In this episode of the Two Piers Podcast, host Erica D’Eramo is joined by James Felton Keith, Chairperson of the ISO-30415:DISM standard for Diversity, Equity, Inclusion, and Belonging (DEIB) and CEO of Inclusion Score Companies. Together, they explore why insurance is a leading indicator of people management risks—and how DEIB is becoming a critical component of risk strategy across industries.
James shares the journey behind developing the ISO standard for DEIB, the impact of employment practices liability on insurance markets, and the practical ways organizations can use DEIB standards to improve compliance, reduce litigation risk, and build resilient teams. From the roles of brokers and underwriters to the pitfalls of ad hoc inclusion efforts, this episode breaks down what leaders need to know now.
What We Cover in This Episode:
- James Felton Keith’s career path from engineering and politics to global DEIB leadership
- The development of the ISO-30415:DISM DEIB standard
- How DEIB intersects with insurance, risk management, and compliance
- The rise of Employment Practices Liability Insurance (EPLI) and its implications
- Understanding the roles of brokers and underwriters in DEIB risk
- Leadership’s role in creating feedback loops and belonging
- Real-world examples of DEIB missteps—and how to avoid them
Resources & Links:
- Learn more at InclusionScore.org
- Explore the ISO-30415:DISM standard on ISO.org
- Check out this article in Insurance Journal
- Connect with James Felton Keith on LinkedIn
- DEIB Resources + tools in the show notes at Two Piers Consulting
Connect with Us:
- Follow Two Piers Consulting on LinkedIn
- Learn more about our work at twopiersconsulting.com
Subscribe & Share:
If you found this episode valuable, please subscribe, leave us a review, and share it with your network. Every listen helps us build a more inclusive, equitable future of work.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Erica D'Eramo (00:00):
Erica, hello and welcome to the Two Piers
(00:06):
Podcast. I'm your host, EricaD'Eramo, and today we have guest
James Felton Keith joining us.
James is the chairperson of the
International ISO-30415 (00:13):
DISM, standard for DEI, and he's the
CEO of inclusion scorecompanies. He's here to chat
with us about why insurancecompanies care about the DEI
pushback.
(00:38):
James, thanks for joining ustoday.
James Felton Keith (00:41):
That was a mouthful. Just when I hear
people go, ISO-30415 (00:43):
DISM, I immediately feel bad for them,
and then watching just it, yeah,like, my my knee jerk. Like,
empathy. Just, I want to jump inand, like, help, like, say it
for you, or, like, hold youwhile you do it. Or
Erica D'Eramo (01:01):
I appreciate that
James Felton Keith (01:02):
so weird and long, but anyway, yeah, thanks
for having
Erica D'Eramo (01:07):
Yeah, yeah, rest assured that myself and probably
many of our listeners have areno strangers to ISO and various
long winded standards, so you'rein good company. So yeah. So
tell us a little bit aboutyourself and the work you do.
What brought you to this work?
James Felton Keith (01:27):
Oh, yeah. I mean, I think it was a series of
things coming together. Maybethis is kind of life's work
falling in my lap, and I justfeel like, well, I don't have
anything else to do, but if I goback to the beginning of my
career, I was a mechanicalengineer who quickly turned
(01:49):
process engineer, and in theearly and mid 2000s that meant
applying process Engineering, ITService Management, corporate
ethnography, corporate changemanagement, etc. And so my
career has always been kind ofrooted in leveraging standards
to deploy processes, rightwhether we're talking about
(02:09):
project management, Lean SixSigma, your crowd will get what
I'm saying. But then life movedon and outside of working in
tech. And most of my clients intech, like I worked at Hewlett
Packard and a bunch of placeslike it, all of our clients were
always insurance companies, sowe were always dropping a bunch
(02:30):
of tech insurance and banking.
You know how it goes to helpthem do what they do better. In
the 2010s though, I got verypolitical, my life changed, and
I worked for a bunch ofpoliticians. Ran for Congress
here in Harlem. I live inHarlem. I ran for Congress in
New York, 13th District. Itfeels like eons ago. And in that
(02:51):
time, kind of micro identifyingmyself, you know, being the
black guy, the queer guy, thesuit guy, also the insurance
guy, I was invited to a lot ofthese round tables and think
tanks about a new standard thatwe were trying to build for
(03:14):
diversity, equity, inclusion andbelonging. And, you know the
standard. It started as aneffort at the Society for Human
Resources Management, if you'refamiliar, they got out of the
standards right in business,which I thought was odd, because
it could be great for them,given the crowd that they have,
(03:35):
and a bunch of folks who've beendoing this work for a lot longer
than me say, about 30 or 40years. A guy named effin is
Henderson was kind of our leaderat moving the the caucus of
deciding what a chief diversityofficer would be, from the
Society for Human ResourcesManagement to the International
Organization for standardsevidence, used to be Chief
(03:58):
Diversity Officer atWeyerhaeuser, you know, out on
the West Coast, again, about 30years my senior, and this other
woman who created employment lawaround 1980 out of Title Seven
of the Civil Rights Act, namedDon Bennett Alexander, who was a
employment law professor at theUniversity of Georgia, which, if
(04:18):
people are not familiar, is kindof like the insurance school. I
didn't know that until I startedteaching there a few years ago.
And basically these two cametogether. And evidence was a
standards guy, Don was abasically who would sue you, and
created this moderate climatewhere everyone's saying, I am in
grieved. You pulled my hair. Youcalled me the dirty word, pay me
(04:40):
now, right? So she kind of cameto this space, and he came to
this space, and that was maybe12 or so years ago, maybe more
than that. Now, I'm bad withmath. Post pandemic, I still
think we're living in 2020 likeJanuary, February, 2020 which
was right before. Yeah, I gotsick. I don't know when
(05:00):
everybody else got hit with it,but, um, yeah, from 2011 to say
2021 there was a crew of us kindof loosely connected, you know,
like Dawn was there, forinstance, in the beginning, and
they had lost track of what wewere doing. And then was
flabbergasted when we were readyto publish a standard in 2021
she said, I thought this wassomething that we gave up on in
(05:21):
2015 anyway, I was in and out ofit being the politician and
being the the global humanrights guy. I remember being
informed that the standard wasmoving forward at World Pride in
Copenhagen in Denmark. That was,you know, a few, yeah, anyway,
years ago, and I was kind ofapproached back to the beginning
(05:45):
of my career to tie it all in asthe engineer, to say, Hey, do
you think you can look at whatthey're doing and see if it
works like for the people whoknow this, ISO 27,001 which is a
cyber standard, or ISO 14,001which is the environmental
standard, or ISO 20,000 which isthe IT Standard, which, if you
(06:06):
put all those together and youwanted to audit the hell out of
the world, would be how youwould rigorously, at least in my
opinion, audit for ESG,environmental, social
governance, for anyone notfamiliar. And so I kind of got
involved, from that standpoint,to look at the workflow
management of it. I'm using abit of jargon here, but, and at
(06:27):
this point, I was, you know, mypolitical aspirations were fully
destroyed because I, you know,it was like, the world is over.
My mother's maybe dying. I quiteverything. I'm not running for
office anymore. And I was like,What am I going to do next? And
we started building thecertifying body around the
standard, once we knew that wewere close to publishing it, and
(06:50):
that's really what got me herewe needed to do. I still feel
like an engineer in my core. Ikind of use that word as an
identity, but I think reallykind of an organizer. So I was
organizing the engineers whocared to say, Can we put
together a process to vet peoplethat think they know how to
audit in this standard, thinkthey know how to define what dei
(07:12):
are in order to go forward? Andthat's been my work kind of
organizing the DEIprofessionals, those that would
like to professionalize it. Andthe reason that we do that is
because we can deploy theaudits, which are based on
(07:33):
something called capability,maturity, Model Integration.
Sorry, to be overly detailedabout that, we can deploy that
maturity score to an insurancecarrier, who are the people or
the companies that pay the bill.
When you say someone called me,whatever the forbidden terms
(07:56):
are, and there's a pattern ofthem calling me out of my name
and looking over me forpromotions. Insurance pays the
bill when we when we disagree incorporate world. And so the
insurance industry really wantedthis standard so that it had a
uniform way to look at peoplemanagement risks across the
(08:16):
board. So we did is we built acertifying body and a standard
to better communicate to Lloydsof London to Chubb to Zurich to
AIG, what the hell we even meantabout dei so that they could
understand if we were improperlyor properly selling professional
(08:37):
liability insurance to companiesfull of douche bags. That was a
mouthful. So, yeah, that's howwe got here.
Erica D'Eramo (08:47):
So I mean, it's, I think one of the reasons I was
so interested to chat with you,well, a I love talking to
another mechanical engineer. I Iagree. I joke all the time like,
you can take the gal out ofengineering. You'll never take
the engineer out of me. Because,I mean, even little things
about, like, am I going to useconvection am I going to use
steam heat? Like, I'm alwaysthinking about heat transfer
rates and what I mean, it'slatent heat, of, yeah,
(09:08):
transformation. Like it's mybrain is broken forever. But I
love the lens through insurance,because ironically, I mean,
insurance is really sort of justa bellwether for so many other
things, like, if you really wantto know the truth, the de
politicized truth about climatechange or climate impacts, look
at the bets that insurancecompanies are making, because
(09:31):
that is their survival, tounderstand the probabilities and
the risks through a clear eyedview. So when we talk about like
dei or dei B people have, like,lost sight of the forest for the
trees, and get got caught up inlike, specific reactions to
specific words, when really whatwe're talking about is, like,
(09:53):
base stakes, leadership, accessto talent. And that's why, like,
it makes total sense to me thatengineers are interested in.
This like, I think that whatdrives my interest in deib is
the same that drives my interestin engineering and, yeah,
efficiency, right? It's likeunderstanding systems. Yeah,
okay, that was my thank you forcoming to my TED Talk.
James Felton Keith (10:15):
Efficiency matters. There's an ache factor
there. People don't like us. Youknow, me or you, and when we go
down that rabbit hole, but youknow, as someone who has not
always had all the access Iwould like, or all the sense of
belonging I would like, I'm justtrying to think, as an engineer,
can I design a better system?
Right? Because maybe this isn'tworking by design, all right,
(10:37):
maybe we can amend it. Maybe wecan do a little change
management going forward, but Ijust have to say, as a sidebar,
I'm just like you. I think aboutheat transfer and fluid
mechanics all the time, and it'sweird. I think we get hazed into
this as students. And you know,when I came to school,
engineering was my fallback. Ithought, you know, I just talk
all day, which is essentiallywhat I do now, but you learn
(11:00):
these skills, and you see themplaying out throughout your
life, and so you just can't moveaway from it. But, um, but no,
you're absolutely right in thatinsurance is the best economic
indicator for what's actuallyhappening from a people
management standpoint. You know,when I hear people pushing out
(11:21):
stats around what chiefdiversity officers are saying,
or what company backed away fromDei, I just look at the claims.
And I look at the 7 million,billion, excuse me, dollar
market of employment practiceliability. I look at its growth
rate to see our risk in peoplegrowing and yeah, the growth
rate is about 15 to 25% a year.
(11:46):
Also look at something likethere's another type of
insurance line called directorsand officers. That's what
usually gets triggered whenyou're suing, you know, your
superiors, and that it also hasabout a 10 to 25% growth rate,
and so that just tells me thatrisks are still high. And
(12:06):
sometimes those numbers change,you know, a little bit here and
there. But when we get intoclimates like we are right now,
where the federal government andits police bodies like the Equal
Employment OpportunityCommission may not be reporting
the entire picture, all you haveto do is look at the insurance
numbers to say, are lawyerstrying to sue companies at the
(12:29):
same rate or a higher rate thanthey were previously? And I can
tell you the National EmploymentLawyers Association at any la
are starting to targetemployment law like how we used
to see personal injury law inthe 90s, they're on billboards.
I swear someone stole a zingerfrom me that I did in Vegas one
time I gave this talk, and Isaid, Never leave your employer
(12:52):
without a lawyer. And I saw thaton a billboard here in New York,
and I wanted to call someonelike, Hey, me. Like my line. You
know, I'm thinking maybe we needto start making mixtapes about
some of this stuff. But, yeah,insurance is concerned because
it is the backdrop for the wholeeconomy. We just don't usually
(13:12):
talk about it that way. So, youknow, we're usually in the
shadows, rightfully so. Peoplehate insurance. I mean, I think
there are some reasons. But, youknow, I think, I think about the
first time I got no faultinsurance, when I was 16, I had
a, you know, a 1986 Ford Tempo.
And I didn't like that. I had tobuy I had to ask my parents, why
(13:33):
do I have this insurance? So Iimmediately hated the industry.
I don't know who these peopleare. I don't know why they take
my money. They're the devil. Ithink we all feel like that,
until we have a crisis, right?
And so, yeah, insurance doesn'tdo a good enough job of
communicating its virtues, eventhough it definitely has its
(13:55):
pitfalls, and people are ickedout about the industry. But
yeah, it is directly tied topeople risk management, and
right now, people are moreavailable to sue, whether it is
well advised or ill advised,than they were previously. And
that is going to increase theprice of doing business. Forget
(14:16):
the insurance piece. It isincreasing the price of doing
business in general.
Erica D'Eramo (14:19):
It's a bigger problem, yeah, yeah. I mean,
fundamentally, it's riskpooling, right? Like, we always
want this going, like to MBA101, stuff, you want to
diversify risk, right? Like youwant a diversified portfolio,
(14:39):
you want to balance out yourrisk. And so the broader you can
set that pool, the more riskresilient you will be, right?
And so like, when we when threepeople go in on buying a
property together, or whatever,like, we're all doing this in
other ways in our lives, butinsurance is essentially risk.
(15:00):
Bullying. I think, personally,like, my my challenge,
especially when it comes to,like, health insurance, is,
like, the for profit element, ifwe're just risk pulling like, it
does get tricky when there's a ashareholder, shareholder need in
play. But tell me, like, rightnow, with all of the changes,
um, what? Like, what's the stateof play right now. What are you
(15:21):
seeing that is interesting toyou?
James Felton Keith (15:25):
We've so what we see in the media is
posturing, even the companies,the 1415, or so companies, and
again, 1450 companies that aremaking a hoopla. And to put in
perspective, just for theAmericans, there are 5.2 million
companies that pay a decentamount of taxes. There are a
(15:45):
bunch of other companies. Youknow, someone started a startup,
whatever. Someone's a consultantat Starbucks on their Mac. But
5.2 million companies, 15 arelike we're backing away from di
maybe if we look at the numbersa slightly different way, we can
say six maximum percent of themarket has stepped back. That's
(16:09):
like a nothing. But when wereally look at the tactics,
they're just doing stuff likechanging messaging. Because if
you're a company and you operatein the modern world, you know
that there aren't enough men todo the work, and so, so that's
what we're seeing. The market isno substantial changes. And even
(16:30):
when we look at, I think again,the insurance industry is also a
good industry to look at as areflection of every other
industry, because every otherindustry has to have insurance.
I haven't seen a single chiefdiversity officer or person in
that staff ilk change roles ormission. I just I got paid to do
(16:51):
two talks this month from blackemployee resource groups at huge
firms. Now I'll do another oneon Friday, and we'll, you know,
we'll do one next month iswomen's month, and so all the
women are going to come do theirthing. My point is, we haven't
seen a big change in thatregard, but what we have seen is
(17:14):
an uptick in grievances file bystraight, white cisgender men
saying that they have beeneither discriminated or
retaliated against. And I dowant to make this clear per
Title Seven of the Civil RightsAct, you can't discriminate. You
can discriminate against whiteguys. Kanye West did it pretty
(17:40):
elaborately and ridiculously uh,recently, and we saw what
happened to him with withAdidas. I think it's necessary
to note that. And so what theother thing that we see in the
market, in the risk managementmarket, is insurance carriers
and brokers starting to telltheir clients again, which are
every type of company we canthink of, that they need to have
(18:00):
a process to validate whythey're doing what they're
doing. And one of the bestrecent examples of this is a guy
sued Starbucks for reversediscrimination. I hate the word
reverse discrimination becauseit reminds me of the word
irregardless, which is not aword. It's redundant. You could
(18:21):
just say regardless, and again,like I just established, you can
discriminate against white guys.
Now, Starbucks lost, and theypaid this guy out $25 million
and that was an insurance claim,but he was sued. He sued them
because he thought that theywere discriminated against him
and hiring Asian women, and Ibelieve it was Colorado. Now, if
Starbucks were able to show viathe ISO 30415, standard, a
(18:45):
workflow that validates viafeedback mechanisms, which is a
terminology using the standardthat they have a reason to go
after certain types of women,those feedback mechanisms may
manifest in something like anemployee resource group or
business resource group or anaffinity group saying, hey,
Asian women exist in Denver, andyou go, you know what? We want
(19:07):
to integrate some of them in ourstores, in our culture. So we
make sure we're engaging thembecause they exist and we see
them, then their lawyers wouldhave been able to get out of
that suit for maybe about 25k inlegal fees, because, you know,
lawyers are expensive, but not25 million, which is what they
parted ways with. And so we seethat send ripple effects
(19:30):
throughout the market, where nowinsurance carriers are asking,
and this will, I think, beparticularly interesting the
insured companies and thebrokers, did you know that there
was a risk mitigation path,because there's something else,
another type of insurance callederrors and omissions. We call it
(19:51):
DNO and errors and omissions ifa broker, for instance, is a
broker that wrote the DNO, theDirect. Was an officer's policy
for Starbucks, and they paid outbecause they were apparently
discriminated against this guy.
If the broker knew that therewas a process he or she or they
could use, then they might alsobe liable for not sharing the
(20:16):
information adequately. So justby doing this podcast, and if
some broker hears it in Coloradoor Ohio or wherever I'm sitting
in New York, they're implicated.
The reason I go around broker tobroker is to let them know if
you know about this, because Ijust told it to you, and it was
advertised on the internet, andwe got a bunch of blue checks
(20:37):
that validate it. You act likeyou didn't know about this,
you're potentially at risk,because Starbucks could have
gone, you know, our brokerdidn't give us a good solution
here, and so they put it rightback on the on the market. So
being aware that a person orpopulation exists, failing to
(20:57):
acknowledge it adequately andingested into the market of both
consumers and employees, is itis a dangerous thing, not only
for modern capitalism and how weget along, but it is a designed
and fail safe per the Insuranceindustry, basically to ignore
(21:17):
that people exist is a bigfinancial fine, aside from
whether it's actually illegal ornot, because it's an ethics
issue with how we give licensesto the broker community.
Erica D'Eramo (21:35):
So for folks, so for folks who don't deal with
insurance regularly, can yougive us like a little rundown of
what some of these terms mean. Imean, I think a lot of people
think that they understand therole of a broker or the role of
an underwriter, but maybe justlike a little well synopsis,
James Felton Keith (21:52):
I think your broker is your first line of
well,this of defense, right? They're
supposed to be yourknowledgeable guide around what
product you're buying, what sortof financial product you're
buying, and that's why there'sthat errors and omissions risk
if they don't properly adviseyou on you're buying this kind
of policy, it will protect youfor XYZ, versus maybe you want
(22:13):
an extra policy on top of thatpolicy that helps you with
whatever's past XY and Z. Sobrokers own the relationship.
They're regulated in. They'rethe only ones who get to sell
anything, and they're really thefriend or peer of probably your
company's CFO or chiefcompliance officer, or just that
(22:34):
team, your risk manager. Theproblem is those people rarely
communicate with your HR, yourD&I, your supplier, diversity
people, those people who work inHR, supper diversity, or anyone
under those rungs, they normallydon't know what the company is
paying out, because you justtold some woman, if she did such
(22:54):
a good job, that if she was aman, you would have gave her 50%
raise, which is illegal, right?
So those are the brokers. Theyare required to know better. The
problem is, there's so manybrokers that usually you know
they don't know better. They'reeverywhere. Everybody's a
broker. So that's them, theunderwriter, separate role
(23:16):
inside of an insurance carrier,which is a type of company. So
like Zurich, is an insurancecarrier, but AON is a broker.
Chubb is a big insurancecarrier, but Willis Towers
Watson, which owns what I stillcall the Sears Tower, because
I'm older in Chicago, they're abroker. Willis is a broker.
(23:37):
Chubb is a carrier. So theyunderwrite things. The
underwriter at the company isthe person who will write the
contract. They make thefinancial transaction real, and
they will also vet if youCompany X, let's say you're a
mid sized manufacturer inIndiana, if you're viable to
(24:01):
sell what we call the paper too.
Again, the paper is what theunderwriter literally writes on
to say, you manufacture x if youtrigger a claim, are entitled to
this sort of payout. If you payus monthly, quarterly, annually,
X amount of premium, right? Sothe carriers are usually the
(24:23):
bigger, older companies, and thebrokers are the ones selling the
paper that they would normallysell. I think that's the easiest
way to differentiate them.
Erica D'Eramo (24:35):
So the brokers are the ones that are like
managing transact, like makingthe transactions happening,
making those connectionshappening. And the underwriters
are the ones that I meanunderwriting in general. We've
is we've taken as kind of ageneral term, but they're the
ones that are essentiallyholding the financial risk and
back, putting the putting theassets behind. Yeah, they're the
(24:59):
bank. Yeah. Hey, yes, the bank,right? Yeah, the asset holder,
yeah.
James Felton Keith (25:02):
The underwriters are the bank. The
brokers are the salespeople. Sothe brokers are the ones calling
you. They're going to come bythe office, they're going to
explain what the bank has made,created for you, right? And one
thing I'll add to that is, Iknow a lot of people think about
insurance as a portion of thefinancial industry. But it's
(25:23):
actually the other way around,without risk capital, without
those initial agreements that weset, let's say way, way back
when, when everyone was wearingsandals, uh, maybe turbans, and
it was Sandy everywhere becausewe hadn't built any
infrastructure, no roads, um,insurance started to exist when,
when leaders made decisions notto kill each other. That was
(25:47):
insurance. And so on top of riskcapital, we built the financial
markets, the debt markets, sobonds, the currency markets, you
name it, the capital markets.
Those are all built on top ofthe sea of insurance. It's just
insurance is more well regulatedthan other industries, and so
(26:09):
you don't see companies as bigas some of the banks that we
normally talk about in the news,like JP, Morgan, B of A, you
name it. We did see AIG duringthe financial crisis, for anyone
who remembers, was one of thebig, too big to fails, right?
But by and large, theirinsurance companies, everywhere
they cover regions, theyspecialize in things. And it's
(26:30):
just a pretty old, conservativeindustry. I like to call it the
oldest industry. I know whateveryone thinks the oldest
industry is but this industry isolder than that one. Because in
order for the thing that we saythey do in the oldest industry
to even happen, two old men,again, probably in sandals, had
to allow it to happen. And thatagreement, that piece, was
(26:54):
insurance. I'm not sayinginsurance are pimps. I'm just
saying it's an older industry.
We don't need to jumble downthat rabbit hole. But anyway,
Erica D'Eramo (27:10):
So the the element, I mean, this is where I
think to bring it back to thepiece around the bellwether, you
know, being able to understandwhat true risk, you know, what
the true understanding of risksare outside of cultural and
(27:30):
political influences. You know,the fires in California. You
know, hearing from some folks inthe insurance industry about
like, and I don't fullyunderstand this, but how,
essentially, it's taking such atoll on insurers that the
insurers are now having to tapinto their insurance that's
(27:51):
covering the insurers, and it'slike this whole underlying
structure that really kind oflike placing bets, in a way, and
the people who are playing, not,I don't mean like in a gaming
way, but ultimately, you'retrying to understand your
probabilities and your risks andunderstand as much as you can
(28:11):
about the outcomes, and theninvest accordingly, like put
your resources accordingly,
James Felton Keith (28:17):
One way, I'll explain it. So for anyone
not familiar, insurers, theirinsurers are an older, bigger
industry called reinsurance.
Yeah, so, right. So you havereinsurers. Most of them are
headquartered in Bermuda. So ifanyone just hangs out in the
Bermuda, whoever you meet at abar, probably works in
reinsurance. But reinsurance isjust like insuring the
(28:40):
insurance, and sometimesinsurers, the littler guy, the
regular carriers, the regularunderwriters, can take on too
much risk in a given area, likewith the wildfires in LA or even
though the flooding in Florida,you know, it is very difficult,
if not impossible, to gethomeowners insurance in Florida.
(29:03):
I think healthcare is anotherinteresting space. Before we dig
into that, I would differentiatelife from property and casualty
insurance first, health andhealth also, even though health
is kind of a form of, you know,property and casualty, but it is
tied to life a bit. And then inproperty and casualty, you have
(29:25):
personal stuff, like houses, andthen you have commercial stuff.
When we talk about Dei, I'mspecifically talking about
commercial insurance. I'mtalking about commercial PNC, or
property and casualty, becauseof how people play onto the
property, etc, of institutions.
But yes, if we get into againhow people feel about how
(29:48):
insurance works, and the ickfactor of the fact that we saw
on the news, a lot of insurerspulled out of California and
Florida, and they will continueto because of ESG things.
Things. You know it's it isreally a proxy of not having
enough participants in thoserisk pools that you mentioned
(30:10):
earlier. Now, this is not new.
It's happened over and overagain. I actually got to the
work that we do now, before Iran for office, I ran a cyber
insurance company, and Iremember when the cyber standard
was amended and came back out inlike 2013 the way I knew we
could build an insurance companyon top of this dei standard is
because we had done it once inthe early 2010s with cyber what
(30:32):
was happening is the world wasnormal in the 2000s and then
everyone started getting hackedin the 2010s and what they
wouldn't do is get an audit,which the underwriters and the
insurance carriers wanted. Rightand more laws were published,
like Europe's General DataProtection Regulation, New York
came out with its cyber reg. SoNew York Department of Financial
(30:57):
Services basically said, if youare tied to a New York bank, I
don't care whether you're amanufacturer in Idaho, if you
deal with New York mailing bank,you have to get an audit, or
you're in violation of New YorkDepartment of Financial
Services. And so given that, Ican't explain how important New
York is, because it controls thebanking sector to the entire
world, because we can auditanyone. And basically all the
(31:19):
banking rules are set here viaour Superintendent of Financial
Services and the insurancecommissioner, which works under
her. So all that said, we sawcompanies or insurance carriers
pull out of insurance companiesthat wanted to pay ransomware in
2013, 1415, until they builtinfrastructure to prevent
(31:44):
against that. And I tie thisright into Dei. More than 90% of
cyber risk or errors that we seein the market are human error,
whether they're deliberate orjust people making mistakes,
right? And so there's a lot oftraining that goes into how we
educate humans to take care ofour digital infrastructure. And
(32:06):
to be clear, in the modern day,all governance, if you're
thinking about E, S and G, iscyber or it has a digital
component. We only govern thingsthrough engineering processes
that we now digitize. So thatsaid, the worst type of employee
that you want taking care ofyour cyber assets is somebody
(32:28):
who didn't come here to worktoday, that lady who's pissed
off, who already hates you.
She's gonna let the virus comein. She's gonna do it. She's not
here to play, or she's only hereto play. Well, she's only here
for her check. We know thesepeople, folks, you know they
whether they work at, you know,the advertising or the
(32:52):
manufacturer of the bankingcompany around you, whether they
work at the city, at themunicipal or the state
government, we know these peoplewho are having a bad day because
their boss told them, you know,you're so good, if you were a
guy, we would have gave you a50% raise or did something else
crash.
Erica D'Eramo (33:09):
I mean, this is where it's like, we could talk
about, like DEI. Ultimately,what we want is people who are
engaged, who are motivated, whofeel bought into the mission.
Who feel like this is why likebelonging. It's like motivation
101, right? Self determinationtheory we've known about
(33:30):
forever. It's this is, you know,autonomy, something that you're
good at and that you can youhave a little challenge, and
then belonging, connectedness,and so we can call it a bunch of
different things, butultimately, having people who
are, who are there and haveopportunities, regardless of
their demographics, regardlessof the color of their skin,
(33:51):
their gender, who are, who getto be autonomous, have some
autonomy and have a sense ofconnectedness and belonging they
are that's good business isethically good. It's like, gives
us all we can sleep at nightknowing that we're creating a
good workplace all the thingsit's like good business. Right?
James Felton Keith (34:12):
Back to your word you're worthy. People. It
goes back to being efficient andeffective, if qualitative
measure like effectiveness. Andpeople go, Yeah, I just thought
this is effective, but per theefficiency rating, it reduces
those premiums, which is anumber, it reduces the spin that
we have to make on ad hocprograms that remedy the problem
(34:32):
that we created for ourselves,which is a radical inefficiency.
If, if I tally the cost of and Ilove your language here, the
lack of belonging. It is thishow anyone should calculate the
cost of a lack of dei and be attheir firm. It's the cost of
your risk premiums, plus thecost of those ad hoc programs
that aren't working for you,plus the cost of at least one
(34:54):
risk manager, let's call her HR,chasing down that crazy thing
that happened. Yeah, and itreminds me of I heard one of my
friends these leads, dei at atKrispy Kreme. Same happens to be
Christopher, and he was like,what we're really doing here,
solving for belonging. And soeven if you do what you would,
(35:16):
what other people might considera little job, you sell donuts,
you you work at the cashregister. You know, having
leadership that has a soft skillset to tell you what we're
really there to do, which is,we're delivering happiness in a
donut to these people. We'd lovefor you also to be able to come
to work happy today. What do youneed to do that we can't solve
all your problems, but we wantyou to know we really care. We
(35:37):
don't want you to leave us openany cyber risk or anything else.
We don't want you to bedeliberately rude to people,
because sometimes I meet folksand go, Well, I'm not in a sexy
role like, you know, Erica, orwhatever it's like, Whatever you
do, if the leadership tells youit serves this broader purpose,
we solve a very human problemhere. Even if you know, you work
(35:57):
for exomo like we, we turn thelights on for you. Everyone can
tell a story, you know, and soand so we should, because what
we're really trying to do issolve for belonging. And when I
meet people and we, we oversee aand we still have it a big
government grant from theNational Science Foundation to
push the standard into STEMsociety. So like, think the
(36:22):
American Society for civilengineers, mechanical engineers.
Shout out to the civilengineers. I'm I stole one of
their cups from DC. I'm drinkingfrom it right now. Greater as we
work with these folks, right?
They're trying to createexcellence in whatever their
field is by motivating people tobe there, and so they have an
incentive to try to solve forbelonging. But as some
(36:43):
colleagues in this one effortcome to me in confidence and
say, I'm not sure we canactually pull off what we're
saying we want to, becausepeople just sometimes they just
generally don't like each other.
And I was like, Look, I'm notasking everybody to like
everybody when they come away,but I am asking, and I know that
this is possible, because I doit every day. I wake up, I'm
(37:05):
really comfortable in my ownroom, in my own home. I put on a
shirt, I brush my teeth, I tryto be overtly repulsive around
folks, and I code switch it atwork. It's like all we're really
asking some people to do who aremore offensive at work is to
come to work and coach whichjust a little bit more, be a
(37:27):
little bit more on that pieceand cues. Maybe don't slap
somebody on their behind and gothat was actually a compliment,
because it's offensive someguys, and it's usually guys, I
just have to be honest, are alittle too comfortable at work,
and it creates these culturalrifts. I go to work every day,
and I try to deliberatelymonitor how I engage everybody,
(37:49):
and that's really all we're allwe're asking for. It's not It's
not rocket science, and it isdesignable in a mechanical
process, for sure.
Erica D'Eramo (37:59):
Yeah. I mean that belonging becomes very, very
easy if you have an entirelyhomogenous group and yet, like a
we know homogen homogeneity isnot resilient for gazillion
reasons. You wouldn't want it inyour stock portfolio. You
wouldn't want it in youragricultural layout. But, yeah,
(38:21):
having that resilience ofdifferent minds, different skill
sets, different backgrounds,Representative workforces that
look like the community you'reserving, that look like the
community you're drawing from,like that does require a little
bit more effort to create thatbelonging around mission or
around human like being humanstogether. So yeah, I like the
(38:43):
fact that, like, a lot of ushave had to learn how to adapt
and code switch, and all we'reasking is for some of us to,
like, maybe have to do a littlebit less of it, and others to
learn a little bit more of whatthat feels like.
James Felton Keith (38:54):
Yeah, it's kind of simple stuff, but
leadership is necessary to saythis is how we're going to do
it, and we're going to createfeedback mechanisms per the
standard so that people can tellus whether it's anonymous or
outright when they think they'veencountered some of these
situations, so we can look atpotential remedies, and that's
risk mitigation. That's whatLloyds of London wants to engage
(39:18):
now. Do you have a process towhen the aggrieved come to you
to go, we're going to try todissipate this, or are we just
going to court? Because if we'regoing to court, fine, I'm just
going to double the premiums payus double.
Erica D'Eramo (39:31):
It speaks to like leading I get on the case around
leading and lagging indicatorsso much. And I think where we
really lost the plot was likesolely looking at lagging
indicators and lacking curiosityto go upstream and look at the
leading indicators. So I love tohear that there's some process
around it. So tell us wherefolks can find your stuff and
and where to follow you whatyou're doing.
James Felton Keith (39:54):
I'm on all the Yeah, the normal stuff. I
just James and Felton and Keith.
I've way too many first. Things.
And people can call me any ofthose, but the companies is just
at inclusion score.org orinclusion score, dot.ai, we have
an automated tool that we that'swhat we give to the insurance
companies to deploy on theirinsurance if they want to look
(40:16):
up the standard and really readand understand the standard, I
would just Google ISO, 30415, orif you go to the it's gonna be a
Erica D'Eramo (40:24):
We're gonna put it in the we're gonna put it in
long winded the show notes.
James Felton Keith (40:28):
Just inclusion score. If you look up
inclusion score, you'll see allthe stuff. We'll send you to a
million different places. But Iwould say, get familiar with the
standard. If people ask you,what does dei mean? Don't be
poetic. If you're not a poet,some people are poets, but we
still don't want you to bepoetic. Just say the standard,
because it means all the thingsand really d, e, i and b are
(40:51):
they're more philosophicalreaches. Again, we'd love to
solve for belonging. What wefail to do when we talk about
these big philosophical conceptsis established that what we're
really trying to do is implementa business process for active
engagement and workforceresilience. That's all we want.
(41:11):
We want to know you try to seeif we can make the workforce
resilient. It's not all the Iknow people go diversity is
this, and equity is when you canjump over the moon, but you're
holding somebody in yourbackpack. It's all the it's
whatever, not those things. Solearn the standard, or at least
reference the standard. Plentyof people use standards in other
industries every day, and theydon't know what the hell is in
(41:32):
the actual standard. It's fine.
You don't need to know it.
That's our job. But I would lookit up just so that folks know it
exists, and this is how theinsurance carriers of the world
are vetting you.
Erica D'Eramo (41:47):
Yeah, cool. Well, thanks for shining a light onto
this area that I don't thinkI've ever had somebody come on
the podcast and talk aboutinsurance, and definitely not
insurance as it relates tolarger concepts around like
workforce engagement andwhatnot. So thank you for
joining us and sharing some ofyour experiences and insights,
(42:08):
and it's been great having youon.
James Felton Keith (42:10):
Thank you.
Thanks so much. Yeah, great.
Erica D'Eramo (42:13):
And for folks who want to explore a bit more, you
can find the links to theseresources in the show notes, and
we'll also link to a reallyinteresting article about
illegal versus legal DEI, sowe'll share that as well, and
you can find a summary of thispodcast episode and the
transcript on our website,twopierceconsulting.com and
(42:35):
we'll see you next episode.
Thanks for joining you.
Erica, hello and welcome to the Two Piers
(00:06):
Podcast. I'm your host, EricaD'Eramo, and today we have guest
James Felton Keith joining us.
James is the chairperson of the
International ISO-30415 (00:13):
DISM, standard for DEI, and he's the
CEO of inclusion scorecompanies. He's here to chat
with us about why insurancecompanies care about the DEI
pushback.
(00:38):
James, thanks for joining ustoday.
James Felton Keith (00:41):
That was a mouthful. Just when I hear
people go, ISO-30415 (00:43):
DISM, I immediately feel bad for them,
and then watching just it, yeah,like, my my knee jerk. Like,
empathy. Just, I want to jump inand, like, help, like, say it
for you, or, like, hold youwhile you do it. Or
Erica D'Eramo (01:01):
I appreciate that
James Felton Keith (01:02):
so weird and long, but anyway, yeah, thanks
for having
Erica D'Eramo (01:07):
Yeah, yeah, rest assured that myself and probably
many of our listeners have areno strangers to ISO and various
long winded standards, so you'rein good company. So yeah. So
tell us a little bit aboutyourself and the work you do.
What brought you to this work?
James Felton Keith (01:27):
Oh, yeah. I mean, I think it was a series of
things coming together. Maybethis is kind of life's work
falling in my lap, and I justfeel like, well, I don't have
anything else to do, but if I goback to the beginning of my
career, I was a mechanicalengineer who quickly turned
(01:49):
process engineer, and in theearly and mid 2000s that meant
applying process Engineering, ITService Management, corporate
ethnography, corporate changemanagement, etc. And so my
career has always been kind ofrooted in leveraging standards
to deploy processes, rightwhether we're talking about
(02:09):
project management, Lean SixSigma, your crowd will get what
I'm saying. But then life movedon and outside of working in
tech. And most of my clients intech, like I worked at Hewlett
Packard and a bunch of placeslike it, all of our clients were
always insurance companies, sowe were always dropping a bunch
(02:30):
of tech insurance and banking.
You know how it goes to helpthem do what they do better. In
the 2010s though, I got verypolitical, my life changed, and
I worked for a bunch ofpoliticians. Ran for Congress
here in Harlem. I live inHarlem. I ran for Congress in
New York, 13th District. Itfeels like eons ago. And in that
(02:51):
time, kind of micro identifyingmyself, you know, being the
black guy, the queer guy, thesuit guy, also the insurance
guy, I was invited to a lot ofthese round tables and think
tanks about a new standard thatwe were trying to build for
(03:14):
diversity, equity, inclusion andbelonging. And, you know the
standard. It started as aneffort at the Society for Human
Resources Management, if you'refamiliar, they got out of the
standards right in business,which I thought was odd, because
it could be great for them,given the crowd that they have,
(03:35):
and a bunch of folks who've beendoing this work for a lot longer
than me say, about 30 or 40years. A guy named effin is
Henderson was kind of our leaderat moving the the caucus of
deciding what a chief diversityofficer would be, from the
Society for Human ResourcesManagement to the International
Organization for standardsevidence, used to be Chief
(03:58):
Diversity Officer atWeyerhaeuser, you know, out on
the West Coast, again, about 30years my senior, and this other
woman who created employment lawaround 1980 out of Title Seven
of the Civil Rights Act, namedDon Bennett Alexander, who was a
employment law professor at theUniversity of Georgia, which, if
(04:18):
people are not familiar, is kindof like the insurance school. I
didn't know that until I startedteaching there a few years ago.
And basically these two cametogether. And evidence was a
standards guy, Don was abasically who would sue you, and
created this moderate climatewhere everyone's saying, I am in
grieved. You pulled my hair. Youcalled me the dirty word, pay me
(04:40):
now, right? So she kind of cameto this space, and he came to
this space, and that was maybe12 or so years ago, maybe more
than that. Now, I'm bad withmath. Post pandemic, I still
think we're living in 2020 likeJanuary, February, 2020 which
was right before. Yeah, I gotsick. I don't know when
(05:00):
everybody else got hit with it,but, um, yeah, from 2011 to say
2021 there was a crew of us kindof loosely connected, you know,
like Dawn was there, forinstance, in the beginning, and
they had lost track of what wewere doing. And then was
flabbergasted when we were readyto publish a standard in 2021
she said, I thought this wassomething that we gave up on in
(05:21):
2015 anyway, I was in and out ofit being the politician and
being the the global humanrights guy. I remember being
informed that the standard wasmoving forward at World Pride in
Copenhagen in Denmark. That was,you know, a few, yeah, anyway,
years ago, and I was kind ofapproached back to the beginning
(05:45):
of my career to tie it all in asthe engineer, to say, Hey, do
you think you can look at whatthey're doing and see if it
works like for the people whoknow this, ISO 27,001 which is a
cyber standard, or ISO 14,001which is the environmental
standard, or ISO 20,000 which isthe IT Standard, which, if you
(06:06):
put all those together and youwanted to audit the hell out of
the world, would be how youwould rigorously, at least in my
opinion, audit for ESG,environmental, social
governance, for anyone notfamiliar. And so I kind of got
involved, from that standpoint,to look at the workflow
management of it. I'm using abit of jargon here, but, and at
(06:27):
this point, I was, you know, mypolitical aspirations were fully
destroyed because I, you know,it was like, the world is over.
My mother's maybe dying. I quiteverything. I'm not running for
office anymore. And I was like,What am I going to do next? And
we started building thecertifying body around the
standard, once we knew that wewere close to publishing it, and
(06:50):
that's really what got me herewe needed to do. I still feel
like an engineer in my core. Ikind of use that word as an
identity, but I think reallykind of an organizer. So I was
organizing the engineers whocared to say, Can we put
together a process to vet peoplethat think they know how to
audit in this standard, thinkthey know how to define what dei
(07:12):
are in order to go forward? Andthat's been my work kind of
organizing the DEIprofessionals, those that would
like to professionalize it. Andthe reason that we do that is
because we can deploy theaudits, which are based on
(07:33):
something called capability,maturity, Model Integration.
Sorry, to be overly detailedabout that, we can deploy that
maturity score to an insurancecarrier, who are the people or
the companies that pay the bill.
When you say someone called me,whatever the forbidden terms
(07:56):
are, and there's a pattern ofthem calling me out of my name
and looking over me forpromotions. Insurance pays the
bill when we when we disagree incorporate world. And so the
insurance industry really wantedthis standard so that it had a
uniform way to look at peoplemanagement risks across the
(08:16):
board. So we did is we built acertifying body and a standard
to better communicate to Lloydsof London to Chubb to Zurich to
AIG, what the hell we even meantabout dei so that they could
understand if we were improperlyor properly selling professional
(08:37):
liability insurance to companiesfull of douche bags. That was a
mouthful. So, yeah, that's howwe got here.
Erica D'Eramo (08:47):
So I mean, it's, I think one of the reasons I was
so interested to chat with you,well, a I love talking to
another mechanical engineer. I Iagree. I joke all the time like,
you can take the gal out ofengineering. You'll never take
the engineer out of me. Because,I mean, even little things
about, like, am I going to useconvection am I going to use
steam heat? Like, I'm alwaysthinking about heat transfer
rates and what I mean, it'slatent heat, of, yeah,
(09:08):
transformation. Like it's mybrain is broken forever. But I
love the lens through insurance,because ironically, I mean,
insurance is really sort of justa bellwether for so many other
things, like, if you really wantto know the truth, the de
politicized truth about climatechange or climate impacts, look
at the bets that insurancecompanies are making, because
(09:31):
that is their survival, tounderstand the probabilities and
the risks through a clear eyedview. So when we talk about like
dei or dei B people have, like,lost sight of the forest for the
trees, and get got caught up inlike, specific reactions to
specific words, when really whatwe're talking about is, like,
(09:53):
base stakes, leadership, accessto talent. And that's why, like,
it makes total sense to me thatengineers are interested in.
This like, I think that whatdrives my interest in deib is
the same that drives my interestin engineering and, yeah,
efficiency, right? It's likeunderstanding systems. Yeah,
okay, that was my thank you forcoming to my TED Talk.
James Felton Keith (10:15):
Efficiency matters. There's an ache factor
there. People don't like us. Youknow, me or you, and when we go
down that rabbit hole, but youknow, as someone who has not
always had all the access Iwould like, or all the sense of
belonging I would like, I'm justtrying to think, as an engineer,
can I design a better system?
Right? Because maybe this isn'tworking by design, all right,
(10:37):
maybe we can amend it. Maybe wecan do a little change
management going forward, but Ijust have to say, as a sidebar,
I'm just like you. I think aboutheat transfer and fluid
mechanics all the time, and it'sweird. I think we get hazed into
this as students. And you know,when I came to school,
engineering was my fallback. Ithought, you know, I just talk
all day, which is essentiallywhat I do now, but you learn
(11:00):
these skills, and you see themplaying out throughout your
life, and so you just can't moveaway from it. But, um, but no,
you're absolutely right in thatinsurance is the best economic
indicator for what's actuallyhappening from a people
management standpoint. You know,when I hear people pushing out
(11:21):
stats around what chiefdiversity officers are saying,
or what company backed away fromDei, I just look at the claims.
And I look at the 7 million,billion, excuse me, dollar
market of employment practiceliability. I look at its growth
rate to see our risk in peoplegrowing and yeah, the growth
rate is about 15 to 25% a year.
(11:46):
Also look at something likethere's another type of
insurance line called directorsand officers. That's what
usually gets triggered whenyou're suing, you know, your
superiors, and that it also hasabout a 10 to 25% growth rate,
and so that just tells me thatrisks are still high. And
(12:06):
sometimes those numbers change,you know, a little bit here and
there. But when we get intoclimates like we are right now,
where the federal government andits police bodies like the Equal
Employment OpportunityCommission may not be reporting
the entire picture, all you haveto do is look at the insurance
numbers to say, are lawyerstrying to sue companies at the
(12:29):
same rate or a higher rate thanthey were previously? And I can
tell you the National EmploymentLawyers Association at any la
are starting to targetemployment law like how we used
to see personal injury law inthe 90s, they're on billboards.
I swear someone stole a zingerfrom me that I did in Vegas one
time I gave this talk, and Isaid, Never leave your employer
(12:52):
without a lawyer. And I saw thaton a billboard here in New York,
and I wanted to call someonelike, Hey, me. Like my line. You
know, I'm thinking maybe we needto start making mixtapes about
some of this stuff. But, yeah,insurance is concerned because
it is the backdrop for the wholeeconomy. We just don't usually
(13:12):
talk about it that way. So, youknow, we're usually in the
shadows, rightfully so. Peoplehate insurance. I mean, I think
there are some reasons. But, youknow, I think, I think about the
first time I got no faultinsurance, when I was 16, I had
a, you know, a 1986 Ford Tempo.
And I didn't like that. I had tobuy I had to ask my parents, why
(13:33):
do I have this insurance? So Iimmediately hated the industry.
I don't know who these peopleare. I don't know why they take
my money. They're the devil. Ithink we all feel like that,
until we have a crisis, right?
And so, yeah, insurance doesn'tdo a good enough job of
communicating its virtues, eventhough it definitely has its
(13:55):
pitfalls, and people are ickedout about the industry. But
yeah, it is directly tied topeople risk management, and
right now, people are moreavailable to sue, whether it is
well advised or ill advised,than they were previously. And
that is going to increase theprice of doing business. Forget
(14:16):
the insurance piece. It isincreasing the price of doing
business in general.
Erica D'Eramo (14:19):
It's a bigger problem, yeah, yeah. I mean,
fundamentally, it's riskpooling, right? Like, we always
want this going, like to MBA101, stuff, you want to
diversify risk, right? Like youwant a diversified portfolio,
(14:39):
you want to balance out yourrisk. And so the broader you can
set that pool, the more riskresilient you will be, right?
And so like, when we when threepeople go in on buying a
property together, or whatever,like, we're all doing this in
other ways in our lives, butinsurance is essentially risk.
(15:00):
Bullying. I think, personally,like, my my challenge,
especially when it comes to,like, health insurance, is,
like, the for profit element, ifwe're just risk pulling like, it
does get tricky when there's a ashareholder, shareholder need in
play. But tell me, like, rightnow, with all of the changes,
um, what? Like, what's the stateof play right now. What are you
(15:21):
seeing that is interesting toyou?
James Felton Keith (15:25):
We've so what we see in the media is
posturing, even the companies,the 1415, or so companies, and
again, 1450 companies that aremaking a hoopla. And to put in
perspective, just for theAmericans, there are 5.2 million
companies that pay a decentamount of taxes. There are a
(15:45):
bunch of other companies. Youknow, someone started a startup,
whatever. Someone's a consultantat Starbucks on their Mac. But
5.2 million companies, 15 arelike we're backing away from di
maybe if we look at the numbersa slightly different way, we can
say six maximum percent of themarket has stepped back. That's
(16:09):
like a nothing. But when wereally look at the tactics,
they're just doing stuff likechanging messaging. Because if
you're a company and you operatein the modern world, you know
that there aren't enough men todo the work, and so, so that's
what we're seeing. The market isno substantial changes. And even
(16:30):
when we look at, I think again,the insurance industry is also a
good industry to look at as areflection of every other
industry, because every otherindustry has to have insurance.
I haven't seen a single chiefdiversity officer or person in
that staff ilk change roles ormission. I just I got paid to do
(16:51):
two talks this month from blackemployee resource groups at huge
firms. Now I'll do another oneon Friday, and we'll, you know,
we'll do one next month iswomen's month, and so all the
women are going to come do theirthing. My point is, we haven't
seen a big change in thatregard, but what we have seen is
(17:14):
an uptick in grievances file bystraight, white cisgender men
saying that they have beeneither discriminated or
retaliated against. And I dowant to make this clear per
Title Seven of the Civil RightsAct, you can't discriminate. You
can discriminate against whiteguys. Kanye West did it pretty
(17:40):
elaborately and ridiculously uh,recently, and we saw what
happened to him with withAdidas. I think it's necessary
to note that. And so what theother thing that we see in the
market, in the risk managementmarket, is insurance carriers
and brokers starting to telltheir clients again, which are
every type of company we canthink of, that they need to have
(18:00):
a process to validate whythey're doing what they're
doing. And one of the bestrecent examples of this is a guy
sued Starbucks for reversediscrimination. I hate the word
reverse discrimination becauseit reminds me of the word
irregardless, which is not aword. It's redundant. You could
(18:21):
just say regardless, and again,like I just established, you can
discriminate against white guys.
Now, Starbucks lost, and theypaid this guy out $25 million
and that was an insurance claim,but he was sued. He sued them
because he thought that theywere discriminated against him
and hiring Asian women, and Ibelieve it was Colorado. Now, if
Starbucks were able to show viathe ISO 30415, standard, a
(18:45):
workflow that validates viafeedback mechanisms, which is a
terminology using the standardthat they have a reason to go
after certain types of women,those feedback mechanisms may
manifest in something like anemployee resource group or
business resource group or anaffinity group saying, hey,
Asian women exist in Denver, andyou go, you know what? We want
(19:07):
to integrate some of them in ourstores, in our culture. So we
make sure we're engaging thembecause they exist and we see
them, then their lawyers wouldhave been able to get out of
that suit for maybe about 25k inlegal fees, because, you know,
lawyers are expensive, but not25 million, which is what they
parted ways with. And so we seethat send ripple effects
(19:30):
throughout the market, where nowinsurance carriers are asking,
and this will, I think, beparticularly interesting the
insured companies and thebrokers, did you know that there
was a risk mitigation path,because there's something else,
another type of insurance callederrors and omissions. We call it
(19:51):
DNO and errors and omissions ifa broker, for instance, is a
broker that wrote the DNO, theDirect. Was an officer's policy
for Starbucks, and they paid outbecause they were apparently
discriminated against this guy.
If the broker knew that therewas a process he or she or they
could use, then they might alsobe liable for not sharing the
(20:16):
information adequately. So justby doing this podcast, and if
some broker hears it in Coloradoor Ohio or wherever I'm sitting
in New York, they're implicated.
The reason I go around broker tobroker is to let them know if
you know about this, because Ijust told it to you, and it was
advertised on the internet, andwe got a bunch of blue checks
(20:37):
that validate it. You act likeyou didn't know about this,
you're potentially at risk,because Starbucks could have
gone, you know, our brokerdidn't give us a good solution
here, and so they put it rightback on the on the market. So
being aware that a person orpopulation exists, failing to
(20:57):
acknowledge it adequately andingested into the market of both
consumers and employees, is itis a dangerous thing, not only
for modern capitalism and how weget along, but it is a designed
and fail safe per the Insuranceindustry, basically to ignore
(21:17):
that people exist is a bigfinancial fine, aside from
whether it's actually illegal ornot, because it's an ethics
issue with how we give licensesto the broker community.
Erica D'Eramo (21:35):
So for folks, so for folks who don't deal with
insurance regularly, can yougive us like a little rundown of
what some of these terms mean. Imean, I think a lot of people
think that they understand therole of a broker or the role of
an underwriter, but maybe justlike a little well synopsis,
James Felton Keith (21:52):
I think your broker is your first line of
well,this of defense, right? They're
supposed to be yourknowledgeable guide around what
product you're buying, what sortof financial product you're
buying, and that's why there'sthat errors and omissions risk
if they don't properly adviseyou on you're buying this kind
of policy, it will protect youfor XYZ, versus maybe you want
(22:13):
an extra policy on top of thatpolicy that helps you with
whatever's past XY and Z. Sobrokers own the relationship.
They're regulated in. They'rethe only ones who get to sell
anything, and they're really thefriend or peer of probably your
company's CFO or chiefcompliance officer, or just that
(22:34):
team, your risk manager. Theproblem is those people rarely
communicate with your HR, yourD&I, your supplier, diversity
people, those people who work inHR, supper diversity, or anyone
under those rungs, they normallydon't know what the company is
paying out, because you justtold some woman, if she did such
(22:54):
a good job, that if she was aman, you would have gave her 50%
raise, which is illegal, right?
So those are the brokers. Theyare required to know better. The
problem is, there's so manybrokers that usually you know
they don't know better. They'reeverywhere. Everybody's a
broker. So that's them, theunderwriter, separate role
(23:16):
inside of an insurance carrier,which is a type of company. So
like Zurich, is an insurancecarrier, but AON is a broker.
Chubb is a big insurancecarrier, but Willis Towers
Watson, which owns what I stillcall the Sears Tower, because
I'm older in Chicago, they're abroker. Willis is a broker.
(23:37):
Chubb is a carrier. So theyunderwrite things. The
underwriter at the company isthe person who will write the
contract. They make thefinancial transaction real, and
they will also vet if youCompany X, let's say you're a
mid sized manufacturer inIndiana, if you're viable to
(24:01):
sell what we call the paper too.
Again, the paper is what theunderwriter literally writes on
to say, you manufacture x if youtrigger a claim, are entitled to
this sort of payout. If you payus monthly, quarterly, annually,
X amount of premium, right? Sothe carriers are usually the
(24:23):
bigger, older companies, and thebrokers are the ones selling the
paper that they would normallysell. I think that's the easiest
way to differentiate them.
Erica D'Eramo (24:35):
So the brokers are the ones that are like
managing transact, like makingthe transactions happening,
making those connectionshappening. And the underwriters
are the ones that I meanunderwriting in general. We've
is we've taken as kind of ageneral term, but they're the
ones that are essentiallyholding the financial risk and
back, putting the putting theassets behind. Yeah, they're the
(24:59):
bank. Yeah. Hey, yes, the bank,right? Yeah, the asset holder,
yeah.
James Felton Keith (25:02):
The underwriters are the bank. The
brokers are the salespeople. Sothe brokers are the ones calling
you. They're going to come bythe office, they're going to
explain what the bank has made,created for you, right? And one
thing I'll add to that is, Iknow a lot of people think about
insurance as a portion of thefinancial industry. But it's
(25:23):
actually the other way around,without risk capital, without
those initial agreements that weset, let's say way, way back
when, when everyone was wearingsandals, uh, maybe turbans, and
it was Sandy everywhere becausewe hadn't built any
infrastructure, no roads, um,insurance started to exist when,
when leaders made decisions notto kill each other. That was
(25:47):
insurance. And so on top of riskcapital, we built the financial
markets, the debt markets, sobonds, the currency markets, you
name it, the capital markets.
Those are all built on top ofthe sea of insurance. It's just
insurance is more well regulatedthan other industries, and so
(26:09):
you don't see companies as bigas some of the banks that we
normally talk about in the news,like JP, Morgan, B of A, you
name it. We did see AIG duringthe financial crisis, for anyone
who remembers, was one of thebig, too big to fails, right?
But by and large, theirinsurance companies, everywhere
they cover regions, theyspecialize in things. And it's
(26:30):
just a pretty old, conservativeindustry. I like to call it the
oldest industry. I know whateveryone thinks the oldest
industry is but this industry isolder than that one. Because in
order for the thing that we saythey do in the oldest industry
to even happen, two old men,again, probably in sandals, had
to allow it to happen. And thatagreement, that piece, was
(26:54):
insurance. I'm not sayinginsurance are pimps. I'm just
saying it's an older industry.
We don't need to jumble downthat rabbit hole. But anyway,
Erica D'Eramo (27:10):
So the the element, I mean, this is where I
think to bring it back to thepiece around the bellwether, you
know, being able to understandwhat true risk, you know, what
the true understanding of risksare outside of cultural and
(27:30):
political influences. You know,the fires in California. You
know, hearing from some folks inthe insurance industry about
like, and I don't fullyunderstand this, but how,
essentially, it's taking such atoll on insurers that the
insurers are now having to tapinto their insurance that's
(27:51):
covering the insurers, and it'slike this whole underlying
structure that really kind oflike placing bets, in a way, and
the people who are playing, not,I don't mean like in a gaming
way, but ultimately, you'retrying to understand your
probabilities and your risks andunderstand as much as you can
(28:11):
about the outcomes, and theninvest accordingly, like put
your resources accordingly,
James Felton Keith (28:17):
One way, I'll explain it. So for anyone
not familiar, insurers, theirinsurers are an older, bigger
industry called reinsurance.
Yeah, so, right. So you havereinsurers. Most of them are
headquartered in Bermuda. So ifanyone just hangs out in the
Bermuda, whoever you meet at abar, probably works in
reinsurance. But reinsurance isjust like insuring the
(28:40):
insurance, and sometimesinsurers, the littler guy, the
regular carriers, the regularunderwriters, can take on too
much risk in a given area, likewith the wildfires in LA or even
though the flooding in Florida,you know, it is very difficult,
if not impossible, to gethomeowners insurance in Florida.
(29:03):
I think healthcare is anotherinteresting space. Before we dig
into that, I would differentiatelife from property and casualty
insurance first, health andhealth also, even though health
is kind of a form of, you know,property and casualty, but it is
tied to life a bit. And then inproperty and casualty, you have
(29:25):
personal stuff, like houses, andthen you have commercial stuff.
When we talk about Dei, I'mspecifically talking about
commercial insurance. I'mtalking about commercial PNC, or
property and casualty, becauseof how people play onto the
property, etc, of institutions.
But yes, if we get into againhow people feel about how
(29:48):
insurance works, and the ickfactor of the fact that we saw
on the news, a lot of insurerspulled out of California and
Florida, and they will continueto because of ESG things.
Things. You know it's it isreally a proxy of not having
enough participants in thoserisk pools that you mentioned
(30:10):
earlier. Now, this is not new.
It's happened over and overagain. I actually got to the
work that we do now, before Iran for office, I ran a cyber
insurance company, and Iremember when the cyber standard
was amended and came back out inlike 2013 the way I knew we
could build an insurance companyon top of this dei standard is
because we had done it once inthe early 2010s with cyber what
(30:32):
was happening is the world wasnormal in the 2000s and then
everyone started getting hackedin the 2010s and what they
wouldn't do is get an audit,which the underwriters and the
insurance carriers wanted. Rightand more laws were published,
like Europe's General DataProtection Regulation, New York
came out with its cyber reg. SoNew York Department of Financial
(30:57):
Services basically said, if youare tied to a New York bank, I
don't care whether you're amanufacturer in Idaho, if you
deal with New York mailing bank,you have to get an audit, or
you're in violation of New YorkDepartment of Financial
Services. And so given that, Ican't explain how important New
York is, because it controls thebanking sector to the entire
world, because we can auditanyone. And basically all the
(31:19):
banking rules are set here viaour Superintendent of Financial
Services and the insurancecommissioner, which works under
her. So all that said, we sawcompanies or insurance carriers
pull out of insurance companiesthat wanted to pay ransomware in
2013, 1415, until they builtinfrastructure to prevent
(31:44):
against that. And I tie thisright into Dei. More than 90% of
cyber risk or errors that we seein the market are human error,
whether they're deliberate orjust people making mistakes,
right? And so there's a lot oftraining that goes into how we
educate humans to take care ofour digital infrastructure. And
(32:06):
to be clear, in the modern day,all governance, if you're
thinking about E, S and G, iscyber or it has a digital
component. We only govern thingsthrough engineering processes
that we now digitize. So thatsaid, the worst type of employee
that you want taking care ofyour cyber assets is somebody
(32:28):
who didn't come here to worktoday, that lady who's pissed
off, who already hates you.
She's gonna let the virus comein. She's gonna do it. She's not
here to play, or she's only hereto play. Well, she's only here
for her check. We know thesepeople, folks, you know they
whether they work at, you know,the advertising or the
(32:52):
manufacturer of the bankingcompany around you, whether they
work at the city, at themunicipal or the state
government, we know these peoplewho are having a bad day because
their boss told them, you know,you're so good, if you were a
guy, we would have gave you a50% raise or did something else
crash.
Erica D'Eramo (33:09):
I mean, this is where it's like, we could talk
about, like DEI. Ultimately,what we want is people who are
engaged, who are motivated, whofeel bought into the mission.
Who feel like this is why likebelonging. It's like motivation
101, right? Self determinationtheory we've known about
(33:30):
forever. It's this is, you know,autonomy, something that you're
good at and that you can youhave a little challenge, and
then belonging, connectedness,and so we can call it a bunch of
different things, butultimately, having people who
are, who are there and haveopportunities, regardless of
their demographics, regardlessof the color of their skin,
(33:51):
their gender, who are, who getto be autonomous, have some
autonomy and have a sense ofconnectedness and belonging they
are that's good business isethically good. It's like, gives
us all we can sleep at nightknowing that we're creating a
good workplace all the thingsit's like good business. Right?
James Felton Keith (34:12):
Back to your word you're worthy. People. It
goes back to being efficient andeffective, if qualitative
measure like effectiveness. Andpeople go, Yeah, I just thought
this is effective, but per theefficiency rating, it reduces
those premiums, which is anumber, it reduces the spin that
we have to make on ad hocprograms that remedy the problem
(34:32):
that we created for ourselves,which is a radical inefficiency.
If, if I tally the cost of and Ilove your language here, the
lack of belonging. It is thishow anyone should calculate the
cost of a lack of dei and be attheir firm. It's the cost of
your risk premiums, plus thecost of those ad hoc programs
that aren't working for you,plus the cost of at least one
(34:54):
risk manager, let's call her HR,chasing down that crazy thing
that happened. Yeah, and itreminds me of I heard one of my
friends these leads, dei at atKrispy Kreme. Same happens to be
Christopher, and he was like,what we're really doing here,
solving for belonging. And soeven if you do what you would,
(35:16):
what other people might considera little job, you sell donuts,
you you work at the cashregister. You know, having
leadership that has a soft skillset to tell you what we're
really there to do, which is,we're delivering happiness in a
donut to these people. We'd lovefor you also to be able to come
to work happy today. What do youneed to do that we can't solve
all your problems, but we wantyou to know we really care. We
(35:37):
don't want you to leave us openany cyber risk or anything else.
We don't want you to bedeliberately rude to people,
because sometimes I meet folksand go, Well, I'm not in a sexy
role like, you know, Erica, orwhatever it's like, Whatever you
do, if the leadership tells youit serves this broader purpose,
we solve a very human problemhere. Even if you know, you work
(35:57):
for exomo like we, we turn thelights on for you. Everyone can
tell a story, you know, and soand so we should, because what
we're really trying to do issolve for belonging. And when I
meet people and we, we oversee aand we still have it a big
government grant from theNational Science Foundation to
push the standard into STEMsociety. So like, think the
(36:22):
American Society for civilengineers, mechanical engineers.
Shout out to the civilengineers. I'm I stole one of
their cups from DC. I'm drinkingfrom it right now. Greater as we
work with these folks, right?
They're trying to createexcellence in whatever their
field is by motivating people tobe there, and so they have an
incentive to try to solve forbelonging. But as some
(36:43):
colleagues in this one effortcome to me in confidence and
say, I'm not sure we canactually pull off what we're
saying we want to, becausepeople just sometimes they just
generally don't like each other.
And I was like, Look, I'm notasking everybody to like
everybody when they come away,but I am asking, and I know that
this is possible, because I doit every day. I wake up, I'm
(37:05):
really comfortable in my ownroom, in my own home. I put on a
shirt, I brush my teeth, I tryto be overtly repulsive around
folks, and I code switch it atwork. It's like all we're really
asking some people to do who aremore offensive at work is to
come to work and coach whichjust a little bit more, be a
(37:27):
little bit more on that pieceand cues. Maybe don't slap
somebody on their behind and gothat was actually a compliment,
because it's offensive someguys, and it's usually guys, I
just have to be honest, are alittle too comfortable at work,
and it creates these culturalrifts. I go to work every day,
and I try to deliberatelymonitor how I engage everybody,
(37:49):
and that's really all we're allwe're asking for. It's not It's
not rocket science, and it isdesignable in a mechanical
process, for sure.
Erica D'Eramo (37:59):
Yeah. I mean that belonging becomes very, very
easy if you have an entirelyhomogenous group and yet, like a
we know homogen homogeneity isnot resilient for gazillion
reasons. You wouldn't want it inyour stock portfolio. You
wouldn't want it in youragricultural layout. But, yeah,
(38:21):
having that resilience ofdifferent minds, different skill
sets, different backgrounds,Representative workforces that
look like the community you'reserving, that look like the
community you're drawing from,like that does require a little
bit more effort to create thatbelonging around mission or
around human like being humanstogether. So yeah, I like the
(38:43):
fact that, like, a lot of ushave had to learn how to adapt
and code switch, and all we'reasking is for some of us to,
like, maybe have to do a littlebit less of it, and others to
learn a little bit more of whatthat feels like.
James Felton Keith (38:54):
Yeah, it's kind of simple stuff, but
leadership is necessary to saythis is how we're going to do
it, and we're going to createfeedback mechanisms per the
standard so that people can tellus whether it's anonymous or
outright when they think they'veencountered some of these
situations, so we can look atpotential remedies, and that's
risk mitigation. That's whatLloyds of London wants to engage
(39:18):
now. Do you have a process towhen the aggrieved come to you
to go, we're going to try todissipate this, or are we just
going to court? Because if we'regoing to court, fine, I'm just
going to double the premiums payus double.
Erica D'Eramo (39:31):
It speaks to like leading I get on the case around
leading and lagging indicatorsso much. And I think where we
really lost the plot was likesolely looking at lagging
indicators and lacking curiosityto go upstream and look at the
leading indicators. So I love tohear that there's some process
around it. So tell us wherefolks can find your stuff and
and where to follow you whatyou're doing.
James Felton Keith (39:54):
I'm on all the Yeah, the normal stuff. I
just James and Felton and Keith.
I've way too many first. Things.
And people can call me any ofthose, but the companies is just
at inclusion score.org orinclusion score, dot.ai, we have
an automated tool that we that'swhat we give to the insurance
companies to deploy on theirinsurance if they want to look
(40:16):
up the standard and really readand understand the standard, I
would just Google ISO, 30415, orif you go to the it's gonna be a
Erica D'Eramo (40:24):
We're gonna put it in the we're gonna put it in
long winded the show notes.
James Felton Keith (40:28):
Just inclusion score. If you look up
inclusion score, you'll see allthe stuff. We'll send you to a
million different places. But Iwould say, get familiar with the
standard. If people ask you,what does dei mean? Don't be
poetic. If you're not a poet,some people are poets, but we
still don't want you to bepoetic. Just say the standard,
because it means all the thingsand really d, e, i and b are
(40:51):
they're more philosophicalreaches. Again, we'd love to
solve for belonging. What wefail to do when we talk about
these big philosophical conceptsis established that what we're
really trying to do is implementa business process for active
engagement and workforceresilience. That's all we want.
(41:11):
We want to know you try to seeif we can make the workforce
resilient. It's not all the Iknow people go diversity is
this, and equity is when you canjump over the moon, but you're
holding somebody in yourbackpack. It's all the it's
whatever, not those things. Solearn the standard, or at least
reference the standard. Plentyof people use standards in other
industries every day, and theydon't know what the hell is in
(41:32):
the actual standard. It's fine.
You don't need to know it.
That's our job. But I would lookit up just so that folks know it
exists, and this is how theinsurance carriers of the world
are vetting you.
Erica D'Eramo (41:47):
Yeah, cool. Well, thanks for shining a light onto
this area that I don't thinkI've ever had somebody come on
the podcast and talk aboutinsurance, and definitely not
insurance as it relates tolarger concepts around like
workforce engagement andwhatnot. So thank you for
joining us and sharing some ofyour experiences and insights,
(42:08):
and it's been great having youon.
James Felton Keith (42:10):
Thank you.
Thanks so much. Yeah, great.
Erica D'Eramo (42:13):
And for folks who want to explore a bit more, you
can find the links to theseresources in the show notes, and
we'll also link to a reallyinteresting article about
illegal versus legal DEI, sowe'll share that as well, and
you can find a summary of thispodcast episode and the
transcript on our website,twopierceconsulting.com and
(42:35):
we'll see you next episode.
Thanks for joining you.
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