Getting a Handle On District Risks - Brief Article

School Administrator, May, 1996 by Joe P. Loving

Risk is inevitable for local school districts, so administrators must be ready to deal with that risk. Perhaps the most dangerous risk to a district is the risk that goes unnoticed and therefore escapes the risk management process.

The risk management process must begin with a thorough identification of possible areas of loss. The search for potential losses must be meticulous.

Identifying risks may seem like an insurmountable task, but it does not need to be. Several tools are available to guide a beginner through the process. Consultants will perform a risk management assessment for a fee.

Risk identification should be a regularly scheduled and ongoing process. The risk manager of the district should be included in the planning of all new programs, facilities, and events. Each new school or building addition brings with it the potential for new unidentified risks. These risks can be grouped into three broad categories: property losses, liability losses, and employee-related losses.

Property Losses

School districts have substantial sums of money invested in buildings and equipment. Potential property losses need to be identified and evaluated. The first step in identifying property risks is to determine what property the district owns and what the value of that property is. Insurance companies, safety engineering firms, and risk management consultants have checklists that can aid in the identification process. The International Risk Management Institute in Dallas, Texas, sells an exposure checklist as well as other risk management products.

With a quality checklist in hand, compare it with the district's assets as they are shown on the financial statement of the district. The result of this comparison should be a comprehensive list of all property owned by the district, both real and personal.

Once the property has been listed and valued, potential causes of loss should be identified for each type of property.

Liability Losses

Liability losses can represent some of the largest claims against a school district. In recent years, the courts have broadened the scope of the public school's duty as it applies to negligence. Claims arise not only from physical harm being done, but also from a variety of types of mental harm, including violation of civil rights.

To evaluate potential liability claims, administrators must use several tools. A review and analysis of past losses is a good place to start. Checklists are available to aid in this process. Next, a physical inspection of the school's buildings, grounds, and equipment would be in order, noting any potential hazards. Once identification efforts have been completed, a master list of potential liability exposures should be compiled.

Employee Losses

Schools often are so concerned with potential property and liability losses that other risks, such as employee losses, are ignored. Injuries to employees can be expensive losses for school districts. Worker's compensation insurance is expensive and a poor loss record can make it even more so.

School administrators must first recognize that employees are the district's most valuable assets. Keeping employees safe should be of paramount importance. Schools are liable as employers for injuries and illnesses that are a result of the performance of the employee's duties. In recent years courts have been liberal in determining the scope of the employee's duty.

Risks in this category can be identified by asking four questions:

1. Is the work place safe? (A physical inspection is appropriate.)

2. Are job descriptions clear and reasonable? (Review them.)

3. Are district policies and procedures communicated to all employees and are they followed?

4. What have been the prior losses? (Set up a loss data base.)

As a result of site-based management, many districts are transferring the risk management authority to individual school sites. The district owes each site proper training and adequate financial support for the program.

An excellent loss control program involves much work but can result in financial savings amounting to thousands of dollars for a school district. No reasonable school administration should be without a working risk management plan.

Joe Loving, a sixth-grade teacher in Hobbs, N.M., is a certified insurance counselor and an insurance agency owner.