1. Course Introduction Welcome!  Introductions  Icebreaker  Housekeeping  Agenda

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1 Slide 2 Course Introduction Welcome! Introductions Icebreaker Housekeeping Agenda Slide 3 Course Introduction Housekeeping Ground Rules Be on time Listen to and show respect for the opinions of others No disruptive side-conversations Cell Phone and PDAs off Facilities Breaks Lunch Parking Lot Slide 4 Professional Management Development Program (PMDP) M-100 Essentials of Community Association Management M-201 Facilities Management M-202 Association Communication M-203 Community Leadership M-204 Community Governance M-205 Risk Management M-206 Financial Management Course Introduction Slide 5 Course Materials Participant Guide Lessons Activities Course Evaluation Forms Course Exam CD-ROM M-205 Website GAP: Risk Management Course Introduction Slide 6 M-205 Website Samples, articles, resources and much more Slide 7 Focus of Course Developing risk management awareness. Developing the habit of thinking beyond maintenance, beyond property to include liability, net income, and personnel concerns, as well. Course Introduction Slide 8 Importance of Course Risk managementincluding a sound insurance programis a key aspect of preserving and protecting an associations assets. It demonstrates managements ability to manage both assets and crisis situations. Course Introduction Slide 9 Speak as an association or a member Just because you maintain something, doesnt necessarily mean you own it or insure it. Just because you insure something, doesnt necessarily mean you own it or maintain it. Course Introduction Slide 10 Examples: In some homeowner associations, member owns the building, but the association maintains and insures it. Condominium associations often insure unit interiors, which may include real property owned and maintained by members. Course Introduction Slide 11 Module 1: Risk Management Slide 12 Focus: How to apply the risk management process to community association using property as the primary example of exposures to possible loss. Risk Management Slide 13 Module Objectives Conduct an initial inventory of an associations current risk management situation. Use appropriate resources to identify an associations exposures to possible loss. Recognize and respond to exposure to possible loss that requires immediate attention. Risk Management Slide 14 Module Objectives Analyze an associations exposures to possible loss. Identify roles in developing a risk management program. Identify alternative risk management techniques. Risk Management Slide 15 Why Risk Management Awareness? Cant take chance of your association suffering a loss If a loss is perceived as an accident that couldnt have been anticipated, youre lucky. If you anticipate and then prevent or prepare for an accidental loss, youre perceived as valuablenot just lucky Risk Management Slide 16 Lesson 1: Risk Inventory Slide 17 Lesson Objective Conduct an initial inventory of an associations current risk management situation. Risk Inventory Slide 18 Why is an initial inventory necessary? Crisis Claim Risk Inventory Slide 19 Activity # 1: Conduct an Initial Inventory Purpose: To develop the ability to do an initial assessment of an associations current risk management situation. Risk Inventory Slide 20 Directions for working in groups. 1.Choose a leader. This person is responsible for helping the group move through the steps in an activity, keeping the group focused, and getting everyone involved. 2.Choose a timekeeper. This person is responsible for keeping the group posted on how much time it has left to complete an activity. 3.Choose a recorder when appropriate. This person is responsible for recording a summary of the groups ideas and presenting it to the rest of the class, when appropriate. Slide 21 Lesson 2: Exposure to Loss Slide 22 Lesson Objectives Recognize and respond to exposure to possible loss that requires immediate attention. Use appropriate resources to identify an associations exposures to possible loss. Analyze an associations exposures to possible loss. Exposure to Loss Slide 23 Ability to recognize depends on: Managerial experience. Risk management expertise. Available time. Exposure to Loss Slide 24 Insurance Terms Related to Exposure to Loss Exposure to Loss Advertising Injury (Al) Bodily Injury (BI) Directors & Officers Liability (D&O) Employment Practices Liability Liability Exposure Net Income Exposure Personnel Exposure Personal Injury (PI) Property Damage (PD) Property Exposure Wrongful Acts Slide 25 Types of Exposure to Loss: property net income liability personnel Exposure to Loss Slide 26 Example of Exposure to Loss: An increase in expenses as a net income loss: Any expenses associated with another type of loss, such as legal expenses or the extra expenses to set up an office at another location if the current site is damaged. Exposure to Loss Slide 27 Immediate Treatment Delays Deficiencies Defects Exposure to Loss Slide 28 Response time depends on: Authorization Resources Schedule or timing Exposure to Loss Slide 29 Activity #2: Exposure to Possible Loss that Require Immediate Attention Purpose: To develop the ability to recognize and respond to exposures to possible loss that requires immediate attention. Exposure to Loss Slide 30 Lesson 3: Risk Management Roles Slide 31 Objective Identify roles in developing a risk management program. Risk Management Roles Slide 32 A manager is responsible for: Planning, Organizing, Leading, and Controlling Risk Management Process Risk Management Roles Slide 33 A manager should Review exposures. Communicate issues to the board. Manage insurance program. Risk Management Roles Slide 34 Community Association Insurance Agent: Historically the agent represented the carrier and the broker represented the insured. These distinctions dont always hold today. Risk Management Roles Slide 35 What an agent ought to Suggest insurance policy coverage. Obtain premium quotations. Arrange coverage placement. Arrange premium financing. Provide loss runs in a timely fashion. Risk Management Roles Slide 36 Agent may assist with Reporting claims. Identifying and analyzing exposures. Valuation of exposures. Compliance with legal requirements for insurance. Development and implementation of disaster planning. Risk Management Roles Slide 37 What an agent may do depends on Legal constraints under state statutes and licensure. Contract with the insurance carrier. Contract with the association, if any. Knowledge of the community association. Risk Management Roles Slide 38 Activity #3: Identify Insurance Agent Roles Purpose: To identify the roles of an insurance agent. Risk Management Roles Slide 39 Agent should not Offer advice outside area of expertise. Assume responsibility for association risk management and insurance program. Become involved in internal association disputes. Estimate damage. Collect assessments. Contact other insurance carriers or agents. Risk Management Roles Slide 40 Lesson 4: Risk Management Techniques Slide 41 Objective Identify alternative risk management techniques. Risk Management Techniques Slide 42 Next Steps Analyze an associations exposure to possible loss. Review alternative risk management techniques. Risk Management Techniques Slide 43 Risk Management Discussion Whats the difference between loss frequency and loss severity? Whats the difference between loss prevention and loss reduction? Risk Management Techniques Slide 44 Contractual Transfer Risk Financing Risk Control Slide 45 Risk control involves the following five techniques: 1. Exposure avoidance 2. Loss prevention 3. Loss reduction 4. Segregation of exposures a.Duplication b.Separation 5. Contractual transfer a.Legal and fiscal responsibility Slide 46 Risk Financing Risk Retention: Pay for Yourself 1.Current expensing 2.Unfunded reserve for loss 3.Funded reserve for loss 4.Borrowing Risk Transfer: Find Someone Else to Pay 1.Transfer to a commercial insurer 2.Contractual transfer Hold harmless and indemnification agreement Slide 47 Activity #4: Applying Alternative Risk Management Techniques Purpose: To practice applying the risk management process to a specific exposure to loss. Risk Management Techniques Slide 48 Select Appropriate Technique Association Obligation Association Need Owner Expectation Risk Management Techniques Slide 49 Examples Obligation The governing documents require the association to maintain certain coverage. Need Type and condition of association assets involve certain exposures to loss. Owner expectations May vary in terms of how high a deductible they think the association should assume. Risk Management Techniques Slide 50 Activity #5: Risk Management Techniques for Exposure to Loss Purpose: To practice preparing a risk management report to a board of directors. Risk Management Techniques Slide 51 Module Summary Focus: How to apply the risk management process to community association using property as the primary example of exposures to possible loss. Slide 52 Module Summary Module Objectives Conduct an initial inventory of an associations current risk management situation. Use appropriate resources to identify an associations exposures to possible loss. Recognize and respond to exposure to possible loss that requires immediate attention. Slide 53 Module Summary Module Objectives Analyze an associations exposures to possible loss. Identify roles in developing a risk management program. Identify alternative risk management techniques. Slide 54 Discussion Questions Why is it important to inventory as associations risk management situation? What are some common exposures to loss for a community association? How might this differ by housing typehigh-rise condominium vs. large-scale community? What is the role of the board in developing a risk management program? A committee? Management? Residents