Tom Kline

Lead Consultant & Founder | Better Vantage Point

Tom Kline, a former dealership owner with 30+ years of experience, specializes in solving dealership problems through risk mitigation remedies, compliance, and dispute resolution for dealerships. Tom is the Lead Consultant and Founder of Better Vantage Point and has worked with publicly-held and private dealerships. Kline recently created AlwaysDoBetter.com/HowWeHelp, a digital comment box, to prevent employees and customers from posting negative reviews online while giving the dealer an opportunity to resolve the issue.  Kline is a member of the Expert Panel for Dealership Marketing Magazine and an Endorsed Expert for the RVDA, VIADA, and the CIADA. Kline recently spoke at the national Digital Dealer Conference and will be presenting at the RVDA National Conference. Thank you for seeing things from a Better Vantage Point.

How Dealers Should Handle COVID (Co-author Kristina Vaquera)

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Another article about COVID-19?  Ugh! Snap! And oh, my! Employers everywhere are tired with having to handle this additional burden to running their business. But, now, more than ever, it’s important to mitigate your risk by being consistent and current in how you handle COVID. Don’t let your guard down now.    In this article, we will limit our discussion to the federal perspective on COVID as each state may have its own rules or requirements.  FACT: The Equal Employment Opportunity Commission (EEOC) says you can mandate employee vaccinations for employees physically entering the workplace based on business necessity subject to reasonable accommodation requirements. In essence, if it is a threat to the safety and well-being of employees and customers, you can require vaccinates. Very few jobs at the dealership may be completed by being isolated by plexiglass or office walls. Most require daily face-to-face customer contact that cannot be eliminated. FACT: If vaccines are required, employees may claim two (2) accommodations: Because of their sincerely held religious beliefs (i.e., Title VII of the Civil Rights Act), or Because of their disability (i.e. the Americans with Disabilities Act) If an employee asserts an accommodation request, call your employment lawyer for more specifics on how to handle the situation. Each case is different based on the facts. FACT:  To protect your employees and customers, ensure you have the latest signage from the Centers for Disease Control (CDC), Occupational Safety and Health Administration (OSHA) and your state safety and health departments. For example, current CDC guidance has different masking requirements depending on whether you are in a low or medium to high-risk transmission area. Click here for more information. FACT:  As the employer, you are still required to provide personal protective equipment (PPE) and sanitizing stations. Outbreaks at the dealership? If you are having frequent positive COVID situations at the store, you may need to revisit your policies and their efficacy. If you make changes, document what you are doing. Are you required to keep a log of positive cases, or report to your state? Make sure you are doing so if required. If OSHA, or any agency, visits you, they want to know what you are doing to protect everyone. Be diligent here.  FACT:  If you sell fleet vehicles to the government, or have a federal contract, then you may be a federal contractor. If so, you must follow federal COVID mandates required by Executive Order. You may also be subject to mandatory vaccine requirements if you have 100 or more employees.  FACT:  On September 9th, President Biden signed an Executive Order requiring employees of contractors doing business with the federal government to be vaccinated which builds off a previously issued Executive Order from July. President Biden also mandated that OSHA is developing a rule requiring all businesses with more than 100 employees to ensure their employees are fully vaccinated or require workers who remain unvaccinated to produce a negative test result on at least a weekly basis before coming to work. This mandate also requires employers to provide paid time off for the time it takes workers to get vaccinated or to recover if they are under the weather post-vaccination. It is unknown if employers will have to pay for the cost of testing and/or the time associated with testing.   This situation continues to evolve. Don’t “take on” risk by being lackadaisical when it comes to COVID. Author's note: The above article is for informational purposes only and does not constitute legal advice and does not create an attorney-client relationship.
Do You Understand the Components of Your Garage Insurance Policy?

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Flavor: Something we crave in our daily routine. Try this flavor-filled description: “There’s a sense of cornmeal next to sawdust, oily vanilla, and a hint of fresh honey sweetness that entices your senses. It takes on a caramel corn sweetness as the vanilla carries you towards sweeter woods and cherry fruits. The end is short and sweet with a distant wisp of orange oils next to a slight minerality.” Recently, I found this depiction in an online article on Uproxx. Do you know what’s being described? (You’ll have to read the whole article or skip to the bottom for the answer.) With an increase in the complexity of flavors, I would proffer that you discover more appreciation of the product through the layers of taste. And so it is with your garage insurance policy. The more you understand it, the more you will appreciate it and have the taste for it.  I recently studied a garage insurance policy for a client. (Try not to be jealous.) I found 107 items in the policy which were questionable and needed further investigation as they were important for the dealer. As it turned out, at least 26 were actionable. My initial review drove the premium down from $109,641 to $81,511. Based on that audit, here are eight (8) select items for you to consider: What is the total value of your land + building + used vehicle inventory (not floor planned) + parts + blue sky? Your liability umbrella should exceed that total number or the business is underinsured in the case of a catastrophic accident. Do you have enough employee crime coverage to satisfy a claim resulting from someone stealing a vehicle? Do you have an aggregate over your vehicle weather deductible to act as a “stop loss” in the event of a large loss? (For example, if you have a $1000 deductible and 600 vehicles are damaged, you are out of pocket $600,000. If you had a $250,000 aggregate, you would write a check for the $250,000 and not the $600,000.) Have you compared your vehicle physical damage coverage limits to your actual inventory to determine if you should adjust the policy up or down? Did you know this exclusion is in most policies? “Loss caused by an ‘employee’ if the ‘employee’ had also committed ‘theft’ or any other dishonest act prior to the effective date of this insurance and you or any of your partners, ‘members’, ‘managers’, officers, directors or trustees, not in collusion with the ‘employee’, learned of such ‘theft’ or dishonest act prior to the Policy Period shown in the Declarations.” How much are you paying for Med Pay coverage? Isn’t it duplicative of your basic liability coverage? If you eliminate the coverage, how much money could you save? Are you paying an extra premium for higher limits on your uninsured and underinsured drivers policy (than you are legally obligated by your state) to pay? How much will this save you? Also, have you considered a separate, higher limit to protect the owners? Are you accurately self-reporting the number of dealer tags? Getting the flavor here? Make it a priority to review your policy with someone knowledgeable who will go through it and explain everything to you. While it may be distasteful upfront, you’ll be glad you did while gaining an understanding of what provisions the policy contains. And, it’s not ice cream that was being described above.  It was bourbon!
The Saga of the Hdx 27 Gallon Containers and Your Dealership

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You Can Always Do Better... So, I sold my RV, (please hold your applause) and needed to buy HDX 27 gallon storage containers to keep “my stuff,” which had previously lived in the RV basement. I did what I always do, which is go to Home Depot to buy my favorite black and yellow containers. Upon entering a post-COVID-ish Home Depot, I noticed how few people were actually in the store. It was quite empty, actually. I proceeded to the usual place where my favorite storage containers were kept. (Yes, I have favorite containers – HDX 27 gallons with spiffy, stackable tops.) Lo and behold they were absent. I found a not-so-friendly man, in the requisite orange apron, and asked him where my favorite containers were. He gestured to the “end cap” and said, “they’re over there.” (Glad he didn’t strain himself with that one!) I walked over and (of course) they were not there. I came back and he was still standing in the same place. I explained (again) that those were the lowly 17 gallon containers and I needed the superior 27-gallon ones, please. He pointed to the floor where I was standing and said “Have you looked there?” (As if I had missed them the first time I brought him over to that aisle to explain I couldn’t find them?) I pointed out that those were the 17-gallon storage containers, not the 27 gallons that I have come to know and love. (You see in my garage I have approximately 40 of these beloved containers and they are stacked nicely and neatly and in a proper OCD fashion along the wall.)  He then proceeded to the computer where he looked up the SKU number so that he could find out if the containers were on the tippy-top shelves where I had looked for them before I asked him to locate them.  He announced the SKU number out loud, so we could both look together, to determine if we could physically see the location of my beloved containers. Now, to put this in perspective, a 27-gallon container is about the size of a grown Labrador retriever. They are hard to miss, but I continued looking and played along.  He left and then drove back to the aisle with the forklift-thingie which acts like a one-person elevator. (Meanwhile about 20 minutes have elapsed and I’m still looking for my containers.) He closed the aisle by stretching out two gates on either end of the each side, so no one could walk under the forklift-thingie. I think he was actually walking in slow motion.   Then, up he went. (Insert annoying noise here.) After 10 minutes aloft, he sadly announced he could not find the containers. (Immediately after he gave me the SKU, I had told him I did not see any boxes showing that SKU number, based on the old method of “looking up” from the floor where I was standing. He proceeded to look there anyway.)    After he came back down to terra firma on the forklift-elevator-thingie, (don’t forget to insert the annoying noise), I asked if he had looked at the quantity in stock when he initially looked at the computer. He responded “no.” So, he ambled back over to the computer. If this is agonizing to read, imagine how it was to be there.  Now, I’ve been in the Home Depot for almost 45 minutes. Mr. Orange Apron looked back at the computer and announced (quietly) “We have one hundred eight (108) of them. I’m really sorry, I don’t know where they are.” And they have 108 of them they cannot find. ARE YOU KIDDING ME? 108!  108 Labrador Retrievers you cannot find? Just to be sure, I walked up and down a few of the aisles to see what I could see. It was painful and fruitless. I left in a huff. (Usually, I don’t get worked up over these issues. This saga was particularly painful and dreadful.) I trudged next door (literally) to Lowes. They had 27-gallon containers made from another manufacturer. I was desperate, so I bought four (4)…from another manufacturer. They are shaped differently than the forty (40) in my garage but I was desperate.    Now, Home Depot’s ruined my OCD-themed garage because I have about forty (40) of my beloved 27-gallon container and four (4) of the runner-up, “The Commander” – the brand name – of another. (Isn’t that ironic as they are not “commanding anything in my garage?”) Every time I walk into my garage, I cringe. OK, while this was a long and now-amusing story, (not so much at the time), why am I telling you this, and how does this relate to running a dealership? Home Depot could have done better. So can your dealership. You can always do better than this. If I had seen a manager, I would have discussed it with him. I was so irritated, I didn’t go looking for a manager. It likely would have taken another 30 or more minutes. And when I left, I thought I should post a review online.  Or at least, I should post on Twitter where I would likely get a response.   I didn’t.  I just wanted to move on with my life.  After all, I’m dyin’ over here. I carried on.  I was irritated about aggravation over $60 worth of containers. Imagine how hot a customer gets when they are spending tens of thousands of dollars. How can you capture this feedback and mitigate the problem before the customer explodes online?  You could prominently post signage in your dealership asking for feedback. You could post a cell phone number for someone who could fix the problem. You could make sure the floor manager knows when there is an upset customer in the building so your managers can be prepared to act. Do you know the nature of the issues your customers face? Are you certain? How can you stop the problems before they happen? More training? New policies? You have to capture this feedback to attempt to prevent the problems before they start. (Risk mitigation!)  And what about aggravated employees? Ever considered an employee poll or human resources consultant? How can you capture their attention? (Remember, problems at a dealership are like rotten fish. They don’t smell better as time moves on…) And as for me, I’ll be standing in my garage staring at the odd-sized containers. (See attached photo.) If you are reading this #HomeDepot, please send me four (4) HDX 27-gallon containers quickly (and for free), and both me and my OCD, will feel much better. PM me on LinkedIn and I will give you my address!
Auto Dealers: What’s Your Total Cost of Risk (TCOR)?

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Financial statements track how you are doing financially every month. Consider measuring and benchmarking TCOR as a part of your ongoing financial statement process.   What is TCOR and why should you care about your dealership’s Total Cost of Risk (TCOR)?  Business is about keeping the money you make. Your sales and gross profits could be at record highs, but your losses might be, as well. Unless you are tracking TCOR, your money may be walking out the back door because of losses or customer problems. Consider changing the way the dealership accounts for losses at the store (TCOR).    The only way to improve in any area is to measure it and benchmark it. TCOR is a metric used to evaluate your dealership’s internal risk process. Here is how it’s calculated: Insurance premiums + self-insured losses + losses associated with lower profits and productivity + risk administrative expenses (internal & external) = Total Cost of Risk (TCOR)  Tracking this metric will help you laser focus on which parts of the dealership cost you money. Consider customizing and defining each aspect of the formula to specify the guidelines for your dealership. These guidelines will be different for every owner-operator. It’s important to be consistent in how you establish and execute the accounting at your dealership based on those guidelines. Consistency will produce accurate data leading to meaningful answers.  Here’s an example: Let’s say you sell vehicles to people who have credit challenges (secondary customers). In my experience, if you “spot” them in their vehicles, and then cannot get them financed for whatever reason, they tend to write more negative online reviews. Hopefully, you have a process at the dealership to bring them back in and try to satisfy them in some way.   (If not, start today. Most lawsuits and regulatory problems start with upset customers. In fact, a dealership in Tennessee recently had its license revoked after multiple claims of deceptive acts. Now, the owner has been convicted of twenty-one (21) felony counts. His problems all started with customer complaints. Pro Tip: After you have satisfied the customers’ concerns, ask them to “update” their review. If you ask them to “change” their review, the customers will feel manipulated, Then, it will look like the only reason you helped them was to have them update the online review.) If you tracked the personnel time and all other expenses associated with these types of issues, you would be able to determine the actual cost of taking care of these customers. This is only one aspect of TCOR. (Please refer to the formula above.) If the dealership accounts for these costs accurately, it means you can no longer hide these losses in “Other Income.” In many dealerships, “Other Income” becomes the “garbage pail” of accounts, where you charge expenses, so the managers who are paid on gross won’t complain about chargebacks.    Using the secondary customer example above - whether or not TCOR is being tracked - we can discuss which policies and procedures can be put into place to stop these types of losses. There are plenty! We will not know the effectiveness of the procedures unless the numbers are tracked accurately. Recently, I have been hearing dealers espouse a case of the “yets.”   “I haven’t been sued yet.” “I have not heard from a regulator, yet” “We haven’t had any major problems, yet.” So, I don’t need to track TCOR…  Depending on the accounting controls at the store, the losses may be bigger than you realize. Unless you are measuring these costs, it is unknowable how much money is being poured into issues at your dealership. Do you really know your risk costs? Reputational losses? Customer satisfaction charges? Please consider tracking and measuring these numbers moving forward.  I’ll bet you’ll be glad you did. 
Risk Avoidance – Ignored

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Are you too busy selling cars to pay attention to the myriad number of lurking problems and issues that you haven’t had time to address? You would like to correct them and don’t know where to start?   Let today be the day you start. First, don’t be the businessperson and entrepreneur who doesn’t pay any attention to the “what ifs.” What if happens! A lot, in fact. Don’t avoid the risk. Start by being aware that risk is out there and everywhere. Sometimes you see it and sometimes you don’t! Unearthing unknown problems is a process and is heavy lifting. Rest assured there are steps you can take now to be a pro. Here are eight (8) action items you can start today to reduce your operational risks. Consider Doing An Enterprise Risk Assessment Doing an enterprise risk assessment means that you should examine all aspects of your operation for problems and what ifs. This is an on-going process and (1) is not accomplished overnight, and (2) should be a part of your monthly routines.  Here’s a starter checklist: 1. Is someone designated to find, respond, and resolve internet complaints? (If you are asking why you should waste resources on this, consider this internet posting example I found on a review site for a client: “If you are reading this and went through something similar at this ***** hole, email me at @***.com and I will be glad to talk with you.” This is exactly how class action lawsuits begin. Although, this is a huge exposure, it’s easily solved as a straight-forward daily task that someone must be responsible for and bring to conclusion.)   2. Do you know what to do if/when you get served with a lawsuit or an inquiry from a regulator? (Now is the time to formulate a proactive plan, not when you are under time pressure. If you have not had a problem here, consider yourself lucky. Not being pessimistic, but it’s an eventuality. This is not as simple as turning it over to your regular lawyer. Unless they are well versed in consumer law, they may not be qualified to respond. This is the worst situation because they will give you bad advice and you will likely act on it. That makes a bad condition even worse. I’ve seen it a lot and it’s ugly, expensive, and time consuming.) 3. When was the last time you had someone independently check your website for advertising compliance to ensure all advertising laws are being met? (Are you unknowingly using bait and switch advertising? How you read and/or changed your disclaimers to reflect today’s advertising requirements? Recently, I reviewed a dealership’s websites and quickly found seven (7) violations within a three (3) hour quick view. Each and every mistake was actionable by an attorney, regulator, Attorney General, the FTC, or the CFPB (you get the picture here). Several mistakes made the dealer vulnerable to Unfair and Deceptive Acts and Practices (UDAP) laws under which the potential damages are tripled. Tripled! Plus, if sued, the dealer would be liable for the consumer’s attorney’s fees, which will be substantial. $70,000 - $80,000 is not an unusual number, sometimes it’s more. This is a disaster easily avoided by having a third party check your ad content regularly. This should be a regular monthly check as you change your advertising frequently.) 4. Gotcha! The local television news van shows up and wants to do a story about a customer’s broken vehicle that you (personally) don’t even know about. What do you do?   (Do you have a media policy? Do your employees know what to do or where to direct the reporter?  The dealership should have a written media policy signed by each and every employee with a clear delineation about who is authorized to speak to the media. Usually, by the time the news crew arrives, the station already has the customer “in the can,” i.e. the customer’s interview has already been recorded and approved by the station manager. So, the only thing left is for the news crew to interview you on camera and get your side of the story. Sometime, stories can be stopped with facts but you have to be prepared and know how you are going to handle these situations. PRO TIP: Do not ever submit a written comment on your letterhead. Then, everyone who sees the story on television sees your logo with the response! That’s not helping your reputation.) 5. The Internal Revenue Service arrives wanting to talk about IRS Cash Reporting requirements. Are you ready?   (This has nothing to do with income tax. This is how you report customer “cash” transactions to the IRS in compliance with their regulations. Fines for willful non-compliance can be up to $5.5 million and up to five (5) years in jail. Did you know that a traveler’s check is cash? Did you know that a cashier’s check for $10,000 and under is considered cash? Do you have a written policy about how your dealership handles this issue? Did you send the customer a letter at the end of the year indicating that you filed a Form 8300 with the IRS? Big liability here. Get on it.) 6. A mechanic is driving a unit that loses steering or the brakes. It careens into your used oil tank which begins leaking and is running toward the drain. Do you have a plan for this? (First, do you have a written spill plan? Have all of your employees signed off on it? Remember in our business, if it’s not in writing, it doesn’t exist. It’s very difficult to keep up with all the pollution and environmental regulations. Do you have pollution insurance to cover a spill? Did you know you can be personally liable for this type of accident? What happens if your waste oil vendor dumps your used oil in the river? Do they have insurance to cover you? Are you tracking the insurance of your vendor? These “what ifs” get messy, quickly.) 7. A regulator shows up and asks to see your training records on xxx. What do you give them? (Twice-monthly training for your employees is considered “best practices.” Even more importantly, when you train, you must have employees “sign off” on the training materials. Then, you demonstrate to the regulator by providing your training materials with the employee’s signature. If you can prove an attempt to get it right, the regulator will generally be more lenient with you. If you appear to totally disregard this particular area of compliance, then buckle your seatbelt. If a regulator arrives at your dealership, generally they won’t leave without you writing them a check. The question is whether that check will be a few thousand dollars or a “5” or “6” figure check. Oh, and do you have any insurance which might cover these instances?) 8. You receive a “charge” from an employee who goes to the Equal Employment Opportunity Commission (EEOC) claiming that there’s an atmosphere of sexual harassment and discrimination. Now what? (First, have you considered having insurance to cover this type of claim? Second, do you have an Employee Guidebook that has policies on how to cover these issues? If you do not, you leave yourself wide open and vulnerable.) So, there are eight (8) actionable items for you to consider. Ignore these at your own peril because when one bites, you’ll hurt.  
Dealer Risk Mitigation: Expectations & The Fountain of Youth

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My buddy, Tom, recently visited St. Augustine, Florida and he was kind enough to bring us souvenirs. No, my fiancé and I didn’t get t-shirts. We got something a heck of a lot better than that! We were gifted tiny tourist miracles from Ponce de Leon’s THE FOUNTAIN OF YOUTH! In personalized bottles! That’s life-changing, right? Well, I thought it was awesome until I flipped over the bottle and discovered it was “Made in China.” WAIT, WHAT? Then, we were sad. Our hopes and expectations of eternal youth – dashed. This was a kitschy, little reminder that things don’t always turn out as you want them to or as advertised. Sometimes things turn out worse than you thought and sometimes, though not as often, they turn out better.   And so, when you get a regulatory letter saying the dealership has made customer or advertising mistakes requiring immediate correction, often your expectations start with dread and large dollar signs. That eventuality could happen. However, with proper care and diligence, you can settle the issue(s) quickly. Most often, these regulatory issues start one of three ways:  A customer problem An employee issue Advertising violation(s) Be vigilant on these three (3) issues. They should be front and center in keeping you out of trouble. There are plenty of risk mitigation strategies to prevent problems, covered in a subsequent article. Risk mitigation is an ongoing, everyday practice that requires continuous improvement activity.  So, when you receive a letter, administrative action, lawsuit, subpoena, or a formal request for documents, from a regulator, read the paperwork with great care. Sometimes the magic is in the wording of the allegations. Please read it and set it aside for the moment. Building the Story Next, research the problem. Interview the parties involved. Take clear notes as the nuance of the story matters. If the alleged violation is customer or advertising-based, pull the file and review it carefully. Do all of the signatures in the file look consistent? Or may someone have forged a signature? Build the story of what actually happened by reconstructing the detail, step by step, and commit to recording this for yourself to have a chronological record of what happened. Be sure to include direct quotes from the witnesses in your chronology.  Now, refer back to the original allegations to determine what holes are left in the story. Try to unearth the details relating to those holes. Re-interview as needed. Taking good notes is critical! Effective Risk Mitigation Contact your risk mitigation expert and determine if the charge could be covered by your insurance policy. Consider this carefully. Depending on the dollars involved and the nature of the complaint, insurance company adjustors can make the matter more complex and time-consuming. This is an expansive question, so this will be a future article, as well.   Most “complaints” have deadlines. Just be aware of this and ensure you are responding promptly. At this point, I advocate contacting the regulator directly and having a friendly chat. Find out what he/she is looking for. If the problem was related to a consumer or employee, resolving it may be as simple as satisfying their concerns. If it is advertising-related, I can assure you it won’t be that simple. During that call, be positive, be professional, and assure him/her that you want to resolve the issue. Ask for permission to ask questions. Grab your chronology and ask questions to try to fill in the gaps where the allegations do not make any sense. Go slowly and listen carefully as the regulator may or may not have the correct information.  If the regulator has bad information where you can prove the allegation is incorrect, gently offer up one or two incongruous tidbits at that time. Depending on the rapport you have built, you can offer a third, though I would not offer more than that on a first call. The purpose here is to sow doubt about the veracity of the complaint. Don’t overdo it.  The most critical question you should ask is if you can reach out to the upset person(s) and try to satisfy their concerns directly. Most of the time, the answer to this question is a resounding “yes.” It’s important to ask the question. It shows respect and deference.  Then, agree on a time frame when you will get back with the regulator. Keep him/her posted on your progress. It’s better to over-communicate than under-communicate.  Solving the Issue By now, I am sure you are asking yourself, “when is he going to talk about getting the lawyer involved?” The attorney may not be necessary. This is a fact-specific question and I cannot generalize to give guidance on this. Then, satisfy the aggrieved parties’ concerns. However much it costs to fix the problem, I promise it will be less than letting the regulator devise a solution. Ask them to sign a Release of Claims, which should include language like this: “Customer acknowledges that he is COMPLETELY SATISFIED with ____________ (dealership) and with the resolution of his concerns.” Then, call your regulatory contact again and walk him/her through the dynamics of what happened with the upset person(s). Explain how you resolved the concerns. If a lack of proper business practices caused the problem, it’s usually okay to acknowledge it. Thank the regulator, and, if appropriate, let him know you will change your practices, so this doesn’t happen again. (Use a lot of discretion here as this may not be necessary, and you do not want to create a problem where there isn’t one.) Provide the written document to your contact so he can close his file. Phew! Great work! Conclusion Hopefully, your expectations of dread, gloom, and doom did not come to pass. What did you learn? Is it time to change your risk mitigation strategies? If this was stressful for you, consider taking the time to install new policies and procedures to prevent these problems before they occur. You can reduce your anticipated stress level for future problems by hiring someone who can help with these difficult situations.   Temper your expectations through continuous improvement activity. Risk mitigation is not a one-time thing but is an ongoing practice. It reduces the chances of regulatory interference and catastrophic losses. Consider changing your business processes to accommodate these loss prevention techniques. Then, I’ll meet you in St. Augustine, where we can sip Chinese water from the Fountain of Youth.