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RISK ASSESSMENT ROAD MAP. What is Risk Assessment?. A strategic approach to planning. Occurs at all levels and across all functions of an organization. Identifies exposures of activities. Assists the organization in making risk-adjusted business decisions every day.

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What is risk assessment
What is Risk Assessment?

  • A strategic approach to planning.

  • Occurs at all levels and across all functions of an organization.

  • Identifies exposures of activities.

  • Assists the organization in making risk-adjusted business decisions every day.


Why do risk assessments
Why Do Risk Assessments?

  • Facilitates pre-planning, assessing and brainstorming about what can go wrong, resulting in mitigation strategies to manage what does go wrong.

  • Business decisions are made with eyes wide open.

  • Reaction time to an incident, disruptions in operations after an incident, and financial consequences arising from an incident may be mitigated or eliminated.


Where to start
Where to Start?

  • What is the specific activity?

    • Who

    • What

    • When

    • Where

    • How

    • Why


The million dollar question
The Million Dollar Question

  • What is your entity’s appetite for risk?

    • Low with little tolerance for the unexpected.

    • Medium with understanding that service delivery requirements come with risk.

    • High where agency mission and operations do not leave the agency a choice.

    • Extreme where agency mission and operations dictate the appetite, or where risks have not been assessed or addressed.


What is risk
What is Risk?

  • Risk Management Textbook Definition- The danger or probability of loss.

  • Project Definition - There may be external circumstances or events that cannot occur for the project to be successful. If you believe such an event is likely to happen, then it would be a risk.


What is a loss exposure
What is a Loss Exposure?

  • The possibility of financial loss as the result of a particular peril striking a thing of value.

  • Components:

    • The type of value exposed to loss.

    • The peril that caused the loss

    • The extent of the potential financial consequences of that loss.


What values are exposed to loss
What Values are Exposed to Loss?

  • People

  • Property

  • Freedom from liability (alleged wrong doing)


What types of perils cause loss
What Types of Perils Cause Loss?

  • Natural

    • Flood

    • Wind

    • Earthquake

  • Human

    • Arson

    • Vandalism

    • Graffiti

  • Economic

    • Changes in the stock market

    • War

    • Increases in material costs


What about the financial consequences
What About the Financial Consequences?

  • The point – Making sure you don’t give away the farm.


How can we identify exposures
How Can We Identify Exposures?

  • Previous activities of similar type and their outcomes – lessons learned

  • Standardized surveys and questionnaires

  • Financial statements

  • Records and files

  • Loss Reports and claims

  • Flowcharts

  • Personal inspections

  • Experts


What questions should be asked
What Questions Should Be Asked?

  • What is the overall service or activity?

  • Who, what, when, where, how and why will the service or activity be performed?

  • Who or what could be harmed?

  • What could go wrong?

    • Bodily injury

    • Property Damage

    • Liability

    • Impact on systems or workload


Rating the risks of loss
Rating the Risks of Loss

  • Rate the severity of the risk of each potential loss exposure

    • How bad can each loss be?

    • What could it cost?





Don t forget about the value of opportunities
Don’t Forget About the Value of Opportunities

  • What opportunities will be missed if the activity is not done?

  • What is the upside and downside of these opportunities.

  • By considering the full range of potential events – rather than just risks – the risk assessment process ensures that management can identify and take advantage of positive events quickly and efficiently.



Risk rating level of risk
Risk Rating = Level of Risk

  • E = EXTREME RISK - Involve senior management immediately, emergency situation, consider not doing the activity.

  • H = HIGH RISK - Management attention required for business and policy decisions, effective risk control, insurance types and limits, etc.

  • M = MODERATE RISK - Management should be kept informed of risk control, insurance types and limits, etc.

  • L = LOW RISK - Manage by routine procedures, insurance types and limits could be flexible.


What tools are available to manage the risks
What Tools Are Available to Manage the Risks?

  • Risk Control Methods:

    • Avoid the risk altogether.

    • Prevent the frequency of loss.

    • Reduce the severity or cost of loss.

    • Segregate to prevent one event from causing loss to the whole.

    • Contractually transfer the risk.


Risk control measures must be specific to the situation
Risk Control Measures Must Be Specific to the Situation

  • Personal protective equipment.

  • Housekeeping, repair, and maintenance.

  • Inspections.

  • Tools and equipment.

  • Policies, procedures, and process.

  • Supervision.

  • Contract Management and Administration.


Risk adjusted business decisions
Risk Adjusted Business Decisions

  • Which measures best fit the mission, activity, and Risk Rating?

  • How can the measures be implemented?

    • Who will implement?

  • Who will be responsible for making sure the measures are followed?

    • Who will be responsible for ongoing monitoring?


Immunities coverage
Immunities & Coverage

  • Do any statutory immunities apply to the activity?

    • What are the limitations and/or exclusions?

    • Does your agency have a legal opinion on statutory immunities?

  • Does self-insurance cover the activity and/or people?

    • If not, does management want to buy commercial insurance coverage for the activity?


Evaluation of state self insurance or commercial insurance coverage
Evaluation of State Self-Insurance or Commercial Insurance Coverage

  • Which kinds of coverage apply and what are the limits?

  • What are the exclusions to the coverage?

  • Does the agency meet the reporting and loss control requirements of the coverage?


If your agency
If Your Agency: Coverage

  • Has no statutory immunity for the activity.

  • Has not decided to use loss prevention/risk control measures to minimize or mitigate the risks.

  • Has not contractually transferred the liabilities associated with the activity to another party.

  • Does not have self-insurance coverage for the activity.

  • Has not purchased commercial insurance coverage for the activity.



What is the point
What is the Point? activity?

  • Knowing the risks associated with your entity’s operations that should be keeping you awake at night.

  • This insight provides your entity with the ability to plan for proactive loss prevention actions rather than just loss reduction reactions.

  • This process allows your agency to build a “big book of risks.”


One more tool
One More Tool activity?

  • Knowing the risks associated with your entity’s operations that should be keeping you awake at night.

  • This insight provides your entity with the ability to plan for proactive loss prevention actions rather than just reactive loss reduction reactions.


Risk assessment road map

The End activity?