BILL NUMBER:S2230

TITLE OF BILL:  An act to direct the office of general services to
conduct a study to examine, evaluate and make recommendations relating
to the feasibility and advisability of establishing an office of risk
assessment and management, and/or chief risk officers

PURPOSE:

The purpose of this bill is to advance even further, the process of
strengthening and instituting a formal risk management regiment into
normal daily State operations & procedures. In addition, such office
or officer could assess risk as it relates to the anticipation of the
incidence of a natural disaster or other catastrophic weather event
and how such an event would adversely affect state operations and
those operations by affected municipalities.

The 2014/2015 State Budget allocated $ 350,000 to begin the process to
establish a centralized risk management function within state
government. The purpose of this bill is to encourage the Governor to
pursue and advance this concept further to more quickly establish a
centralized risk management function even more aggressively going
forward in 2015 and beyond.

Instituting a formal risk management regiment to state operations, via
the establishment of an office of risk assessment and management
              

and/or a chief risk officer will help to minimize New York State's
future losses and liability exposure due to: a) physical injury to
state employees and the general public during normal business
operations, b) damage to physical property owned and controlled by the
State during normal business operations, c)systemic damage or loss to
state governmental operations, facilities or infrastructure caused by
the occurrence of a natural disaster or catastrophic weather event,
and d) systemic damage or loss to this State's local governments
(including their facilities, labor force and operations) and to the
State's economy either on a state-wide or localized basis due to the
occurrence of a natural disaster or catastrophic weather event.

SUMMARY OF PROVISIONS:

Section 1: Empowers the Office of General Services (OGS), in
consultation with the Department of Law, State Comptroller, State
Insurance Fund, Office of Employee Relations and the Division of the
Budget to conduct a study to examine, evaluate and make
recommendations concerning the feasibility and advisability of
establishing an office of risk assessment and management (GRAM)and/or
a chief risk officer, within OGS.

The bill provides for a study on the appointment of a chief state risk
manager and to study the duties and responsibilities that the chief
state Risk Manager should possess. The risk manager is to help
anticipate, curtail and minimize future state liabilities due to
personal injury of its employees and the general public or the
physical damage to property that occurs during the normal course of
state operations or as a consequence of a natural disaster or
catastrophic weather event.


In the end, due to the existence of the Bureau of Risk and Insurance
Management (BRIM) which is already within the OGS, BRIM's role maybe
expanded to take on the responsibilities of the proposed GRAM. Hence,
this may help to minimize the fiscal costs associated with
establishing such an office and the upfront costs that will be need to
be expended before cost savings from its operations can be realized,
The study can look at the financing of this Office by securing risk
management consultants.

Under this bill, OGS should study and assess the qualifications that
the proposed chief state risk manager should have to be appointed to
that position and how they are to be compensated.

Among the responsibilities that could be studied and determined to be
assigned, or not, to the chief state risk manager and the Office
include are:

1) conduct an inventory of all state real property and ascertain past,
present and future liability exposure due to state operations on such
property.

2) conduct a study of the actions, claims, and claims settlement
processes of the court of claims, actions in the New York and Federal
Courts, and payment of those claims to ascertain trends in the payment
of state claims due to injury of persons or property.

3) examine and evaluate current state practices and how those
practices could be altered to minimize future claims brought against
the state and damage sustained by the State. Under this provision, the
risk manager and Office could be responsible for making
recommendations to alter state operations and capital construction
programs to anticipate potential future climatic changes that may be
caused by global warming. Under this scenario, various State agencies
would be advised on proper risk management techniques and procedures
and how alter their operations and capital plans to anticipate future
change.

4) to look at financial losses arising from the ownership, control or
use of real or personal property and to establish business continuity
programs for state services in the normal course of business or in
case of a natural disaster or catastrophic weather event.

The study should look to how state agencies are to cooperate with the
work of the chief State risk manager. Further, it will evaluate
whether it is desirable to allow any public benefit corporation,
public authority, or local government to contract with the state risk
manager to perform risk management services or supplement already
existing internal risk assess- ment and management services. This
could help reduce the cost of provid- ing services for local
governments and to anticipate operational changes that may need to be
made in response to a natural disaster or catastrophic weather event.
In the end, this could help to reduce the increasing cost of real
property taxes.

Section 2: In addition, such study shall examine and determine:


1) the financial benefits to the State that could be realized by
establishing the Office and/or a chief risk officer.

2) the financial costs and estimate of the size of the workforce
needed to staff such an Office and/or appoint a chief risk officer.

3) the method or process by which the Office could be established
and/or a chief risk officer and the manner in which such office's
operations could be phased in over a five year period of time.

4) the method of financing such Office, in as much as the initial
costs of it may not be offset by cost savings and reduction in
liability exposure until the Office has been in existence for some
time.

Sections 3 & 4: Provides for an immediate effective date and that such
Study shall be submitted to the Governor, Attorney General, State
Comptroller and State Legislature within 18 months of this bill's
effective date.

EXISTING LAW:

There is now no provision for a comprehensive system to assess risks
and potential losses for the operation of activities conducted by the
State of New York or its political subdivisions.  However, the State
Budget in 2014-2015 appropriated $ 350,000 so that the Executive could
begin to pay for services and expenses related to a centralized risk
management function within state government. The purpose of this bill
is to further advance the concept of establishing a more comprehensive
chief state risk manager or risk management function within State
government.

JUSTIFICATION:

The State of New York each year faces dramatic exposure and
third-party liability both to persons under the care and custody of
the state and visitors to state premises. In 2007, the liabilities for
workers' compensation alone exceed $1.7 Billion for indemnity claims
and 1.2 Billion for medical claims. Further, tort actions adjudicated
in the Court. of Claims cost $82.5 million last year alone.

The expansion of a central Office of Risk Assessment and Management
would go far to determine the full extent of the State's exposure to
civil tort liability and allow the state to systemically reduce such
exposure through the integration of professional risk management
procedures into daily state operations.

Enactment of this measure would help to further the process (first
started pursuant to the State Budget 2014-2015 (the OGS budget) to pay
for services and expenses related to a centralized risk management
function within state government) on how to institute procedures and
policies to help bring New York State in line with a majority of
states, most larger municipalities, and most large corporate entities
that have centralized risk management evaluation procedures and
mitigation practices. Not only will this bill help reduce the annual
payments to satisfy personal and property damage against the state, it
will help to reduce personal injuries sustained by State employees and


members of the general public. Further details on the need to codify
and expand the responsibilities and duties of a statewide risk manager
can be found in a report. produced by Senator.  Klein entitled.
"Expansion of New York State's Risk Assessment and Management
Activities" stated March 2011.

There is a growing concern that global warming may be significantly
altering weather patterns in New York State and the entire Atlantic
seaboard. Global warming may be altering weather patterns in a manner
that is instigating the increasing number of more severe and
catastrophic weather events in New York, especially along our coastal
areas and in farming regions of the State. These seemingly more
commonly reoccurring significant or catastrophic weather events, such
as hurricanes, storm surges, ice storms, floods and droughts are
imposing substantial new costs to operate State and local governments,
to reconstruct after such events, and are significantly damaging the
State's economy both on a state-wide and localized basis.

The institution of a formal risk management program in New York should
help our state & local governments anticipate damages caused by such
potential future severe weather events. Further, it can help our
State's economy to anticipate such changes in weather patterns, to
mitigate damage to such economy, and channel new growth into new
industries in a manner that is consistent with potential future
weather patterns.

LEGISLATIVE HISTORY:

New bill, but this bill continues the process to study how to
establish and finance an Office of Risk Management and Assessment as
provided for in S. 2326. The contents of this bill was included and
adopted in the Senate Budget Resolution for the fiscal year 2013 -
2014. In addition, a process to begin establishing a chief risk
officer was included in the State Budget for 2014-2015, with an
appropriation of $350,000. Under such appropriation, $ 350,000 was
allocated for services and expenses related to a centralized risk
management function within state government.

FISCAL IMPLICATIONS:

To be determined.

LOCAL FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

Immediate.