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RISK MANAGEMENT PROCESS
Definitions
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Risk, broadly defined, means
the chance of financial loss |
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Risk Management - the art of
minimizing the adverse effects of risk |
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Risk management for district
11 - the methods to
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reduce risks of loss common
to school districts and specific to district 11, |
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protect assets against
catastrophic loss exposures, and minimize the cost of risk |
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Cost of risk is the direct and
consequential cost of loss prevention measures, plus the insurance premiums,
plus the losses, minus recoveries from third parties, plus associated
administrative expenses |
The Risk Management Decision
Process
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Search and identify loss
exposures |
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Examine alternative techniques
for risk control and risk financing |
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Select the most promising
techniques |
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Implement the chosen
techniques |
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Monitor the results to control
and strengthen the program |
Risk Management
Techniques - Risk Identification
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Processes to systematically
and continuously identify property, net income, liability and personnel
exposures as soon or before they emerge.
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Physical assets - land,
buildings, equipment, furnishings, vehicles, environmental... |
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Financial assets -
profitability, cash, transit, receivables, investments, funded reserves… |
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Liability - contracts,
operations, obligations, commitments…. |
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Human assets, such as
personnel, students, other specialists... |
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Risk Management
Techniques - Risk Control
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Reduce expected liability,
property and personnel losses |
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Make long term loss experience
more predictable |
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Includes - avoidance, loss
control, loss prevention, loss reduction, separation of exposure units,
combination of exposure units, duplication, transfer to non-insurer of legal
responsibility |
Risk Management Techniques -
Risk Financing
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To obtain funds at the least
possible cost to restore losses |
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Transfer to non-insurer
through obligation - usually through provisions in contracts |
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Risk retention - passive or
unplanned, without funding, or active or planned, such as self insurance,
deductibles, or sirs (self-insured retention) |
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Transfer through insurance -
loss control reduces insurance costs |
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