Sports Law • Risk Management

The Fundamentals of the Risk Management Process in Sport and Recreation

Sport and recreation risk managers should understand the risk management process so that when evaluating risk and engaging in risk management planning, the steps can be applied. The steps are as follows: 1. Risk Identification; 2. Analysis and Measurement; 3. Risk Control; 4. Risk Financing; 5. Implementation; 6. Monitoring. These steps can be applied systematically in your analysis so that your organization has a comprehensive risk management plan.

Risk identification means to identify and examine the potential sources of losses faces by your organization. This step requires utilizing methods to identify exposures, such as flowcharts, checklists, insurance policy analysis, survey questionnaires, physical inspection, compliance review, loss history review, net income/financial analysis, policy and procedures review, or consultation with experts.

The next step is to analyze and measure the potential impact that the exposure will have on your organization. This will include a risk assessment, which means identifying loss exposures and understanding their impact on your organizations ultimate risks and performance. This will also include a financial assessment---the financial impact of loss exposures---and a loss data assessment, which means identifying, understanding and applying various methods of assessing loss data and analyzing the impact such losses have on your risk management policy.

Risk control is implementing techniques to minimize losses, which include pre-loss and post-loss techniques. Risk financing means acquiring funds to pay for losses, whether by risk retention or risk transfer, such as by purchasing insurance.

Risk administration is necessary to implement and monitor the risk management plan that your organization has in place.
Hopefully, the above will provide you an overview of the risk management process. If your organization is not currently engaged in such risk management planning, it is never too late to start.