Risk Management

Risk Management

Risk management is a central part of any organisation's strategic framework. The Orange Book (HM Treasury Guidance on Risk management) defines risk as 'this uncertainty of outcome, whether positive opportunity or negative threat, of actions and events.' Risk has to be assessed in respect of the combination of the likelihood of something happening and the impact which arises if it does actually happen. Risk management refers to any activity both short term and long term and includes 'identifying and assessing risks and then responding to them.' Risk management should be managed and integrated at a strategic and operational level and should be led from the top but embedded throughout the organization at all levels. Potential benefits and opportunities for implementing effective risk management procedures are:

• better sporting or participation outcomes
• improved safety for participants, officials, the board and volunteers
• lower costs and increased budget certainty
• more effective management of assets, events, programs and activities
• more effective & efficient compliance with the law, regulations and other formal requirements e.g conditions of grant or standards of best practice
• enhanced image and reputation.

Risks facing sport and recreational organisations

The inherent nature of sport and recreation means that risk areas are broad. Some general risks that could apply to your organisation include:

• inadequate or inappropriate insurance
• the organisation lacks fitness for purpose structures
• lack of financial policies and safeguards
• unsafe equipment and facilities
• no emergency medical plan

Risks can be analysed as follows:

• Strategic Risk: The risk that the NGB would take a strategic direction or engage in activity at variance with its mission statement or fundamental organisational objectives.
• Operational Risk: The risk that the NGB's policies, procedures or activities would fail to make progress towards achieving its organisational objectives.
• Financial Risk: The risk of failing to safeguard company assets, financial impropriety, financial misreporting or failure to achieve value for money.
• Reputational: The risk that the organisation or personnel would engage in activities or be perceived to engage in activities that would threaten its good name brand and public image.
• Managing Risks: When identifying risks many NGBs will identify the symptoms of risk. However, to enable risks to be effectively managed, the underlying reason for the risk exposure (its cause) will have to be identified.

Responsibility for risk management rests ultimately with the NGB's Board who should retain responsibility for the major risks facing the organisation. However, all levels of staff should be responsible for the management of risk in their particular area.
For more information visit www.theirm.org

Risk Review

A monitoring process provides reasonable assurance to the Board that there are appropriate control procedures in place for all the NGB's significant business activities and that these procedures are being followed (e.g. consideration by the Board of reports from management, from external auditors or from independent accountants and advisors). There should be formal procedures to identify changes and weaknesses in the business, the NGB's policies and procedures and its environment, which will require changes to the system of internal control.

A full review of the risks that the NGB faces should be undertaken periodically as informed by the nature of the risk. Where necessary, further action should be agreed to deal with unacceptable outstanding risk and a report should be sent to the Board on the results of this risk review process.
At all stages and in all aspects of risk review, where an action is required, the appropriate people/staff/level of management should be identified and ownership formally allocated.

Insurance

In the ever-increasing world of litigation, the requirement for sport and recreation organisations to have appropriate insurance has become an essential part of survival. It is vital your organisation protects its key assets including its reputation with adequate insurance as insurance is a means to transfer risk.

Other risk management strategies should be adopted in order to reduce the risk from occurring in the first place.

Examples of legal claims/risks sporting organisations are exposed to:

• negligence claims - eg. personal injury or decisions made
• criminal liability - including claims for sexual offences and discrimination
• occupier's liability
• occupational health and safety
• employment liability - eg. unfair dismissals.

Types of insurance

Your risk assessment process will identify the type of risks the organisation is subject to. This will help determine whether insurance is available and appropriate. Some policies that may be applicable to your organisation:

• Public liability insurance
• Professional indemnity insurance
• Directors and officers liability insurance
• Associations liability insurance
• Personal accident insurance
• Occupational health and safety cover
• Workers compensation
• Property contents insurance
• Building insurance
• Travel insurance