OIG Advisory Concerning Claims Analysis and Risk Management

An OIG inquiry determined that the City does not currently have a comprehensive risk management program and lacks the ability to analyze claims trends across the wide variety of claim types as is recommended best practice for local governments. This is a matter of significant concern because the City spends many tens of millions of dollars annually to pay claims. Based on the limited data available, OIG estimates that in 2013 and 2014 the City paid over $457.8 million in claims—$203.1 million for workers’ compensation, $146.3 million for police misconduct and other public safety claims, $54.9 million to settle a dispute with its parking meter contractor, and $53.5 million on other claims, such as property damage or personal injury due to vehicle accidents—averaging $4.4 million per week. We have raised our concern about the City’s lack of comprehensive risk management with the Department of Finance (DOF), which concurs that “regular analysis coupled with action taken as a result of that analysis may decrease claims and the associated liability.”[1]

We address this advisory to the Mayor’s Office because successful risk management depends on support and direction from the top. High-level support is also necessary because effective risk management requires coordination and cooperation across departments and direct access to all data and information needed for effective proactive claims analysis and risk management. We therefore urge the City to invest in a comprehensive approach to risk management that addresses all claim types. A successful approach will reduce the number and severity of personal injuries and property damage to the public and employees, and reduce the cost of claims, settlements, and judgments against the City.

[1] See page three of the memorandum from DOF to OIG dated March 15, 2016 in Appendix C.