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IN A HEALTHCARE BUSINESS ENTERPRISE
EVERY BUSINESS FACES RISK
WHAT IS BUSINESS RISK?
EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY
EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY
EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY
EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY
EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY
EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY
UNEXPECTEDDOES NOT MEAN
UNFORESEEN
EVERY BUSINESS FACES RISK
MAINTAINING A SYSTEMIC PROCESS
TO IDENTIFY
AND
CONTAIN BUSINESS RISK
IS A CORE FUNCTION
OF MANAGEMENT
EVERY BUSINESS FACES RISK
MAINTAINING A SYSTEMIC PROCESS
TO IDENTIFY
AND
CONTAIN BUSINESS RISK
IS A CORE FUNCTION
OF MANAGEMENT
EVERY BUSINESS FACES RISK
MAINTAINING A SYSTEMIC PROCESS
TO IDENTIFY
AND
CONTAIN BUSINESS RISK
IS A CORE FUNCTION
OF MANAGEMENT
EVERY BUSINESS FACES RISK
MAINTAINING A SYSTEMIC PROCESS
TO IDENTIFY
AND
CONTAIN BUSINESS RISK
IS A CORE FUNCTION
OF MANAGEMENT
EVERY BUSINESS FACES RISK
MAINTAINING A SYSTEMIC PROCESS
TO IDENTIFY
AND
CONTAIN BUSINESS RISK
IS A CORE FUNCTION
OF MANAGEMENT
THE RISK MANAGEMENT PROCESS
A FIVE STEP ROUTINE
1. Discovery of Potential Loss Exposure
2. Evaluation of Likelihood and Severity
3. Selection of Control Strategy
4. Implementation of Control Strategy
5. Monitoring / Feedback / Correction
DISCOVERY OF POTENTIAL LOSS EXPOSURE
UNDISCOVERED LOSS EXPOSURES MUST NOT BE
DISMISSED AS A
“COST OF DOING BUSINESS”
DISCOVERY OF POTENTIAL LOSS EXPOSURE
UNDISCOVERED RISK
YIELDS
UNCONTROLLED RISK RETENTION
DISCOVERY OF POTENTIAL LOSS EXPOSURE
BE REALISTIC
NOT EVERYTHING THAT
CAN GO WRONG
WILL GO WRONG
DISCOVERY OF POTENTIAL LOSS EXPOSURE
FOCUS MANAGEMENT ATTENTION
ON THOSE UNEXPECTED EVENTS WHICH CAN CAUSE
MATERIAL DAMAGE
DISCOVERY OF POTENTIAL LOSS EXPOSURE
TYPES OF LOSS EXPOSURE
1. Property
2. Liability
3. Key Personnel
4. Net Income
DISCOVERY OF POTENTIAL LOSS EXPOSURE
USE ALL AVAILABLE RESOURCES
TO IDENTIFY RISKS
1. Internal Resources
2. Industry and Regulatory Resources
3. Insurers
4. Consultants
DISCOVERY OF POTENTIAL LOSS EXPOSURE
INTERNAL RESOURCES
1. Survey your own people
2. Consult your own history
3. Diagram your processes
4. Analyze your cash to cash cycle
5. Ask yourself “What if ………?”
DISCOVERY OF POTENTIAL LOSS EXPOSURE
INDUSTRY AND REGULATORY RESOURCES
1. Professional Societies like the American Academy of Dermatology
2. Guidelines Promulgated by your Licensure Boards
3. ASHRM – The American Society for Healthcare Risk Management (www.ashrm.org)
DISCOVERY OF POTENTIAL LOSS EXPOSURE
INSURERS
1. Professional responsibility carriers provide training courses and guidance
2. Property and casualty carriers also provide training and guidance
DISCOVERY OF POTENTIAL LOSS EXPOSURE
CONSULTANTS
1. Industry-specific consultants can bring experience and fresh eyes
2. Learn from the mistakes of others
3. Knowledge of control techniques
EVALUATE EACHPOTENTIAL LOSS EXPOSURE
DIMENSIONS OF RISK
1. Frequency
2. Potential Severity
3. Realistic Range of Loss
DISCOVERY OF POTENTIAL LOSS EXPOSURE
BE REALISTIC
NOT EVERYTHING THAT
CAN GO WRONG
WILL GO WRONG
EVALUATE EACHPOTENTIAL LOSS EXPOSURE
GOAL OF THE ANALYSIS?
IDENTIFY A PRACTICAL
RISK CONTROL STRATEGY
RISK CONTROL STRATEGIES
TWO CATEGORIES
1. OPERATIONAL
2. FINANCING
RISK CONTROL STRATEGIES
OPERATIONAL
1. Risk Avoidance
2. Loss Control
3. Combination
4. Transfers of Operational Risk
RISK CONTROL STRATEGIES
OPERATIONAL
1. Risk Avoidance
2. Loss Control
3. Combination
4. Transfers of Operational Risk
RISK CONTROL STRATEGIES
OPERATIONAL
1. Risk Avoidance
2. Loss Control
3. Combination
4. Transfers of Operational Risk
RISK CONTROL STRATEGIES
LOSS CONTROL
1. Prevention
2. Mitigation
3. Separation
RISK CONTROL STRATEGIES
OPERATIONAL
1. Risk Avoidance
2. Loss Control
3. Combination
4. Transfers of Operational Risk
RISK CONTROL STRATEGIES
OPERATIONAL
1. Risk Avoidance
2. Loss Control
3. Combination
4. Transfers of Operational Risk
RISK CONTROL STRATEGIES
TWO CATEGORIES
1. OPERATIONAL
2. FINANCING
RISK CONTROL STRATEGIES
FINANCING TECHNIQUES
1. Non-insurance financing transfers
2. Insurance
3. Retention/Reserves
RISK CONTROL STRATEGIES
NON-INSURANCE FINANCING TRANSFERS
1. Contractual Indemnification
2. Guaranties
3. Warranties
4. Common Law Indemnification
5. Contribution
RISK CONTROL STRATEGIES
NON-INSURANCE TRANSFERS
RISK FINANCING OBLIGATIONS CAN BE TRANSFERRED
FROM YOU OR TO YOU
RISK CONTROL STRATEGIES
NON-INSURANCE TRANSFERS
THE TRANSFER IS ONLY AS EFFECTIVE
AS THE FINANCIAL CAPABILITY OF
THE TRANSFERREE TO PAY THE BILL
RISK CONTROL STRATEGIES
FINANCING TECHNIQUES
1. Noninsurance financing transfers
2. Insurance
3. Retention/Reserves
RISK CONTROL STRATEGIES
INSURANCE
A risk financing technique
with a financially responsible partner,
but
with strings attached.
RISK CONTROL STRATEGIES
INSURANCE
1. Scope of Coverage
2. Adequacy of Amount
3. Conditions on Claim
4. Conditions on Payment
RISK CONTROL STRATEGIES
FINANCING TECHNIQUES
1. Noninsurance financing transfers
2. Insurance
3. Retention/Reserves
RISK CONTROL STRATEGIES
RETENTION/RESERVES
1. A decision to retain the financing burden of
a risk should be made only after carefully
evaluation.
2. No risk should be retained without
providing a specific and committed reserve.
THE RISK MANAGEMENT PROCESS
A FIVE STEP ROUTINE
1. Discovery of Potential Loss Exposure
2. Evaluation of Likelihood and Severity
3. Selection of Control Strategy
4. Implementation of Control Strategy
5. Monitoring / Feedback / Correction
IMPLEMENTATION OF THECONTROL STRATEGY
MAKE A PLAN
1. Document the risk you have identified and the evaluation
you have made.
2. Document the reasons for your selection of a control
technique
3. Assign responsibility and set deadlines
4. Follow through
THE RISK MANAGEMENT PROCESS
A FIVE STEP ROUTINE
1. Discovery of Potential Loss Exposure
2. Evaluation of Likelihood and Severity
3. Selection of Control Strategy
4. Implementation of Control Strategy
5. Monitoring / Feedback / Correction
THE RISK MANAGEMENT PROCESS
RISK MANAGEMENT IS A
CORE MANAGEMENT FUNCTION
THE RISK MANAGEMENT PROCESS
MAINTAINING THE ENTERPRISE RISK
MANAGEMENT PROCESS
IS THE RESPONSIBILITY
OF THE CHIEF EXECUTIVE OFFICER
Douglas O. GuffeyJaburg Wilk, PC3200 N Central Avenue, 20th FloorPhoenix, AZ 85012
602-248-1039dog@jaburgwilk.comwww.jaburgwilk.com
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