RMPE 352-Risk Management for Public Entities

By Kallman, James; Barrese, James | Journal of Risk and Insurance, June 2002 | Go to article overview
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RMPE 352-Risk Management for Public Entities

Kallman, James, Barrese, James, Journal of Risk and Insurance

RMPE 352-Risk Management for Public Entities, edited by George Head and Kwok-- Sze Richard Wong, 1999, Malvern, Penn.: AICPCU/IIA

Reviewers: James Kallman and James Barrese, The School of Risk Management, St. John's University

One of the latest texts offered by the AICPCU/IIA is RMPE 352-Risk Management for Public Entities. The book is designed to prepare students for one of the exams in the sequence leading to the AICPCU's ARM-P designation. The focus of the book is the practice rather than the theory of risk management in the public sector.

The government sector in the United States accounts for approximately 16 percent of the reported GDP.' State and local governments account for more than 65 percent of this governmental spending. Studying the theories of the motivations and spending decisions of government organizations involves both the economic and political science literature. The editors may have felt that a summary of this literature might distract the reader from the book's focus on the current practice of risk management in government. However, we feel the limited philosophical discussion to be one of the few flaws in an otherwise ambitious book. Head and Kwok-Sze focus on the practice of risk management, and the volume they have produced is an encyclopedia of public sector risk management issues and practice.

The general topics covered include public sector risk management administration, exposure identification and analysis, managing distinctive liability exposures, risk control, claims and litigation, risk financing, pooling for risk financing, establishing risk management programs, and disaster planning and emergency response. The fiscal federalism literature discusses the economic rationale for various levels of government and for the provision of different services by these different levels (see, for example, Oates, W. C., 1972, Fiscal Federalism [New York: Harcourt Brace Jovanovich]).

For example, grade-school exposures are most common at the local government levels but rare at the state and national government levels. In contrast, public universities are more common at state government levels. The existence of these different exposures by different levels of government leaves the readers hoping for a discussion of the strategic and philosophical justifications for risk management at the various levels of government. Instead, the book provides a very broad discussion of governments more fitting for a civics course.

Chapter Two contains little material unique to risk management administration. Chapter Six, "Claim and Litigation Management for Public Entities," is an excellent discussion of claims management, but we fail to find anything unique to a public entity.

Chapter Seven's risk financing sources likewise contain details on retention and insurance that most intended readers would already understand. For example, discussing the differences in the various insurance policies (for instance, the property cause-ofloss forms) is hardly unique to public entities (pp. 323-336). Consequently, much of this material could be edited out of the text. This would allow the reader to focus on material that is special for public entities, such as public officials' liability coverages (p. 336).

The book's preface states, "This text aims to highlight the distinctive aspects of public entity risk management." In that goal, the book falls short; the tools of risk management presented are not significantly different from those presented in an approach to corporate risk management. The reviewers posit that the readers of the text will be practicing risk managers who are already familiar with the basic tenets of risk management. We suggest that readers will already either possess an Associate in Risk Management (ARM) designation or have studied this material.

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