A clinical perspective: identifying and analyzing loss exposures. (Risk Management).

In the last risk management column, we outlined implementation of a five-step risk management decision-making process to control insurance costs (see October 2002 issue). These steps include:

* Identifying and analyzing loss exposures with both a current and retrospective view of the adverse incidences and actual losses incurred by the entity.

* Examining in an objective fashion possible risk management alternatives.

* Selecting from the list of risk management alternatives the actions necessary to solve the problem(s) and the development of a strategic action plan to aggressively attack the base cause of sentinel events or adverse incidences.

* Implementing the plan.

* Monitoring and adjusting the plan as necessary.

Many organizations are driven to identify and analyze loss exposures by accreditation, licensure or regulatory bodies. Add to those requirements the Occurrence of a sentinel event or shock loss and further efforts at identification and analysis are usually felt to be too arduous and too expensive. However, complying with standards and regulations does not impress upon an entire organization the importance of monitoring risk, and it is often forgotten that standards and guidelines represent a baseline of acceptable practice, not a measure of excellence. Unfortunately, a sentinel event or shock loss draws attention to a single situation and nor necessarily to the possibility that precursors may have existed that are the proximate cause of the loss itself.