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Begin 2010 January 5, 2010 Issue 12
Risk management is... a vital business process.
Fundamentals of Sound Risk Management Programs
There are six fundamental things a school district
should do, according to one of the leading risk management educators and
Director Emeritus of the American Institute for Chartered Property & Casualty Underwriters.
In his newly published white paper titled, "Risk Management Why and How,
" Dr. George Head outlines the fundamentals and illustrates what a sound risk
management program can do for a school district.
The white paper is distributed for reproduction without
charge by the International Risk Management Institute and can be downloaded here.
are some of
Dr. Head's key points for
#1 Welcome Change as A Starting Place
essential place to start is to recognize risk-the possibility of surprising
change. Risk management should
work with change, in principle seizing unexpected opportunities for gain where
possible-but more importantly, thwarting threats of accidental loss wherever
they emerge. A good risk management program begins with an appreciation, almost
a welcoming, of change."
#2 Follow a Definite Process
"The exact number of steps in the process does not matter.
What does matter is that the steps encompass the whole risk management process,
from the recognition of a threat to reliable, complete, cost-effective, and
equitable financing of recovery from loss. In this sense, managing risk is like
eating an orange: the number of sections into which you slice it does not
matter, as long as you get it all."
#3 Get Everyone on the Risk Management Team
"To underscore that everyone is on the "risk management
team," it is good to assign general risk management duties to each
employee. It also matters that
everyone, all an organization's personnel, "gets it." Each employee must
understand the essence-not necessarily the more complex details-of risk
Equal Attention to Controlling and Financing Losses
"Risk control to reduce the probability, size, or
unpredictability of losses from a given exposure is never enough. Simply paying
for losses without trying to prevent them, make them smaller, or make them more
predictable wastes money that even the most elementary risk control could have
saved. Properly managing any loss exposure requires combining, pairing, and
devoting equal attention (although not necessarily equal resources) to risk
control and risk financing for that exposure."
#5 Practice the Golden Rule of Risk
"Because risk closely or remotely links us all, we should
act ethically toward one another in managing risk for our shared well-being.
More specifically, in managing risk, we at least ought to provide and expect
total honesty in our dealings, consider the risk-related rights and duties of all
those in our local and global communities, and apply the Golden Rule of Risk.
This is the Golden Rule of Risk: Manage your own risks as well as you would
like others to manage theirs."
So, what is the 6th fundamental? Dr.
Head encourages, "linking risk management to your mission" and he offers some specific ways to do this in the
Even though the paper is written for a wide audience, it
contains many practical suggestions and an easy-to-follow, basic framework for
Preview of Some Upcoming Events
School finance directors, risk managers and other school
leaders in North Carolina aremeeting January 29 to discuss ways to promote innovation, research and
exchange of information concerning risk management in their state. Curtis Grogan, Wake, Ron Allen, Durham
and Kevin Earp, Charlotte-Mecklenburg are the meeting organizers.
The Public Agency Risk Managers Association is holding its
annual conference February 16 -18 in Sacramento, CA. This is billed as
the second largest conference for public agency risk managers in the United
States. 36 sessions are scheduled
for the three-day event. David
Pinnecker, Apple Valley USD, CA is a member of the PARMA Board.
The Institute held it first summit last June in Dallas and a
second one in September during the Annual Conference of the University Risk
Management & Insurance Association. These summits provide opportunities for
personal connection for those who are able to travel. Preparations are being
made for a series of four regional summits, based on time zones, during February,
April, May and June. The Institute is seeking support for broadcasting from
each site to wider audiences.
Professionals Call Attention to Educator Sexual Misconduct and Other Key Issues
|Short articles from a cross section of contributors began appearing in November at the newly launched web platform known
as Risk Central. Leading the way
were Bill Clayton who wrote about safe driving, Dave George urged care on field
trips, Dorothy Gjerdrum explained enterprise risk management, plus the
importance of the ISO 31000 standard, and Bruce Kaechle delivered a two part
series on risk management technology. Kharla Ray provided the first in a
three part series on educator sexual misconduct. Chuck Origer
also talked about this important topic. Kevin Supple shared insights on
risk management as a CFO, Joe Goncalves wrote about building security, and Glenn
Backus offered thoughts on dedicated claims management services.
lineup includes Don McPherson, Paul Binsfield, Jill Eaton, Christine Lueders,
Dennis Chandler and Herb Appenzeller. Bios and photos are included for each
contributor and all past articles are easy to access. Recommendations and requests to join the featured
contributors can be sent to the Executive Director.
Institute Service in the Spotlight
|Newsletters Past Present and Future
The monthly Institute newsletter is undergoing some changes
in format and scheduling in order to continue to provide timely, useful
information. All issues are archived for public viewing on the Institute
website. To view these,
please go to homepage Resources, then Helpful Links and open SchoolRisk News.
This newsletter was published ten times in 2009. The special topics/article headings
Downsizing Risk Management Needs
What Are School Risk Managers
Traits of Effective Risk Managers
Teach What You Expect
Science and Safety
Safety and Health Grants
Medicare Mandatory Claims Reporting
Pushback Encourages Risk Reduction
ASBO School Insurance Handbook
A special edition Risk Control
& Safety Digest was published that included information about:
Flu - H1N1
The 2009 newsletters also featured
coverage of major events and organizations of special interest in school risk
management, including the following:
Florida Education Risk Management
Public Risk Management Association
California Association of Joint
Association of Governmental Risk
Schools Excess Liability Fund
|People & Achievements
Two public school risk management leaders Jan DeGracia,
CPCU, and Shaw Bubb, CPA, were among the ten distinguished guest experts in the
second session of the Essentials In Pool Management course offered this past
fall by the Insurance Educational Association with support from the Association
of Governmental Risk Pools, National League of Cities Risk Information Sharing
Consortium and California Association of Joint Powers Authorities. DeGracia is the Executive Director of
North Bay Schools Insurance Authority and her topic was The Role of the Pool
Manager. Bubb serves as Director of Insurance for the Montana
School Boards Association and his topic was Financial Stability of a
James Huckaby, risk
manager, Mesquite ISD, TX has produced another of his trademark Annual Risk
Management Reports, this one highlighting the accomplishments for the year
ending June 30, 2009. The
report documents both short-term savings and consistent value over a multi-year
period. The district received 76
safety awards in March 2009 from the National Safety Council, developed new
safety audit tools, in addition to holding 830 monthly safety meetings.
Employee Safety, Healthcare Reform and Food Safety Among
HR 2067 is pending in Congress to make school districts in
26 states subject to Federal Occupational Safety & Health Act requirements.
Currently, districts in 24 states are subject to approved State Plan OSHA
requirements. On December 7,
the U.S. Department of Labor released video remarks by Secretary Hilda L. Solis outlining the department's regulatory
agenda. Click here to view.
The immediate and long-term impact of the national
healthcare reform legislation approved on December 24 is still uncertain.
Food Safety was in the spotlight again as USA Today published
a story on December 30 titled, "Schools could learn lessons of food
safety." The article
notes, "It has been a decade since the U.S. Department of Agriculture
decided that the ground beef it buys for school lunches must meet higher
standards than ground beef sold to the general public. But those rules, which required that
school lunch meat be rejected if it contains certain pathogens, such as
salmonella, have fallen behind the standards that fast-food chains and other
businesses are adopting on their own." The report also stated that Dept of
Agriculture Secretary Tom Vilsack "has embraced a different measure for food
safety - one that goes beyond pathogen tests and looks at the true toll: how many
people get sick."
The Institute can provide additional information on request
about these and other
concerns pending before Congress or the Federal Courts. The Fast Answer Network can be used to
obtain insights and opinions from across the country.
|Some Insights from Market Watchers and
"An independent analysis of whether the insurance
industry has been setting aside enough money to pay its claims estimates that
the American International Group has a shortfall of $11.9 billion in its
property and liability operations." From
New York Times December 1 article.
has changed dramatically in the past decade - it's a dangerous place full of
new and complex risks. Here's the big question: What have we learned? Are we doing anything differently
today? I don't think so. Whether
it's severe weather or pandemics or cyber security, the simple truth is that
the risks of the 21st century are big, and real, and must be faced openly and
transparently. As business leaders, we must look at all the risks we face and
address them head on. And we have to be honest and open about what we see and
what we're doing about it. That is the only way to make our customers and the
public believe in us again." From
published remarks on December 8 by the Chairman & CEO of Willis Group.
"The global recession has caused companies to rethink their
business models, strategies, and operations-including the role of risk
management. Many risk practitioners are responding by increasing the efficiency
within their departments and attempting to forge closer ties to the C-suite.
Yet the majority of risk managers and their C-suite counterparts continue to be
stalled when it comes to a professed desire to take on a more strategic
approach to risk management." - From Risk Management Excellence, a 2009
survey report prepared by Marsh and the Risk & Insurance Management
"Dispiriting, isn't it? On the bright side, we've already made a lot of
progress. All we need now is the
civic courage to keep doing the right things. Congress roughed up some rating-agency executives at
hearings and may yet require more disclosures here, too. But the basic conflict
persists. Genuine reform fizzled.
We'll regret it when the next crisis hits."
Contrasting views of Peter Coy and Paul Bennett, in the December 28 edition of
|Course and Program Resource Inventory Project Underway
An ambitious project is being undertaken by the Institute with the objectives of
inventorying online training courses offered by vendors and training program
resources offered by school risk groups.
The initial table lists 93 course titles within five main
categories. The table shows eight
leading vendors and has a column for "others." Initially, the scope of the research on risk group resources
will focus on 16 organizations from different parts of the country and various
In future editions of this newsletter, the Institute will
offer insights on specific courses and look closer at the various resources for
training on vital topics and concerns.
|Board Policies Matter
aren't being followed are a lurking danger, " warns Melanie Herman of the
Nonprofit Risk Management Center. She recently advised her newsletter readers
to prevent "passive disobedience" by avoiding (a) "voluminous compilation of
detailed instructions and requirements that busy staff won't have time to read,
nor follow with care and (b)
"policies written without engaging the people who must follow them," She
added, "adopting someone else's
risk management policies without knowing whether you can fully implement the
policies may increase, rather than mitigate risk. Zeal to commit all of its policies and practices to writing
may have unintended consequences that can be avoided."
The Institute can provide assistance with a comprehensive
policy on risk management that improves upon the myriad board policies on
safety and different types of insurance.
Effective Safety Programs Flow from Research
"Safety should be internally - not externally driven" is the first of 50
principles explained by Scott Geller, Ph.D., in The Psychology of Safety. He adds, "It makes sense to talk about corporate safety as a mission owned and achieved by the very people it benefits." Dr. Geller is an acclaimed Virginia
Tech educator and is affiliated with Coastal Training, Virginia
More Good News
|Round up and Look Ahead
Headlines and events of the past decade were captured in a seven-minute video produced
by Newsweek. This video is a neatly packaged compilation. Click here and hang on for a
dizzying retrospective ride.
"2010: Year of Innovation - Promoting Risk Management in
In its December newsletter, the Texas Association of School
Boards Risk Management Fund announced the 7th round of innovation
grants in risk management. Up to
ten districts will be selected to receive $1,000 grants based on applications
submitted by January 22, 2010.
Foundation in Place for Working Together
The 12 months of 2009 were a
time of mixed growth, opportunity, confusion, doubt
and some dismay. Budgets shrunk, staffs were reduced. Most of us endured some kind of unexpected loss or
adversity. Risk managers and everyone connected with school districts had
to maintain an extraordinary high level of readiness.
We often read the headlines about the small number of things
that went wrong and forget the thousand things that went right.
For the Institute, 2009 started with a fearless group of founders, five
hundred or so district and associate members and a half-dozen corporate
partners, The year ended with nearly three times as many district and
associates members, plus twenty three companies making up the corporate partner
More than 80 ideas and possible projects were identified,
distilled and entered into a planning process in the first part of last year.
Then 12 national priorities were chosen in April. A game plan was developed and refined over the summer. It
incorporates four closely aligned initiatives labeled, Risk Management
Technology, Commonwealth, Blueprints and Education. Within the four initiatives are roughly 30 top services and
programs already introduced or planned for the benefit of members.
Eighteen months ago, nine
board members agreed to serve as the stewards of a vision for linking school
districts and school risk groups across the country. From that very humble
beginning several milestones have been passed. Two new board members were added
last summer and a plan for staggering the terms of office was adopted. Board
members serve voluntarily and their commitment and contributions have been
A resurgence of activity
occurred this past fall. In November, Risk Central added a new
dimension of technology for interactivity.
As December was coming to an end, progress was made to bring forth the
continuous improvement model for school risk management. The fourteen process
categories and 120 action elements were arranged into four sections - core
activities, risk improvement, insights & analytics, and support &
recovery. Together, the four
sections create a workable, comprehensive risk management operating system that
can be scaled to the needs of any sized district.
The Institute seeks to build on the foundation that was put in place in 2009. Some themes that school risk management leaders could
explore together in 2010 include:
- Smart Risk Finance: Competency
in Controlling the Cost of Risk and Increasing Risk Management ROI
- Risk Mapping and Strategic
Risk Success: Getting to the Blue Ocean and Protecting the Blindside
- Effective Injury &
Illness Prevention: Research and Re-imagination
- Total Risk Management: It Can
Collaboration is widely viewed as the key to innovation and a better future. This is a great time to increase commitment to each other.
Safety is Our #1 Priority and An Enduring Value
|There are countless efforts being made across the country to make school safety both a top priority and an enduring value. The Public School Risk Institute salutes everyone who is engaged in school safety, health and wellness. |
Please call or send us a note with your comments and
suggestions about this newsletter and any projects you would like to see us
undertake. We also want to receive school contact names, contacts with
organizations you believe may want to be involved, and material for the new
We hope you find the Institute's newly updated website useful. Please visit regularly and let us know how we can support your efforts to advance risk management. Your input and feedback is greatly desired and appreciated.
Lee Gaby, Executive Director
Public School Risk Institute
NEW Phone (706) 715-3381 Ext. 701