Law Offices of Samuel J. Erkonen, P.C.
Your Lawyer For Life In Plainfield

Football, the Titanic and Risk Management

Every August, every team from the pee-wee league to professional football, starts its season by re-learning basic blocking and tackling, the very fundamentals of the game. It does not matter how good you are, or how experienced, every player starts the season doing the same repetitive and miserable drills they learned in their first year.

Managers of organizations should conduct themselves like football players and revisit the basics of risk management each and every time. "Oh, that does not apply to me because I am so experienced. Look at me." Many times experience can actually work against us because we do not pay attention like we should. Ask Captain Smith how his vast experience helped him on the Titanic. His unrivaled experience on the seas led to his disastrous decision to go full steam ahead despite the iceberg warnings. His probable thinking was a captain of his skill could handle any situation. Had he proceeded with the proper caution, the Titanic likely would have had the necessary time to avoid the collision with the iceberg, and Jack & Rose Dawson would have lived happily ever after.

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So professionals should ignore their experience level and revisit their blocking and tackling and the fundamentals of risk management. The first fundamental is risk avoidance. If we can avoid risk, we do so at every opportunity. If we do not want to worry about the risk of an alcohol related incident, then we can simply avoid that risk and not have alcohol at our event. The professional must ask, every time, how can we avoid risk in each situation. Similarly, risk shifting is another highly effective way to attack risky situations. Here, we simply shift the risk to our suppliers, typically through an indemnification agreement. For example, if the organization is hiring a bus company to transport attendees at their meeting, the risk is that the bus will get into an accident and attendees will get hurt. In this case, the organization shifts that risk to the bus company by asking/requiring the bus company to indemnify the organization in their contract. The indemnification language states that the bus company will indemnify, defend, and hold the organization harmless (from a financial standpoint) from any claims due to the bus company's negligence. Another technique for shifting liability risk is to use a document known as a release and waiver. The concept behind the release and waiver is that the individual participant takes sole responsibility and assumes liability for any injuries arising out of his/her participation in the activity.

Another way an organization can cover its risk is through risk retention. When an organization purchases insurance, it is agreeing to "retain" the risk (up to the dollar amount of the deductible). Everything in excess of that deductible is covered by the insurance company.

Risk management is all about fundamentals. In order to master the fundamentals, we must practice them over and over and at every opportunity, just like football players in training camp.

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