October 23, 2014
Jean Jelinek, Loss Prevention Program Coordinator 360.407.8158
Overview
During this session, we will
cover:
– When bad things happen: a
brief introduction to tort
liability and commercial
insurance
– Preventing bad things: an
introduction to enterprise risk
management (ERM)
• Presentation by AAG John
Clark
• Risk discussion/panel
Potential risks – broad categories
• State property is damaged (e.g., building damaged
in an earthquake, data is lost, vehicle is totaled in a
collision) – might be covered under commercial
insurance
• Student is injured at school – might be covered by
student’s health care insurance bought by the student
or by an insurance policy bought by the organization
• Employee is injured at work – might be covered by
workers compensation
• State employee is negligent -- does something in the
course of their work that damages someone else’s
property, injures another person or violates someone’s
civil rights –– could result in a tort claim / law suit,
which might be covered under Self Insurance Liability
Program
A word about tort claims
• Tort = breach of a duty owed to
another person (excluding breach of
contract)
• Typically, states have sovereign
immunity (from early English law can’t sue the King)
• Washington waived immunity in 1961
• Agencies can be sued just like private
persons
• A tort claim must be filed prior to a
lawsuit
• ORM works to resolve tort claims short
of litigation
• AGO defends the state in litigation
Self Insurance Liability Program
• Washington is self-insured – RCW 4.92.130
• SILP is administered by DES Office of Risk Management (ORM)
and pays for claims against:
– State agencies, state employees and volunteers acting within the
scope of their employment
– Defense costs
• Examples of what is covered by SILP:
– Bodily injury or property damage to a third party
– Violations of civil rights
• Examples of what is not covered by SILP:
– Worker injuries (covered by workers compensation or the Jones
Act)
– The state’s own losses, such as property damage (commercial
insurance can be purchased to cover property losses)
Risk Financing
Commercial Insurance
Available coverage (organization must contact ORM to purchase):
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Accidental death & dismemberment (AD&D) – Covers non-instructional activities policy such as performing arts,
talent show, Christmas boutique (excess insurance; health care plan is primary)
Athletic insurance program –Provides AD&D benefits for authorized participants of scheduled, college sponsored
games and practices.
Auto – For buses, trucks, etc. Most cars are covered by SILP.
Aviation – For airport and aviation liability
Boiler & machinery (HVAC equipment breakdown)
Bonds – e.g., public employees fidelity bond
Fine arts – e.g., to cover loaned art collection
Foreign liability – Foreign trips for employees (auto and general liability, repatriation)
Marine – ferry and non ferry policies, pollution
Master property (physical damage (including earthquake and flood) to scheduled buildings, electronic
data processing equipment, contents and loss of income
Medical student intern general liability (damage equipment)
Medical student intern professional liability (medical malpractice)
Non-medical student intern professional liability (e.g., shop)
Out-of-state workers compensation (required if employee works >30 days in another state in a year)
Student injury and sickness insurance – medical coverage for registered students taking 60 or more credit hours per
quarter
Special event liability coverage (haunted house, graduation)
Club sports (non-sponsored, e.g., wrestling, lacrosse) – health insurance bought by students
John Christenson 360.407.9461
Enterprise Risk Management
Traditional Risk Management
• Reactive to incidents, claims, lawsuits
• Examines what happened afterwards
• Ad hoc
Enterprise Risk Management
• Proactively considers and treats risks that
might affect an organization’s goals
• Doesn’t replace traditional risk
management activities
• Must still respond when bad things
happen
• Must be prepared for emergencies
Department of
Enterprise Services
State of Washington
ERM focuses on the future, not the past.
Office of Risk Management
Risk Management 101
Parents gave us our first RM lessons:
– Identify the risk:
look both ways
– Assess the risks:
how fast is the car going, and how big is it?
– Manage the risks:
mitigate risk by using crosswalk or wearing
reflective clothing
– Monitor the risks:
as you are crossing, keep an eye out for
vehicles
Benefits of ERM
• Helps organizations
reach their strategic
goals
• Helps organizations
meet mandates and
statutory requirements
• Helps prevent injuries
and losses
• Protects the assets of
the organization
• Reduces tort claims
and litigation
Roadmap to Managed Risk
Risk Management Process
Identify
exposures, risks
and
opportunities
Identifying Risk Based on Goals
Enterprise Risk Management
• Why does your agency exist?
• What are you required to achieve (e.g.,
legislative mandates)?
• What accomplishments are targeted in
your strategic plan?
What can get in the way of accomplishing your mission?
• Some risk cannot be avoided. What is
your agency’s “risk tolerance”?
Identifying Risk Based on Assets
• Real Property – buildings, bridges, etc.
• Personal Property – computer systems,
records, cash, etc.
• Intangible property (reputation, branding, etc.)
• Employees
What hazards and perils threaten your assets?
Risk Identification Methods
•
•
•
•
•
•
Safety checklists
Surveys
Inspections
Assessments
Brainstorming
Review of loss history, accident reports, tort
claims, etc.
• Industry review
• Operations flow chart – identifies critical
points, weak links, lack of standards
Risk Identification
• What are the uncertainties, exposures, perils and hazards facing
your organization?
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Catastrophic event (earthquake, tsunami, flood)
Theft
Insufficient number of trained employees
Buildings or grounds in disrepair
Unsafe driving habits
Employment practices
Independent contractors
Illness, disability, retirement, death of employees
Poor morale
Terrorism/ active shooter
Slip and fall on premises
Work-related injuries
Lack of safety equipment, non-adherence to safety procedures
Cyber threats, lack of data control
Budget
Risks unique to your institution’s goals, services and assets
Six Simple Steps
1. Clearly state the goal
Seven
Simple
Steps
(e.g., ‘prepare
students
for workforce’, or ‘conduct graduation ceremony’)
2. List everything that could keep you
from meeting the goal (the ‘risks’)
3. Evaluate each risk:
Choose a likelihood rating from 1-5
Choose an impact rating from 1-5
Vote
Multiply together & ‘Map’
4. Prioritize (Pick the most severe risks)
5. Develop a response plan (risk register):
Avoid
Accept & Monitor
Transfer
Reduce the likelihood
Reduce the impact
- Include measures of success
6. Implement and monitor plan
Communicate Results
Gather & share ‘best practices’
Review & Refine
Clearly state the goal
Examples:
• Fencing club plans to drive to Oregon for
tournament
• Mountaineering club wants to build a 50
foot outdoor climbing wall
Health
and
Safety
Risks?
Step 2:
Identify potential risks
Property
Risks?
• Brainstorm potential risks
• Don’t be bogged down at this step by how
likely the risk is, or how you will manage
the risk
• Consider different areas of risk. A student
trip to another state could pose many
types of risk
Legal and
Compliance
Risks?
Reputation
/ Credibility
Risks?
Step 3:Vote to determine risk score
• Group would then vote on each risk, using
set ranking criteria for likelihood and
impact
• Take the average likelihood score and
multiply it by the average impact score for
each risk
• Plot the risk scores on a heat map
Step 4: Prioritize your risks
Sample Heat Map
Review potential exposures to determine likelihood and severity
• The most severe risks will fall
in the ‘Red Zone’.
• Unless you have unlimited
resources of people, time and
money, your initial focus
should be on treating risks
that fall in the red zone
Step 5: Develop a Treatment Plan
• Determine how you will treat/mitigate each
priority risk
– Avoid
– Accept and monitor
– Reduce the likelihood
– Reduce the impact
– Transfer the risk via contract or waiver
– Insurance
Step 5: Create a risk register
to list risks, risk scores and treatment plans
GOAL:
Risk
(Briefly describe;
include ‘score’)
Risk Treatment
(Check type and briefly describe)
□
□
□
□
□
□
□
□
□
□
□
□
□
□
□
□
□
□
□
□
□
□
□
□
Avoid
Accept
Reduce
Transfer
Avoid
Accept
Reduce
Transfer
Avoid
Accept
Reduce
Transfer
Avoid
Accept
Reduce
Transfer
Avoid
Accept
Reduce
Transfer
Avoid
Accept
Reduce
Transfer
How will we know
when we succeed?
(What are the ‘measures’?)
Target
Date
Person
Responsible
Risk Intelligence
 Many things that make our lives better
today are the result of someone taking a
calculated risk yesterday.
 Get in the habit of looking for risks.
 Ask, “What might get in the way of
accomplishing this goal on time?”
 Ask, “If we do this, what might the
consequences be?”
 Develop a toolkit for managing risk.
 Know who to call for help.
Thank you for participating!