Risk Management • Need • Total cases in all Courts have increased dramatically and will continue to do so.
Total Cases • US District Courts and Court of Appeals • 1980 136,856 • 1990 319,860 (234% increase) • 1995 342,061 (107% increase) • 1996 369,012 (108% increase)
Need for Risk Management • According to Seidler (2001) a person involved as a professional administrator/coach will have 15%-25% greater chance of being involved (sued) than those entering the field 5 years previously
Potential Risks to Manage • (1) Property loss or damage (e.g., facility/equipment and vandalism) • (2) Non-negligent public liability (e.g., discrimination, product liability, employee actions, and criminal incidents).
Potential Risks to Manage • (3) Business operations (e.g., potential financial losses, contracts) • (4) Negligent public liability (e.g., bodily injury and organization or employee services)
Risk Management Defined • Risk management has been defined as the control of financial and personal injury loss from sudden, unforeseen, unusual accidents and intentional torts (Ammon, 1993). • Wong and Masteralexis (1998) termed it as “a management strategy to maintain greater control over the legal uncertainty that may wreak havoc on a sport business” (p. 90).
Risk Management Defined • Other academics (Mulrooney & Farmer, 1998) explained risk management as “reducing exposure to danger, harm, or hazards leading to lawsuits” (p. 273). The loss or “risk” can be either physical or financial in nature.
Risk Management • A risk management plan is the systematic analysis of operations for potential risks or exposures to risks and the plan to reduce those risks
Risk Management • Identifies risks • Estimates frequency and severity of risks • Determines other approaches in controlling the risk
Risk Management • Financial losses may occur due to incidents such as vandalism, poorly written contracts, stolen equipment, and accidents in the facility parking lot due to poor lighting.
Job of Risk Manager • The primary goal of a risk manager must be to reduce possible monetary losses.
Risk Management Questions • Who is in charge of managing the plan? • How is the plan communicated to the facility employees? • What are five of the most common risks that occur? • What are their classifications?
Risk Management Questions 5. What is the most significant treatment used to reduce the risks? 6. How do you plan on dealing with inherent risks? • Are all staff members aware of the risk management plan? • Do they (staff members) have any input?
Risk Management Plan • An effective risk management plan should include an analysis of all the assets to be protected, how an asset could be lost or damaged, the probability of each loss type, the cost to the company (Cooper, 2002).
D.I.M Principle of Risk Management • Develop • Implement • Manage
D.I.M Principle • Develop procedures and policies to guard against litigious situations • 1) identifying the risks • 2) classifying the risks • 3) selecting treatments for the risks.
Implement Plan • Each employee has a shared responsibility to ensure the success of the plan. • Each employee needs to be made a member of the risk management team. • Communication of the risk management plan is critical for Implementation
Ways to Identify Alternative Approaches to Risks • Avoidance • The organization chooses not to offer an activity or service due perceived liability • Should be used when there is lack of facility, leadership, or expertise
Risk Management Treatments • Avoidance • The organization chooses not to offer an activity or service due perceived liability • Should be used when there is lack of facility, leadership, or expertise
Risk Management Treatments • Transference • Occurs when there is a shifting of the liability to another liability most commonly done in the form of insurance policies • Can also be accomplished through contracts
Risk Management Treatments • Retention • The acceptance of the risk within the financial structure of the organization • Usually occurs when the severity is low but the frequency is high • Reduction • Reducing the exposure through operational management
Risk Management Matrix HIGH LOSSMODERATE LOSS LOW LOSS • OFTEN Avoid Transfer & ReductionTransfer or Retain & Reduction • AVERAGE Avoid or Transfer & Retain & Transfer & Reduction Reduction Reduction • SELDOM Transfer & Transfer or Retain Retain & • Reduction & Reduction Reduction
Management of Risk Plan • In-service training and education should be done at least once per year • It is recommended that it should be done once every 4-6 months
I.C.E.E Principle • I.C.E.E involves 4 basic actions: • Identification of foreseeable liabilities. • Communication of those foreseeable liabilities to appropriate individuals on a regular basis. • Education of personnel of risk management procedures to guard against potential liabilities. • Enforcement of organizational risk management policies and procedures through appropriate measures.
I.C.E.E Principle • This principle is circuitous in nature. • By identifying potential litigious situations one of the best avenues in protecting the individual and organization from litigation, communication, may be adopted. • Proper communication allows the employees to increase their understanding of their roles in managing the overall risk management plan.
I.C.E.E Principle • Simple distribution of an organization’s risk management policy without appropriate employee education is ineffective. • Education enhances the employee’s understanding of the proper implementation and management of the risk management plan.
I.C.E.E Principle • Through employee education, the enforcement of a written risk management plan may increase as the employees may better be able to make sound judgments and decisions as well as standard of care responsibilities in managing a risk management plan.
I.C.E.E Principle • Enforcement may allow the manager and other organizational personnel to identify other sources of potential liabilities thus continuing the circle. • Should a manager in recreation and sport choose not to follow the D.I.M. process in conjunction with I.C.E.E., he/she may very well be on the extraordinarily icy slope toward litigation.