Risk Management
As a lawyer my perspective on risk management is conservative. By this I mean I recommend my clients take a very comprehensive approach to create a proper risk management program. I consider a risk management plan as the framework an organization should use within which to run its activities so that they minimize the chance of injury, damage or loss. It organizes the company/association and ensures that all necessary policies and procedures are in place and used; thereby reducing liability.
This memo outlines the basic contents of a risk management plan. The best method is to do the whole process in order to fully understand your risk and be able to manage it. However, it might not be economically viable to create a complete risk management plan at once.; I recommend preparing to incorporate changes over time, as your budget permits.
The creation of a risk management plan involves 3 stages:
Risk Identification and Analysis
A risk management plan is a systematic analysis of potential risk and the creation of a plan to reduce the severity and frequency of exposure. In other words, this stage is an analysis of your company's risk. It takes the form of reviewing the activities of the organization and determining what risks it has, both physical (injuries caused by inherent hazards) and legal (i.e. negligence, contracts). Once the potential risks are determined, they are analyzed to determine, as best as possible, the likelihood of occurrence and the consequence of any loss.
Risk Control (aka Policies and Procedures)
This is the meat and bones of the risk management plan as it is the framework for running the business in a manner that limits its liability. This section is specific to the needs of each company/association. The list below is an example of the types of documents, policies and procedures that might be required for a recreation organization.
- Disclosure - medical/application forms;
- Emergency Protocols - Procedure for providing First Aid; Emergency Response Plan (including evacuation)
- Practices and Policies - Safety Talks; Trip Plan; Post Incident Response Plan;
- Paperwork - First Aid Report; Incident Report;
- Administration/Management - Filing paperwork; Training staff/volunteers; Incident/emergency management (evacuation); Post-incident management;
- Contracts - Review existing contracts to understand your rights and obligations and the consequences of a breach by either party.
This is not meant to be an exhaustive list. Please consult with a lawyer or other risk management professional about the needs of your specific organization/company. These policies help organize your company, prevent accidents and provide a process to follow in the event of an emergency. The creation of a proper framework of policies and procedures is also invaluable to defend against a negligence suit.
Risk Treatment/Management
Once you have outlined the risks of your organization, there are four ways in which you treat or manage that risk:
- Eliminate - Avoid programs considered too risky
- Retain - Take on the risk because you feel the possibility of liability is remote, even though you may not be covered by your insurance
- Reduce - Create a proper framework of policies, procedures and protocols; Conduct annual reviews, especially if there have been any changes to your programs
- Transfer - Other people or organizations take on your risk through contract (such as in a waiver, insurance or subcontractors).
Depending on the specific risk, you will choose the appropriate method of treating that risk. Many companies get insurance, a waiver and an evacuation plan and believe they have a full risk management plan. Please do not be misled into this false sense of security.
The purpose of this memo is to give you a better understanding of what is involved in the process of creating a risk management plan. The best case scenario is to do an audit and determine your risk. The next step is to draft a plan that involves clearly writing out your policies and procedures. This includes the protocols and reports you will use during an emergency. This should also incorporate training staff on these policies and providing it to them in a staff manual. Finally, the written plan should detail how you intend to manage the different risks outlined during your review.
Once you have your risk management plan in place, it is then time to draft or update your policies, procedures and protocols. This includes such items as an emergency evacuation plan and a waiver. Getting these policies and procedures in place will help in keeping organized and running safer programs. To ensure you continue to run safe activities, it is important to do an annual review to determine if there have been any changes to your organization that require amendments to your plan.
