1  Formal Function  Risk Manager  Environmental Health/Safety  Human Resources  Legal Counsel  Business Officer  Police Department  Press/Public Relations  ITS  Employee/Labor Relations  Institutional Access & Equity  Employees – Staff/Faculty  Ad Hoc Function  CFO  Someone in Purchasing  Someone in Human Resources  Someone in Safety/Security  Someone in Legal  Someone in the President’s Office  Outsourced Function It is every person’s responsibility to manage risk! Who is Responsible for Managing Risks?

ONE METHOD OF HANDLING RISK

3 CLASSIFYING LOSS EXPOSURES THREE (3) DIMENSIONS OF LOSS EXPOSURES Type of Value Exposed to Loss The Peril Causing the Loss The Financial Consequences of That Loss

4 IDENTIFYING AND ANALYZING LOSS EXPOSURES  Inspection  Loss Analysis  Checklists  Financial Statements  Flow Analysis  Surveys/Questionnaires  Reactive/Situational Range of Assessment? Frequency of Assessment?

5 Work to Reduce & Insure Insure Ignore Work to Reduce & Insure (Stop Loss) High Frequency High Severity Low Severity Low Frequency FREQUENCY AND SEVERITY

6 HOW BIG A RISK IS IT?  Frequency (how often) and Severity (how big)  Risk Mapping  Common Sense  Consistency with Organizational Objectives  Benchmarking

7 ALTERNATIVE RISK MANAGEMENT TECHNIQUES Risk (Loss) Control Risk Financing

 Is it possible?  Is it practical?  It is political?

9 LOSS PREVENTION AND CONTROL Three Opportunities 1) Pre-Loss 2) Concurrent with Loss 3) Post Loss Physical techniques – Prevent the loss from happening – Prevent the loss from worsening Training / Education – Most losses arise from human error Management – Waivers, Claims Management, Public Relations, Investigation

10 FINANCING RISK  Transfer - Insurance - Contracts  Self Insure - Retain Current Expense - Reserves (Funded/Unfunded) - Borrow - Other

11 RETAINING RISKS Deductibles Self-Insured Retention Uninsured - funded - not funded Limits of Liability THEORY: ASSUME THE PREDICTABLE INSURE THE CATASTROPHIC

12 TYPES OF INSURANCE  FIRST PARTY INSURANCE protects the institution from its own loss or damage  THIRD PARTY INSURANCE protects the institution from loss as a result of damage to others

13 CATAGORIES OF INSURANCE  Property  Casualty (Liability)  Title  Surety  Life & Health  Specialty  Affiliate Operations  Special Media/Publishers  Cyber Risk  Emergency Travel Assistance

PRIMARY INSURANCE COVERAGES Cox Business School - Georges Auditorium Property Workers Compensation General Liability Auto

15 May 5, 1995 Flood Southern Methodist University $2.1 Million Business School - Georges Auditorium PROPERTY  Buildings & Contents  Loss of Rents  Business Interruption  Extra Expense  Tuition Fees  EDP Equipment & Media  Demolition and Construction Premium Rate: $645,000 /yr Deductible: $100,000

BUSINESS AUTO All University owned, leased and rental vehicles Annual Premium: $801 - $1000 Deductible: $1000 (Department) $750 (Student Organizations) Both Premium and Deductible are allocated to Departments in the event of a loss

17 WORKERS COMPENSATION  Full-time Staff and Faculty  Part-time and Full-time “temporary”  Student workers Lost-time wages paid by Workers’ Compensation are charged back to the department on an annual basis. Premium:$209,867/yr Deductible: $250,00

GENERAL LIABILITY Third Party Liability Coverage – Public Liability Coverage All claims incurred due to negligence or business operations legally liable Premium: $137,000/yr

19 ADDITIONAL CASUALTY INSURANCE PROGRAM  Educators Legal Liability  Directors & Officers / Employment Liability  Foreign Liability  Fiduciary / ERISA Employment Retirement Income Security Act  Professional Liability  Medical Malpractice  Umbrella / Excess

20 Factors that Determine Premium Rates  Insurance Industry - Market  Exposures to Loss  Actual Losses Incurred

21 RENEWAL PROCEDURES  Property ~ Boiler Machinery ~ Business Interruption ~ Crime  Auto  General Liability ~ Umbrella/Excess  Foreign Travel  Pollution ~ Environmental

22

23 QUESTIONS

24 THANK YOU