CSRM cheat sheet

Risk is uncertainty about loss; it has two dimensions - frequency (how often) and severity (how much per occurrence). Expected loss = frequency × average severity.

Pure risk offers only loss or no-loss outcomes (fire, liability, injury) and is insurable; speculative risk (investment, enrollment growth) involves gain or loss and is generally not insurable.

Hazard vs. peril: a peril is the cause of loss (fire, windstorm, theft); a hazard is a condition that increases the chance or size of loss (clutter, poor lighting, icy walkway).

Hazard types: physical (building defects), moral (dishonest conduct such as faked claims), morale (indifference, e.g., leaving doors unlocked), and legal (statutes or court rulings that expand liability).

Risk management process: identify exposures → measure/analyze → select techniques (avoid, reduce, retain, transfer) → implement → monitor and revise.

Risk control reduces frequency or severity (avoidance, loss prevention, loss reduction, separation, duplication); risk financing provides funds after loss (retention, insurance, non-insurance transfer).

Loss prevention lowers frequency; loss reduction lowers severity. Separation splits assets across locations; duplication keeps backups of critical assets or data.

The risk management matrix uses frequency (high/low) and severity (high/low) to choose a technique: low/low → retention; high/low → prevention; low/high → insurance; high/high → avoidance.

Statutory, contractual, and common-law duties (reasonable care, supervision, premises safety) create liability exposures; tort liability rests on duty, breach, causation, and damages.

Exposure identification sources: incident reports, maintenance logs, inspection records, claims history, staff and student surveys, and walk-through audits of facilities and activities.

Loss data are summarized by frequency (number of claims per period) and severity (dollar amount per claim); expected annual loss = number of exposures × loss frequency × average severity.

Probability of at least one loss in n independent exposures ≈ 1 − (1 − p)^n; this shows why many small exposures still create a high chance of some loss.

Loss development and trending: historical claims must be adjusted for inflation, rising medical or repair costs, and changes in enrollment or activity levels before projecting future losses.

Maximum Possible Loss (MPL) is the worst-case total loss of the entire property; Probable Maximum Loss (PML) is the largest loss expected under normal conditions with protective features working.

Total cost of risk = insurance premiums + retained losses + deductibles/self-insured retention + administrative and safety costs; comparing this to exposure value guides financing decisions.

Risk mapping or a risk register scores each exposure by likelihood and impact, producing a ranked list that drives priorities and budget requests.

Data limitations: small samples, unreported near-misses, and changing conditions make purely historical estimates unreliable; combine internal data with industry benchmarks and actuarial judgment.

Valuation bases differ: replacement cost (new for old, no depreciation) vs. actual cash value (replacement cost minus depreciation); liability exposures are measured by potential damages and defense costs, not asset value.

Avoidance eliminates the exposure (dropping a high-risk activity); it is the only technique that removes both frequency and severity, but it may forfeit educational mission benefits.

Loss prevention reduces frequency (safety training, background checks, maintenance schedules); loss reduction reduces severity (sprinklers, first-aid kits, evacuation drills, rapid response plans).

Separation and duplication limit the impact of a single event by distributing activities, records, or equipment across sites or keeping backups.

Retention (self-insurance) is appropriate for low-severity, high-frequency losses; fund it with a formal reserve and set a retention limit. Use active retention knowingly, not passive retention by default.

Transfer shifts financial consequences: insurance transfers to an insurer; non-insurance transfer includes hold-harmless agreements, waivers, and leases - contracts transfer liability but not all risk.

Insurance is best for low-frequency, high-severity exposures; choose limits, deductibles, and coverage forms (property, general liability, auto, workers' compensation, educators' legal liability) to match measured exposures.

Contractual risk transfer requires careful review: indemnification and hold-harmless clauses, additional insured status, certificates of insurance, and waiver enforceability for minors.

Emergency and crisis planning (drills, communication trees, reunification plans, business continuity for payroll and records) is a loss reduction and continuity technique, not a financing tool.

Technique selection rule: avoid when frequency and severity are both high; prevent when frequency is high and severity low; insure when frequency is low and severity high; retain when both are low.

Funding sources include the general operating budget, dedicated risk management or insurance reserves, insurance premiums, and in some cases state or district risk pools and captive arrangements.

Insurance premium components: expected losses + insurer expenses + profit/risk charge + taxes and fees, adjusted by credits or debits for loss experience, safety programs, and deductibles.

Retention funding must be actuarially estimated (expected losses plus a loading for volatility); a reserve equal to expected annual retained losses plus a margin is a common benchmark.

Self-insured retention (SIR) applies per claim before insurance responds; a deductible is typically subtracted from the insurer's payment. SIRs usually carry more administrative responsibility.

Risk pooling: members contribute premiums and share losses; pools can stabilize costs and fill coverage gaps, but members remain exposed to pool assessments if losses exceed pool funds.

Captive insurance is a subsidiary insurer owned by the organization; it funds retained risk formally, requires capital, and is regulated as an insurer.

Cost allocation: charge premiums or internal charges back to departments or activities based on their exposure and loss experience, creating incentives for loss control.

Budgeting rule: total risk cost must be funded - premiums, retained losses, deductibles, and safety/administration - not just the insurance line item; unfunded retention is a hidden liability.

Coverage limits and deductibles trade off against premium: raising deductibles lowers premium but increases required reserve; lowering limits cuts premium but raises retained severity exposure.

Policy administration: maintain current coverage schedules, policy periods, limits, deductibles, and endorsements; verify certificates of insurance from vendors and contractors before work begins.

Claims administration: report claims promptly, document the incident, preserve evidence, cooperate with the insurer, and track reserves and settlements for loss-experience impact.

Recordkeeping: retain incident reports, inspection logs, training records, and claim files for the required retention period; documentation supports both defense and renewal negotiations.

Program governance: assign risk management responsibility, set written procedures, and review the program at least annually or when enrollment, facilities, or activities change.

Monitoring metrics: claim frequency and severity trends, loss ratio (incurred losses ÷ premiums), cost of risk per student, open claim counts, and completion of safety inspections and drills.

Communication: train staff and volunteers on reporting procedures and safety rules; publish emergency plans; ensure students and families receive required notices and waivers.

Insurance market management: prepare accurate exposure data (payroll, enrollment, values, vehicle counts) for renewals; begin renewal review well before expiration and compare coverage, not just price.

Regulatory and contractual compliance: meet state reporting, workers' compensation, and transportation requirements; audit contracts for insurance, indemnity, and additional insured terms.

Risk is uncertainty about loss; it has two dimensions - frequency (how often) and severity (how much per occurrence). Expected loss = frequency × average severity.

Pure risk offers only loss or no-loss outcomes (fire, liability, injury) and is insurable; speculative risk (investment, enrollment growth) involves gain or loss and is generally not insurable.

Hazard vs. peril: a peril is the cause of loss (fire, windstorm, theft); a hazard is a condition that increases the chance or size of loss (clutter, poor lighting, icy walkway).

Hazard types: physical (building defects), moral (dishonest conduct such as faked claims), morale (indifference, e.g., leaving doors unlocked), and legal (statutes or court rulings that expand liability).

Risk management process: identify exposures → measure/analyze → select techniques (avoid, reduce, retain, transfer) → implement → monitor and revise.

Risk control reduces frequency or severity (avoidance, loss prevention, loss reduction, separation, duplication); risk financing provides funds after loss (retention, insurance, non-insurance transfer).

Loss prevention lowers frequency; loss reduction lowers severity. Separation splits assets across locations; duplication keeps backups of critical assets or data.

The risk management matrix uses frequency (high/low) and severity (high/low) to choose a technique: low/low → retention; high/low → prevention; low/high → insurance; high/high → avoidance.

Statutory, contractual, and common-law duties (reasonable care, supervision, premises safety) create liability exposures; tort liability rests on duty, breach, causation, and damages.

Exposure identification sources: incident reports, maintenance logs, inspection records, claims history, staff and student surveys, and walk-through audits of facilities and activities.

Loss data are summarized by frequency (number of claims per period) and severity (dollar amount per claim); expected annual loss = number of exposures × loss frequency × average severity.

Probability of at least one loss in n independent exposures ≈ 1 − (1 − p)^n; this shows why many small exposures still create a high chance of some loss.

Loss development and trending: historical claims must be adjusted for inflation, rising medical or repair costs, and changes in enrollment or activity levels before projecting future losses.

Maximum Possible Loss (MPL) is the worst-case total loss of the entire property; Probable Maximum Loss (PML) is the largest loss expected under normal conditions with protective features working.

Total cost of risk = insurance premiums + retained losses + deductibles/self-insured retention + administrative and safety costs; comparing this to exposure value guides financing decisions.

Risk mapping or a risk register scores each exposure by likelihood and impact, producing a ranked list that drives priorities and budget requests.

Data limitations: small samples, unreported near-misses, and changing conditions make purely historical estimates unreliable; combine internal data with industry benchmarks and actuarial judgment.

Valuation bases differ: replacement cost (new for old, no depreciation) vs. actual cash value (replacement cost minus depreciation); liability exposures are measured by potential damages and defense costs, not asset value.

Avoidance eliminates the exposure (dropping a high-risk activity); it is the only technique that removes both frequency and severity, but it may forfeit educational mission benefits.

Loss prevention reduces frequency (safety training, background checks, maintenance schedules); loss reduction reduces severity (sprinklers, first-aid kits, evacuation drills, rapid response plans).

Separation and duplication limit the impact of a single event by distributing activities, records, or equipment across sites or keeping backups.

Retention (self-insurance) is appropriate for low-severity, high-frequency losses; fund it with a formal reserve and set a retention limit. Use active retention knowingly, not passive retention by default.

Transfer shifts financial consequences: insurance transfers to an insurer; non-insurance transfer includes hold-harmless agreements, waivers, and leases - contracts transfer liability but not all risk.

Insurance is best for low-frequency, high-severity exposures; choose limits, deductibles, and coverage forms (property, general liability, auto, workers' compensation, educators' legal liability) to match measured exposures.

Contractual risk transfer requires careful review: indemnification and hold-harmless clauses, additional insured status, certificates of insurance, and waiver enforceability for minors.

Emergency and crisis planning (drills, communication trees, reunification plans, business continuity for payroll and records) is a loss reduction and continuity technique, not a financing tool.

Technique selection rule: avoid when frequency and severity are both high; prevent when frequency is high and severity low; insure when frequency is low and severity high; retain when both are low.

Funding sources include the general operating budget, dedicated risk management or insurance reserves, insurance premiums, and in some cases state or district risk pools and captive arrangements.

Insurance premium components: expected losses + insurer expenses + profit/risk charge + taxes and fees, adjusted by credits or debits for loss experience, safety programs, and deductibles.

Retention funding must be actuarially estimated (expected losses plus a loading for volatility); a reserve equal to expected annual retained losses plus a margin is a common benchmark.

Self-insured retention (SIR) applies per claim before insurance responds; a deductible is typically subtracted from the insurer's payment. SIRs usually carry more administrative responsibility.

Risk pooling: members contribute premiums and share losses; pools can stabilize costs and fill coverage gaps, but members remain exposed to pool assessments if losses exceed pool funds.

Captive insurance is a subsidiary insurer owned by the organization; it funds retained risk formally, requires capital, and is regulated as an insurer.

Cost allocation: charge premiums or internal charges back to departments or activities based on their exposure and loss experience, creating incentives for loss control.

Budgeting rule: total risk cost must be funded - premiums, retained losses, deductibles, and safety/administration - not just the insurance line item; unfunded retention is a hidden liability.

Coverage limits and deductibles trade off against premium: raising deductibles lowers premium but increases required reserve; lowering limits cuts premium but raises retained severity exposure.

Policy administration: maintain current coverage schedules, policy periods, limits, deductibles, and endorsements; verify certificates of insurance from vendors and contractors before work begins.

Claims administration: report claims promptly, document the incident, preserve evidence, cooperate with the insurer, and track reserves and settlements for loss-experience impact.

Recordkeeping: retain incident reports, inspection logs, training records, and claim files for the required retention period; documentation supports both defense and renewal negotiations.

Program governance: assign risk management responsibility, set written procedures, and review the program at least annually or when enrollment, facilities, or activities change.

Monitoring metrics: claim frequency and severity trends, loss ratio (incurred losses ÷ premiums), cost of risk per student, open claim counts, and completion of safety inspections and drills.

Communication: train staff and volunteers on reporting procedures and safety rules; publish emergency plans; ensure students and families receive required notices and waivers.

Insurance market management: prepare accurate exposure data (payroll, enrollment, values, vehicle counts) for renewals; begin renewal review well before expiration and compare coverage, not just price.

Regulatory and contractual compliance: meet state reporting, workers' compensation, and transportation requirements; audit contracts for insurance, indemnity, and additional insured terms.

Risk is uncertainty about loss; it has two dimensions - frequency (how often) and severity (how much per occurrence). Expected loss = frequency × average severity.

Pure risk offers only loss or no-loss outcomes (fire, liability, injury) and is insurable; speculative risk (investment, enrollment growth) involves gain or loss and is generally not insurable.

Hazard vs. peril: a peril is the cause of loss (fire, windstorm, theft); a hazard is a condition that increases the chance or size of loss (clutter, poor lighting, icy walkway).

Hazard types: physical (building defects), moral (dishonest conduct such as faked claims), morale (indifference, e.g., leaving doors unlocked), and legal (statutes or court rulings that expand liability).

Risk management process: identify exposures → measure/analyze → select techniques (avoid, reduce, retain, transfer) → implement → monitor and revise.

Risk control reduces frequency or severity (avoidance, loss prevention, loss reduction, separation, duplication); risk financing provides funds after loss (retention, insurance, non-insurance transfer).

Loss prevention lowers frequency; loss reduction lowers severity. Separation splits assets across locations; duplication keeps backups of critical assets or data.

The risk management matrix uses frequency (high/low) and severity (high/low) to choose a technique: low/low → retention; high/low → prevention; low/high → insurance; high/high → avoidance.

Statutory, contractual, and common-law duties (reasonable care, supervision, premises safety) create liability exposures; tort liability rests on duty, breach, causation, and damages.

Exposure identification sources: incident reports, maintenance logs, inspection records, claims history, staff and student surveys, and walk-through audits of facilities and activities.

Loss data are summarized by frequency (number of claims per period) and severity (dollar amount per claim); expected annual loss = number of exposures × loss frequency × average severity.

Probability of at least one loss in n independent exposures ≈ 1 − (1 − p)^n; this shows why many small exposures still create a high chance of some loss.

Loss development and trending: historical claims must be adjusted for inflation, rising medical or repair costs, and changes in enrollment or activity levels before projecting future losses.

Maximum Possible Loss (MPL) is the worst-case total loss of the entire property; Probable Maximum Loss (PML) is the largest loss expected under normal conditions with protective features working.

Total cost of risk = insurance premiums + retained losses + deductibles/self-insured retention + administrative and safety costs; comparing this to exposure value guides financing decisions.

Risk mapping or a risk register scores each exposure by likelihood and impact, producing a ranked list that drives priorities and budget requests.

Data limitations: small samples, unreported near-misses, and changing conditions make purely historical estimates unreliable; combine internal data with industry benchmarks and actuarial judgment.

Valuation bases differ: replacement cost (new for old, no depreciation) vs. actual cash value (replacement cost minus depreciation); liability exposures are measured by potential damages and defense costs, not asset value.

Avoidance eliminates the exposure (dropping a high-risk activity); it is the only technique that removes both frequency and severity, but it may forfeit educational mission benefits.

Loss prevention reduces frequency (safety training, background checks, maintenance schedules); loss reduction reduces severity (sprinklers, first-aid kits, evacuation drills, rapid response plans).

Separation and duplication limit the impact of a single event by distributing activities, records, or equipment across sites or keeping backups.

Retention (self-insurance) is appropriate for low-severity, high-frequency losses; fund it with a formal reserve and set a retention limit. Use active retention knowingly, not passive retention by default.

Transfer shifts financial consequences: insurance transfers to an insurer; non-insurance transfer includes hold-harmless agreements, waivers, and leases - contracts transfer liability but not all risk.

Insurance is best for low-frequency, high-severity exposures; choose limits, deductibles, and coverage forms (property, general liability, auto, workers' compensation, educators' legal liability) to match measured exposures.

Contractual risk transfer requires careful review: indemnification and hold-harmless clauses, additional insured status, certificates of insurance, and waiver enforceability for minors.

Emergency and crisis planning (drills, communication trees, reunification plans, business continuity for payroll and records) is a loss reduction and continuity technique, not a financing tool.

Technique selection rule: avoid when frequency and severity are both high; prevent when frequency is high and severity low; insure when frequency is low and severity high; retain when both are low.

Funding sources include the general operating budget, dedicated risk management or insurance reserves, insurance premiums, and in some cases state or district risk pools and captive arrangements.

Insurance premium components: expected losses + insurer expenses + profit/risk charge + taxes and fees, adjusted by credits or debits for loss experience, safety programs, and deductibles.

Retention funding must be actuarially estimated (expected losses plus a loading for volatility); a reserve equal to expected annual retained losses plus a margin is a common benchmark.

Self-insured retention (SIR) applies per claim before insurance responds; a deductible is typically subtracted from the insurer's payment. SIRs usually carry more administrative responsibility.

Risk pooling: members contribute premiums and share losses; pools can stabilize costs and fill coverage gaps, but members remain exposed to pool assessments if losses exceed pool funds.

Captive insurance is a subsidiary insurer owned by the organization; it funds retained risk formally, requires capital, and is regulated as an insurer.

Cost allocation: charge premiums or internal charges back to departments or activities based on their exposure and loss experience, creating incentives for loss control.

Budgeting rule: total risk cost must be funded - premiums, retained losses, deductibles, and safety/administration - not just the insurance line item; unfunded retention is a hidden liability.

Coverage limits and deductibles trade off against premium: raising deductibles lowers premium but increases required reserve; lowering limits cuts premium but raises retained severity exposure.

Policy administration: maintain current coverage schedules, policy periods, limits, deductibles, and endorsements; verify certificates of insurance from vendors and contractors before work begins.

Claims administration: report claims promptly, document the incident, preserve evidence, cooperate with the insurer, and track reserves and settlements for loss-experience impact.

Recordkeeping: retain incident reports, inspection logs, training records, and claim files for the required retention period; documentation supports both defense and renewal negotiations.

Program governance: assign risk management responsibility, set written procedures, and review the program at least annually or when enrollment, facilities, or activities change.

Monitoring metrics: claim frequency and severity trends, loss ratio (incurred losses ÷ premiums), cost of risk per student, open claim counts, and completion of safety inspections and drills.

Communication: train staff and volunteers on reporting procedures and safety rules; publish emergency plans; ensure students and families receive required notices and waivers.

Insurance market management: prepare accurate exposure data (payroll, enrollment, values, vehicle counts) for renewals; begin renewal review well before expiration and compare coverage, not just price.

Regulatory and contractual compliance: meet state reporting, workers' compensation, and transportation requirements; audit contracts for insurance, indemnity, and additional insured terms.

Risk is uncertainty about loss; it has two dimensions - frequency (how often) and severity (how much per occurrence). Expected loss = frequency × average severity.

Pure risk offers only loss or no-loss outcomes (fire, liability, injury) and is insurable; speculative risk (investment, enrollment growth) involves gain or loss and is generally not insurable.

Hazard vs. peril: a peril is the cause of loss (fire, windstorm, theft); a hazard is a condition that increases the chance or size of loss (clutter, poor lighting, icy walkway).

Hazard types: physical (building defects), moral (dishonest conduct such as faked claims), morale (indifference, e.g., leaving doors unlocked), and legal (statutes or court rulings that expand liability).

Risk management process: identify exposures → measure/analyze → select techniques (avoid, reduce, retain, transfer) → implement → monitor and revise.

Risk control reduces frequency or severity (avoidance, loss prevention, loss reduction, separation, duplication); risk financing provides funds after loss (retention, insurance, non-insurance transfer).

Loss prevention lowers frequency; loss reduction lowers severity. Separation splits assets across locations; duplication keeps backups of critical assets or data.

The risk management matrix uses frequency (high/low) and severity (high/low) to choose a technique: low/low → retention; high/low → prevention; low/high → insurance; high/high → avoidance.

Statutory, contractual, and common-law duties (reasonable care, supervision, premises safety) create liability exposures; tort liability rests on duty, breach, causation, and damages.

Exposure identification sources: incident reports, maintenance logs, inspection records, claims history, staff and student surveys, and walk-through audits of facilities and activities.

Loss data are summarized by frequency (number of claims per period) and severity (dollar amount per claim); expected annual loss = number of exposures × loss frequency × average severity.

Probability of at least one loss in n independent exposures ≈ 1 − (1 − p)^n; this shows why many small exposures still create a high chance of some loss.

Loss development and trending: historical claims must be adjusted for inflation, rising medical or repair costs, and changes in enrollment or activity levels before projecting future losses.

Maximum Possible Loss (MPL) is the worst-case total loss of the entire property; Probable Maximum Loss (PML) is the largest loss expected under normal conditions with protective features working.

Total cost of risk = insurance premiums + retained losses + deductibles/self-insured retention + administrative and safety costs; comparing this to exposure value guides financing decisions.

Risk mapping or a risk register scores each exposure by likelihood and impact, producing a ranked list that drives priorities and budget requests.

Data limitations: small samples, unreported near-misses, and changing conditions make purely historical estimates unreliable; combine internal data with industry benchmarks and actuarial judgment.

Valuation bases differ: replacement cost (new for old, no depreciation) vs. actual cash value (replacement cost minus depreciation); liability exposures are measured by potential damages and defense costs, not asset value.

Avoidance eliminates the exposure (dropping a high-risk activity); it is the only technique that removes both frequency and severity, but it may forfeit educational mission benefits.

Loss prevention reduces frequency (safety training, background checks, maintenance schedules); loss reduction reduces severity (sprinklers, first-aid kits, evacuation drills, rapid response plans).

Separation and duplication limit the impact of a single event by distributing activities, records, or equipment across sites or keeping backups.

Retention (self-insurance) is appropriate for low-severity, high-frequency losses; fund it with a formal reserve and set a retention limit. Use active retention knowingly, not passive retention by default.

Transfer shifts financial consequences: insurance transfers to an insurer; non-insurance transfer includes hold-harmless agreements, waivers, and leases - contracts transfer liability but not all risk.

Insurance is best for low-frequency, high-severity exposures; choose limits, deductibles, and coverage forms (property, general liability, auto, workers' compensation, educators' legal liability) to match measured exposures.

Contractual risk transfer requires careful review: indemnification and hold-harmless clauses, additional insured status, certificates of insurance, and waiver enforceability for minors.

Emergency and crisis planning (drills, communication trees, reunification plans, business continuity for payroll and records) is a loss reduction and continuity technique, not a financing tool.

Technique selection rule: avoid when frequency and severity are both high; prevent when frequency is high and severity low; insure when frequency is low and severity high; retain when both are low.

Funding sources include the general operating budget, dedicated risk management or insurance reserves, insurance premiums, and in some cases state or district risk pools and captive arrangements.

Insurance premium components: expected losses + insurer expenses + profit/risk charge + taxes and fees, adjusted by credits or debits for loss experience, safety programs, and deductibles.

Retention funding must be actuarially estimated (expected losses plus a loading for volatility); a reserve equal to expected annual retained losses plus a margin is a common benchmark.

Self-insured retention (SIR) applies per claim before insurance responds; a deductible is typically subtracted from the insurer's payment. SIRs usually carry more administrative responsibility.

Risk pooling: members contribute premiums and share losses; pools can stabilize costs and fill coverage gaps, but members remain exposed to pool assessments if losses exceed pool funds.

Captive insurance is a subsidiary insurer owned by the organization; it funds retained risk formally, requires capital, and is regulated as an insurer.

Cost allocation: charge premiums or internal charges back to departments or activities based on their exposure and loss experience, creating incentives for loss control.

Budgeting rule: total risk cost must be funded - premiums, retained losses, deductibles, and safety/administration - not just the insurance line item; unfunded retention is a hidden liability.

Coverage limits and deductibles trade off against premium: raising deductibles lowers premium but increases required reserve; lowering limits cuts premium but raises retained severity exposure.

Policy administration: maintain current coverage schedules, policy periods, limits, deductibles, and endorsements; verify certificates of insurance from vendors and contractors before work begins.

Claims administration: report claims promptly, document the incident, preserve evidence, cooperate with the insurer, and track reserves and settlements for loss-experience impact.

Recordkeeping: retain incident reports, inspection logs, training records, and claim files for the required retention period; documentation supports both defense and renewal negotiations.

Program governance: assign risk management responsibility, set written procedures, and review the program at least annually or when enrollment, facilities, or activities change.

Monitoring metrics: claim frequency and severity trends, loss ratio (incurred losses ÷ premiums), cost of risk per student, open claim counts, and completion of safety inspections and drills.

Communication: train staff and volunteers on reporting procedures and safety rules; publish emergency plans; ensure students and families receive required notices and waivers.

Insurance market management: prepare accurate exposure data (payroll, enrollment, values, vehicle counts) for renewals; begin renewal review well before expiration and compare coverage, not just price.

Regulatory and contractual compliance: meet state reporting, workers' compensation, and transportation requirements; audit contracts for insurance, indemnity, and additional insured terms.

Risk is uncertainty about loss; it has two dimensions - frequency (how often) and severity (how much per occurrence). Expected loss = frequency × average severity.

Pure risk offers only loss or no-loss outcomes (fire, liability, injury) and is insurable; speculative risk (investment, enrollment growth) involves gain or loss and is generally not insurable.

Hazard vs. peril: a peril is the cause of loss (fire, windstorm, theft); a hazard is a condition that increases the chance or size of loss (clutter, poor lighting, icy walkway).

Hazard types: physical (building defects), moral (dishonest conduct such as faked claims), morale (indifference, e.g., leaving doors unlocked), and legal (statutes or court rulings that expand liability).

Risk management process: identify exposures → measure/analyze → select techniques (avoid, reduce, retain, transfer) → implement → monitor and revise.

Risk control reduces frequency or severity (avoidance, loss prevention, loss reduction, separation, duplication); risk financing provides funds after loss (retention, insurance, non-insurance transfer).

Loss prevention lowers frequency; loss reduction lowers severity. Separation splits assets across locations; duplication keeps backups of critical assets or data.

The risk management matrix uses frequency (high/low) and severity (high/low) to choose a technique: low/low → retention; high/low → prevention; low/high → insurance; high/high → avoidance.

Statutory, contractual, and common-law duties (reasonable care, supervision, premises safety) create liability exposures; tort liability rests on duty, breach, causation, and damages.

Exposure identification sources: incident reports, maintenance logs, inspection records, claims history, staff and student surveys, and walk-through audits of facilities and activities.

Loss data are summarized by frequency (number of claims per period) and severity (dollar amount per claim); expected annual loss = number of exposures × loss frequency × average severity.

Probability of at least one loss in n independent exposures ≈ 1 − (1 − p)^n; this shows why many small exposures still create a high chance of some loss.

Loss development and trending: historical claims must be adjusted for inflation, rising medical or repair costs, and changes in enrollment or activity levels before projecting future losses.

Maximum Possible Loss (MPL) is the worst-case total loss of the entire property; Probable Maximum Loss (PML) is the largest loss expected under normal conditions with protective features working.

Total cost of risk = insurance premiums + retained losses + deductibles/self-insured retention + administrative and safety costs; comparing this to exposure value guides financing decisions.

Risk mapping or a risk register scores each exposure by likelihood and impact, producing a ranked list that drives priorities and budget requests.

Data limitations: small samples, unreported near-misses, and changing conditions make purely historical estimates unreliable; combine internal data with industry benchmarks and actuarial judgment.

Valuation bases differ: replacement cost (new for old, no depreciation) vs. actual cash value (replacement cost minus depreciation); liability exposures are measured by potential damages and defense costs, not asset value.

Avoidance eliminates the exposure (dropping a high-risk activity); it is the only technique that removes both frequency and severity, but it may forfeit educational mission benefits.

Loss prevention reduces frequency (safety training, background checks, maintenance schedules); loss reduction reduces severity (sprinklers, first-aid kits, evacuation drills, rapid response plans).

Separation and duplication limit the impact of a single event by distributing activities, records, or equipment across sites or keeping backups.

Retention (self-insurance) is appropriate for low-severity, high-frequency losses; fund it with a formal reserve and set a retention limit. Use active retention knowingly, not passive retention by default.

Transfer shifts financial consequences: insurance transfers to an insurer; non-insurance transfer includes hold-harmless agreements, waivers, and leases - contracts transfer liability but not all risk.

Insurance is best for low-frequency, high-severity exposures; choose limits, deductibles, and coverage forms (property, general liability, auto, workers' compensation, educators' legal liability) to match measured exposures.

Contractual risk transfer requires careful review: indemnification and hold-harmless clauses, additional insured status, certificates of insurance, and waiver enforceability for minors.

Emergency and crisis planning (drills, communication trees, reunification plans, business continuity for payroll and records) is a loss reduction and continuity technique, not a financing tool.

Technique selection rule: avoid when frequency and severity are both high; prevent when frequency is high and severity low; insure when frequency is low and severity high; retain when both are low.

Funding sources include the general operating budget, dedicated risk management or insurance reserves, insurance premiums, and in some cases state or district risk pools and captive arrangements.

Insurance premium components: expected losses + insurer expenses + profit/risk charge + taxes and fees, adjusted by credits or debits for loss experience, safety programs, and deductibles.

Retention funding must be actuarially estimated (expected losses plus a loading for volatility); a reserve equal to expected annual retained losses plus a margin is a common benchmark.

Self-insured retention (SIR) applies per claim before insurance responds; a deductible is typically subtracted from the insurer's payment. SIRs usually carry more administrative responsibility.

Risk pooling: members contribute premiums and share losses; pools can stabilize costs and fill coverage gaps, but members remain exposed to pool assessments if losses exceed pool funds.

Captive insurance is a subsidiary insurer owned by the organization; it funds retained risk formally, requires capital, and is regulated as an insurer.

Cost allocation: charge premiums or internal charges back to departments or activities based on their exposure and loss experience, creating incentives for loss control.

Budgeting rule: total risk cost must be funded - premiums, retained losses, deductibles, and safety/administration - not just the insurance line item; unfunded retention is a hidden liability.

Coverage limits and deductibles trade off against premium: raising deductibles lowers premium but increases required reserve; lowering limits cuts premium but raises retained severity exposure.

Policy administration: maintain current coverage schedules, policy periods, limits, deductibles, and endorsements; verify certificates of insurance from vendors and contractors before work begins.

Claims administration: report claims promptly, document the incident, preserve evidence, cooperate with the insurer, and track reserves and settlements for loss-experience impact.

Recordkeeping: retain incident reports, inspection logs, training records, and claim files for the required retention period; documentation supports both defense and renewal negotiations.

Program governance: assign risk management responsibility, set written procedures, and review the program at least annually or when enrollment, facilities, or activities change.

Monitoring metrics: claim frequency and severity trends, loss ratio (incurred losses ÷ premiums), cost of risk per student, open claim counts, and completion of safety inspections and drills.

Communication: train staff and volunteers on reporting procedures and safety rules; publish emergency plans; ensure students and families receive required notices and waivers.

Insurance market management: prepare accurate exposure data (payroll, enrollment, values, vehicle counts) for renewals; begin renewal review well before expiration and compare coverage, not just price.

Regulatory and contractual compliance: meet state reporting, workers' compensation, and transportation requirements; audit contracts for insurance, indemnity, and additional insured terms.

Risk is uncertainty about loss; it has two dimensions - frequency (how often) and severity (how much per occurrence). Expected loss = frequency × average severity.

Pure risk offers only loss or no-loss outcomes (fire, liability, injury) and is insurable; speculative risk (investment, enrollment growth) involves gain or loss and is generally not insurable.

Hazard vs. peril: a peril is the cause of loss (fire, windstorm, theft); a hazard is a condition that increases the chance or size of loss (clutter, poor lighting, icy walkway).

Hazard types: physical (building defects), moral (dishonest conduct such as faked claims), morale (indifference, e.g., leaving doors unlocked), and legal (statutes or court rulings that expand liability).

Risk management process: identify exposures → measure/analyze → select techniques (avoid, reduce, retain, transfer) → implement → monitor and revise.

Risk control reduces frequency or severity (avoidance, loss prevention, loss reduction, separation, duplication); risk financing provides funds after loss (retention, insurance, non-insurance transfer).

Loss prevention lowers frequency; loss reduction lowers severity. Separation splits assets across locations; duplication keeps backups of critical assets or data.

The risk management matrix uses frequency (high/low) and severity (high/low) to choose a technique: low/low → retention; high/low → prevention; low/high → insurance; high/high → avoidance.

Statutory, contractual, and common-law duties (reasonable care, supervision, premises safety) create liability exposures; tort liability rests on duty, breach, causation, and damages.

Exposure identification sources: incident reports, maintenance logs, inspection records, claims history, staff and student surveys, and walk-through audits of facilities and activities.

Loss data are summarized by frequency (number of claims per period) and severity (dollar amount per claim); expected annual loss = number of exposures × loss frequency × average severity.

Probability of at least one loss in n independent exposures ≈ 1 − (1 − p)^n; this shows why many small exposures still create a high chance of some loss.

Loss development and trending: historical claims must be adjusted for inflation, rising medical or repair costs, and changes in enrollment or activity levels before projecting future losses.

Maximum Possible Loss (MPL) is the worst-case total loss of the entire property; Probable Maximum Loss (PML) is the largest loss expected under normal conditions with protective features working.

Total cost of risk = insurance premiums + retained losses + deductibles/self-insured retention + administrative and safety costs; comparing this to exposure value guides financing decisions.

Risk mapping or a risk register scores each exposure by likelihood and impact, producing a ranked list that drives priorities and budget requests.

Data limitations: small samples, unreported near-misses, and changing conditions make purely historical estimates unreliable; combine internal data with industry benchmarks and actuarial judgment.

Valuation bases differ: replacement cost (new for old, no depreciation) vs. actual cash value (replacement cost minus depreciation); liability exposures are measured by potential damages and defense costs, not asset value.

Avoidance eliminates the exposure (dropping a high-risk activity); it is the only technique that removes both frequency and severity, but it may forfeit educational mission benefits.

Loss prevention reduces frequency (safety training, background checks, maintenance schedules); loss reduction reduces severity (sprinklers, first-aid kits, evacuation drills, rapid response plans).

Separation and duplication limit the impact of a single event by distributing activities, records, or equipment across sites or keeping backups.

Retention (self-insurance) is appropriate for low-severity, high-frequency losses; fund it with a formal reserve and set a retention limit. Use active retention knowingly, not passive retention by default.

Transfer shifts financial consequences: insurance transfers to an insurer; non-insurance transfer includes hold-harmless agreements, waivers, and leases - contracts transfer liability but not all risk.

Insurance is best for low-frequency, high-severity exposures; choose limits, deductibles, and coverage forms (property, general liability, auto, workers' compensation, educators' legal liability) to match measured exposures.

Contractual risk transfer requires careful review: indemnification and hold-harmless clauses, additional insured status, certificates of insurance, and waiver enforceability for minors.

Emergency and crisis planning (drills, communication trees, reunification plans, business continuity for payroll and records) is a loss reduction and continuity technique, not a financing tool.

Technique selection rule: avoid when frequency and severity are both high; prevent when frequency is high and severity low; insure when frequency is low and severity high; retain when both are low.

Funding sources include the general operating budget, dedicated risk management or insurance reserves, insurance premiums, and in some cases state or district risk pools and captive arrangements.

Insurance premium components: expected losses + insurer expenses + profit/risk charge + taxes and fees, adjusted by credits or debits for loss experience, safety programs, and deductibles.

Retention funding must be actuarially estimated (expected losses plus a loading for volatility); a reserve equal to expected annual retained losses plus a margin is a common benchmark.

Self-insured retention (SIR) applies per claim before insurance responds; a deductible is typically subtracted from the insurer's payment. SIRs usually carry more administrative responsibility.

Risk pooling: members contribute premiums and share losses; pools can stabilize costs and fill coverage gaps, but members remain exposed to pool assessments if losses exceed pool funds.

Captive insurance is a subsidiary insurer owned by the organization; it funds retained risk formally, requires capital, and is regulated as an insurer.

Cost allocation: charge premiums or internal charges back to departments or activities based on their exposure and loss experience, creating incentives for loss control.

Budgeting rule: total risk cost must be funded - premiums, retained losses, deductibles, and safety/administration - not just the insurance line item; unfunded retention is a hidden liability.

Coverage limits and deductibles trade off against premium: raising deductibles lowers premium but increases required reserve; lowering limits cuts premium but raises retained severity exposure.

Policy administration: maintain current coverage schedules, policy periods, limits, deductibles, and endorsements; verify certificates of insurance from vendors and contractors before work begins.

Claims administration: report claims promptly, document the incident, preserve evidence, cooperate with the insurer, and track reserves and settlements for loss-experience impact.

Recordkeeping: retain incident reports, inspection logs, training records, and claim files for the required retention period; documentation supports both defense and renewal negotiations.

Program governance: assign risk management responsibility, set written procedures, and review the program at least annually or when enrollment, facilities, or activities change.

Monitoring metrics: claim frequency and severity trends, loss ratio (incurred losses ÷ premiums), cost of risk per student, open claim counts, and completion of safety inspections and drills.

Communication: train staff and volunteers on reporting procedures and safety rules; publish emergency plans; ensure students and families receive required notices and waivers.

Insurance market management: prepare accurate exposure data (payroll, enrollment, values, vehicle counts) for renewals; begin renewal review well before expiration and compare coverage, not just price.

Regulatory and contractual compliance: meet state reporting, workers' compensation, and transportation requirements; audit contracts for insurance, indemnity, and additional insured terms.