I wouldn’t recommend pursuing Enterprise Risk Management as the best or most serious way of “doing” risk management. Humphrey’s Capability Maturity Model (CMM) forms the theoretical basis for ERM. According to Wikipedia, “CMM was originally intended as a tool for objectively assessing the ability of government contractors’ processes to perform a contracted software project.” According…
Pulling to the curb to make an emergency cell phone call makes sense on most roads at most times, but pulling to the curb isn’t always a practical solution on congested freeways and creates its own nontrivial countervailing risks involving traffic crashes and traffic capacities. There should be room for procedures (individual choice) as well…
The exemption of state and local government employees from mandatory federal OSHA compliance was due to arguments supported by state and local governments concerning the application of unfunded mandates by the federal government on states. Underlying such arguments were the Tenth Amendment and differing conceptions of federalism. Individual decisions by states, perhaps, can be attributed…
Under Federal Railroad Administration guidelines, train engineers must sound their horns as they approach crossing areas to warn pedestrians and vehicle traffic. A local government has the option of silencing trains under federal law, but only if the local government agrees to certain conditions set down in “quiet zone” regulations. The public entity would need…
All things equal, I think that developing and maintaining productive, long-term relationships with insurers is preferable to switching insurers after a large loss in order to receive a premium lower than the incumbent will offer you on renewal. Unfortunately, seldom are “all things equal.” A single large loss often triggers surcharges in addition to normal…
The concept of “bounded rationality” (Herbert Simon) is a structure for understanding how we cope with the complexity of the world in framing risk management decisions. In the arena of the public sector and public policy, Charles Lindlblom called an earlier but similar notion the process of “muddling through,” the idea that decisions are evolutionary…
I read an article (see http://www.riskandinsurance.com/070415_column_4.asp ) that poorly explains the concept of risk compensation. All things equal, wearing a seat belt while driving is safer than not wearing a seat belt. Risk compensation results from the fact that, in the aggregate, all things are not equal. On average, people who wear seat belts due…
In the U.S., under the Clean Air Act, Section 112(r), the U.S. EPA requires risk management plans (RMPs) be provided to the EPA by facilities possessing greater than certain threshold quantities of 140 chemicals. The list of 140 chemicals (77 toxic and 63 flammable chemicals including anhydrous ammonia) and their threshold quantities are found at…
If a collision claim is adjusted on an actual cash value (ACV) basis, the adjustment is relatively simple. Repair costs are estimated. If covered repair costs exceed the ACV (which in California, is “fair market value”), the insurance company pays the claimant the fair market value of the vehicle less the deductible. If covered repair…
Someone commented that a mission statement is no more than a fancy representation of a job description. A job description may be “digging holes as directed,” but a mission may be as different as “sinking productive water wells,””building strong, secure fences,” or “planting corn to feed healthy livestock.” An organizational mission statement (its form is…