What is Risk Management

Risk Management is defined under the Australian Standard AS4360 where any organization has an obligation to identify and assess foreseeable hazards, and take steps to eliminate or control the risk. It is the process if identifying the risk, assessing the risk then elimination or controlling the risk. Once the risks have been eliminated or controlled, then a monitoring process is established to evaluate and improve the implemented risk controls.
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What is Risk?

A Risk or Hazard is anything that may have the potential to harm the health or safety of a person, the business assets or its ability to continue.

Who is responsible for Risk Management?

The employer or organization is responsible to provide a safe working / sporting environment and take reasonable care to identify hazards to both people and the business, and introduce effective measures to mitigate or control the risk.

What is Risk Control?

Identifying risks is jus the beginning, actions must be taken to do something to eliminate or control the risk before it has the chance to cause injury, damage or financial loss. This is called Risk Control.

Risks can be transferred to other parties either by contract or insurance. Or the risk can be reduced by implementing procedures or controls such as administrative procedures, engineering, repairs or maintenance, or security measures to reduce the chance of the risk occurring.

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Your Duties

To ensure protection, you have various duties both before you enter into a new insurance contract as well as at renewal or whenever your risk changes. Failure to observe these duties could lead to the rejection or diminution of an otherwise proper claim.

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The Duty Of Disclosure

Before you enter into a contract of general insurance with an insurer, you have a duty under the Insurance Contracts Act 1984 to disclose to the insurer every matter that you know or could reasonably be expected to know, is relevant to the insurer’s decision whether to accept the risk of the insurance and, if so, on what terms.

You have the same duty to disclose those matters to the insurer before you renew, extend or reinstate a contract of general insurance.

Your duty, however, does not require disclosure of a matter:

  • that diminishes the risk to be undertaken by the insurer;

  • that is of common knowledge;

  • that your insurer knows or, in the ordinary course of his business, ought to know;

  • as to which compliance with your duty is waived by the insurer.

Non-Disclosure

If you fail to comply with your duty of disclosure, the insurer may be entitled to reduce his liability under the contract in respect of a claim or may cancel the contract. If your non-disclosure is fraudulent, the insurer may also have the option of avoiding the contract from its beginning.

N.B. The disclosure is especially important in matters relating to the physical risk, past claims, cancellations of insurance covers, the imposition of increased premiums etc. and any matters that might affect the acceptance of the risk (such as insolvency or criminal convictions).

Your duty of disclosure must be taken seriously as it may affect your right to claim. Disclosure is not limited to matters applying to to the insured named in the policy but includes other past businesses or private insurances.

The Average Clause (Under Insurance)

Many policies contain a Co-insurance (or average) provision whereby you may be required to bear a rateable proportion of the loss in the event that the sum insured is less than the value of the insured property at the commencement of the insurance. Sums insured should be such as to ensure you are not penalised by this provision.

Hold Harmless Agreements Contracting Out Removal Of Subrogation Rights

You will prejudice your rights of a claim if, without prior agreement from your insurer, you make any agreement that may prevent the insurer from recovering the loss from a third party.

These “hold harmless” clauses are often found in leases, in maintenance or supply contracts (eg. from burglar alarm or fire protection installers), building or repair contracts and sales agreements. If you are in doubt consult us.

This notification requirement applies to all Property insurances and also to Public Liability insurance. It has a special connotation in Products Liability where you must not, without the insurer’s agreement, indemnify or hold a supplier harmless.

Insuring The Interest Of Other Parties

If you require the interest of any additional parties to be covered you MUST request this. Most policy conditions will exclude indemnity to other parties (eg. mortgagees, lessors, principals’ etc.) unless their interest is properly noted on the policy.

Utmost Good Faith

Insurance contracts are subject to the doctrine of Utmost Good Faith and this is part of the Law.

Both parties must strictly adhere to utmost Good Faith. If you fail to do so, you may prejudice any claim.

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Financial Risks

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Accounting Systems

  1. Make sure that any cash / cheques received are deposited each day, and not left overnight.

  2. Ensure receipts are made for all cash received.

  3. Where possible cash should be checked by a 2nd person.

  4. Monthly statements (where applicable) to be sent to customers.

  5. Ordering of cheque books, storage of unused checks, and authorization of cheques should be someone other than the person issuing the cheque.

  6. Cheques should require 2 signatories.

  7. When requesting a cheque, the requisition should have supporting documentation with the requisition.

  8. Bank statements, receipts, and supporting documentation should be checked monthly against the cash book entries by a person other than making the entry.

Remuneration

A screening process should be in place when paying salaries and wages, a second person should check the figures and sign off that the original payments are correct. Electronic systems should be checked regularly for unauthorized entries.

Payments to authorities such as tax, superannuation, and other levies should be checked by a person other that the person issuing the payments.

Stock and Warehousing

A procedure should be in place to check stock arriving on the premises to ensure it is accurate and complete. When stock leaves the premises, a process is required to ensure that the amounts are correct.

These can then be balanced off against inventory.

Stocktakes should be conducted bi annually at a minimum.

An action plan should be established to deal with discrepancies in inventory and stocktake.

  • Inform manager

  • Record discrepancy and amount

  • Verification that the discrepancy is real.

  • Establish nature of discrepancy, is it repeated or one off.

  • Advise authorities / insurers.

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Management Risks

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Supplier / Customer Contracts

  1. Ensure that all contracts of your suppliers do not contain any waivers of subrogation, or indemnify them against their actions. Look at the warranty provisions to ensure that there is a warranty of fitness and fit for purpose specified.

  2. Do not agree to have any parties noted as an insured on your policy. Your insurance policy is your own, and allowing other unrelated parties to be named on your policy allows them to potentially submit their own losses without regard to you the principal insured. It may also be dual insurance.

  3. Any principal under a contract can be noted as a Principal on your policy. This will provide them with indemnity them for their vicarious liability arising out of your actions. (subject to policy terms and conditions).

Employment Liabilities and OH&S

Some of the most litigious areas of business arise out of workplace employment matters. As such it is vital that you have where applicable the following Processes:

  1. An OH&S guide including injury management for employees. If you do not have one, this can be obtained from your workers compensation provider. (contact you broker).

  2. All new employees are provided with an induction, covering email policy, discrimination, equal opportunity, and use of computer systems.

  3. There are procedures in place for the employment and termination of staff, and is followed.

Workers Compensation

Workers compensation is mandatory in Australia for all employees. Each state in Australia has its own state based workers compensation programs, and each do differ to some degree as to what is covered (and when). If you have employees over a number of states, It is important that you understand the differences between the states based covers and seek appropriate advice as to how to address any inconsistencies, (from your broker).

New South Wales, South Australia, Victoria and Queensland all have statutory rating on workers compensation and are Government run and sponsored organizations, premium rates are gazetted and are controlled, as such there can be no fluctuation in pricing other than based on claims.

Northern territory, Western Australia, and the ACT, have been allowed to be underwritten by insurers and there is some degree of flexibility of pricing based on loss history.

Should you need any assistance with Workers Compensation, contact your broker for the initial enquiry.

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Physical Risks Controls

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Fire prevention

Hydrants & Hose reels should be installed and maintained in accordance with Australian Standard AS1851 – maintenance of Fire Protection System.

Portable extinguishers should be maintained in accordance with Australian Standerd AS2444 – portable fire extinguishers and fire blankets.

Hydrants, hose reels and portable extinguishers should be maintained by a properly licensed fire protection engineering firm.

Fire protection system Impairment procedures

Impairment procedures should be established and formalized to ensure the proper handling of impairments to any fire protection related system. Important elements of an impairment procedure include:

  • Designate a senior employee to monitor all impairments.

  • Notification of all relevant parties, including the fire safety officer, onsite fire team, fire brigade, your insurance company and Insurance broker.

  • Planning of work to minimize during the impairment

  • Review of the impairment with respect to risk factors such as hazardous operations, hot work and other available fire protection.

  • Regular fire during impairment

  • Follow up notification of restoration of systems.

Impairment notification forms will be available soon.

Self Inspection Program

As a precaution against deterioration of housekeeping standards, to ensure that safe practices are not being ignored and to ensure that fire fighting equipment is clearly marked and accessible, it is recommended that a competent employee complete a formal self inspection program on a monthly basis and again on the game day. Management should review the completed forms and any deficiencies should be corrected.

Game Day Checklist for Venue Hirer (73KB PDF)
Game Day Checklist for Venue Owner/Manager (85KB PDF)

Contractor Controls

Ensure all third parties working for the business have the appropriate insurance coverage, otherwise liability for any negligence of these third parties may fall upon the business.

A record of all contractors Public and Products Liability policies and Workers Compensation Policies should be maintained. Contractors include any contract maintenance firm or any other third party who has reason to perform Duties on your site. These documents should be requested each year to ensure the contractor does not allow their cove to lapse.

Hot Work Permit System

When any maintenance or other types of work around the premises require welding, its is recommended that where possible hot work should be conducted outside the maintenance area and performed strictly in accordance with the Australian Standard AS1674.1 Safety in welding and allied processes – Fire precautions. Part of which requires the use of a hot work permit system. Hot work permit systems should be issued only by a senior manager and apply to any hot works undertaken by any contractor.

Please Note: A failure to maintain a hot work permit system and a resultant fire loss may prejudice your ability to make a claim on your insurers.

Hot Work Permit / Impairment Notice is attached for your download and use (63KB PDF).

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Injury Management

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What is an Incident?

An incident is any matter where injury or damage is a result and may give rise to a claim on the policy. When the facility manager or club manager becomes aware of an incident it should be recorded to assist in the preparation of the claim.

New one to be provided Incident/Accident Report Form (53KB PDF)

When do you report an Incident to Horsell International?

Any incident where you believe that it is likely that a claim will occur, especially any incident that has occurred where there is an allegation of negligence.

What should you do for the injured person?

At all time you should render assistance to the best of your ability, including providing first aid by a qualified first aid provider if there is one available. Offer the injured person a drink and even follow up with a telephone call. You should never admit liability for any injury or damage that may have occurred.

What you should advise the injured player?

If you are asked if any of the injury is covered by insurance, you should refer them to your insurance broker for coverage specifics. However, in every case the first response to any injury cost is Medicare, then private hospital cover should the injured person have private health insurance, and then subject to the policy terms and conditions, the player accident policy may provide some benefits for any excess costs.

When are claim forms issued?

You should issue a personal injury claim form following a request for one from the injured player, their parent or guardian. You should not provide any advice as to what is covered, or any enquiries as to coverage, you should refer them to them to PSC Insurance.

Where can I find claim forms, summaries of cover and policy wordings?

These documents are available by contacting PSC Horsell.

Whom do you contact?

If you have any queries as to how a particular matter should be addressed, or policy cover, you should call PSC Horsell.

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