Identify Risk Management Strategies
For each risk you have identified, there will be one or more strategies or courses of action available to you. The main strategies that you will be working with are as follows:
- Risk Control
- Risk Transfer
- Loss Reduction
- Segregation of Exposures (Spread of Risk)
- Duplication of Resources
This is the most effective risk management strategy in that, by avoiding an activity or risk, any chance of a loss is eliminated. While it is the most effective strategy, it is also not always the most practical choice, as every part of a school operation has some level of risk, and avoiding all risk would mean a school (or society) could not function.
The key with Avoidance is to use it for situations where:
- the activity is inherently dangerous and/or a serious injury is likely to occur (See High Risk category);
- the foreseeable risks are beyond your control;
- the activity is not necessary to fulfill educational goals;
- the risks are not acceptable to your organization, or
- you do not wish to devote the necessary resources to manage it properly.
If the risks have been properly identified and ranked as described in Step 1, then an informed decision can be made as to whether a risk should be avoided.
(b) Risk Control
This is the process of actually managing the risk – taking proactive steps to reduce the identified risks where possible and putting steps, rules or procedures in place to minimize the residual risk to reduce the chance of a loss or the severity of such a loss. Classic examples of risk control are things like using protective gear for sports activities, setting rules, and of course, supervising to ensure rules are enforced.
Risk Control is the most widely used strategy, as, when combined with the other strategies, it enables activities or operations to take place with best safety practices or policies/procedures in effect that address the various elements of risk inherent in the activity or process.
In effect, Risk Control enables calculated, informed risk taking to occur where the benefits of proceeding with an activity outweigh the much-reduced risks that are present.
(c) Risk Transfer
This is the proactive process of transferring unwanted risk away from your organization to another person or organization. Risk can be transferred to another party as follows:
- by law (e.g. Occupier’s Liability, Joint and Several Liability, Employer’s Vicarious Liability):
- through a written agreement or contract between two parties (known as Contractual Transfer), or
- through a conventional insurance policy.
There are several situations where this strategy is effective:
- Purchasing an insurance policy to substitute a known risk (the premium you will pay) for an uncertain risk (will I have a million dollar loss?);
- Purchasing an insurance policy to protect against liability imposed by civil law for Occupier’s Liability, Joint and Several Liability and Employer’s Vicarious Liability;
- Someone else is using your premises/property for an activity they are in control of (See Certificates of Insurance)
- n outside person or independent contractor is performing work on your behalf. (See Certificates of Insurance)
(d) Loss Reduction
This is a “post-loss” strategy that is essentially a response plan that addresses what will be done if a loss does occur. An effective Loss Reduction strategy can effectively reduce the impact of a loss and can make the difference between an inconvenience and a catastrophe.
Fire Drills and Emergency Response Plans are examples of Loss Reduction strategies.
(e) Segregation of Exposures
In essence, this strategy follows the adage “don’t put all your eggs in one basket”. By spreading your exposure to loss across different locations or by isolating certain risks, the chance of a total loss is significantly reduced.
Some typical examples of segregation of exposures in a school environment include, but are not limited to:
- Not allowing combustible materials to be stored in boiler/furnace/electrical rooms;
- Using steel fire-proof cabinets for storing flammable liquids;
- Sports and Field Trips - Using female supervisors for female students and male supervisors for male students;
- Cash management procedures that require separate duties for employees or volunteers regarding cash receipts and cash disbursements and audit functions;
- Computer systems that can operate from different sites (hot sites);
- Computer back-up medium stored off-site.
(f) Duplication of Resources
This strategy involves maintaining back-up facilities or having a contingency plan in place in case an unexpected situation interrupts the normal flow of operations. While this strategy can involve maintaining an expensive infrastructure, it is an important strategy to consider for certain critical operations for your school board.
Some applications of this strategy include, but are not limited to:
- Ensuring an adequate number of supervisors are present for school excursions or activities to provide back-up in case of distraction, illness, injury or other emergency;
- Computer facilities – back-up computer data and access to alternate computer equipment that can be used to run the board’s computer systems (see also “Segregation of Exposures”).
- Alternate suppliers of goods and services to protect against supply chain interruption (e.g. fuel oil, maintenance contractors, etc.)
- Maintaining access to alternate teaching facilities either by contractual agreement or by utilizing existing schools that are not in use. For example, if a fire destroyed a high school, where would the students be sent?
This strategy is applied to manage risks that are either uninsurable due to high risk factors, or for small, infrequent losses that can be better managed internally than by claiming through an insurance policy (e.g. deductible level on a property insurance policy).
Most school boards do not have many uninsurable high risks that are essential to their business operations (see Avoidance), so the Self-Retention strategy is most commonly applied to supplement conventional insurance policy contracts by carrying a deductible. In return for taking a share of the small losses by way of a “deductible”, school boards are able to achieve reduced premiums on their main property insurance coverage, saving the insurance policy for catastrophic losses, while funding the small losses internally.