insurance & risk management

Insurance & Risk Insurance & Risk ManagementManagement

By PP Don Shields, PHFBy PP Don Shields, PHF

District 9780 Insurance Officer District 9780 Insurance Officer

(& Risk Management) (& Risk Management)

“Risk – the chance that something great might happen”

AgendaAgenda• What is Risk ManagementWhat is Risk Management• Why is it importantWhy is it important• When should it be doneWhen should it be done• Who in your club need to do itWho in your club need to do it• How do you do it How do you do it • AS/NZS ISO31000:2009AS/NZS ISO31000:2009• What happens to it once doneWhat happens to it once done• Things to rememberThings to remember• Brief Summary of Insurance covers & Brief Summary of Insurance covers & DIO RoleDIO Role


Take risks, if you win you will be Take risks, if you win you will be happy, happy,

if you lose you will be wise”if you lose you will be wise”

Author UnknownAuthor Unknown


What is Risk Management?What is Risk Management?

““Risk management is the system or process Risk management is the system or process used to consider all risks that could impact used to consider all risks that could impact a project or activity, so that we can avoid, a project or activity, so that we can avoid, reduce or control those acceptable risks, reduce or control those acceptable risks,

and so that we can ensure we don’t and so that we can ensure we don’t undertake activities that can’t be insured undertake activities that can’t be insured against or are considered unacceptable” against or are considered unacceptable”

Author PP Don Shields (DIO)Author PP Don Shields (DIO)


Definitions (AS/NZS ISO31000:2009)Definitions (AS/NZS ISO31000:2009)

Risk: The effect of uncertainty on Risk: The effect of uncertainty on objectivesobjectives

Risk Management: Co-ordinated activities Risk Management: Co-ordinated activities to direct and control an to direct and control an organisation with regard to organisation with regard to riskrisk


Why is it important?Why is it important?Ignoring the risks which apply to your project, activity or the Ignoring the risks which apply to your project, activity or the events you have planned could impact on the following:events you have planned could impact on the following:

• • the health and safety of members, volunteers, the health and safety of members, volunteers, employees, customers, other participants & members of employees, customers, other participants & members of the public in generalthe public in general

• • your individual reputation, credibility and status your individual reputation, credibility and status

• • public and customer confidence in your club (& Rotary public and customer confidence in your club (& Rotary in general), in general),

• • attracting & retaining members in your club (& Rotary attracting & retaining members in your club (& Rotary in general), in general),

• • your club’s financial position – having to pay the policy your club’s financial position – having to pay the policy excess, plus it could adversely effect future club excess, plus it could adversely effect future club fundraisingfundraising

• • plant, equipment and the environment.plant, equipment and the environment.

A systematic approach to managing risk is now A systematic approach to managing risk is now regarded as good management practice.regarded as good management practice.


When should it be done?When should it be done?

Risk Management is a “living” process, and should be Risk Management is a “living” process, and should be undertaken at all stages of the planning process, and added undertaken at all stages of the planning process, and added

to or changed where necessary.to or changed where necessary.

This means Risk Management should start when preliminary This means Risk Management should start when preliminary planning is undertaken and is an integral part of the decision planning is undertaken and is an integral part of the decision process as to whether a project is viable and given approval process as to whether a project is viable and given approval by the Board of your club. It is then developed at the same by the Board of your club. It is then developed at the same

time as planning for the activity. time as planning for the activity.

It is NOT any afterthought or “butt covering” exercise. It is NOT any afterthought or “butt covering” exercise.


Who in your club needs to do it?Who in your club needs to do it?

Risk Management should be undertaken by Risk Management should be undertaken by the person or committee tasked with planning the person or committee tasked with planning

the project or activity – as they should be the project or activity – as they should be intimately familiar with the activity or intimately familiar with the activity or

project.project.

The Risk Management Plan can be developed The Risk Management Plan can be developed by a single Rotarian or sub-committee – its up by a single Rotarian or sub-committee – its up to your club. The most important thing is that to your club. The most important thing is that

it is completed & independently checked.it is completed & independently checked.


How do you do it?How do you do it?

Rotary’s National Insurance Committee has developed some Rotary’s National Insurance Committee has developed some simple forms which can be found on the District Website. You simple forms which can be found on the District Website. You can use these if you wish. It’s a simple matter of filling in the can use these if you wish. It’s a simple matter of filling in the gaps. Alternately, should your club have a Risk Management gaps. Alternately, should your club have a Risk Management Expert, they can use their own forms & make it as simple or Expert, they can use their own forms & make it as simple or difficult as they like – the most important thing is that your difficult as they like – the most important thing is that your

club does it for club does it for everyevery activity! activity!

Note: Don’t reinvent the wheel. For example, on a vocational Note: Don’t reinvent the wheel. For example, on a vocational visit, ask the venue if they have a completed Risk visit, ask the venue if they have a completed Risk

Management Plan. Use it, review it for relevance & inform Management Plan. Use it, review it for relevance & inform participants of risks. participants of risks.

AS/NZS AS/NZS ISO31000:2009ISO31000:2009

Risk management – Principles & GuidelinesRisk management – Principles & Guidelines

a) Creates valueb) Integral part of

organisational processes

c) Part of decision making

d) Explicitly addresses uncertainty

e) Systematic, structured and timely

f) Based on best available information

g) Tailored

h) Takes human and cultural factors into account

i) Transparent and inclusive

j) Dynamic, iterative and responsive to change

k) Facilitates continual improvement and enhancement of the organisations

Principles

Mandate & Commitme

nt

Design of framework

for managing

risks

Implement risk

management

Implement risk

management

Monitoring & review of the framework

Framework

Establishing the context

Risk identification

Risk analysis

Risk evaluation

Risk treatment

Risk Assessment

Com

mu

nic

ati

on

an

d c

on

sult

ati

on

Mon

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Process

AS/NZS ISO31000:2009AS/NZS ISO31000:2009

Risk Management FrameworkRisk Management Framework Mandate and commitmentMandate and commitment Design a Framework for managing riskDesign a Framework for managing risk Implement Risk ManagementImplement Risk Management Monitor and Review the FrameworkMonitor and Review the Framework Continual Improvement of the Continual Improvement of the

FrameworkFramework


The Process – Establish the ContextThe Process – Establish the Context Understanding the external environment in which we Understanding the external environment in which we

operate inoperate in Political ClimatePolitical Climate Industry RegulationsIndustry Regulations social and cultural views of the communitysocial and cultural views of the community

Understanding the internal environmentUnderstanding the internal environment Organisational ObjectivesOrganisational Objectives CultureCulture Business Systems & ProceduresBusiness Systems & Procedures Understanding the Risk Management ContextUnderstanding the Risk Management Context


The Process – Establish the ContextThe Process – Establish the ContextDefine Risk CriteriaDefine Risk Criteria

How consequences will be measuredHow consequences will be measuredHow will likelihood be definedHow will likelihood be defined

How will be prioritise riskHow will be prioritise risk Qualitative Risk Analysis Matrix – Level of Risk

Likelihood of Loss

Consequence of Loss

Insignificant

Minor

Moderate

Major

Catastrophic

Almost Certain

Moderate Significant High High High

Likely Low Moderate Significant High High

Moderate Low Moderate Moderate Significant High

Unlikely Low Low Low Moderate Significant

Rare Low Low Low Low Moderate


The Process – Risk AssessmentThe Process – Risk Assessment Risk IdentificationRisk Identification

o Whether or not under our controlWhether or not under our controlo Tools available include: workshops, interviews Tools available include: workshops, interviews

etcetc Risk AnalysisRisk Analysis

o What are the consequencesWhat are the consequenceso What is the likelihoodWhat is the likelihood Risk EvaluationRisk Evaluationo PrioritisationPrioritisation


The Process – Risk TreatmentThe Process – Risk Treatment Is the risk tolerable?Is the risk tolerable? What are our options?What are our options?

o AvoidanceAvoidanceo Increase the riskIncrease the risko Change the likelihoodChange the likelihoodo Change the consequencesChange the consequenceso Transfer the risk to someone elseTransfer the risk to someone else Prepare Treatment PlansPrepare Treatment Plans

AS/NZS ISO31000:2009AS/NZS ISO31000:2009The ProcessThe Process

Monitor & reviewMonitor & review• What has changed?What has changed?

o Organisational Organisational objectivesobjectives

o PeoplePeopleo ProcessesProcesses

• Maintain recordsMaintain records• Identify opportunities Identify opportunities

to improveto improve

CommunicationCommunication• Integral to every stepIntegral to every step

• Informs the entire Informs the entire processprocess

• Ensures engagement Ensures engagement and understandingand understanding


Principles of Effective Risk Principles of Effective Risk ManagementManagement

• Create & Protects ValueCreate & Protects Value• Integral part of organisational ProcessesIntegral part of organisational Processes• Part of decision makingPart of decision making• Explicitly addresses certaintyExplicitly addresses certainty• Systematic, structured & timelySystematic, structured & timely• Based on best available informationBased on best available information• TailoredTailored

• Takes into account human & cultural factors

• Transparent and inclusive

• Dynamic, interative and responsive to change

• Risk management facilitates continual improvement


The Benefits of Risk ManagementThe Benefits of Risk Management

Helps create CertaintyHelps create Certainty Understand and exploit opportunitiesUnderstand and exploit opportunities Improved planning, performance and Improved planning, performance and

effectivenesseffectiveness Protect our ReputationProtect our Reputation Protection of DirectorsProtection of Directors Good governanceGood governance


What happens to it once done?What happens to it once done?

The following is good management practice:The following is good management practice:• Independently checkedIndependently checked• Approved by Board of your Club as part of Approved by Board of your Club as part of Project Approval process (before activity or Project Approval process (before activity or project commences)project commences)• Brief/Inform participantsBrief/Inform participants• Have present for reference during eventHave present for reference during event• Review, evaluate & update it for the next time Review, evaluate & update it for the next time the same activity is conductedthe same activity is conducted


Things to remember

1)Don’t forget to undertake Risk Management2)Don’t forget to have it independently checked3)Don’t forget to have Board approval4)Don’t forget to brief or disseminate to participants5)Don’t forget to take to activity for reference6)Don’t forget to review post activity


Brief Summary of covers:Brief Summary of covers:

Policy Types: Policy Types: 1. Public & 1. Public & Products LiabilityProducts Liability

2. Personal Accident & 2. Personal Accident & TravelTravel

3. Industrial Special 3. Industrial Special RisksRisks

4. Association Liability4. Association Liability5. Crime5. Crime6. Caravan/Trailer 6. Caravan/Trailer

(optional)(optional)

Public & Products Public & Products LiabilityLiability

2010-2011 Limits & Deductibles2010-2011 Limits & Deductibles Public/Products LiabilityPublic/Products Liability$50,000,000$50,000,000 MolestationMolestation$2,000,000$2,000,000 Statutory Liability (Fines & Penalties)Statutory Liability (Fines & Penalties) $150,000$150,000

Deductibles:Deductibles: Public/ProductsPublic/Products $1,000 (Nil for individuals) $1,000 (Nil for individuals) Molestation Molestation $25,000 $25,000 (National Fund (National Fund established)established) Statutory Liability Statutory Liability $5,000 ($1,000 for $5,000 ($1,000 for individuals)individuals)

Insurer: QBEInsurer: QBE

Public & Products Public & Products LiabilityLiability

2010-2011 Limits & Exclusions2010-2011 Limits & Exclusions• Care, Custody or Control $100,000 any one occurrenceCare, Custody or Control $100,000 any one occurrence• Miscellaneous Activities Exclusion (Rodeos; Trains or Miscellaneous Activities Exclusion (Rodeos; Trains or Railways other than model railways used for amusement Railways other than model railways used for amusement rides; Animal rides; Regular child care services; Martial Arts rides; Animal rides; Regular child care services; Martial Arts activities; and Fire Arms activities) activities; and Fire Arms activities) • Construction/Demolition Exclusion (valued more than Construction/Demolition Exclusion (valued more than $250,000)$250,000)• Pharmaceutical ExclusionPharmaceutical Exclusion• Participation ExclusionParticipation Exclusion• Professional Indemnity/Medical Malpractice/Treatment Risk Professional Indemnity/Medical Malpractice/Treatment Risk ExclusionExclusion• Indemnity EndorsementIndemnity Endorsement• Vicarious/Contingent Liability for “Markets” EndorsementVicarious/Contingent Liability for “Markets” Endorsement

Personal Accident & Personal Accident & TravelTravel

2010-2011 Limits & Deductibles2010-2011 Limits & Deductibles

Death & Capital BenefitsDeath & Capital Benefits $250,000$250,000 Weekly Injury benefitWeekly Injury benefit $1,500$1,500 Overseas MedicalOverseas Medical UnlimitedUnlimited

DeductibleDeductible: : Weekly Injury - 7 DaysWeekly Injury - 7 Days

A ‘journey’ is defined as Travel exceeding 50 km from the A ‘journey’ is defined as Travel exceeding 50 km from the insured person’s normal place of residence, on a 24 insured person’s normal place of residence, on a 24 hour basis until returning thereto, to a maximum hour basis until returning thereto, to a maximum period of 90 days.period of 90 days.

Insurer: AceInsurer: Ace

Industrial Special RisksIndustrial Special Risks2010-2011 Limits & Deductibles2010-2011 Limits & Deductibles Material Damage - $500,000 any one loss or series of losses Material Damage - $500,000 any one loss or series of losses

arising out of one event (sarising out of one event (subject to sub-limits on next slide)ubject to sub-limits on next slide) Increased Cost of Working - $25,000 any one loss or series of Increased Cost of Working - $25,000 any one loss or series of

losses arising out of one eventlosses arising out of one event

Deductible/Excess:Deductible/Excess: Earthquake, Subterranean Fire or Volcanic Eruption - $20,000 Earthquake, Subterranean Fire or Volcanic Eruption - $20,000

or an amount equal to 1% of the total declared values at the or an amount equal to 1% of the total declared values at the situation where damage occurs.situation where damage occurs.

Increased Cost of Working - NILIncreased Cost of Working - NIL Directors, Employees, Members & Volunteer Workers Personal Directors, Employees, Members & Volunteer Workers Personal

Effects (worldwide) $500Effects (worldwide) $500 Machinery Breakdown $500Machinery Breakdown $500 All other Losses $1,500All other Losses $1,500

Insurer: AceInsurer: Ace

Industrial Special RisksIndustrial Special Risks2010-2011 Material Damage Sub-Limits of 2010-2011 Material Damage Sub-Limits of

LiabilityLiability ““Static” risks not declared and agreed $50,000Static” risks not declared and agreed $50,000 Accidental Damage $50,000Accidental Damage $50,000 Property Insured (other than Money as defined) by Burglary or Property Insured (other than Money as defined) by Burglary or

Theft, or any attempt thereat $50,000Theft, or any attempt thereat $50,000 Theft of Property in the Open Air $25,000Theft of Property in the Open Air $25,000 Money $50,000 Money $50,000 Directors, Employees, Members & Volunteer Workers Personal Directors, Employees, Members & Volunteer Workers Personal

Effects (worldwide) $5,000 any one person and limited to $50,000 Effects (worldwide) $5,000 any one person and limited to $50,000 per Event.per Event.

Art Shows (pieces of Art) $100,000 any one item to a maximum of Art Shows (pieces of Art) $100,000 any one item to a maximum of $500,000 any one Exhibition$500,000 any one Exhibition

Landscaping $ 5,000Landscaping $ 5,000 Donations in kind – unless otherwise agreed $100,000Donations in kind – unless otherwise agreed $100,000 Flood $20,000Flood $20,000

Industrial Special RisksIndustrial Special Risks2010-2011 Material Damage Sub-Limits 2010-2011 Material Damage Sub-Limits

(continued) (continued) Plate Glass Replacement ValuePlate Glass Replacement Value Removal of Debris $100,000Removal of Debris $100,000 Extra Cost of Reinstatement $100,000Extra Cost of Reinstatement $100,000 Goods or Property in Transit in Australia (excluding Art Works) Goods or Property in Transit in Australia (excluding Art Works)

$50,000$50,000 Pieces of Art in Transit $25,000 any one conveyance/ lossPieces of Art in Transit $25,000 any one conveyance/ loss Goods or Property in Transit elsewhere in the World $20,000Goods or Property in Transit elsewhere in the World $20,000 Machinery Breakdown $5,000Machinery Breakdown $5,000 Boiler & Pressure Vessel Explosion $5,000Boiler & Pressure Vessel Explosion $5,000 Spoilage of Stock $5,000Spoilage of Stock $5,000 Property Outside of Australia $20,000Property Outside of Australia $20,000 Contract Works – Contract Value $100,000 (Contracts over this Contract Works – Contract Value $100,000 (Contracts over this

limit must be declared to and accepted by Insurers) limit must be declared to and accepted by Insurers)

Association LiabilityAssociation Liability2010-2011 Limits & Deductibles2010-2011 Limits & Deductibles Professional Indemnity any one claim $10,000,000 & $20 Professional Indemnity any one claim $10,000,000 & $20

Million in aggregateMillion in aggregate Directors & Officers $10,000,000 any one claim and in the Directors & Officers $10,000,000 any one claim and in the

aggregateaggregate Association Reimbursement & Association Entity $10,000 any Association Reimbursement & Association Entity $10,000 any

one claim and in the aggregateone claim and in the aggregate

Deductibles:Deductibles: $2,000 each and every claim for Fidelity Guarantee.$2,000 each and every claim for Fidelity Guarantee. $2,000 each and every claim for Taxation Investigation$2,000 each and every claim for Taxation Investigation $1,000 each and every claim Insured vs Insured$1,000 each and every claim Insured vs Insured $5,000 each and every claim for Statutory Liability$5,000 each and every claim for Statutory Liability Nil All othersNil All others

Insurer: CGU (60%) & Vero (40%)Insurer: CGU (60%) & Vero (40%)

Fidelity Guarantee/CrimeFidelity Guarantee/Crime

2010-2011 Limits & Deductibles2010-2011 Limits & DeductiblesCovers dishonesty by Rotarians, Volunteers, Employees Covers dishonesty by Rotarians, Volunteers, Employees

whilst performing services for Rotarywhilst performing services for RotaryLimit any one claim $50,000 Limit any one claim $50,000 and in the aggregateand in the aggregate $200, 000 $200, 000

Principal ExclusionsPrincipal Exclusions Fines, Penalties or DamagesFines, Penalties or Damages Errors or omissionsErrors or omissions Loss after aware of member committing dishonest actLoss after aware of member committing dishonest act Loss of confidential informationLoss of confidential information Indirect or consequential lossIndirect or consequential loss

Deductibles: Deductibles: $5,000 each and every claim$5,000 each and every claim

Insurer: ACEInsurer: ACE

Caravan / Trailer Caravan / Trailer

This cover is optional & was not This cover is optional & was not selected this year. selected this year.

Clubs have been advised for several Clubs have been advised for several years now to insure their own trailers. years now to insure their own trailers. Cover is available for less locally with Cover is available for less locally with lower excesses when compared to this lower excesses when compared to this insurance.insurance.

If your club owns a caravan/trailer, If your club owns a caravan/trailer, please check to see if your club has please check to see if your club has insured it.insured it.

DIO Role & DIO Role & ResponsibilityResponsibility

Risk Management advice to DG and Risk Management advice to DG and ClubsClubs

Risk Management training to Assistant Risk Management training to Assistant GovernorsGovernors

Insurance presentations at PETS, Insurance presentations at PETS, Assemblies etcAssemblies etc

Travel Insurance support & advice to Travel Insurance support & advice to YEP YEP

Provision of Insurance Certificates of Provision of Insurance Certificates of CurrencyCurrency

Prompt incident & claims reporting to Prompt incident & claims reporting to Aon & NICAon & NIC

Advice & support for District Property Advice & support for District Property OfficerOfficer

Completion of annual Insurance Completion of annual Insurance Return to AonReturn to Aon

(taken directly off RDU website (taken directly off RDU website 26/4/11)26/4/11)

Things to note Things to note (to stop DIO being grumpy)(to stop DIO being grumpy)

1.1. DIO does not complete Risk Management for DIO does not complete Risk Management for youyou

2.2. DIO does not require completed Risk DIO does not require completed Risk Management documents to be sent in (unless Management documents to be sent in (unless you are asked)you are asked)

3.3. Requires an Incident Report Form for Requires an Incident Report Form for everyevery incident as soon as possibleincident as soon as possible

4.4. Asks that you read the summary before Asks that you read the summary before making contactmaking contact

5.5. Does not want to know about every activity or Does not want to know about every activity or project in the District, ONLY those that are project in the District, ONLY those that are clearly not covered or you are unsure of clearly not covered or you are unsure of whether cover automatically applieswhether cover automatically applies

6.6. Asks for a quick email (not phone unless Asks for a quick email (not phone unless absolutely no alternative) – these are my only absolutely no alternative) – these are my only record of your enquiryrecord of your enquiry

Insurances & Risk Insurances & Risk ManagementManagement

Any Any Questions?Questions?

Contact detailsContact details

Don ShieldsDon Shields

0419 390 3030419 390 303

[email protected]@gibvic.com.au

insurance & risk management

Documents

risk management plan

risk management expert

insurance risk managementwhen

insurance risk managementhow

insurance risk managementwho

objectivesrisk management

club rotary

good management practice