Assume the risk

• Decide that the risk is minor and do nothing

Reduce the risk             

• Change people’s behaviour or the environment so that risk is reduced
• Pre-loss activity example: preparation of contingency plans before a loss occurs

Eliminate/Avoid the risk

• Fix the problem
• Remove it or choose not to begin

Transfer the risk

• Accept the risk - transfer the cost and responsibility to someone else

Control - Post-loss:

• Keep resulting damages to a minimum
• Control the contingent consequences
• Called mitigating loss – required by insurance
• Examples: Effective administration of third party claims

Contractual Risk Transfer

• Transfers the risk of a specific activity or project to another party through a contract
• Waivers, disclaimers, indemnity agreements, hold harmless agreements, work contracts
• Insurance is a form of contractual risk transfer

Transfer to Insurance

• Some exposures may be uninsurable
• Loss of reputation
• All Insurance policies have exclusions

Policy Exclusions Exist to:

1. Eliminate uninsurable loss exposures:
   • Those not accidental, or predictable
   • Within the control of the insured
   • Catastrophic
2. Manage moral and morale hazards
   • Intentional acts
   • Loss caused by undue care and attention
3. Avoid coverage duplication:
   • Other insurance is available
4. Eliminate coverage for extreme risks
   • Those requiring special treatment – flood, earthquake
5. Keep premiums at a reasonable level
   • No policy can or will insure everything
   • Losses may exceed policy limits

Implementation

1. Assign responsibility and accountability
2. Allocate required resources
3. Document (record of decisions and plans)
4. Establish criteria to measure performance

Strategies

• Define framework – Risk Management Plan
• Define it as policy
• Select Risk Champion
• Task people to engage
• Set guidelines and train

Risk Management Should Be:

• Proportionate: to the risk assessed
• Accountable: those affected should be advised how and why decisions are made
• Balanced: between “analysis-paralysis” by over-managing and indecision by not making decisions and taking action
• Consistent: interpret policies consistently
• Transparent: open and user-friendly process
• Targeted: treatments focused on problem

Best Practices

• Commitment and support from leaders
• Risk management plan provides roadmap
• Effective Risk Management Plans
  • Reflect the range of stakeholder perspectives
  • Express the belief in and support of a risk management philosophy and practice
  • State that all personnel are vital in protecting the mission, reputation and assets
• Policy statement defines the commitment
• Risk mitigation control system in place
• Risk Identification/Mitigation
  • Enables decisions about potential risks that risk is either acceptable or requires treatment
  • Minimizes the possibility that risk will go undetected – no surprises
• Concept: manage risk within acceptable levels

SPORT4ONTARIO would like to thank Volunteer Alberta for the information contained in this section.      

Other Risk Management Topics: