50 | MARCH 2019 | Claims Magazine | PropertyCasualty360.com
Last month we discussed the princi- ples of risk management and why it is important for adjusters and adjusting firms or departments to establish
systems of risk control and financing.
Some loss is inevitable; risk has cost even
when no actual loss occurs. We spend
money on various ways to prevent or pay
for loss, and despite that expenditure, no
loss may occur. However, unanticipated
loss could far exceed what we might
For example, a warehouse full of stock
is exposed to various kinds of loss: fire,
flood, theft, worker injuries, almost any-
thing one could imagine. The owner de-
cides to install a fire protection system
that sounds an alarm and has sprinklers
if there is a fire. Such systems are expen-
sive. If there never is a fire, was the invest-
ment in the system wasted money? What
if the sprinkler system leaks and damages
stock? What if the alarm malfunctions
and employees leave the building, losing
an hour’s worth of work while the fire
department checks? What if the fire de-
partment fines the company $1000 for a
An “exposure” is anything to or from
which loss may occur, those “pickles and
jams” that are common to any business.
You might become unemployed, or your
family might have illnesses. You might
be arrested for an auto accident, or your
home or auto might be damaged. Everyone faces these exposures. For a business,
multiply the exposures by the number of
employees, clients and companies with
which you work. What exposures do you,
as an adjuster or adjusting firm have?
Consider your surroundings
One theory is that risks fall into three
categories: physical, moral and morale.
While far too simplistic for sound risk
management, in a broad way it reflects
the truth of exposures. Physical expo-
sures involve items that can be damaged,
lost, broken or made useless such as a
person, structure or personal property.
These are subject to loss from sources
such as fire, storms, theft, litigation, even
obsolescence or wear and tear.
Moral exposures are a bit trickier. There
is the natural tendency to make life easier.
For an adjuster with a difficult claim, “giv-
ing in” and paying an unfair demand is an
exposure. It violates the principle of the
state’s unfair claims settlement practices
act requiring prompt, fair and equitable
settlement of claims where liability is rea-
sonably clear. However, those words are
subjective. Fair and equitable to whom?
How fast is “prompt”? Who decides when
“liability” is “reasonably clear”? This sort
of questioning makes every decision a
potential exposure for an adjuster.
We are hearing more about cybercrime
and the exposures created when data
systems are attacked and manipulated
by unknown or unidentified parties.
What will such thieves do with our data?
What about other types of criminal ac-
tivity? Are you stealing from your boss
by spending an hour or so on Facebook,
Twitter or checking you e-mail?
Morale exposures are even more subtle. Are your assignments “just a job”? Do
you go home and leave important matters on your desk? Perhaps you could not
possibly care less what happens in your
case files, but your morale affects your
There are many exposures to loss. In
the coming months, we will look at managing risks by recognizing and correcting
hazards, and look at the perils those hazards might create.
Ken Brownlee, CPCU, (kenbrownlee@
msn.com) is a former adjuster and risk
manager based in Atlanta, Ga. He now
authors and edits claims-adjusting
textbooks. Opinions expressed are the
Adjuster Risk Management
Tools – Part 2 – Exposures