What's the Difference? Duty of Care Versus Travel Risk Management

Many in the corporate travel community use "duty of care" and "travel risk management" interchangeably, but the two have distinct meanings. Duty of care, put simply, is a "moral and legal obligation to take a more serious responsibility for the safety of our travelers," Christopherson Business Travel president Mike Cameron said. Travel risk management is the course of action to provide that.

"The 'why' has become labeled as the 'what,'" he said of the confusion. The moral and legal obligation should be the reason why companies implement the what, risk management practices. He added that duty of care and risk management's statuses as hot topics validate the need for professional risk management.

While that clarification can help travel buyers understand what duty of care means, what it is remains murky, particularly in the U.S.

Safety Obligations

If a U.S. employee is injured on the job, workers compensation insurance generally covers a company's responsibility, said Stephen Barth, a University of Houston law professor and founder of the Hospitality Lawyer media and information platform. He explained that once an employee gets a certain distance from where the business is located—and that distance varies from state to state—workers compensation no longer provides coverage. However, the business still has obligations under U.S. Occupational Safety and Health Administration regulations to provide a safe work environment. When one's job includes a global travel program, the place where those obligations begin and end is not always clear, even to legal experts. The U.K., for example, has the Corporate Manslaughter Act, which clearly spells out obligations and penalties, but in the U.S., the issue falls under common law, Barth said.

Generalized advice, that companies should heed the duty of care, "leaves employers without practical guidance in the international business travel and global mobility context," according to Donald Dowling, a partner in law firm K&L Gates global employer solutions team. "Each foreign business trip and expatriate assignment is unique and presents its own set of physical risks. No law or regulations tell an employer what specific steps it must take and what specific precautions it need not take to heed its duty of care when it dispatches an employee overseas."

In court, decisions have gone both ways, according to a white paper authored by law firm Fisher & Phillips and published this year through the International SOS Foundation. For example, after four Union Texas Petroleum auditors were killed while on business in Pakistan, their families brought a suit in Houston against the oil and gas company in 1999. The jury determined the company had taken adequate steps—hiring a private risk management firm, for example—to ensure the employees' safety. More recently, however, a jury in Connecticut awarded several million dollars in damages to the family of a student who suffered severe brain damage after contracting tick-borne encephalitis during a school trip to China. The jury's decision cited the argument that the school had not advised the student on how to dress for a hike or to use insect repellent.

"A United States employer would be remiss if it did not understand the potential for a negligence action to be filed and the costly ramifications of such a suit," according to the white paper. "Unfortunately, there is no clear line of case law on which an employer can rely when evaluating the risks of sending its employees abroad."

Evaluating Risk

This ambiguity means no company will be able to protect itself from liability with full certainty. By extension, no company can protect its employees' safety with full certainty, either. Of course, the very phrase "travel risk management" implies just that. A company is "thinking about managing risk. It's rarely, if ever, about eliminating risk," Barth said.

As such, he said, the fundamental formula for travel risk management boils down to:

• evaluating risks
• mitigating those risks however possible
• insuring against any risks that cannot be brought down to a manageable level

Travel risk management should begin with an assessment of employees' exposure to risk, Cameron said. For example, a company whose employees travel mostly domestically might determine there is minimal benefit to implementing a sophisticated travel risk management program; such a company might opt instead to self-insure, he said.

Even so, that does not mean such programs should ignore risk management altogether. Another common misconception about travel risk management involves only catastrophic events, such as tsunamis, volcanic eruptions, civil unrest and terrorist attacks, Barth said. In doing so, they lose sight of everyday risks that can be just as deadly. "Look at the things that can happen: pedestrian accidents, car accidents, incidents on subways and buses," Barth said. "People forget the basics when they hear 'travel risk.'"

This applies to international travel, as well. Most probably would not include Japan or the U.K. on a list of high-risk destinations. However, travelers' itineraries to those countries often include early morning landings after long flights, at which point the travelers must rent cars and drive. Not only are they bleary eyed, but they are expected to drive on the opposite side of the road [than] they do at home, which they may never have learned to do.

Crafting a policy that allows travelers to use car services after long or overnight flights falls under travel risk management even though it addresses a car accident rather than a larger-scale incident. "A lost passport, someone getting sick, not understanding the culture—stay focused on the basics," Barth said.

Adapting to Company Culture

Yet another misconception is that the travel department should be the sole house for a travel risk management. Doing so could be a setup for failure. "A lot of businesses that are getting into travel risk are just touching the tip of the iceberg," Barth said. "It's really unfair to put that burden on a travel manager. You have to think about your entire ecosystem of travel risk management."

For larger, more complex companies, that includes bringing in departments that handle security, insurance, HR, legal and communications, Barth said. These departments need to be involved not only in developing travel risk management policy but also in executing it when emergencies occur, he said.

At smaller companies, many of those departments do not exist, making it harder to find a logical home for travel risk management, Cameron said. For them, travel risk management might be the CFO or controller merely approving an insurance policy once a year, he said.

Different companies also have different levels of willingness to manage risk, he said. Some insure against everything, and some insure only for major crises. In general, companies today are migrating toward higher deductibles rather than the premium for a sophisticated response to duty of care, he said. "They say, 'Let's just deal with the costs that will come along, as things will inadvertently happen. That doesn't make sense because it could end up costing you a lot of money."

That realization can be harsh. Cameron noted that one client with a large presence in Belgium implemented a global risk management program after the airport terrorist attack in Brussels last year. The attack made the client realize the importance of knowing where its travelers are and what is happening, he said.

That discovery harkens back to that original definition of duty of care: the "moral and legal" obligation. All the concerns about insurance, lawsuits and cost are driven by the legal part. When companies concentrate on the moral part, however, their actions tend to answer the legal questions, as well. "The companies that we see take the more proactive approach are the ones that don't view it as a legal obligation," Barth said, "but view it as an ethical corporate responsibility."