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Elected Officials and Risk Management

Posted by Roger Neal on July 12, 2016 at 12:00 AM

Virtually all public entities have an elected board of directors, council or commissioners who enact the policies that the agency uses daily. Unfortunately, only a few elected officials think of risk management when making decisions. And when they do, it is usually after there has been a loss or when they have to pay their insurance premium. In fact, many think that their decisions only apply to a single department, not the entire organization.

When elected officials truly incorporate risk management as a way of conducting business, property claims are reduced, lawsuits don’t get filed against the agency, and employees are safer. When risk management is not a component of every decision, bad things can happen.

Public entities are vulnerable to many risks beyond the common, insurable losses such as property damage from fires, natural hazards, auto accidents, lawsuits, and workers’ compensation. Some of the non-tradtional risks are:

  • Loss of tax revenue
  • Responding to public records requests
  • Reduction in bond rating
  • Major employer leaving your municipality
  • Aging workforce
  • Replacement of specialized vehicles
  • Changes in weather and climate
  • Computer hacking or ransomware attack
  • Violation of the open public meetings act
  • Changes in statutes, and regulations

Do the elected understand these risks? Have they even identified with many of them? Probably not. Risk management is more than buying insurance.

So what can you do to help your elected officials transition into policymaking risk managers? Here are some suggestions:

  1. Incorporate risk management concepts into your staff reports. Here’s an example. Your entity is sponsoring an event that will include a bounce house. Your staff report could include something like, “Board, although many citizens consider bounce houses as safe activities, annually there are over 37,000 emergency room visits related to bounce houses. We can transfer the risk from the ABC agency, by hiring a vendor who will operate the bounce house and meet our insurance requirements.”
  2. Use facts. Elected officials make fact-based decisions.
  3. Provide training for elected officials on their roles and responsibilities, budget process, and employment practices. All are probably different than what the elected are used to in the private sector.
  4. When the council, board or commission proposes a course of action, ask, “What are the risks?” and then lead them through a quick risk identification discussion; or “How can we reduce the risks?” which gives you the opportunity to talk about loss prevention. Always try to phrase things in a positive tone that the elected will relate to. In the bounce house example, you could say, “Council, this is about the kids having a fun and safe activity” which will resonate well with the elected. Remember they are always seeking public approval.
  5. For staff reports where action is requested, attach the risk management matrix. The report should identify those high risk/low frequency, high risk/high frequency events. And offer solutions, other than “No we can’t do that.”
  6. Finally, and this is critical, treat all elected with respect and don’t play favorites.