Fundamentals of Risk Management

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Loss control
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a ‘code of behaviour’ for senior players, and this would include a commitment by 
each player to follow an appropriate, healthy lifestyle. Failure to comply with the 
code of behaviour would result in financial and other punishments.
The club may also decide that additional controls are required to reduce player 
absence, including fitness monitoring and social support for overseas players who 
have recently moved to the country to join the team. It may also be agreed that an 
attempt should be made to place contractual limits on the ability of national teams 
to call on its overseas players. These actions will be taken in addition to other loss 
control activities, such as excellent medical facilities to provide immediate medical 
care and reduce the damage when an injury occurs. Also, the company may purchase 
insurance to protect itself against the financial losses associated with the absence of 
a player.
Risk magnitude
Reducing the magnitude of a hazard risk is very important. For hazard risks, magnitude 
is often referred to as the inherent severity of the risk should it materialize. Reduction 
in overall hazard risk severity will be achieved by reducing both the impact and con-
sequences when the adverse event occurs. The seat belt in a car can reduce the impact 
of an accident, but has no effect on the likelihood of having an accident.
It is possible for a serious fire to occur that results in a considerable amount of 
property damage and is considered to be very severe and expensive. However, in
reducing the severity of a serious fire, the requirement is to reduce the impact of
the fire on the finances, infrastructure, reputation and marketplace (FIRM) of the 
organization. Actions to reduce impact will concentrate on damage limitation at
the time of the fire and cost containment after the event. The consequences relate to 
the effect on the strategy, tactics, operations and compliance (STOC) of the organ-
ization. Loss control is concerned with mitigation of the magnitude, impact and 
consequences of an adverse event.
Damage limitation is also an important feature of reputational risk management. 
When a serious incident occurs that attracts public attention, an organization will 
need to be able to protect its reputation by reassuring stakeholders that the organ-
ization responded appropriately to the event. It is almost invariably the case that
the CEO or chairman of the company will arrive at the scene when there has been
a serious train or plane crash.
There have been examples where a serious incident has occurred and the manage-
ment of the media by the organization has been very poor. In these cases, it is likely 
that inadequate attention was paid to pre-incident planning, so that the damage to 
the reputation of the organization was not effectively minimized at the time the 
incident occurred.
Organizations will also need to be concerned with cost containment. Cost con-
tainment following an event is usually based on the business continuity plan (BCP) 
or disaster recovery plan (DRP) that the organization put in place before the incident 
occurred. The development of effective BCP and DRP will put the organization in 
the best position to ensure that the overall cost of the incident is kept as low as possible.

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