting James Quiggle, senior director of communications for the Coalition Against Insurance Fraud: "Workers' comp, auto and health insurers could find themselves confronting surges of false telemedicine claims. Insurers in each line have a unique vulnerability due to the large volume of medical claims."

It appears that many of the bogus comp billing scams we've all seen for, lo, these many years are being refashioned for the world of tele-this and tele-that. Tricks we know so well, like up-coding and boiler room "patient" recruitment, take on slightly new twists with the same end - fleecing employers and carriers. What to do? What we've always done. Telemedicine may be new, but trained, experienced adjusters, and fraud detection techniques are not. They've seen it all and will root it out again, whatever the guise fraud takes.

Telemedicine is an important new technological solution, especially well-suited to the new world of COVID social distancing, but it's not the only fraud venue that's heating up right now. Disasters and economic downturns always bring the cockroaches into the kitchen. A new report in the Insurance Journal quotes data from a Dutch fraud-tech company, Friss, which indicates that "the fraud storm is well under way." The article quotes a number of examples primarily from the EU, but don't think for a moment that fraud doesn't travel well. Over here, the Insurance Service Office MedSentry team is seeing unlisted lab tests, unnecessary DME, and unlikely PT billings. Fraud may also be picking up in auto coverages as well. Comp doesn't get all the glory.

a man holding up a bank in a cartoon saying you know, you can do this just as easily online

*See Joe Paduda's report on the adoption of telemedicine post-COVID reported in the June 11 issue of this very blog.


Quick Take 2:

In A Man for All Seasons, Thomas More says to the perjured Richard Rich, the new chancellor of Wales, "Why, Richard, what profits it a man to gain the whole world if he shall lose his soul in the process? But for Wales?" Wales has moved up in the world since Tudor days and a new review of businesses adapting to COVID in Wales from the BBC may offer some pointers about our near future cohabiting with the virus.

Wales is small enough, but diverse and modern enough to offer a useful microcosm to help us visualize the future now engulfing us. For example, late last year, only 5% of employees worked from home in Wales. Now it's 49%-- an eye-popping change. Local employers and most of their people seem to like the change and expect it to continue for most. Over in London, the CEO of Barclays observed that putting 7,000 people in one office building may well be a thing of the past.

The CEO of a large firm in Cardiff said, "We have proven that people can be just as effective, if not more so, working from home. The benefits including trading daily commute time for increased time at home, for exercise or for personal development, are helping colleagues to feel more satisfied, engaged and more productive." Another regional CEO noted that the technology now in place allows people to choose which option - office or home - best suits their needs, job, and lifestyle. In short, the technical strides we've had forced on us to combat COVID may well have long term benefits to help employers and employees alike tailor work to better suit everyone's needs.

It's too soon to say that as Aberystwyth* goes, so goes the world, but this report from Wales suggests that the emergency accommodations we've all made may have serious sticking power and our new-normal risk management plans need to wrap around these new arrangements. For example, have you restructured succession and continuity plans around the idea of a distributed workforce? Rethought contingency plans to match the new reality? Adapted aspects of your ERM system?

Before you "re-open" be sure to consult with your broker and underwriters because the facilities you are returning to are not the same. How has social distancing altered the risk profile of an office or a factory? How many of 2019's easy and obvious assumptions are 2020's no go places?

*Yes, my Spellcheck exploded when it intersected this ancient Welsh university town.

a man holding up a bank in a cartoon saying you know, you can do this just as easily online

Aberystwyth, a lovely town, despite its jawbreaker name


Say It Isn't So...

Once again, COVID shoves us into progress, ready or not:

Computer Science and Artificial Intelligence Laboratory (CSAIL) teamed up with intelligent mobility robotics company Ava Robotics and the Greater Boston Food Bank (GBFB) to create a robot that can clean 4,000-square-foot spaces to CDC standards using UV radiation in as little as 30 minutes.

 a photo of a robot warehouse worker sanitizing shelves

Virus particles don't stand a chance.


Words to Remember

You may not be familiar with Naval Ravikant, a combination of philosopher, venture capitalist, and CEO of AngelList, but you should keep in mind his recent statement:

"The human brain was not designed to handle all the world's emergencies in real time."

There. Don't you feel better already?


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