Some risk is normal when you’re a fraternal organization. The challenge is what to do about it. Fully assessing what your risks are, what aspects of your organization could be affected and what to do about each exposure can be a big job. But the right process makes tackling risk easy.
A risk assessment is a simple process any organization can use to discover risks and take effective action, saving you money, time and heartache. Here’s a step-by-step guide for how to do a risk assessment for your Post.
What to Know About Conducting a Risk Assessment
Hazards and exposures combine together to create risk, and today’s organizations face numerous hazards and risks. Yet not all are equal. Some scenarios have a low likelihood of occurrence, while others are likely to have little impact on your organization, even if they do occur.
Where a risk assessment really shines is in its ability to guide you to focusing on the hazards, risks and scenarios that do matter. These are the events that are more likely than not to occur and be a problem for your organization when they do.
Ready.gov offers great resources to help organizations conduct a risk assessment, including a Business Risk Assessment Table you can download and use to get started with your organization’s own risk assessment. Here’s how to use this kind of a resource to get the most out of conducting your own risk assessment.
Step-by-Step Guide to Risk Assessment
In general, a risk assessment is comprised of 8 key steps. Follow this process to conduct your assessment.
Step 1: Compile a List of Assets
Your organization assets include all the resources owned or controlled by your organization that are of economic value and expected to provide a future benefit to the organization or its operations. Assets can be tangible property, such as cash, real estate, inventory or equipment, or intangible, such as human resources or intellectual property.
Start your risk assessment by compiling a list of the assets important to your organization. You likely have more assets than you think, so it’s best to organize them in writing. The kinds of assets you have can also vary depending on your specific organization operations, but many risk assessments will list assets that include:
- Facilities
- Personnel
- Inventory
- Equipment
- Machinery
- Technology
- Finished goods
- Raw materials
Step 2: List the Hazards for Each Asset
A hazard is something that increases the likelihood or severity of an insurable loss. It could be a particular condition, behavior or circumstance. For example, a building fire causes a loss, but the building’s outdated wiring would be a hazard that makes a damaging fire more likely.
For each asset that you identified above, there will be at least some kind of hazard that could impact it, and some assets may have multiple hazards. List the hazards for each asset. Most organization hazards fall into several general categories. It can be helpful to start with these hazards and add additional ones as needed. Common hazard categories include:
General Workplace Hazards
- Housekeeping
- Slip, trip and fall
- Electrical
- Equipment
- Machinery
- Fire safety
- Workplace violence
Health Hazards
- Chemical
- Biological
- Physical
- Ergonomic
Environmental Hazards
- Seasonal weather
- Emergency weather events
- Other natural phenomena
More resources for identifying hazards are available at OSHA and Ready.gov websites.
Step 3: List Possible Hazard Scenarios
A hazard scenario is a short description of how a particular hazard may contribute to an insurable loss. Scenarios address key questions about an incident, such as:
- Who or what is the cause of the loss?
- What hazard contributes to loss?
- What asset or assets are impacted?
- What occurs in the incident?
- What time or duration the loss involves?
- What impact the loss has on the organization?
An example of a hazard scenario could be: Outdated wiring leads to a small electrical fire that impacts operations for twelve weeks.
In this step of your risk analysis, brainstorm scenarios in which the hazard may occur. Be sure to include scenarios with:
- A low impact but high probability of occurrence.
- A high impact but low probability of occurrence.
Step 4: List Current and Potential Mitigation Strategies
In many scenarios, there are opportunities to:
- Reduce the severity of a loss
- Prevent its occurrence altogether
These mitigation efforts can play an important role in your organization’s risk management efforts. Mitigation efforts can focus on common problems that are easily prevented, as well as less common problems that it’s smart to protect against, due to their severity, potential disruption or high cost.
In this step of the risk analysis, list mitigation strategies that can prevent or minimize potential losses for each hazard scenario. You likely already have some mitigation procedures in place, so be sure to note these current efforts in the analysis. However, additional solutions are likely available. To help identify fresh mitigation strategies, assess each asset’s vulnerabilities and weaknesses and what could be done to protect or strengthen them.
Step 5: Assign a Probability to Each Scenario
As OSHA notes, risk is the product of a hazard and your exposure to that hazard. Thus, not all hazards are something every organization should worry about, nor are all exposures worth the cost, time and effort required to protect against them. It’s best to focus on what is:
- Most likely
- Most impactful
To start, use this step of the risk analysis to estimate the probability of occurrence for each scenario identified above. Decide how likely it is that each scenario may occur. A scale of “low,” “medium” and “high” probability offers enough detail for the purposes of this analysis.
Step 6: Analyze the Impact on the Organization
Organization impacts from a loss can be wide-ranging. Some incidents can impact your entire operation, others may be limited to one segment of the organization. Impacts can also be mild, moderate or severe, and some parts of your organization may feel a loss more than others.
Analyze the various impacts a potential scenario may cause to your organization in this part of the risk analysis. It’s recommended that organizations consider the impact on your:
- People
- Property
- Operations
- Environment
- Organization Entity
Use the same scale of “low,” “medium” and “high” impact for each of the five areas of your organization. A business impact analysis can also be conducted to help you gauge the impact on your operations.
Step 7: Assign an Overall Hazard Rating
At this point in the risk assessment, it’s time to begin drawing some conclusions about the hazards you’ve identified for your organization. You’ll start by assigning each hazard an overall hazard rating.
The hazard rating has two parts:
- The first deals with the likelihood of loss. Note the “low,” “medium,” or “high” probability of occurrence rating given to each hazard scenario in Step 5.
- The second part deals with the impact of the loss. For each hazard, pair the probability of occurrence rating with the highest impact rating assigned in Step 6, either “low,” “medium,” or “high,” across the categories of People, Property, Operations, Environment or Organization Entity.
The combination of the two, the probability of occurrence and its greatest impact, gives your organization a better idea of the true risk that hazard presents to your organization and its operations. With this information in hand, you can start to make some decisions and take preventative action.
Step 8: Review Scenarios with High Risk
In the last step of the risk assessment, you’ll review your hazards and scenarios, looking for the ones that pose the greatest risk to your organization. Any overall hazard ratings from Step 7 that rise to the level of “medium” or “high” risk deserve special attention.
These are the areas of focus where your risk mitigation and management efforts make the most sense and have the greatest likelihood of positively benefiting your organization. Consider what actions can be taken to reduce the probability of the hazard scenario occurring, minimize the impact to your people, property, organization, environment or organization entity if it does occur, or positively benefit both the probability of an occurrence and its impact.
Further steps can include identifying action steps for each hazard and setting deadlines for their completion. The risk assessment can also be used to note the date that these actions were completed for documentation purposes.
Conclusion
A risk assessment is a great first step to prioritizing and managing the many risks your organization faces. However, not all risk can be eliminated, which is why having the right insurance protection is key.
Insurance from the Post Insurance Program is designed for your organization and industry, helping you protect what matters most. With products to cover your members, guests, property, events, financial security and more, Lockton Affinity’s Post Insurance Program has everything you need to protect your organization, complemented by best-in-class service.
Whether you have a simple question or need a full policy review, we’re here to help. Contact Lockton Affinity to learn more.
