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Today’s Discussion

Reputational Risk Management: Cautionary Tales Excerpts From 2012 CaJPA Annual Conference Jenny P. Emery Executive Director Association of Governmental Risk Pools. Today’s Discussion. For Board M embers: All you ever need to know as a pool board member, so you won’t be afraid to ask

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Today’s Discussion

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  1. Reputational Risk Management:Cautionary TalesExcerpts From2012CaJPA Annual ConferenceJenny P. EmeryExecutive DirectorAssociation of Governmental Risk Pools

  2. Today’s Discussion • For Board Members: All you ever need to know as a pool board member, so you won’t be afraid to ask • For Pool Executives: Just because you are paranoid, doesn’t mean they aren’t out to get you • For the Pooling Movement: Flying under the radar is hard to sustain when you dominate the industry

  3. Repeat After Me • Public Sector Risk Pooling is the single, most successful example of interlocal cooperation, which has saved billions of taxpayer dollars, and thousands of lives.

  4. Search Results: The Kentucky League of Cities scandal

  5. Did you know? EXAMINATION OF CERTAIN FINANCIAL TRANSACTIONS, POLICIES, AND PROCEDURES OF THE KENTUCKY LEAGUE OF CITIES, INC. December 17, 2009 “It is not the intent of this examination to report on the operations of the insurance component of KLC, as the Department of Insurance has regulatory authority to audit self-insurance funds.” from the cover of the report

  6. Recent Trial Court Finding in Pennsylvania • A recent opinion by a trial court, in acting on behalf of former members of a health trust, offered the opinion that: • “To construe the Health Trust as a pooled trust would not only inaccurately represent the spirit of the [Trust] Agreement but would also violate public policy. It is unreasonable to determine that the scriveners of the trust expected the representatives of each of the [school] districts to agree to a document which would require one [school] district to pick up the cost of another [school] district….

  7. Have you read the Regulatory Action against NHLGC? • Count I: Improper Corporate Structure • Count II: Failure to return surplus funds to members • Count III: Sale of unregistered securities by unlicensed broker-dealers…. • Count IV: Knowing or negligent aid in sale of unregistered securities • Count V: Fraud, Deceit and material Omissions in connection with the offer or sale of securities • Count VI: Civil Conspiracy

  8. The “Decision” Issued August 16, 2012 • Counts against individuals dropped • Counts related to securities fraud dropped • Finding that the organizational structure was flawed and ordered to change • Finding that the surplus level was excessive and ordered to return $33M to members • Finding that board-directed management of funds across coverage lines was wrong and requires repayment ($17m) • Finding that not buying reinsurance (because surplus was adequate) was not allowed, and ordered to buy reinsurance!!

  9. Take positions on litigation or regulatory action when the risks of inaction demand it “These new regulations will Fundamentally change the waywe get around them”

  10. So, Why is this Session about “Reputational Risk”? • In these examples, and others, risk assessment, avoidance, mitigation and reduction all imply elements of reputational risk management • In policy and governance • In communication – to the choir, and beyond • In operational performance • In strategic planning – because that light at the end of the tunnel just might be a train!

  11. Thank You Jenny P. Emery jemery@agrip.org

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