Tag: reputational risk

  • Environmental Liabilities Create Reputational Risks

    environmental Strategist, between the lines:  The reputational risk associated with pollution liabilities is often overlooked or not even considered.  One reason for this is environmental liabilities tend to be a severity versus frequency issue.

    Volkswagen with their emissions scandal, Flint Michigan and most municipalities with their lead pipes for potable water and the below link updating Lumber Liquidators and the increased risk of cancer for consumers who have used some of their products.

    Whataretheysaying

    Let’s drill down and look at the small businesses that operate in your community that are exposed to reputational risk due to environmental liabilities such as auto dealers, manufacturers, agricultural, aviation, contractors, golf courses, health care facilities, marinas, gas stations, real estate owners and developers, resorts, schools… all have exposure to reputational risk from environmental liabilities.  What is their strategy to deal with this exposure.

    As Will Rogers once said “It takes a lifetime to build a good reputation, but you can lose it in a minute.”  That certainly holds true for environmental liabilities.

    Lumber Liquidators Set To Slump After Revised Cancer-Risk Report

    Lumber Liquidators shares were set to tumble on Monday after a revised U.S. federal agency report showed people exposed to some types of the company’s laminate flooring were three times more likely to get cancer than previously estimated.

    The Centers for Disease Control and Prevention (CDC) said on Feb. 18 it estimated the risk of cancer was six-30 cases per 100,000 people, compared with the two-nine cases it had estimated in a Feb. 10 report. The CDC said the revised results were preliminary.

    Lumber Liquidators’ shares were set to open more than 15 percent lower on Monday, which would be the stock’s biggest intraday percentage drop in six months. (Get the latest quote here.)

    The CDC said it had used an incorrect value to calculate ceiling height, which meant its estimates of the airborne concentration of cancer-causing formaldehyde were about three times lower than they should have been.

    CBS “60 Minutes” reported on Sunday it was alerted to the possibility that scientists had not converted feet to meters in some calculations.

    Lumber Liquidators was not available for comment outside regular business hours. It had supported the recommendations of the CDC’s previous report on the safety of flooring made in China between 2012 and 2014.

    The company’s’ shares and sales have been in a tailspin since March last year when CBS “60 Minutes” reported the retailer’s laminates from China contained excessive levels of formaldehyde.

    Up to Friday’s close of $14.21, Lumber Liquidators’ shares had risen 17.5 percent since the CDC’s initial report. But they are still down 79 percent since the company had in late February last year warned of the CBS report.

  • Look Out Below

    environmental Strategist, between the lines:  Exacerbate:  means to make worse, aggravate, intensify.  If you exacerbate a pollution incident, under federal law you can be held accountable and have to expense defense dollars, claims management, clean up costs, business interruption, bodily injury, property damage, reputational risk….Contractors pollution liability insurance covers the insured should they cause or exacerbate a pollution incident.

    USA Today is doing a series of pieces on our infrastructure and below are some links to give you some insight why. Contractors, real estate owners, municipalities, or owners or operators of our county’s infrastructure are all potentially at risk (i.e. oil and gas pipelines, water / sewer / storm water pipes, roads, bridges…)  The United States is falling apart and most of it is out of sight so out of mind.

    Exacerbation liabilities have put many a business out of business because they elected to self insure their environmental exposures.  Our aging infrastructure creates a huge exacerbation environmental exposure for those that own, work on or live near our aging infrastructure.  What is your financial assurance strategy?

    http://www.usatoday.com/longform/news/nation/2014/09/23/gas-pipes-cast-iron-deaths-explosions-investigation/15783697/

    http://www.usatoday.com/story/news/local/2014/09/23/pensacolas-aged-gas-mains-cause-concern/16112477/

  • More water problems hit Town of Jackson residents Friday

    environmental Strategist, between the lines:  Fact:  when businesses analyze their environmental exposures they generally focus on their exposure to clean up costs should a spill / release / exacerbation… of pollutants take place.  In reality, the cost to clean up a spill / release / exacerbation… of pollutants is far less than the claims / costs that come in from third parties for bodily injury, property damage and what I call the big black hole, business interruption.  You have to also factor in costs for defense, environmental investigations, claims management, public relations, natural resource damages….  Environmental insurance can cover the above environmental costs and more.

    So the real question a business has to answer when analyzing their environmental exposures is “does it make financial sense based upon our business model to transfer our environmental liabilities to a third party for fractions of a cent on the dollar or wait until an environmental liability occurs and pay 100 cents on the dollar out of our own pocket for clean up, third party bodily injury, property damage, business interruption, defense, environmental investigations, claims management, public relations, natural resource damages…”.

    Since every business is impacted by environmental exposures, every business must have a strategy to address their environmental exposures if they want to remain viable in today’s business environment.  environmental Strategist proprietary environmental Management Strategy (eMS) is designed to accomplish this goal and much more.  Contact us if you would like more information on development and execution of an eMS to drive growth and profits in today’s business environment.

    10/31/2014 – Milwaukee Journal Sentinel (WI)

    For Tom Willetts and his neighbors in the Town of Jackson, what he calls the next chapter in “the continuing saga” of a 2012 gasoline pipeline spill came Friday with the Halloween-style trick of no drinking water followed by a brownish flow.

    When he started his day early Friday, there was no water pressure, and no water in the line, Willetts said. Low pressure was restored a short time later but he wouldn’t drink or use what was coming out of his pipes, he said.

    “It looked pretty nasty,” Willetts said in describing the thick, brown water that flowed into his home Friday morning.

    Earlier this year, town residents living near the spill were offered connections to Village of Jackson water service as a substitute for contaminated wells or other private wells in a contamination advisory area.

    On July 17, 2012, a section of gasoline pipeline ruptured and spilled an estimated 54,600 gallons of gasoline in a farm pasture.

    West Shore Pipe Line Co. of Illinois, owner of the regional fuel distribution pipeline, is paying all costs of extending village water service to a large portion of the town. West Shore also is paying costs of building lateral lines needed to connect municipal mains to residences.

    The state Department of Natural Resources ordered 37 contaminated water wells to be abandoned.

    As of Tuesday, a total of 102 town residences had been connected to the municipal water system, Heidtke said.  Eight miles of water main have been installed to serve an area of the town on the west.

     

  • ‘New normal’: No one escapes pain in drought areas

    environmental Strategist, between the lines: Everything that exists on our planet is impacted by environmental exposures as the article below points out.  According to the report below “drought now covers about 38 percent of the lower 48 states”, so people living in drought areas are getting a real life experience just how precious a resource water is.

    We can’t control our environment but we can do a better job of utilizing the resources we need to live.  Since 99% + of species that have inhabited earth are extinct the odds say we better wake up or we won’t be smelling any roses.

    Our environment is creating demand for environmental Strategist™ much like computers created demand for IT professionals.  The big difference being one you can live without and one you can’t.  For a better life www.estrategist.com.

    Mark Koba@MarkKobaCNBC , 5-20-14:

    The dry conditions in the western U.S. are so bad that even many of the companies that are thriving in the drought feel economic pain.

    Case in point—Limoneira, of Santa Paula, California, and one of the largest U.S. growers of lemons and avocados: It reached record revenue of $100 million this year thanks to higher prices brought on by a freeze in South America, said president and CEO Harold Edwards.

    Despite the higher sales, however, getting through the drought is costly, said Edwards, who noted that his firm constantly monitors its underground wells so as not to overuse them.

    “We have to do more water pumping, invest in sprinkler systems, and every extra irrigation costs us,” said Edwards, whose company has some 11,000 acres in agricultural production.

    eS factoid:  80% of the worlds fresh water is used for Agriculture.

    Analysts say that no matter what, farmers, businesses and consumers are going to feel the effects of the drought, and survival will mean shared pain through conditions that show no sign of letting up.

    “This is the new normal,” said Lori Anne Dolqueist, a partner at the law firm Manatt, Phelps & Phillips and an expert in California water regulations. “In terms of the drought, we can’t just expect to wait it out and pray for rain. We have to do a lot more through education on how we use water, stricter laws on water use and other means to get a handle on it,” she said. “And that means a tough conversation for everyone about water.”

    Severity of drought

    The current drought is not a new one. Various states have been in drought conditions for the last three to four years. But the severity of what’s happening now is alarming to many observers.

    For the first time in this century, the entire state of California is in a severe drought or worse, according to the U.S. Drought Monitor.

    Drought conditions in Oklahoma have farmers there expecting only 20 percent of their normal wheat yield this spring. States like Kansas Arizona, Nevada, New Mexico and Colorado are also caught in the grasp of extremely dry conditions.

    And a dearth of rain over the past four years in Texas has climatologists saying the state is suffering the worst drought conditions of the past 500 years. Dozens of Texas communities, especially in the southern part, are said to have less than 90 days of water, putting lives at risk.

    California’s drought will deal a severe blow to Central Valley irrigated agriculture and farm communities this year, and could cost the industry $1.7 billion and cause more than 14,500 workers to lose their jobs, according to preliminary results of a new study by the UC Davis Center for Watershed Sciences.

    Consumers are taking a hit as well: Prices for meat, eggs, fresh fruits and vegetables and other foods are on the rise, in large part because of the drought that has seized western states.

    The drought has an economic trickle-down effect that could leave some towns and communities devastated, said Umar Sheikh, an industry sector credit analyst at insurance firm Euler Hermes.

    “Without water, there are no crops, and you have an exodus of people moving out of the areas,” argued Sheikh. “That means less kids in schools, less tax money for the towns and more dependence on government assistance.”

    With weather conditions as they are, a whole new way of thinking about water use is necessary, said Wayne Tucker, founder of BIO S.I. Technology, which makes microbial soil that helps increase water nutrients and efficiency for agriculture.

    “Instead of planting 5,000 acres of a crop that could use thousands of gallons of water, we need to reduce crop planting to something like 2,000 acres, ” argued Tucker. “We’re not getting the sufficient rainfall we need to keep doing what we have been doing.”

    Lynn Wilson, academic chair at Kaplan University and an environmental researcher said it will take more than just shorter showers to help the situation.

    “We have to look at all kinds of methods to save and produce water, like desalination as expensive as that is, and reusing waste water,” she said.

    Preparation for drought conditions is key, said Euler Hermes’ Sheikh.That means bigger reservoirs for storing water when it rains so there’s enough to go around during dry spells, he said.

    An online wine-selling outlet, NakedWines.com, said it’s helping wine growers in California with its own relief efforts. CEO Rowan Gormley explained that NakedWines, which uses crowd funding from its customers to invest in wineries, allows those wineries to switch to producing other wines that aren’t threatened by the drought.

    The online outlet has also invested in wineries that have their own water sources. But the company’s efforts don’t help everyone—Gromley noted that it’s primarily premium wines whose growers have sufficient water, whereas the drought is a bigger concern for “entry-level wines sourced out of the Central Valley of California.” NakedWines doesn’t focus on those areas.

    ‘Share the burden’

    According to the most recent outlook, drought now covers about 38 percent of the lower 48 states. Most of the Texas and Oklahoma Panhandles, northeastern New Mexico, and southwestern Kansas received only a few tenths of an inch of rain from mid-April to mid-May, when precipitation is usually on the increase in this region.

    And drought persistence is highly probable along the West Coast and in the mountain areas of states such as Colorado, where summer is a relatively dry time of year and both surface and subsoil moisture almost always decline.

    Experts say even if there were huge amounts of rainfall in the months ahead, the drought won’t go away, and it’s time to look for new ideas.

    “Whole civilizations in the past have disappeared because of lack of water,” said Kaplan University’s Wilson. “We’re going to be fighting over resources like water and it’s time we looked at them as having limits.”

    By CNBC’s Mark Koba.

  • Reputational Risk for Contractors

    environmental Strategist, between the lines:  We often talk about the reputational risk associated with environmental crimes, see the example below and as if it’s not bad enough to get caught, then you have the EPA putting this out on a nationwide notification.

    What about the exposure to a property owner of a pre-1978 structure who hires a contractor like HarenLaughlin Construction Company to work on a rental dwelling?  I can only image there is an ambulance chasing attorney looking to bring suit against the property owner that exposed tenants to lead.

    For more on RRP regulations go to www.estrategist.com.

    HarenLaughlin Construction Company of Lenexa, Kan., to Pay $27,286 Penalty for Failure to Use Lead-Safe Work Practices and Notify Property Owner of Lead RisksRelease Date: 06/05/2013

    Environmental News
    FOR IMMEDIATE RELEASE

    epa(Lenexa, Kan., June 5, 2013) – HarenLaughlin Construction Company, of Lenexa, Kan., has agreed to pay a $27,286 civil penalty to settle allegations that it failed to use proper lead-safe work practices during the renovation of a multifamily property built in 1922 at 811 E. Armour Boulevard., Kansas City, Mo., in violation of the Renovation, Repair, and Painting (RRP) rule. It also failed to notify the property owner about lead-based paint risks before the company or its subcontractors performed renovation work at the site.

    Under the agreement, HarenLaughlin will complete a supplemental environmental project valued at $24,500 to remove lead-based paint from the nearby Valentine Apartments, at 3560 Broadway Street, Kansas City, Mo. HarenLaughlin will pay the remaining $2,786 in the form of a cash penalty.

    According to an administrative consent agreement and final order filed by EPA Region 7 in Lenexa, Kan., HarenLaughlin was legally required to use proper lead-safe work practices during the renovation of the Armour Boulevard property, including posting signs, notifying the public, and placing plastic sheeting to minimize the spread of lead-based paint chips. HarenLaughlin also failed to provide owners of the property with an EPA-approved lead hazard information pamphlet, known as the Renovate Right pamphlet, before starting renovations. The Renovate Right pamphlet helps homeowners and tenants understand the risks of lead-based paint, and how best to minimize these risks to protect themselves and their families.

    The RRP rule requires that general contractors and subcontractors that work on pre-1978 dwellings and child-occupied facilities are trained and certified to use lead-safe work practices. This ensures that common renovation and repair activities like sanding, cutting and replacing windows minimize the creation and dispersion of dangerous lead dust. EPA finalized the RRP rule in 2008 and the rule took effect on April 22, 2010.

    This enforcement action addresses RRP rule violations that could result in harm to human health. Lead exposure can cause a range of adverse health effects, from behavioral disorders and learning disabilities to seizures and death, putting young children at the greatest risk because their nervous systems are still developing.

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