MANAGING BUSINESS RISKS AN OVERVIEW CSU, Northridge January, 2004 Chris Brady University Risk Manager

WHAT IS RISK MANAGEMENT?  Risk: The organization’s exposure to accidental loss.  Management: Planning, organizing, Leading and controlling.  “Everyone on campus must be a risk manager.”

Classic risk management is no longer adequate

IN ORDER TO MANAGE RISK EFFECTIVELY YOU MUST………  Understand risks associated with your objective.  Understand your role as a part of the CSUN Risk Management Team.  Expand your knowledge base of risk management principles.  Take an active role in the risk management effort at CSUN.  Seek creative solutions to risk management issues.

Why Managing Risk Is Important  Accountability  Raises Awareness  Financial impacts Program cuts Premiums Deductibles Claims

CSUN Insurance Contributions (Premiums)

$4,169,434

Benefits of Hands-On Risk Management  Increases awareness of objectives  Puts focus on mission critical objectives  Clear understanding of responsibility & accountability  Improves cross-functional communication  Creates a sense of TEAM-OWNERSHIP  Early identification of risks can result in mitigation activity that significantly reduces exposure

SIX STEPS OF RISK MANAGEMENT  1. Identify and Analyze Exposures  2. Analyze Feasibility of Alternative Techniques  3. Select Method of Risk Control  4. Implement Chosen Techniques  5. Monitor Results  6. Modify Techniques

STEP 1 – Identify & Analyze Exposures  Identification Tools: Loss History Program Outlines Annual Budget Meeting Agendas Purchase Agreements Inspection and Maintenance Records Contracts and Leases

STEP 2: Feasibility of Alternative Techniques  Avoidance  Transfer of Risk  Retention of Risk Reduce Risk through Loss Reduction Efforts Finance Retained Risk  Define Meaningful Standards and Expectations

STEP 3 Evaluate Loss Potential  Evaluation Techniques Frequency/Severity of Claims Publications/Periodicals/Other Universities Political/Litigation Climate Anticipate

MITIGATION OPTIONS  Control It (prevention & detection techniques)  Share It (co-source; warrants; guarantees)  Transfer It (insurance; hold harmless contracts)  Avoid It (process re-design; eliminate process)  Accept It (cost/benefit analysis)  Residual Risk (Opportunity To Manage)

STEP 4 – Implement Chosen Technique  Management Support  Documentation and Notification  Governing Board Approval for Major Actions  Develop Policies and Procedures

STEP 5 – Monitor Results  Compare Actual Results to Anticipated Results  Consider Environmental Changes  Keep Records/Documents

STEP 6 – Modify Techniques to Reflect experience  Document Decision Making Process  Maintain a Safety/Loss Control Program  Continue to Monitor Results  Start over at Step 1 !!!

CURRENT CHALLENGES Changing environment – remodel Budget issues – Circumvent procedures/taking shortcuts Policies & Procedures – Clearly defined Safety environment – Constant changes Communication – Sharing of information Equipment – Purchasing & Insurance requirements Maintain a teamwork philosophy, share information, focus on the objective of the college and the impact to future programs.

RISK RELATED ACTIVITIES Lab Environment Project design & testing Competitions Internships Field Trips Proper planning, training and supervision for these types of activities will significantly reduce the risk of loss, damage or injury.

Insurance Issues Risk Assessments Ergonomic Assessments Compliance Monitoring Claim Management Training & Staff Development For Assistance With: Insurance & Risk Management at ext. 2401

Questions & Answers