SECTION 4: RISK ID METHODS - SELF-ADMINISTERED TOOLS

Question 1

3 Types of Perils

Answer 1

Natural

Human

Economic

Question 2

3 Types of Hazards

Answer 2

• Physical: conditions that exist naturally, or those that are caused by human negligence, such as the presence of dead trees near buildings
• Moral: Defects in human character, such as the intent to cause harm by stealing someone’s identity or passwords
• Morale: Arise out of indifference, such as not locking your car because you know it is insured and there is nothing of value in it

Question 3

3 Self-Administered Methodologies for Risk Identification

Answer 3

Checklists

Physical Inspections

Flowchart Method

Question 4

Checklists: General use // 4 Strengths // 2 Weaknesses

Answer 4

Definition: Systematically searching and id’ing as many exposures , perils, and hazards as possible.

General Uses: Primary tool and flexible

Strengths:
Standardized
Tailorable
See history of risk changing
Easy to train people ot use

Weaknesses:
Impossible to cover every operation
Dynamic organizations are in a constant state of flux, and the checklist must change

Question 5

5 Types of Checklists

Answer 5

I PAPA

Industry Checklist: Specific operations, industries, and provide detailed listing of activities or situations found in industries.

Preliminary Checklist: General info on the business, ownership, personnel, description of operations

Activity / Situation Checklist: Yes or no listing of various activities or situations in which an org is involved. Can group activities together based on biz class. Best for liability and human resources exposures.

Perils Checklist: ID original source or cause of loss once the exposure is identified and BEFORE a loss occurs. Used for companies willing to invest in preventing losses.

Asset Checklist: Both tangible and intangible assets, best used for property and net income exposures

Question 6

Physical Inspections: General Use // 3 Strengths // 5 Weaknesses

Answer 6

Informational visit to critical sites within and outside the org to determine exposures, perils, and hazards. Conducted by RM, safety pro, other operating personnel, specialized 3rd party, regulatory agencies

General Use: In conjunction with checklists. Good for seeing maintenance

Strengths:
- Visualization of business processes
- Helpful for finding unreported or unidentified exposures, perils or hazards
- Some reg. agencies and insurance companies will provide inspections free of charge

Weaknesses:
- Time consuming and can be costly due to traveling and involving workers
- Need periodic inspections for changing operations
- Scheduled in advanced so condition of location may be different than when they don’t prepare.
- Local personnel can steer RM away from problem areas
- Inspections by regulatory agencies may bring unwanted attention or fines / penalties

Question 7

5 Analysis Types for the Flow Chart Method

Answer 7

PD DSC

• Product Analysis: assess ability of org to produce deliverables
• Dependency Analysis: examines all materials and activities required to complete a process
• Decision analysis: examine relevant information related to the decision
• Site analysis: selecting sites for operations
• Critical path analysis: dependency analysis that focuses on every key task necessary to complete a project

Question 8

Flowchart Method: Define // 2 General Use // 4 Strengths // 4 Weaknesses

Answer 8

Definition: Graphic tool that sequentially depicts the activities of a particular operation or process.

General Uses:
- Good for orgs that have a process that needs to be conducted in a sequence.
- Useful for net income and certain liability exposures

Strengths:
- Process-driven and logical.
- Can ID pinch points or bottle necks
- Determine the critical path or activity
- ID internal or external dependencies

Weaknesses
- Does not indicate frequency or severity of events
-Does not provide info on financial impacts
- Does not show minor processes that have major loss potential
- Can become very process-oriented, causing management to have a myopic view instead of seeing the big picture