CSRM key terms

Uncertainty about future outcomes that could reduce the value of school assets, disrupt operations, or increase liabilities. It includes both the chance of loss and the chance of missed opportunity.

A continuous process of identifying exposures, measuring their potential effect, choosing techniques to treat them, funding the chosen techniques, and monitoring results so that school objectives are protected.

A situation offering only two outcomes: loss or no loss. Fire, liability claims, and employee injury are pure risks, which schools typically insure or otherwise transfer because no gain is possible.

A situation that can produce gain, loss, or no change, such as launching a new program or investing reserves. It is generally not insurable but should still be identified and evaluated in planning.

Any person, property, activity, or contractual obligation of the district that could be affected by a loss event. Exposures are the units risk managers count and value when measuring risk.

A single measurable item used to count how much risk a school carries, such as one bus, one student athlete, one building, or one acre of grounds. Rates and premiums are often quoted per exposure unit.

How often a particular type of loss is expected to occur over a period, usually stated as a number of claims per year or per hundred exposure units. High frequency is often handled by prevention and retention.

The size or cost of an individual loss once it happens, ranging from a small property repair to a catastrophic liability judgment. High severity exposures are usually transferred through insurance.

The average loss a school can anticipate over time, calculated by multiplying loss frequency by average loss severity. It is the core input to deciding how much risk to retain and how much to insure.

The largest loss a reasonable person would expect from a single event under normal conditions, considering available protection such as sprinklers or alarms. It helps set limits and retention levels.

The worst loss that could occur if all protection fails, such as a total building loss from fire. Comparing it with maximum probable loss shows the value of protective systems and needed limits.

The systematic process of identifying exposures, evaluating the likelihood and impact of each, and ranking them so resources go to the most significant risks first. It precedes selection of treatment techniques.

A grid that plots likelihood against impact to sort risks into priority levels. School leaders use it to communicate which exposures need immediate treatment and which can be monitored.

Techniques that reduce the chance or size of a loss rather than pay for it, including avoidance, prevention, reduction, and separation. Control is chosen when the exposure itself can be made smaller.

Techniques that provide money to pay for losses after they occur, such as retention, insurance, and contractual transfer. Financing answers the question of who ultimately bears the cost.

Eliminating an activity or asset that creates an exposure, such as discontinuing a high-hazard field trip. It removes the risk entirely but may also remove educational benefits or create new exposures.

Measures taken before a loss to reduce the probability it occurs, such as background checks on volunteers, playground inspections, or strict chemical storage rules. Prevention targets frequency rather than severity.

Measures that limit the damage after a loss begins, such as sprinkler systems, evacuation drills, or rapid claims reporting. Reduction targets severity and often lowers insurance cost.

Deliberately keeping some or all of a risk and paying losses from district funds, either because the exposure is small or because insurance is uneconomical. Retention may be planned or unintended.

Shifting the financial consequence of a loss to another party through insurance, hold-harmless agreements, leases, or vendor contracts. The exposure itself may remain even when the cost is transferred.

A contract in which an insurer promises to pay specified losses in exchange for a premium. For schools it is the primary method of transferring low-frequency, high-severity exposures such as liability and property damage.

The written contract setting out what is covered, what is excluded, the limits of payment, the deductible, and the conditions the insured must meet. Reading it carefully prevents gaps in protection.

The amount a school pays an insurer for coverage over a policy period. It reflects exposure units, loss history, limits, deductibles, and the insurer's expenses and profit margin.

The amount the district pays on each loss before the insurer responds. Choosing a higher deductible lowers premium but increases retained risk, so it must fit the district's budget.

A specified amount of each loss that the district funds itself before insurance or a pooled program applies. Unlike a deductible, the district may also control how the claim is handled within that layer.

A formal arrangement in which a district or group sets aside funds and administers claims for specified risks instead of buying conventional insurance. It requires actuarial study, reserves, and strong claims management.

A cooperative of school districts that combines contributions to pay members' claims and buys reinsurance for large losses. Pooling spreads risk and stabilizes cost for entities too small to self-insure alone.

Insurance purchased by an insurer or pool to protect itself against unusually large or numerous claims. It ultimately backs the promises made to school policyholders and supports the primary insurer's capacity.

The maximum amount an insurer will pay under a policy for a covered loss, per occurrence or in total. Limits should be compared with maximum probable loss to avoid a shortfall.

A provision in a policy stating that certain losses, activities, or property are not covered. Districts must identify excluded exposures and arrange separate coverage or retention for them.

A property policy requirement that the insured carry coverage equal to a stated percentage of property value, or suffer a penalty on partial losses. It encourages limits that reflect true replacement cost.

A contract clause in which one party agrees to accept liability for certain losses and protect the other from claims. Schools use them with vendors, facility users, and contractors to shift risk.

A document from an insurer summarizing another party's coverage, limits, and expiration. Districts collect these from contractors and outside users to confirm that risk has actually been transferred.

A report from an insurer or pool listing claims, payments, and reserves for a district over a period. Underwriters use it to price coverage, and risk managers use it to spot recurring problems.

A factor, common in workers' compensation, that adjusts premium up or down based on a district's loss history compared with similar entities. A lower factor rewards effective safety programs.

The portion of a rate intended to cover expected claims, before insurer expenses and profit are added. Comparing loss costs with premiums paid helps a district judge the value of its program.

The district's approved plan of revenues and expenditures for a fiscal year. Risk management costs, including premiums, deductibles, and safety spending, must be built into it and justified to the board.

Funds set aside to pay anticipated or unexpected losses and claims that exceed current budgeted amounts. Adequate reserves protect instructional programs from being disrupted by a single large loss.

The person responsible for identifying, measuring, treating, and funding the district's exposures, often in addition to other duties in smaller districts. Authority, reporting lines, and access to records must be clearly defined.

A group of administrators, staff, and sometimes community members who review exposures, recommend policies, and monitor safety performance. It broadens ownership of risk decisions beyond a single office.

A database used to record exposures, claims, inspections, and costs so trends can be analyzed and reported. Reliable data supports budgeting, renewal negotiations, and evaluation of safety programs.

An exposure that meets insurer criteria: many similar units, accidental losses, measurable amounts, and premiums that are affordable. Risks failing these tests usually must be retained or controlled instead.