Risk Management - a Tool for Reducing Exposure to Legal Liability.

by Doyice J. Cotten
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). Clement (1988) suggested that the
magnitude (the number of people who will be harmed) also be included. The approach to
handling risks would vary depending on these factors.
Selecting Risk Approaches
Once you have identified and evaluated the risks, the third aspect in the process is to
decide what to do about it. Four approaches to risk management are risk elimination, risk
retention, risk reduction, and risk transfer. HPERD professionals must understand each of
these approaches to make the best decision regarding the risk.
Risk elimination. Risk elimination can entail the discontinuance of the risk (to stop
offering the activity in the program due to risk) or the avoidance of the risk (to choose not
to add the activity to the program) (van der Smissen, 1990). An example of
discontinuance is locking up a trampoline which has been used for years, while an
example ...