Risk Management Basics

When it comes to risk management, the director emeritus of the American Institute for Chartered Property and Casualty Underwriters says school districts need to work on six fundamentals – the first of which is to embrace change.

In a newly published white paper, George Head says a good risk management program “begins with an appreciation, almost a welcoming, of change.” District administrators, he advises, should look at change as a chance to seize “unexpected opportunities for gain” and thwart threats of accidental loss.

Writing in “Risk Management – Why and How,” a white paper recently distributed by the International Risk Management Institute, Head says the next step for risk-averse public school districts is to follow a specified process that encompasses “the whole risk management process, from the recognition of a threat to reliable, complete, cost-effective and equitable financing of recovery from loss.”

The third piece of the puzzle is to recruit every district employee as a member of the risk management team. “Assign general risk management duties to each employee,” he recommends, all of whom “must understand the essence of risk management,” even if they don’t grasp the complex details.

The fourth fundamental, says Head, is to give equal attention to controlling and financing losses. “Properly managing any loss exposure,” he explains, “requires combining, pairing and devoting equal attention, although not necessarily equal resources, to risk control and risk financing for that exposure.”

Next, districts should make a point of following the Golden Rule of Risk, which is to “manage your own risks as well as you would like others to manage theirs.” Last but not least, Head encourages district officials to make risk management an integral part of their mission as education professionals.

For a link to the complete white paper, click here.