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Presented by:

Erike Young, MPPA, CSP, ARM-E

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I would like to thank the Public Entity Risk Institute (PERI) for providing funding for this course. It is due to PERI’s funding that this course has been waived for all participants and all course material will remain public on the ARM Study Group website.

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Course Schedule

• 7/31 Introduction and Chapter 1

• 8/7 Chapter 2

• 8/14 Chapter 3

• 8/21 Chapter 4

• 8/28 Chapter 5

• 9/4 No Class

• 9/11 No Class

• 9/18 Chapter 6

• 9/25 Chapter 7

• 10/2 Chapter 8

• 10/9 No Class

• 10/16 Chapter 9

• 10/23 Chapter 10

• 10/30 Course Review

Recordings

• For those who cannot attend the live presentations, each

webinar will be recorded and typically posted for viewing

within 24 hours. I know that due to the different time

zones, these recordings are important will get them

posted as soon as possible. In some cases, it could be

within several hours. The recordings will be made

available on a YouTube channel accessible by going to

www.armstudygroup.com.

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Scheduling the Exam

75 Multiple Choice Questions – 2 Hours

45.5% pass ratio

Structured Review

How to make the most of this review:

• Take notes in course guide, but don’t waste

effort copying slides. (Slides are be available for

download)

• Questions are important. Yet time is limited to

cover all of the material.

• Goal is to cover all chapters in 10 weeks –

average of 1 chapter per meeting

• The primary purpose is to pass national exam.

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Studying the Material

• Educational Objectives

• Terms and Phrases

• Text Exhibits

• Chapter Summary

• Optional

– Course Guide Review Questions

– Course Guide Application Questions

SUGGESTION: Read the Educational Objectives in

the course guide BEFORE reading the text.

Studying the Material

• Have an answer for ALL Educational Objectives

• Review all exhibits

• Use same terms and phrases – (EX: The text has 4 Pre-Loss Goals and 6 Post-Loss Goals;

then so do you!)

– This course requires memorizing content, not creating NEW examples.

– Use acronyms to keep the lists separate.

• Test questions frequently interchange information..

SUGGESTION: Divide material in the text and course

guide into units for EVERY Educational Objectives.

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What’s Special About Public Entity Risk Management?

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Differences between public and private sector 1. Essential government functions

2. Scope of exposures

3. Special legal requirements

4. Public interest, nonprofit objectives

5. Power to tax

6. Poltical scrutiny

7. Special tax status

8. Differing accounting and budgeting procedures

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Differences between public and private sector ◦ Essential government functions

Police, fire, water are examples

◦ Scope of exposures

Small public entities can have more risks than a large corporation

◦ Special legal requirements

Some public entities exempt from laws, but may have restrictions on taking action (Open meeting laws)

◦ Public interest, nonprofit objectives

Must provide services within budget constraints

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Differences between public and private sector ◦ Power to tax

Only generate revenue through taxes and fees

◦ Political scrutiny

Elected officials have agendas which can make long-term planning difficult

◦ Special tax status

Public entities are typical exempt from income and sales taxes

◦ Differing accounting and budgeting procedures

Public entities have specific accounting rules and conservative investing

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Five Step Risk Management Process ◦ Identify and Analyze loss exposures

◦ Examine risk management alternatives

◦ Select among risk management alternatives

◦ Implement chosen risk management technique

◦ Monitor and improve risk management program

Remember:

I Am Extremely Savvy In Money

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Identifying and Analyzing Loss Exposures ◦ Types of Values Exposed to Loss

Property

Tangible property – land, building, equipment, vehicle

Intangible property – rights, privileges or reputation

Freedom from Liability

Causing harm to a person or violation of citizens rights

Net Income

Loss is due to reduction in income or increase in expenses

Key Personnel

Person with special knowledge or skill

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Perils Causing Loss ◦ All accidents or catastrophic events that result in a

loss can be grouped to their original causes

Natural perils

earthquake, flood, wild fire

Human perils

due to action or inaction of a person

Economic perils

due to acts of government or large numbers of individuals, such as boycott, war, changes in technology

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Consequences of Loss ◦ Losses are analyzed in terms of their financial

consequence and their effect on the organization’s ability to meet its objectives. These include:

Continuity of operations

Stable revenues and expenses

Humanitarian concerns

Legal requirements

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Surveys and questionnaires

Loss histories

Financial statements

General records and documents

Flow charts

Personal inspections

Consultation with experts

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Risk Control ◦ Exposure avoidance

◦ Loss prevention – reduces frequency

◦ Loss reduction – reduces severity

◦ Segregation of loss exposure units

◦ Contractual transfer for risk control

Risk Financing ◦ Retention

◦ Contractual transfer of risk financing

Insurance

Hold harmless and indemnity agreements

Risk manager must determine combination of risk control and risk financing techniques that would be most effective in controlling organization’s risk exposure

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Technical vs. Managerial Decisions ◦ Technical decisions are within authority of risk manager,

but may need to be explained to senior officials

◦ Managerial decisions are made by those with “line authority”. Risk manager only has staff (advisory) authority and must work with managers on implementation of risk management methods.

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Risk management process is essentially the same for public and private sector organizations

Difference is in how organizations are structured and the goals/objectives ◦ Money vs. public good

◦ Revenue generation – Profit vs. surplus

◦ Flexibility vs. organizational constraints

Contrasts in Organizational Objectives ◦ Risk management decisions in the public interest

depend on several factors related to the following:

Political Climate

Tolerance for Risk

Obligations to provide services

Statutory requirements

Budgetary concerns

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Political Climate ◦ Political wishes of elected officials or community

leaders may influence risk management actions

Tolerance for Risk ◦ Ability of its management and other personnel to

continue functioning effectively despite significant uncertainties.

◦ Good public policy sometimes means assuming certain risk in the interest of the public

◦ Obligations to provide services

Statutory requirements

Budgetary concerns

Obligations to provide services ◦ Police, fire, water, education, etc..

Legal requirements ◦ Public entity can be sued for not performing

certain duties

Budgetary concerns ◦ Loss control measures must compete for money

with services for the community which are often more tangible

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Contrasts in Organizational Structure ◦ Government agencies also differ in the following

areas:

Hierarchy

Division of labor

Span of control

Rules and regulations

Hierarchy ◦ Risk manager must understand position within hierarchy

and level of authority

◦ Structure often causes numerous polices and procedures

Division of labor ◦ Govt. agencies often create silos that make managing risk

more difficult

Span of control ◦ Public sector manager often have a larger span of control,

which limits supervision and increases risk

Rules and regulations ◦ Public entities have both formal rules/regulations, but often

will defer to departmental norms and standard operating procedures

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Contrasts in Financial Management ◦ Sources of Revenue Revenue is more systemic (taxes, bonds, fees)

Increasing taxes often requires a vote of the public

◦ Budgeting Long budgeting process

Often must make budget decisions with incomplete data or rely on funding from higher entity

◦ Financial Reporting Extensive reporting requirements and standards (GASB)

Contrasts in Managerial Accountability ◦ Public officials are accountable to general public

and may have different priorities

◦ Frequent changes in public officials

Contrasts in Political Environment ◦ Every action is in the public domain and open to scrutiny

◦ Public Information Act and Freedom of Information Act require accurate record keeping

◦ Citizens often focused on tangible results and focus on risk management needs is not interesting

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Property Exposures ◦ Facilities and vehicle fleets

Employment-Related Exposures ◦ Varied types of jobs and skills with different risks

Trades, police, fire, maintenance, daycare, faculty

Roads and Streets

Parks and Recreation ◦ Fields, playground equipment, swimming pools,

dog parks

Law Enforcement

Special Events

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Utilities ◦ Electrical, water, sewer

Social services

Changes in Legislative and Regulatory Requirements ◦ Public entities must also comply with OSHA and

other regulatory requirements

◦ Unfunded mandates

◦ Changes to workers’ compensation laws

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