What is risk management?
”Risk management can be described as the culture, processes and organization that helps a business to evaluate risk, assess its potential impact and plan the appropriate action to take in order to avoid or control risk by the most economical means. It is not possible or desirable to eliminate all risks, the objective is to implement cost effective processes that reduce risks to an acceptable level, reject unacceptable risks, and transfer other risks through insurance and other means.”
http://www.abbi.com.au/dira/abbi/abb...Mgt-Definition
As some of you may recall, some members of the AMA staff/leadership attended a seminar on risk management. Since that time, the term has emerged again and again. We now have people with a little knowledge trying to make risk management policy. Those people are relying on the opinions of others, including the Safety Committee, to determine risk. Ultimately, the Board of Directors (EC) determines risk management policy. I am not aware of as many as one person on the AMA staff or Board of Directors that could be classified as an expert in risk management. In other organizations, entire departments of paid professionals make such policy.
In the past, the AMA has transferred risk through the purchase of insurance. It appears that the rising cost of insurance has created concern, and other methods are being employed to reduce/mitigate risk. When one, or two people are trying to make the determination of unacceptable risk, the potential for personal prejudices comes into play. The question becomes: “what risk is unacceptable, and what risk should be transferred through insurance or other methods?”.
Is the cost of having a professional risk management department more, or less, than the cost of increased insurance? Should the responsibility for determination of risk be left in the hands of a few that are not well versed on the subject? Does the potential exist for errors in the process of defining and elimination of risk? What risks are acceptable/unacceptable and why?
Stanford University has a web page devoted to a short discussion of risk management. Since the AMA is also an educational organization, I thought it an interesting information source, although there are several orders of magnitude difference in the wealth of the organizations. Here is the link:
http://www.stanford.edu/dept/Risk-Ma...deptinfo.shtml