Risk Management Presentation May 12, 2011 Pam Lombardo, Director EH&S.

Risk Management PresentationMay 12, 2011 Pam Lombardo, Director EH&S

Risk Management Presentation

Meeting Topics

Section 1. Risk & the Risk Management Process Section 2. UC Insurance Programs & Policies Section 3. Risk & Contracts Section 4. Other Risk Transfer Techniques Section 5. Enterprise Risk Management

Section 1

Risk & the Risk Management Process

Definitions

The Risk Management Process

– Risk Analysis

– Risk Financing

– Elimination, Loss Control, Risk Retention

– Risk Transfer

Risk Management Flow Chart

Section 1. Risk & the Risk Management Process

Definitions

Risk: – the potential that a chosen action or activity (including the choice of inaction) will

lead to a loss; the possibility of loss or exposure to loss. Almost any human endeavor creates some risk.

Risk Management: – a process that involves the identification, analysis and evaluation of risk and the

selection of the best method of treating the risk. The objective of the risk management process is the protection of an organization’s financial, physical, and human assets from loss or destruction.


The Risk Management Process

Define Objectives: What do you want to do and how will you do it.

Risk Identification: Identify all potential loss exposures – an inventory of all possible human, physical, financial, and natural losses.

Apply Risk Management Techniques: Analysis, financing, elimination, reduction, retention, and transfer.


Risk Analysis

High Frequency Low Frequency

High Severity Work to reduce and insure

Insure

Low Severity Work to reduce and insure

Retain and self-insure

Risk Analysis: How frequently will losses occur? How severe will they be? What are the total loss possibilities for a single risk occurrence?


Elimination, Loss Control, Retention

Elimination: – The best solution, is to eliminate risk if possible.

Loss Control: – take steps to avoid risk as much as possible, and implement policies and procedures

that will reduce and prevent losses.

Risk Retention: – After you made your best effort to eliminate and avoid risks, and taken steps that

will reduce and prevent losses, you must analyze the remaining loss potential to whether it is small enough to retain or it is necessary to transfer.

Section 1. Risk & Risk Management Process

Risk Transfer

Risk Transfer:

– Insurance: • The University purchases insurance to cover the exposures that are caused by its

operations and that cannot be retained, eliminated, or transferred to a vendor. Insurance is a risk transfer technique.

– Indemnification or Hold Harmless Provision: • Requires a supplier, tenant, or contractor to assumes responsibility for liabilities caused

by its own negligence; vendor provides evidence of insurance to demonstrate it has financial wherewithal to meet the indemnification obligation.

– Waiver of Liability: • A document that requires a participant in an activity to hold the University harmless if

injured in the activity.


Risk Management Flow Chart

DefineObjectives

Monitor Controls

Risk Identification

Manage Risks

What are you trying to do and how will you do

it?

What are potential human, physical,

financial & natural loss exposures?

What are you doing to manage

the risks – financing,

elimination, loss control, retention,

and/or risk transfer?

Are you monitoring key risk indicators and tracking

efficacy of risk management techniques?

Section 2

UC Insurance Programs & Policies

UC Self Insurance Programs UC Excess Insurance Policies Commercial Insurance Policies

Section 2. UC Insurance Programs & Policies

Self-Insurance Programs

The University of California has been self-insured since 1986. Self-insurance is a form of retained risk. UC decided that the cost of buying insurance was so high that it made sense to establish the following in-house self-financed insurance programs:

Workers Compensation Auto Liability General Liability Professional Liability Employment Practices Liability Property Insurance


UC’s Excess Commercial Policies

The University’s Self-Insurance programs provide coverage to certain limits, the self-insured retention (SIR). Above the self-insurance programs, UC purchases excess commercial insurance policies. Excess insurance policies are a means of transferring risk.


UC Commercial Insurance Policies UC does not self-insure all its exposures. It transfers the cost of risk of some by

purchasing commercial policies that provide “first dollar” coverage:

Aviation Boiler & Machinery Builder’s Risk Business Travel ICA & Club Sports Fine Arts & Collections Foreign General Liability Ocean Marine Off-Campus Student Travel Marine Open Cargo Special Events

Section 3

Risk & Contracts

What is a Contract? Types of Contracts Indemnification UC’s Standard Mutual Indemnification Provision Vendor Insurance UC’s Vendor Insurance Matrix Typical Vendor Insurance Requirements The Certificate of Insurance Waiver of UC Insurance Requirements

Section 3. Risk and Contracts

What is a Contract?

Contract: A contract is a legally enforceable agreement between two (or more) parties to perform, or refrain from performing, some specified act(s) in exchange for lawful consideration.

Contract Elements:

– Offer

– Acceptance

– Consideration

– Terms (unambiguous)

– Signature of individuals authorized to enter into contract


Types of Contracts

Facility Use Permits

Professional Services Agreement

Grants

Research Access Permits

Performance Agreements

Academic, Instructional agreements

Leases, Rentals

Purchase Orders


Indemnification

What is Indemnification? – A Contract provision that is a form of risk transfer, as it specifies who shall be

financially responsible in the event of a loss.

Regents' Standing Order 100.4(dd)(9): – Prohibits campuses from entering into agreements that contain indemnification

provisions by which UC assumes liability for conduct of persons other than University officers, agents, employees, students, invitees, and guests.


Vendor Insurance

Indemnification – is a Promise to Perform

Vendor Insurance – is the Financial Wherewithal to Perform


UC’s Vendor Insurance Matrixhttp://www.ucop.edu/ucophome/policies/bfb/bus63-VendorMatrix.pdf


Typical Vendor Insurance Req’ts.

GENERAL LIABILITY (contractual liability included) with minimum limits:

a) Each Occurrence $1,000,000

b) Products/Completed Operations Aggregate $2,000,000

c) Personal and Advertising Injury $1,000,000

d) General Aggregate $2,000,000

BUSINESS AUTOMOBILE LIABILITY $ 1,000,000 CSL

WORKERS COMPENSATION As req’d by State law

ADDITIONAL INSURED: both the General Liability and Automobile Liability policies shall be endorsed to include The Regents of the University of California as additional insured.


The Certificate of Insurance


Waiver of UC Insurance Requirements

Can UC Insurance Requirements Be Waived? It depends – can be waived when exposure to liability is determined to be

negligible.

What Is Critical to Determining If Exposures Are Negligible? We need to know what the final product is and how the vendor will

accomplish the contract scope of work. The how and what is what creates the exposures.

A Waiver Negates Risk Transfer. When a department requests a waiver of University insurance requirements it

creates increased liability for the University. Waivers are granted on the condition that the department requesting the waiver assumes financial responsibility for any losses that arise out of the contract scope of work.

Section 4

Miscellaneous Risk

UC Waivers of Liability Campus Connexions Accident/Travel Insurance

Section 4. Miscellaneous Risks

UC Waivers of Liability protect the University from legal

liability for injuries that may occur to individuals who participate in voluntary or required activities.

a participant in an activity agrees to hold the University harmless if injured in the activity.

commonly required for activities that create physical risk to the participants, e.g. sports activities, off-campus travel, boat charters, transportation, etc.

Insurance for Affiliated Organizations:

Registered Student Organizations Event Liability Policy Foundations, Alumni, and Support Groups Policies Tenant Users Liability Insurance Protection (TULIP) Recognized Club Sports Camps and Clinics Event Liability Policy Renters Insurance

http://ucsb.marshcampusconnexions.com


CampusConnexions


Travel Accident Insurance The University’s Travel Accident Insurance Program: a travel insurance program for

employees and students who are traveling out-of-state on University business or participating in University sponsored activities. The benefits are provided at no cost and include:

– Out-of-Country Medical Expenses– Emergency Medical Evacuation– Repatriation of Remains– Security Extraction– Travel Assistance– Personal Property and Lost Luggage– Trips Interruption and Cancellation

iJet/WorldcueTRAVELER: When University travelers register for travel accident coverage they will receive travel alerts about the country they are traveling in. The system also allows the University to keep track of and communicate with its employees and students in the event of an emergency.

http://www.ucop.edu/riskmgt/uctrips/

Section 5

Enterprise Risk Management

Definition Elements of Enterprise Risk Management Everyone is a Risk Manager Top 5 Risks at UCSB?

ERM - Defined

A risk-based approach to managing an enterprise– Integrates concepts of internal controls and

strategic planning– Includes all stakeholders– Incorporates a broad spectrum of risks in

complex organizations to ensure they are managed

Section 5. Enterprise Risk Management

Elements of Enterprise Risk Mgmt.

Strategic Goals – The University’s mission is teaching, research and public service.

Risk Assessment: Identify and assess risk in context of strategic goals, to identify changing risk trends, and to prioritize risk management.

Risk Response: Develop a set of actions to mitigate risks. Control Activities: Establish and implement policies and procedures to help

ensure risk responses are effectively carried out. Communication: Communicate risk management goals and activities,

identify interrelations of risk factors across activities and units. Monitor: Develop and implement means to monitor key risk indicators, and

report on processes for on-going risk management activities.

ERM Flow Chart


Everyone is a Risk Manager MSO’s – Internal Controls, SAS 112

Internal Audit - Annual Risk Assessment

General Counsel - Advice for Legal Matters, Manages Litigation

Insurance - Workers’ Compensation, General Liability Insurance

Compliance and Ethics Committee - Compliance with Laws, Ethics, Policies

Student Affairs - Student Behavioral Health Team

Athletics - NCAA Compliance

Strategic Planning - Funding for Operations

EH&S - Assess Safety and Hazards

Information Security- HIPAA, IS-3

Design and Construction - Earthquake Assessment

Research - Compliance with Grant Regulations, Laws

Control Self-Assessment Questionnaire

The Control Self-Assessment Questionnaire is a tool to be used by departments to assess the adequacy of the internal controls within their area. Departments are encouraged to conduct a self-assessment annually, or as needed with changes in administrative personnel.

UCSB Policies and Procedures for Business Officers:

http://www.policy.ucsb.edu/policies/specialty/admin


Top 5 Risks at UCSB

Lab Safety Outdated Information Technology Systems Deferred Maintenance Inadequate Information Technology Funding Loss of Research Productivity as PI’s Teach Classes

Risk Management Presentation

Questions?

Section 6. Campus Contact Information

Contacts

Lee Mudrick, Insurance Administrator – Tel. 893‐2860; Email: [email protected]

Kathy Speer, Insurance Coordinator– Tel. 893‐5837; Email: [email protected]

Kimberly Tapia, Contracts Manager– Tel. 893-5836; Email: [email protected]

Daniel Sweeney, Contracts Analyst– Tel. 893-2271; Email: [email protected]

Ron Betancourt, Contracts Assistant – Tel. 893‐4670; Email: [email protected]

Carrie Frandsen, Enterprise Risk Management– Tel. 893-3154; Email: [email protected]

Risk Management Takes a Village

http://www.riskmanagement.ucsb.edu

Risk Management Presentation May 12, 2011 Pam Lombardo, Director EH&S.

Documents

Transcript of Risk Management Presentation May 12, 2011 Pam Lombardo, Director EH&S.