This document discusses business risk and the risk management process. It defines business risk as unexpected circumstances that could significantly impact a business's operations or finances. It then outlines a five step risk management process: 1) identifying potential risks, 2) evaluating the risks' likelihood and severity, 3) selecting control strategies, 4) implementing controls, and 5) monitoring risks and controls. It emphasizes that ongoing risk management is a core management responsibility.

1. IN A HEALTHCARE BUSINESS ENTERPRISE

2. EVERY BUSINESS FACES RISK
WHAT IS BUSINESS RISK?

3. EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY

4. EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY

5. EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY

6. EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY

7. EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY

8. EVERY BUSINESS FACES RISK
UNEXPECTED CIRCUMSTANCES
OF SUFFICIENT SEVERITY
TO MATERIALLY IMPACT A BUSINESS’
OPERATIONAL CAPABILITY
OR
FINANCIAL INTEGRITY

9. UNEXPECTED
DOES NOT MEAN
UNFORESEEN

10. EVERY BUSINESS FACES RISK
MAINTAINING A SYSTEMIC PROCESS
TO IDENTIFY
AND
CONTAIN BUSINESS RISK
IS A CORE FUNCTION
OF MANAGEMENT

11. EVERY BUSINESS FACES RISK
MAINTAINING A SYSTEMIC PROCESS
TO IDENTIFY
AND
CONTAIN BUSINESS RISK
IS A CORE FUNCTION
OF MANAGEMENT

12. EVERY BUSINESS FACES RISK
MAINTAINING A SYSTEMIC PROCESS
TO IDENTIFY
AND
CONTAIN BUSINESS RISK
IS A CORE FUNCTION
OF MANAGEMENT

13. EVERY BUSINESS FACES RISK
MAINTAINING A SYSTEMIC PROCESS
TO IDENTIFY
AND
CONTAIN BUSINESS RISK
IS A CORE FUNCTION
OF MANAGEMENT

14. EVERY BUSINESS FACES RISK
MAINTAINING A SYSTEMIC PROCESS
TO IDENTIFY
AND
CONTAIN BUSINESS RISK
IS A CORE FUNCTION
OF MANAGEMENT

15. THE RISK MANAGEMENT
PROCESS
A FIVE STEP ROUTINE
1. Discovery of Potential Loss Exposure
2. Evaluation of Likelihood and Severity
3. Selection of Control Strategy
4. Implementation of Control Strategy
5. Monitoring / Feedback / Correction

16. DISCOVERY OF POTENTIAL LOSS EXPOSURE
UNDISCOVERED LOSS
EXPOSURES MUST NOT BE
DISMISSED AS A
“COST OF DOING BUSINESS”

17. DISCOVERY OF POTENTIAL LOSS EXPOSURE
UNDISCOVERED RISK
YIELDS
UNCONTROLLED RISK
RETENTION

18. DISCOVERY OF POTENTIAL LOSS EXPOSURE
BE REALISTIC
NOT EVERYTHING THAT
CAN GO WRONG
WILL GO WRONG

19. DISCOVERY OF POTENTIAL LOSS EXPOSURE
FOCUS MANAGEMENT
ATTENTION
ON THOSE UNEXPECTED
EVENTS WHICH CAN CAUSE
MATERIAL DAMAGE

20. DISCOVERY OF POTENTIAL LOSS EXPOSURE
TYPES OF LOSS EXPOSURE
1. Property
2. Liability
3. Key Personnel
4. Net Income

21. DISCOVERY OF POTENTIAL LOSS EXPOSURE
USE ALL AVAILABLE RESOURCES
TO IDENTIFY RISKS
1. Internal Resources
2. Industry and Regulatory Resources
3. Insurers
4. Consultants

22. DISCOVERY OF POTENTIAL LOSS EXPOSURE
INTERNAL RESOURCES
1. Survey your own people
2. Consult your own history
3. Diagram your processes
4. Analyze your cash to cash cycle
5. Ask yourself “What if ………?”

23. DISCOVERY OF POTENTIAL LOSS EXPOSURE
INDUSTRY AND REGULATORY
RESOURCES
1. Professional Societies like the American Academy of
Dermatology
2. Guidelines Promulgated by your Licensure Boards
3. ASHRM – The American Society for Healthcare Risk
Management (www.ashrm.org)

24. DISCOVERY OF POTENTIAL LOSS EXPOSURE
INSURERS
1. Professional responsibility carriers provide training
courses and guidance
2. Property and casualty carriers also provide training
and guidance

25. DISCOVERY OF POTENTIAL LOSS EXPOSURE
CONSULTANTS
1. Industry-specific consultants can bring experience
and fresh eyes
2. Learn from the mistakes of others
3. Knowledge of control techniques

26. EVALUATE EACH
POTENTIAL LOSS EXPOSURE
DIMENSIONS OF RISK
1. Frequency
2. Potential Severity
3. Realistic Range of Loss

27. DISCOVERY OF POTENTIAL LOSS EXPOSURE
BE REALISTIC
NOT EVERYTHING THAT
CAN GO WRONG
WILL GO WRONG

28. EVALUATE EACH
POTENTIAL LOSS EXPOSURE
GOAL OF THE ANALYSIS?
IDENTIFY A PRACTICAL
RISK CONTROL STRATEGY

29. RISK CONTROL STRATEGIES
TWO CATEGORIES
1. OPERATIONAL
2. FINANCING

30. RISK CONTROL STRATEGIES
OPERATIONAL
1. Risk Avoidance
2. Loss Control
3. Combination
4. Transfers of Operational Risk

31. RISK CONTROL STRATEGIES
OPERATIONAL
1. Risk Avoidance
2. Loss Control
3. Combination
4. Transfers of Operational Risk

32. RISK CONTROL STRATEGIES
OPERATIONAL
1. Risk Avoidance
2. Loss Control
3. Combination
4. Transfers of Operational Risk

33. RISK CONTROL STRATEGIES
LOSS CONTROL
1. Prevention
2. Mitigation
3. Separation

34. RISK CONTROL STRATEGIES
OPERATIONAL
1. Risk Avoidance
2. Loss Control
3. Combination
4. Transfers of Operational Risk

35. RISK CONTROL STRATEGIES
OPERATIONAL
1. Risk Avoidance
2. Loss Control
3. Combination
4. Transfers of Operational Risk

36. RISK CONTROL STRATEGIES
TWO CATEGORIES
1. OPERATIONAL
2. FINANCING

37. RISK CONTROL STRATEGIES
FINANCING TECHNIQUES
1. Non-insurance financing transfers
2. Insurance
3. Retention/Reserves

38. RISK CONTROL STRATEGIES
NON-INSURANCE FINANCING TRANSFERS
1. Contractual Indemnification
2. Guaranties
3. Warranties
4. Common Law Indemnification
5. Contribution

39. RISK CONTROL STRATEGIES
NON-INSURANCE TRANSFERS
RISK FINANCING OBLIGATIONS CAN
BE TRANSFERRED
FROM YOU OR TO YOU

40. RISK CONTROL STRATEGIES
NON-INSURANCE TRANSFERS
THE TRANSFER IS ONLY AS
EFFECTIVE
AS THE FINANCIAL CAPABILITY OF
THE TRANSFERREE TO PAY THE BILL

41. RISK CONTROL STRATEGIES
FINANCING TECHNIQUES
1. Noninsurance financing transfers
2. Insurance
3. Retention/Reserves

42. RISK CONTROL STRATEGIES
INSURANCE
A risk financing technique
with a financially responsible partner,
but
with strings attached.

43. RISK CONTROL STRATEGIES
INSURANCE
1. Scope of Coverage
2. Adequacy of Amount
3. Conditions on Claim
4. Conditions on Payment

44. RISK CONTROL STRATEGIES
FINANCING TECHNIQUES
1. Noninsurance financing transfers
2. Insurance
3. Retention/Reserves

45. RISK CONTROL STRATEGIES
RETENTION/RESERVES
1. A decision to retain the financing burden of
a risk should be made only after carefully
evaluation.
2. No risk should be retained without
providing a specific and committed reserve.

46. THE RISK MANAGEMENT
PROCESS
A FIVE STEP ROUTINE
1. Discovery of Potential Loss Exposure
2. Evaluation of Likelihood and Severity
3. Selection of Control Strategy
4. Implementation of Control Strategy
5. Monitoring / Feedback / Correction

47. IMPLEMENTATION OF THE
CONTROL STRATEGY
MAKE A PLAN
1. Document the risk you have identified and the evaluation
you have made.
2. Document the reasons for your selection of a control
technique
3. Assign responsibility and set deadlines
4. Follow through

48. THE RISK MANAGEMENT
PROCESS
A FIVE STEP ROUTINE
1. Discovery of Potential Loss Exposure
2. Evaluation of Likelihood and Severity
3. Selection of Control Strategy
4. Implementation of Control Strategy
5. Monitoring / Feedback / Correction

49. THE RISK MANAGEMENT
PROCESS
RISK MANAGEMENT IS A
CORE MANAGEMENT FUNCTION

50. THE RISK MANAGEMENT
PROCESS
MAINTAINING THE ENTERPRISE RISK
MANAGEMENT PROCESS
IS THE RESPONSIBILITY
OF THE CHIEF EXECUTIVE OFFICER

51. Douglas O. Guffey
Jaburg Wilk, PC
3200 N Central Avenue, 20th Floor
Phoenix, AZ 85012
602-248-1039
dog@jaburgwilk.com
www.jaburgwilk.com