What Exactly is Risk Management?

What exactly is Risk Management?

Friendly acquaintance asks: What do you do for a living? 

Reply:  Healthcare Risk Management Consultant, I reply. 

Acquaintance: <Looking confused, but still interested> So, what exactly is risk management?

ReplyRisk management is the identification, evaluation, and prioritization of risks followed by coordinator and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities.

…but I respond with my passion.  “I ensure vulnerable people and their caregivers are protected, recognized as individuals, are dignified, nurtured and have the opportunity to thrive, in their environment, and community in which they live, visit, and work.”

Acquaintance:  How do you do that Marcia?  

Reply:  <thinking> I know the formal techniques and control measures, but again respond again with my experience and passion. "Healthcare, service for the aging, developmentally disabled, mental health and human services organizations all exist to serve and protect most vunerable among us. Once senior leaders of the organization commit themselves to serving the vulnerable, obstacles to ensure those individuals' well-being and safety are identified, mitigated or removed, and a proactive risk management program is born."

Acquaintance:  Is one of those obstacles money?

Reply:  For some, yes; like any business sector, for-profit mentalities exists.  However, most healthcare providers and their caregivers, whether they be a nurse, doctor, administrator, therapist, counselor or consultant are in the healthcare industry to serve the sick and vulnerable individual.  Committed organizations who support risk management programs designed to protect and serve the sick and vulnerable will fulfill their mission, and the money will follow. 

Acquaintance:  So, developing a sound risk management program supports a Healthcare providers mission by protecting the sick and vulnerable, but in addition, programs protect healthcare companies’ assets, so they may continue with carrying out the shared mission of those serving the sick and vulnerable. Did I get that correct? 

Reply:  Exactly.  It takes the commitment of senior leadership, who support a culture of safety, in every aspect of their business, at all levels. 

Acquaintance:  How do you implement a risk management program? 

Reply:  10 Steps, and the first is essential:    

1)    Executive and Senior Leadership commitment.

2)    Provide resources and accountability at all levels

3)    Assess what already exists

4)    Enhance and develop what is working, discard what is not

5)    Implement and practice the plan.

6)    Measure improvements and outcomes.

7)    Celebrate successful outcomes

8)    Re-invest the successes back into the program

9)    Reward participants

10) Mission accomplished

Some components of a successful risk management program for vulnerable persons:

1)    Abuse Risk Prevention and Response

Healthcare, child, senior, developmentally disabled providers are mandatory reporters of Abuse, Neglect, and Exploitation. Incidents must be reported and investigated promptly.  Biased investigations are quickly exposed by regulatory agencies, and a healthcare provider may receive a finding of Negligence for a biased or insufficient investigation, which may be public record, and reputational damage may occur, despite a finding of no wrong doing.  By preventing allegations, we prevent the need for an investigation. 


Does your organization have an unbiased investigator for all types of allegations?

Do you have policies and procedures that reflect how your organization prevents abuse, neglect and exploitation?

Do your caregivers, medical providers, and management have specialized training on prevention and response to allegations? 


2)    Prevention and Management of Claims and Litigation

Two national insurance carrier closed claim analytic studies confirm the following top trends and costs associated with these claim types: 

a.     Mid-Level Practioners (MLP) with most claims coming from MLP’s in general and family practice groups.  Average indemnity paid over a 10-year period of closed claims for MLP’s, was $329,841 for the most frequent allegation; error of diagnosis.   

b.     Aging services, Senior living, two most frequent allegation/claim; Falls, and Pressure Ulcers due to two negligent types; failure to monitor $189,686 and improper care $193,151.

Big exposures, unnecessary expense, require risk management techniques to prevent occurrence, and management of claims to mitigate loss.  What does your organization’s claim data reflect? 

If it correlates with the data found in these claim studies, as well as CMS focus, the risk management program should emphasize these top exposures, with specialized resources provided for prevention and litigation management to protect the organizations assets. 


3)    Enterprise Risk Management

Environmental, Fleet/Auto, Cyber, All Hazards Emergency Preparedness, exposures require healthcare leaders to adopt a strategic enterprise-wide perspective to assessing and managing risks.  In addition to clinical risks, there are exposures which deserve leadership attention to reduce loss and safeguard patients, residents, and employees.  Challenge your organization to grow your risk management program into an Enterprise Risk Management program:


Is your organization committed to providing a compassionate, resident-focused culture of safety?

Does your organization monitor updates in evidenced-based practices that could further help employees prevent and mitigate resident falls and pressure ulcers?

Is there a program in place to ensure that all caregivers have the necessary knowledge, skills and attitude to provide high-quality care?

Is your organization committed to addressing not only professional liability exposures, but also property, auto, and cyber risks?

Are you measuring progress toward achieving these goals? If not, please join with me to commit to your organizations culture of safety and Enterprise Risk Management. 

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