Risk Management - a Tool for Reducing Exposure to Legal Liability

Article excerpt

The authors of these feature articles have discussed some of the major legal issues that concern physical education, recreation, and dance professionals. A thread which ties these legal concerns together is risk management.

Risk management has been defined as "the formal process of assessing exposure to risk and taking whatever action is necessary to minimize its impact" (National Association of Independent Schools, 1988).

Four basic aspects of the risk management process are: (1) identifying the potential risks; (2) evaluating risks; (3) selecting the proper approaches to the risks; and (4) implementing operational procedures.

Identifying the Risks

van der Smissen (1990) identified four general categories into which all risks may be placed: (1) property exposures; (2) public liability (excluding negligence in program services); (3) public liability (negligence in program services);and (4) business operations.

Property exposure. Property exposure includes loss or damage to facilities, equipment, and equipment of others that might be on loan, leased, or stored on your premises. To identify these risks, first make a list of all property on your premises. Then estimate what damage or loss could result from occurrences such as fire, vandalism, theft, and natural elements such as hail, tornado, flood, lightning, wind, or rain.

Public liability (excluding negligence). Many types of risks are included in this category. Some of these risks are rendered by acts of your employees, such as malpractice; intentional torts such as libel, slander, and false arrest; assault and battery; invasion of privacy; and violation of dram shop and host liquor laws. Exposure may include that of products liability for any equipment used as well as for the sale of food. Other exposures include contractual liability, natural hazards, advertiser's liability, and discrimination or civil liberty violations.

Public liability (negligence). Examine the program to assess what types of exposures exist to determine the likelihood and the seriousness of the bodily injuries (e.g., death, quadriplegia, broken bones) that might occur in supervised services (such as swimming programs, physical education classes, and sport leagues) and unsupervised areas (such as parks, lakes, playgrounds, and parking areas). Consider the number and training of the personnel involved, the maintenance status of the facilities, and the number of participants or facility users.

Business operations. Evaluate the potential financial loss that could result from the disruption of various aspects of the business operations. These may be classified as personnel-related and nonpersonnel-related risks. Some personnel-related risks include embezzlement and employee dishonesty, health and accident coverage, health of key personnel, and errors or omissions by officers. Nonpersonnel exposures include loss of income due to natural elements, health-related or political reasons, vehicle coverage, and service contracts.

Insurance consultants or a professional risk management company can come to your facility to do a complete risk analysis, but you and your institutional/agency staff also can do a good job of identification. Keep in mind, however, that a onetime identification of risks is not sufficient. Risk identification must be an ongoing process. Personnel should be taught to recognize risks and to know what to do once the risk is recognized (Miller, 1989).

Evaluating Risks

Some risks are more important than others; thus, the second aspect of the risk management process is evaluation of risks. While some might be severe in terms of the physical and financial effect, others might be less serious, but more likely to occur. Risks must be evaluated in terms of the severity of the potential risk (both from the impact on the organization and from the seriousness of the injury to the participant) and the likelihood of the occurrence (van der Smissen, 1990). …