Employers and their insurers will have a new tool available to assess an organization's vulnerability to employment practices liability lawsuits later this year when Montage Analytics officially rolls out its EPL Risk Index, which is now in beta-testing mode.
A feature of the index that sets it apart from traditional insurance underwriting tools is a foundation in behavioral science, the field of specialization of Kathleen Long, Co-Founder and CEO of Mountain View, Calif.-based Montage Analytics.
"People sue their bosses because of their emotions and feelings, not because they are keeping track of rules and regulations," Long tells NU, explaining why the application of behavioral science is critical to the understanding of management liability risk.
Put another way, Montage believes that "human behavior lies at the core of operational risk but is virtually ignored with current risk assessment."
While government agencies and legal systems look to put rules and regulations in place with the goals of protecting companies by making sure there is fairness, it is "at the level of the supervisor/employee interaction where the problem is. And it's emotional. That's the big secret—that emotion drives business," Long says.
Instead of having a check-mark assessment that might involve a consultant or insurance underwriting asking "do you do this" in compliance with this rule or "do you do that" to follow that regulation, the question-asking process used by the EPL Risk Index is aimed to get employers and insurers closer to understanding those critical human interactions, she explains.
Long also says Montage's risk index, unlike conventional insurer risk assessment tools, does not rely on inductive processes, which "look backward to see what happened before statistically, assuming it will happen again. Historical statistics paint an incomplete picture of risk. We look beneath the surface to plot early complex patterns of emerging risk"—examining and diagnosing preconditions associated with risk.
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