by Harvey Mathias, director of Risk Management Services
When most people hear the words "risk management," they think of safety and loss control. However, I submit to you that good risk management should expand on that traditional thinking.
In a recent article in Public Risk magazine, Dr. Peter Young (considered by many to be the "father" of risk management) states "risk management thinking can help all managers better understand how risk and uncertainty influence every aspect of management and how proper consideration of risk and uncertainty can improve the quality of decisions and performance of their organizations. In other words, risk management employs tools, techniques, methods of analysis, and a frame of reference that is distinct from other fields of study and practice. Incorporating knowledge of risk management can make all managers better managers."
Sadly, we are all too aware of the economic crisis now facing us in the United States and around the world. Some top corporate executives have stated the reason for the financial crisis, which many major companies and banks now face, is the lack of good risk management. In short, not enough attention was devoted to the risks being taken and the consequences of failure. When things are going too good, it is easy to become complacent (and in some cases perhaps too greedy) and not pay enough attention to the core values which allowed success in the first place. The companies that have continued to perform reasonably well are the ones that have "stayed the course" and not ventured into areas where they did not understand or manage the "new risks" they were undertaking.
While local governments are not in the business of earning profits, they must always be good stewards of the taxpayers’ money. Much care must be given to what services are to be provided and how the provision of those services is to be managed. There are risks in everything we do, and much consideration must be given how to "minimize the risks" if things don’t always turn out "right."
For the most part, I believe SCMIT and SCMIRF members are doing a better job today in managing risks, with the help of our Risk Management Services staff. We have encouraged the use of proper policies and procedures, and we have provided good training opportunities for them to learn how to do the job better.
The end result is there are no overall rate increases for either the SCMIT workers’ compensation program or the SCMIRF property/liability program for the 2009 programs’ renewal. In addition, SCMIRF is returning $1 million to its members who have been in the program for at least three full years and who renew for the 2009 program year. All of this is possible because these programs are in the best shape ever, both programmatically and financially. To keep them this way, we must continue to make risk management a top priority every day in everything we do.