risk assessment road map 06 2009 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Risk Assessment Road Map 06/2009 PowerPoint Presentation
Download Presentation
Risk Assessment Road Map 06/2009

Loading in 2 Seconds...

play fullscreen
1 / 110

Risk Assessment Road Map 06/2009 - PowerPoint PPT Presentation


  • 53 Views
  • Uploaded on

Risk Assessment Road Map 06/2009. Has something gone wrong with a current activity?. Or, are you considering a new activity?. The Incident Analysis Approach. Incident Analysis: Establishes a cause for an incident that has already happened.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Risk Assessment Road Map 06/2009' - nedaa


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
has something gone wrong with a current activity

Has something gone wrong with a current activity?

Or, are you considering a new activity?

the difference between incident analysis and risk assessment
Incident Analysis:

Establishes a cause for an incident that has already happened.

Focuses on analyzing the reasons for the incident and development of strategies to prevent future incidents.

Risk Assessment:

Focuses on identification of potential exposures to prevent incidents from happening.

Breaks business decisions down into bite sized pieces to enable pre-planning for loss control and mitigation strategies.

The Difference BetweenIncident Analysis and Risk Assessment
slide5

If something has gone wrong with an activity, you may want to analyze the incident (what went wrong) before moving forward.

why analyze incidents
Why Analyze Incidents?
  • To establish cause and prevents future incidents.
  • To determine ALL causes and contributing factors to the incident.
  • To identify corrective actions.
  • To assess the risks of future activities.
identify systems failures causes
Identify Systems Failures/Causes
  • Rarely a Single Cause.
  • Be Objective, Consistent.
  • Avoid Blame Finding.
  • Systems/Causal Factors.
    • Management
    • Equipment
    • Environmental
    • People
slide8

Systems Contributing To An Incident

People

Management

INCIDENT

Equipment

Environment

slide9

Management

  • Policies & Procedures
  • Training & Other Resources
  • Accountability Practices
slide10

People

  • Training
  • Level of experience
  • Moral or morale
  • Competency
  • Past incidents
slide11

Equipment

  • Maintenance Records
    • Repairs
    • Modifications
  • Availability of Proper Equipment
slide12

Environment

  • Distractions
  • Visibility
  • Conditions
  • Hazards
  • Terrain
  • Other Users
recommend corrective actions
Recommend Corrective Actions
  • Based on specific systems failures/causes.
  • Plan and recommend changes that will prevent further incidents of this nature.
  • Analyze the risks associated with the changes.
  • Follow up to ensure changes are instituted and maintained.
what is risk assessment
What is Risk Assessment?

A strategic approach to planning, at all levels and across all functions of an organization, that identifies exposures of activities and assists in making risk adjusted business decisions every day.

GET RID OF SILOS

what is a risk appetite
What is a Risk Appetite?
  • Risk appetite is the degree of uncertainty an agency is willing to accept to reach its goals.
  • Risk appetite is a key factor in evaluating strategic options.
  • Risk Assessment helps management consider risk appetite when setting goals that align with overall agency strategy, and managing risks related to that strategy.
slide19

Work with your agency’s management to decide:

  • What is your agency’s risk tolerance?
  • How much or what are you willing to risk to accomplish the mission or activity?
  • How much can your agency afford to lose in any one occurrence or in the aggregate?
slide20

What Does Your Agency Do?

(Mission, Goals, Objectives)

slide22

No

If the answer =

Take to management for consideration

Move on

Management decides yes =

Stop

Management decides no =

slide23

Yes

If the answer =

What could go wrong?

Who could be harmed?

Make a list - write it down.

These are your loss exposures.

what could happen
What could happen?
  • Could there be bodily injury, property damage or other liability exposures caused by this service or activity?
  • Is there any impact on workload? Could there be any damage to our systems?
what is risk

What is Risk?

The danger or probability of loss.

loss exposure
Loss Exposure

Possibility of financial loss as the result of a particular peril striking a thing of value.

components of a loss exposure
Components of a Loss Exposure
  • The type ofvalueexposed to loss.
  • The perilthat causes the loss.
  • The extent of the potential financial consequences of that loss.
values exposed to loss
Values Exposed to Loss
  • People
  • Property
  • Freedom from Liability

(Alleged Wrongdoing)

perils causing loss
Perils Causing Loss

Natural Perils:

Human Perils:

Economic Perils:

potential financial consequences
Potential Financial Consequences

Make sure that you don’t give away the farm!

why is this important
Why is this important?

An unrecognized loss exposure cannot, except by chance, be effectively managed.

Is this your agency?

methods of identifying exposures
Methods Of Identifying Exposures:
  • Previous contracts of similar type and their outcomes.
  • Standardized surveys/questionnaires
  • Financial statements
  • Records and files
  • Loss Reports/Claims
  • Flowcharts
  • Personal inspections
  • Experts
slide35
Rate the severity of the risk of each potential loss exposure. How bad can each loss be? What could it cost?
risk rating rr level of risk
Risk Rating (RR) = 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, 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.
exploiting opportunities
EXPLOITING 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.
slide44

If RR = E or H

Is the Activity Necessary?

No

If the Answer =

Management Business Decision

No = Stop

Management Decides

Yes = Move On

for each thing that could go wrong

For Each Thing That Could Go Wrong…

What Tools Are Available To Manage the Risks?

slide46

Statutory Immunities:

Research Statutes

Do any immunities apply to the activity?

No = Move on to Loss Prevention/Risk Control Measures

statutory immunities
Statutory Immunities

Yes

If the Answer is:

Do you have a legal opinion on statutory immunities?

What are the limitations and/ or exclusions?

No = Management business decision on legal opinion

Yes = Move on to Loss Prevention/Risk Control Measures

what are loss prevention risk control methods
What are Loss Prevention/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.
avoid exposure
Avoid Exposure

Entirely eliminates any possibility of loss. It is achieved either by abandoning or never undertaking an activity or an asset.

slide53

Segregate Your LossesArrange your agency’s activities and assets to prevent one event from causing loss to the whole.- two methods -

contractual transfer of risk
Contractual Transfer of Risk

GOAL:

To insure that a contractor is responsible for claims arising out of his or her acts, and has some way to pay for these losses.

slide57

Develop Risk Control Measures Specific to the Situation

  • Personal protective equipment.
  • Housekeeping, repair, and maintenance.
  • Inspections.
  • Tools and equipment.
  • Policies, procedures, and process.
  • Supervision.
  • Contract management and administration.
slide62

Did you choose Contractual Transfer?

Yes = Move on to select appropriate Contractual Transfer Contract Clauses

No = Go to

State’s Self – Insurance or

Commercial Insurance

slide63

Contractual Transfer –

Contract Clauses

  • Independent Contractor
  • Indemnity/Hold Harmless.
  • Insurance and Bonds.
  • Warranties.
slide64

Will you use a contract?

Will you require insurance or bonds?

Will you use a template?

Yes = Move on to Contractual Transfer

No = How will the state be protected?

Re-evaluate the situation. Figure out how the state will be protected. Talk to management.

coverage assessment
Coverage Assessment

What kind and how much insurance or bonds?

where does risk assessment insurance bonding and indemnification fit in the contracting process
Where Does Risk Assessment, Insurance, Bonding and Indemnification Fit in the Contracting Process?
  • At the inception of an idea, your agency should perform a risk assessment of the activity.
slide68

Common Types of Insurance Coverage

  • Commercial General Liability
  • Automobile Liability Coverage
  • Professional Liability
  • Workers’ Compensation
  • Builder’s Risk Coverage
  • Excess Liability Coverage
  • Pollution Liability Coverage
  • Tail Coverage
general liability insurance myths
General Liability Insurance Myths
  • Insurance covers “the indemnification provided in the contract.”
    • FALSE
  • General Liability insurance will cover your entity if the contractor’s work is done “negligently.”
    • FALSE
  • There is “contractual liability” coverage in a General Liability policy.
    • MOSTLY FALSE
commercial general liability cgl
Commercial General Liability (CGL)

Insurance covering “Third Party”:

  • Bodily injury.
  • Property damage.
  • Limited Contractual liability.
  • Products and completed operations.
  • May also cover personal and advertising injury liability.
cgl policy definitions
CGL Policy Definitions
  • Bodily Injury: The injury of physical tissue by an outside force, bodily harm, sickness, or disease.
  • Personal Injury: Libel, slander, false arrest, and invasion of privacy.
cgl policy definitions continued
CGL Policy Definitions(Continued)

Products & Completed Operations: Insurance covering the contractor for damage or injury to third parties resulting from something the contractor made, repaired, or installed. The damage to third parties resulting from the service would be covered not the contractors actual product.

cgl policy definitions continued1
CGL Policy Definitions(Continued)

Contractual Liability: A portion of Commercial General Liability coverage that allows limited coverage for liability assumed under the contract. The coverage allowed by Contractual Liability includes:

  • Liability assumed under an “insured contract”.
  • Liability that the insured would have in the absence of the contract or agreement.
what is an insured contract
What is an “Insured Contract”?

Per the CGL Policy Definitions, an “Insured Contract means:

  • A contract for a lease of premises.
  • A sidetrack agreement (a railroad term).
  • Easements.
  • Agreements required by municipalities as a result of ordinances (not for work done for municipalities.)
  • Elevator maintenance agreements.
  • Liabilities that “would be imposed by law in the absence of any contract or agreement.”
current case law
Current Case Law
  • Id. at 479. A tort claim, where there is a contract between parties, may only proceed where there is some kind of obligation owed by one party to the other beyond the duties that the contract imposes.
  • Id. at 477. Examples of such relationships are those between lawyers and clients, doctors and patients, or trustees and beneficiaries. The court has called these “special relationships.”

Jones v. Emerald Pacific Homes, 188 Or App 471, id at 477 & 479

special relationships
Special Relationships

Only Exist When:

  • One party has relinquished control over the subject matter of the relationship to the other party; and
  • Has placed its potential monetary liability in the other’s hands.
slide78

Will you require Additional Insured and other clauses?

No

Re-evaluate the situation. Figure out how the state will be protected. Talk to management.

e extreme risk
E = Extreme Risk:
  • First, consider not doing the activity.
  • If you must, you will need to decide how much a potential loss could cost?
  • In general, risks at this level warrant more than $1.5 million per person and $3 million per occurrence in coverage for Bodily Injury (BI) and Death. In addition, if property damage is an exposure, add $100,000 per single limit and $500,000 per occurrence.
h high risk
H = High Risk:
  • Could a potential loss cost in excess of $1.5 million per person and $3 million per occurrence in coverage for Bodily Injury (BI) and Death? Ask for more coverage. In addition, if property damage is an exposure, add $100,000 per single limit and $500,000 per occurrence.
  • Make sure your assessment considers all costs of potential losses.
  • Risk Management would not recommend limits of less than $1.5 million per person and $3 million per occurrence in coverage for Bodily Injury (BI) and Death. In addition, if property damage is an exposure, add $100,000 per single limit and $500,000 per occurrence.
m moderate risk
M = Moderate Risk:
  • Standard limit of insurance is $1.5 million per person and $3 million per occurrence in coverage for Bodily Injury (BI) and Death. In addition, if property damage is an exposure, add $100,000 per single limit and $500,000 per occurrence.
  • Assessment should consider all costs of potential losses.
  • If assessment reveals potential loss in excess of $1.5 million per person and $3 million per occurrence in coverage for Bodily Injury (BI) and Death and in addition, if property damage is an exposure, add $100,000 per single limit and $500,000 per occurrence, your risk may actually be high (see H for High Risk.)
l low risk
L = Low Risk:
  • If risk is minimal, this is the area where coverage and limits may potentially be flexible.
  • Standard limit is still $1.5 million per person and $3 million per occurrence in coverage for Bodily Injury (BI) and Death. In addition, if property damage is an exposure, add $100,000 per single limit and $500,000 per occurrence.
  • In the case of minimal risks, the agency could make a business decision to lower the limits of coverage.
  • Risk Management would not generally recommend insurance limits of less than $1.5 million per person and $3 million per occurrence in coverage for Bodily Injury (BI) and Death. In addition, if property damage is an exposure, add $100,000 per single limit and $500,000 per occurrence.
  • If the risk assessment reveals only minute risk, agency could make a business decision to waive coverage.
always remember
Always Remember
  • Don’t rely on insurance or bonds to cover all of the risks associated with your contract.
  • Many times outcome based statements of work, contract administration, and supervision are far better risk control measures to protect the state’s interests than insurance or bonds.
  • Insurance and bonds should be thought of as the safety net that catches us when everything else goes wrong.
for more details on insurance types and limits
For More Details on Insurance Types and Limits

See Smart Contracting Toolkit on our Web site at: http://www.oregon.gov/DAS/SSD/Risk/SmartContractingToolkit.shtml

slide88

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

Does management want Risk Mgmt to buy commercial insurance for the activity?

No

No = How will the agency pay for losses resulting from the activity?

Yes = Move on to evaluate Self-Insurance or Commercial Insurance Coverage

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

Which kind of coverage and what are the limits?

What are the exclusions and coverage requirements?

Does the agency meet the coverage requirements?

For Commercial Insurance, Contact Andrea Peters in Risk Mgmt

For Self-Insurance Coverage, see the State of Oregon Self-Insurance Handbook

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.

How will the agency pay for losses resulting from the activity?

the point
The Point?
  • Knowing the risks associated with your agency’s operations that should be keeping you awake at night.
  • This insight provides your agency with the ability to plan for proactive loss prevention actions rather than just reactive loss reduction reactions.
risk assessment is not rocket science
Risk Assessment is Not Rocket Science

At times, people tell us that the Risk Assessment Road Map process is too simple…..

Our Answer . . .

If Risk Assessment is so simple, why aren’t you doing them?

one more tool
One More Tool
  • Risk Assessment is just one more tool to enhance your agency’s business decision-making tool box.
  • This tool also gives your agency a method of documenting the rationale for your business decisions.
  • Risk Assessment Roadmap Toolkit: http://www.oregon.gov/DAS/SSD/Risk/RiskAssessmentRoadmapToolkit.shtml
what is the scope of the contractual activity
What is the scope of the contractual activity?

What is the overall activity?

Replacement of the Bybee Bridge

What are the activity components?

  • Demolish existing structure
  • Remove debris
  • Design of new structure
  • Construction of new structure
slide96
When and where does the activity take place(s)?

Bybee and McLoughlin Blvds,

Portland, Oregon

1/26/04 through 11/30/04

Who will be performing the activity?

Capital Concrete Construction, Inc.

Various sub-contractors

slide97
Will the contractor interact with others, i.e., public, staff, etc.?
  • Yes, there will be interaction with various ODOT and City of Portland employees, the public and sub-contractors.
slide98
Will there be any hazardous materials involved?
  • Yes – oil, gasoline, paint, chemicals, debris, construction site runoff, etc.
what are the potential loss exposures associated with this activity
What are the potential loss exposures associated with this activity?
  • Bodily injury
  • Property damage
  • Environmental damage
  • Design flaw
what could go wrong who could be harmed
What could go wrong? / Who could be harmed?

- Bodily injury and/or illness to third party.

- Damage to third party property.

  • Pollution from refueling or maintenance operations.
  • Structure destroyed due to vandalism
  • Runoff contamination.
  • Demolition improperly performed.
  • Faulty construction due to improper design or materials.
  • Collapse of structure due to faulty design.
slide101
Is there any impact on workload or damage to our systems?

- Delay in bridge completion due to faulty construction or design

- Environmental cleanup

- Additional costs for repair or re-design of bridge

rate the severity of each potential loss exposure how bad can each loss be what could it cost
Rate the Severity of Each Potential Loss Exposure. (How bad can each loss be? What could it cost?)
  • Bodily Injury:Insignificant to Minor (1-2), Hundreds to Thousands
  • Property Damage: Insignificant to Moderate (1-3), Hundreds to Thousands
  • Environment: Minor to Critical (2-5), Thousands to millions
  • Design Flaw: Minor to Moderate (2-3), Thousands to millions
what is the likelihood that each of these potential losses will happen
What is the Likelihood That Each of These Potential Losses Will Happen?

Bodily Injury - Unlikely (2)

Property Damage - Possible (3)

Environmental Damage – Likely (4)

Design Flaw – Unlikely (2)

determine the risk rating or level of risk for each loss exposure
Determine the Risk Rating or Level of Risk for Each Loss Exposure.
  • Bodily Injury:Low Risk
  • Property Damage: Low to High Risk
  • Environment: Moderate to Extreme Risk
  • Design Flaw: Low to Moderate Risk
what could be the opportunities on this project
What Could Be The Opportunities On This Project?
  • Possible funding from other entities i.e. federal government, cities, counties, etc.
  • Good public perception for widening and/or fixing a deteriorating bridge.
  • The opportunity of avoiding liability that could arise from the collapse or failure of the deteriorating bridge.
  • Economic stimulation, and the opportunity to utilize minority, women, or emerging small business
determine non insurance risk control measures
Determine Non-Insurance Risk Control Measures
  • Involve the community at the earliest stage to determine concerns. Address concerns, examples include: detours, closures, access to emergency services when the bridge is closed, ways the environment will be protected, etc.
  • Communicate to the public through various methods, to include the web, TV and radio stations, newspapers, neighborhood meeting, etc.
  • Identify potential pollution sources from materials and wastes that will be used, stored or disposed of on the job.
slide108
Use best business practices to address pollution issues, such as using one area for vehicle parking, refueling and routine maintenance. Insure that wastes will be disposed of properly. Require recycling of wastes when possible.
  • Close access to the work site for phases of the construction that pose hazard to the public, such as demolition.
  • Verify that all of the contractor’s employees are properly trained and/or certified as required for the scope of work.
  • Require the contractor to maintain on-site MSDS sheets.
assignment of insurance and bonding coverage
Assignment of Insurance and Bonding Coverage
  • Bodily Injury: Low Risk - CGL/Automobile Liability
  • Property Damage: Low to High Risk -CGL/Automobile Liability
  • Environment: Moderate to Extreme Risk - Pollution Liability
  • Design Flaw: Low to Moderate Risk –Professional Liability