RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management...
description
Transcript of RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management...
![Page 1: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/1.jpg)
RISK MANAGEMENT BASICS
Presented by John Chino, ARM PE, CSRM
Arthur J. Gallagher Risk Management Services, Inc.
![Page 2: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/2.jpg)
OBJECTIVES
Attendees will understand:
• Components of the Risk Management Process• The direct & indirect cost of risk• The benefits of Risk Management• Current loss trends• Risk avoidance techniques
![Page 3: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/3.jpg)
• Manage risks Reasonable application of effective management skills to control internal & external risks
• Reducing organizational risks to an acceptable level
• Good managementIdentify unsatisfactory conditions/practices
WHAT IS RISK MANAGEMENT?
![Page 4: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/4.jpg)
“Locate, assess, and establish effective preventative and corrective measures for elements detrimental to organizational efficiency and effectiveness”
WHAT IS RISK MANAGEMENT’S FUNCTION?
![Page 5: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/5.jpg)
WHY WORRY ABOUT RISKS?
• Direct cost (insured)
• Indirect cost (uninsured)• $1 to $3 - $53 Ratio• Operational budget
$1
$3-$53
![Page 6: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/6.jpg)
IMPACT Example
• Direct Cost $12.4 million annually
• Indirect Cost
$3 X $12.4M = $37.2 million annually
$5 X $12.4M = $62.1 million annually
$10 X $12.4M = $124 million annually
![Page 7: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/7.jpg)
INDIRECT COSTS
• Employee lost time• Employee/crew wages• Overtime/comp time• Cost of hiring
replacement• Cost of training
replacement• Supervisory time
• Investigation time• Legal expenses• Building/equipment
damage• Replacement of
materials/supplies• Decreased output• Over 125 miscellaneous
costs
![Page 8: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/8.jpg)
RISK MANAGEMENT BENEFITS
• More effective and efficient services• Better quality of services• Increased production (more services per dollar)• Decreased operational costs• Reduced cost of risk (direct & indirect)• Reduced waste of resources• Community satisfaction ( happier taxpayer)• Improved employee morale (motivation)
![Page 9: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/9.jpg)
PUBLIC ENTITY MISSIONS• Efficient, Accessible and Effective Government
• A Great place to live, work and play
• Provide solution oriented services to the community through the application of professional skills, adopted plans, and standards which facilitate the growth of the local economy and enhance the quality of life and preserve the natural environment for current and future generations.
![Page 10: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/10.jpg)
RISK MANAGEMENT PROCESS
Five step process
1) Identify risk exposures
2) Analyze risk exposures
3) Select appropriate risk management techniques- risk funding- risk control (avoidance)
4) Implement techniques/measures
5) Monitor results and revise as necessary
![Page 11: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/11.jpg)
RISK IDENTIFICATION 1st Step
• Identify all areas of exposure
• Physical property
• Loss of income/services
• Human resources
• Legal liability
![Page 12: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/12.jpg)
EXERCISE
Risk Identification
![Page 13: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/13.jpg)
SAMPLE EXPOSURE
![Page 14: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/14.jpg)
RISK ANALYSIS 2nd Step
• What can go wrong?• Identify everything that can go wrong
• How severe is it likely to be?
• How frequently is it likely to occur?
• Prioritize (most serious first)
![Page 15: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/15.jpg)
RISK ANALYSIS 2nd step cont.
• Property• Automobiles• Buildings• Equipment
• Property damage• Crime• Weather• Fire• Other
![Page 16: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/16.jpg)
RISK ANALYSIS 2nd step cont.
• Loss of income/services• Operations that produce income
• Taxes• Fees• Other
• Loss of services (work disruption)• Accounting processes/IT• Embezzlement
![Page 17: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/17.jpg)
RISK ANALYSIS 2nd step cont.
• Human Resources• How can staff get hurt/killed
• Office• Field• On travel
![Page 18: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/18.jpg)
RISK ANALYSIS 2nd step cont.
• Legal Liability• Auto, General, Law Enforcement, Civil Rights,
• Land Use, etc.• Protect citizens property• Protect citizens operations• What tasks/activities will get you sued
![Page 19: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/19.jpg)
SAMPLE RISK RANKING CRITERIA
2
Sample – Likelihood
How Likely? % of Time How often? Frequency
5 Certain or Almost Certain
>75% Expected to occur in most circumstances Daily, weekly
4 Likely 50 – 75% Will likely occur in most circumstances Monthly
3 Possible 25 – 50% Fairly likely to occur at some time Once a year
2 Unlikely 5 – 25% Could occur at some time
Once a decade
1 Rare 0 – 5%Will occur only under
special circumstances
10 years or >
![Page 20: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/20.jpg)
![Page 21: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/21.jpg)
RISK AVOIDANCE
![Page 22: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/22.jpg)
AVOIDANCE 3rd Step
• Terminate
• Transfer• Hold Harmless• Indemnification Clause• Defense Clause• Insurance Certificates
• Treat
• Tolerate
![Page 23: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/23.jpg)
DECISION
PROCESS
Identify all sources of
potential loss
Evaluate each risk
TERMINATE
Take action toeliminate risk
TREAT
TOLERATE
TRANSFER
Take action totransfer risk
Monitor and Review Results
Take action to treat risk
Set standardsPolicyTrainingEquipmentServices Accept risk
NO
YESNO
NO
NO
YES
YES
YES
RE-ASSESSSeverity, Probability, & Frequency
![Page 24: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/24.jpg)
IMPLEMENTATION 4th Step
• Build a Team/Create a RM Culture• Policies & procedures• Define responsibilities• Communicate to employees• Train employees• Implement preventative measures
![Page 25: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/25.jpg)
MONITOR 5th Step
• Establish and evaluate performance measures
• Commend and correct individually and organizationally
![Page 26: RISK MANAGEMENT BASICS Presented by John Chino, ARM PE, CSRM Arthur J. Gallagher Risk Management Services, Inc.](https://reader035.fdocuments.net/reader035/viewer/2022062501/568168b3550346895ddf807f/html5/thumbnails/26.jpg)
CONCLUSION
Q & A