You have spent this week exploring types of risks, the effects risk has on society and institutions, as well as the characteristics and benefits of insurance. Your assignment for this week asks you to draw these insights together through an analysis of the risk management process. Consider the following scenario:
Scaffold Equipment manufactures and sells scaffolds and ladders that are used by a variety of organizations including hospitals, long-term care facilities, and construction firms. The products are sold directly to independent retailers in the United States. The company’s risk manager knows that the company could be sued if a scaffold or ladder is defective, and someone is injured. Because the cost of products liability insurance has increased, the risk manager is considering other techniques to treat the company’s loss exposures.
For this assignment, your analysis of this scenario should include a description of the four steps in the risk management process as well as a discussion of four specific risk management techniques:
- Loss Prevention
- Loss Reduction
- Noninsurance Transfers
For each of the risk management techniques listed above, recommend a specific action using that technique that might help Scaffold Equipment address their products liability exposure. Review the Active Risk Control Toolkitfrom ASHRM to help develop your analysis and recommendations. The toolkit can provide industry-standard and useful questions to help guide your analysis.
Your analysis must include an introduction, discussion of the risk management process, description of the risk management techniques, actions for using those techniques, and a conclusion. You must also include a chart (using Word or Excel) you created that outlines the process and techniques.
Your submission must be a minimum of 1250 words, not including the title, reference, or chart pages. The chart should be in APA 7th edition style. Be sure to use a minimum of 4 references: 1 from the course textbook, 1 from the ASHRM website, and 2 additional of your choosing. Please use the APA 7th Essay Template available in the Supplementary Course Resources>>APA 7th Edition Resources section.
The very presence of risk leads to unwanted social and economic effects, what your textbook classifies as ‘burdens,’ (p. 12). For this week’s discussion, begin by briefly explaining the 3 types of burdens outlined in your textbook. Next, select 2 of these burdens and find a contemporary example of each in the healthcare industry. For help choosing relevant examples, be sure to visit the Internet Resources listed at the end of Chapter 1 (p. 20).
Once you have selected your examples, discuss the following for each:
- How does this example qualify as one of the three burdens listed in your textbook?
- How does it affect society or specific organizations?
- What are two techniques that can manage this risk, and why?
Expert Solution Preview
In this assignment, we will analyze a scenario involving Scaffold Equipment, a company that manufactures and sells scaffolds and ladders. The company is concerned about the risk of being sued if a defective scaffold or ladder causes injury to someone. Due to the increased cost of products liability insurance, the risk manager is exploring alternative risk management techniques. We will discuss the four steps in the risk management process and recommend specific actions using four risk management techniques. Additionally, we will examine burdens caused by risk in the healthcare industry and provide contemporary examples, exploring how these burdens affect society or specific organizations and suggest risk management techniques for each example.
Answer to Content:
Step 1: Identification of Risks
The first step in the risk management process is to identify the risks faced by the organization. For Scaffold Equipment, the primary risk is products liability exposure arising from potential defects in their scaffolds and ladders. This could result in injury to individuals, leading to legal claims and financial losses for the company.
Step 2: Evaluation and Analysis of Risks
Once the risks are identified, it is crucial to evaluate and analyze their potential impact and likelihood. Scaffold Equipment should assess the severity of injuries that could occur and estimate the probability of such incidents happening. This analysis will help the risk manager determine the prioritization and allocation of resources for risk mitigation.
Step 3: Treatment of Risks
After evaluating the risks, the next step is to determine the most appropriate risk treatment strategies. In the case of Scaffold Equipment, we will discuss four risk management techniques that can be employed:
1. Avoidance: This risk management technique involves eliminating or minimizing the exposure to risk. Scaffold Equipment could consider discontinuing the production and sale of scaffolds and ladders, shifting focus to other product lines. By avoiding the production of products with high liability exposure, the company can reduce the risk of being sued for a defective product.
2. Loss Prevention: This technique aims to reduce the frequency of losses caused by risks. Scaffold Equipment can implement comprehensive quality control measures at every stage of the manufacturing process to prevent defects. Regular inspections, testing, and adherence to industry standards can help minimize the chances of producing faulty scaffolds or ladders.
3. Loss Reduction: Loss reduction techniques involve minimizing the impact of risk events that do occur. Scaffold Equipment should develop a robust post-sales support system, including timely handling of customer complaints, product recalls, and efficient repair or replacement procedures. By swiftly addressing any potential defects or issues, the company can minimize the harm caused and reduce liability.
4. Noninsurance Transfers: Noninsurance transfers involve shifting the financial burden of losses to another party through contracts or agreements. Scaffold Equipment can consider entering into indemnification agreements with their suppliers or retailers. These agreements would stipulate that any liability arising from defects in the products would be passed on to the responsible party, reducing the financial risk for Scaffold Equipment.
Chart for Risk Management Process and Techniques:
Please refer to the attached Word document for the risk management process and techniques chart.
In conclusion, Scaffold Equipment faces potential risk exposure from defective scaffolds and ladders, which could lead to legal claims and financial losses. To address this exposure, the company can implement a comprehensive risk management process comprising identification, evaluation, and treatment of risks. By employing risk management techniques such as avoidance, loss prevention, loss reduction, and noninsurance transfers, Scaffold Equipment can effectively mitigate its products liability exposure. These techniques aim to minimize the likelihood of accidents, reduce the severity of losses, or transfer the financial burden to other parties.
Answer to Question 2:
The three types of burdens outlined in the textbook are physical burdens, psychological burdens, and economic burdens. Let’s explore two contemporary examples of these burdens in the healthcare industry:
1. Physical Burden: Hospital-Acquired Infections (HAIs)
HAIs are infections that patients acquire while receiving treatment in healthcare facilities. These infections burden patients physically by prolonging their recovery period, increasing pain and discomfort, and in severe cases, leading to disability or death. HAIs can also burden healthcare organizations as they are required to invest significant resources in infection prevention and control measures, resulting in increased costs and potential damage to their reputation.
Two techniques that can manage the risk of HAIs are:
– Strict Adherence to Infection Control Protocols: Healthcare organizations can implement rigorous infection control practices such as hand hygiene, sterilization of equipment, and proper disinfection of patient rooms. By strictly adhering to these protocols, the transmission of infectious agents can be minimized, reducing the risk of HAIs.
– Staff Education and Training: Healthcare staff plays a vital role in preventing HAIs. Educating and training healthcare workers on infection control practices and raising awareness about the importance of following proper protocols can significantly reduce the risk of HAIs. Regular training sessions, updated guidelines, and ongoing monitoring can ensure staff compliance with infection control measures.
2. Economic Burden: High Cost of Prescription Medications
The rising cost of prescription medications imposes an economic burden on both individuals and healthcare organizations. Patients often struggle to afford necessary medications, leading to medication non-adherence and poorer health outcomes. Healthcare organizations, particularly hospitals and clinics, face financial challenges due to the increasing costs of purchasing medications and providing subsidized or free medications to indigent patients.
Two techniques that can manage the economic burden of high prescription medication costs are:
– Formulary Management: Healthcare organizations can adopt formulary management strategies to control costs and promote cost-effective prescribing practices. By implementing a formulary that includes generic alternatives or cost-effective medications, healthcare organizations can negotiate better prices with pharmaceutical companies and provide affordable options to patients.
– Pharmacy Benefit Management: Healthcare organizations can partner with pharmacy benefit managers (PBMs) to leverage their expertise in negotiating lower drug prices with pharmaceutical manufacturers. PBMs can also help streamline medication distribution, optimize medication utilization, and ensure cost-effective prescribing practices, thereby reducing the economic burden of high prescription medication costs.
In conclusion, the physical burden of hospital-acquired infections and the economic burden of high prescription medication costs are two significant challenges faced by the healthcare industry. By implementing risk management techniques such as strict adherence to infection control protocols, staff education and training, formulary management, and pharmacy benefit management, healthcare organizations can effectively manage these risks. These techniques aim to reduce the occurrence of HAIs, promote affordable access to medications, and alleviate the physical and economic burdens imposed by these risks.