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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:
  • 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?
  • 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
  • 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.