Adding value to risk management programs in hard times.

• Author: Roper, Paree
• Position: Best Practices

Increasing the value of your risk management program during these difficult economic times may seem like an uphill climb. Public risk management programs and the entities they serve are already cut to the bone as far as budget, personnel, and time are concerned. In the coming year, many risk management departments will face additional cuts, furloughs, or consolidations, so enlarging a program may not be a viable solution. Nevertheless, now is exactly the time when risk management programs can show their true value.

HOW LESS CAN BE MORE

The phrase "less is more" is attributed to Ludwig Mies van der Rohe. Mies, as he was known, was considered one of the fathers of the Modern style of architecture, which has little or no ornamentation and features minimal frameworks that house flexible interior spaces. The version risk managers are hearing, though, is "do more with less." For the risk manager, these phrases dovetail.

The components of Mies's buildings often served several purposes. For example, the spaces in Crown Hall, his signature building at the Illinois Institute of Technology in Chicago, can be configured as classrooms one day and design studios the next. This type of built-in flexibility accommodates change quickly and makes the best possible use of the space that is present. A risk management program is similar in that neither requires lots of bells and whistles; they provide more bang for the buck by being flexible.

A risk management program can exercise this kind of flexibility by using components of the organization's risk plan in more intense ways. Many risk managers are busy responding and reacting and do not think in these terms, but just as Mies helped reshape the way architects thought about buildings by changing interior spaces, public risk managers can adapt to change and add value by visualizing and using their program components in different ways.

FOCUS ON RISK MONITORING

Many public risk managers have well-established programs. First-rate claims management, stellar loss control, and excellent loss data provide organizations with information and services that reduce risks, costs, and exposure. But while risk monitoring is a critical element in the risk management process, it is often the most neglected component, given the realities of day-to-day operations. Risk monitoring should be given more attention so that the effectiveness of risk plans can be measured.

Risk monitoring is a status reporting mechanism whereby new and...