Risk Management
Risk: Risk is any uncertainty about a future event that threatens your organization's ability to accomplish its mission. Cost of Risk Equals: • Insurance premiums; plus • retained losses; plus • internal administrative costs; plus • external administrative costs.

Risk Management is the systematic method of identifying, measuring and treating exposures to property and casualty loss. Risk management focuses on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death, and lawsuits). Purpose – To develop pre-emptive strategies to prevent or reduce losses and loss effects; and to develop strategies to reduce the effects of a loss after it happens (Business Continuity Planning); reduce surprises after the loss. Risk Management is a discipline for dealing with the possibility that some future event will cause harm. It provides strategies, techniques, and an approach to recognizing and confronting most threats faced by an organization in fulfilling its mission. Risk management may be as uncomplicated as asking and answering three basic questions: What can go wrong? What will we do (both to prevent the harm from occurring and in the aftermath of an incident)? If something happens, how will we pay for it? Importance -To protect the assets and financial resources of your agency so that you can continue to service clients and the community. It will help ensure the survival of the agency after a severe loss. Essential Components of The Risk Management Plan: • • • • Identify Sources of risk exposure Evaluate or analyze risk exposure (measure the cost of the risk to the organization) Treatment of risk exposure Monitor the plan

Sources of Risk Exposure: • Property: Loss of real, personal, owned, leased, rented or owned by others; includes theft or embezzlement 1

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Indirect: Extra expense, loss of income, loss