Subject: Introduction

1. Purpose:

The purpose of this document is to provide a formalized method of communicating the policies, procedures, guidelines, and other pertinent information within the our client's business with regard to the United Kingdom Guarantee Company (UKGC) Risk Management and Safety Program and its many functions.

The information contained in the document is intended to communicate ideas and clarify practices which were previously contained in numerous UKGC letters and memos, stated verbally, or contained in outdated documents.

The information contained in the document should provide a common basis of understanding between the United Kingdom Guarantee Company and our clients, and eliminate any misunderstandings and misinterpretations of policies and procedures.

2. Organization of the Document:

The document is divided first between Risk Management issues and Safety issues, and then into major sections which correspond to the major functions of the United Kingdom Guarantee Company Risk Management and Safety Program.

Information such as policies, procedures, guidelines and other pertinent data will be issued within the major sections of the document. Whenever there are changes in United Kingdom Guarantee Company operational policy and procedure, updates will be issued as delineated below.

This document will be supplemented by other applicable formal documents in many areas, as well as other documents and technical publications where necessary. These documents will be referenced in the Risk Management and Safety Document.

3. Policy Review and Replacement:

All policies included in this document will be issued initially in draft form and are open for revision by United Kingdom Guarantee Company and client's personnel. Client's are advised to begin using the draft policies and forms at the date of issuance. Suggested revisions should be submitted to United Kingdom Guarantee Company Risk Management in a clear and supported manner. It is preferred that revisions follow the set format of the document so that additions and deletions do not change the underlying structure. Upon acceptance, all formal revisions will be issued to all document holders. Due to the initial quantity of draft policies, a packet of revisions will be issued to document holders semi-annually.

Subject: Risk Management Functions

1. Authority and Organization:

Client's Risk Management (CRM) is responsible for administering of client's risk. This includes establishing policies and guidelines for risk management programs throughout the all institutions of the client to ensure that the basic objective of risk management - the preservation of client's assets (both human and physical) by the minimization of loss at all institutions--is met at the least possible cost to the client and his shareholders (owners).

Client's risk manager is designated by the director (president, owner) at each Client's institutions,  to carry out the risk management responsibilities, and therefore, is the chief contact for the United Kingdom Guarantee Company Risk Manager in carrying out the Client's responsibilities.

2. Background:

Risk management is the process of identifying, measuring and treating property, liability, income, and personnel exposures to loss. The ultimate goal of risk management is the preservation of the physical and human assets of the organization for the successful continuation of its operations. Since the general objective of the Client's business is for the efficient delivery of products or services to the customers, it follows that the objective of CRM is to maintain smooth operations and peace of mind in the face of risk, as well as an environment which promotes safe and enjoyable customer service.

In order to achieve these objectives, delegation of the various risk management functions from Client's Administration to the institution level is necessary. The President of the Client's business, along with CRM, charges each institution Manager and the institution Office of Risk Management with the following responsibilities.

3. Policy:

It is the policy of the Client to preserve the assets of the company and protect the physical well-being of his client's, employees, and the general public involved in activities occurring both on and off company. Preservation of assets and protection of personnel is a responsibility of each company. Company must, therefore, learn to manage those exposures to risk, which could destroy or deplete their assets or cause harm to persons. Five basic steps in managing the exposures to loss are as follows:

1. Identification of loss exposures can be achieved before a loss occurs through the use of surveys of operations, inspection of facilities, and questionnaires. The company risk manager must analyze the variety of property, liability, income, and personnel exposures at the company.
2. Measurement of loss exposures through analysis of the probable frequency and severity of loss can help to reduce the uncertainty involved and lead to corrective action.
3. Alternative risk management tools or remedies exist for every exposure that the institution faces. These include:

1.Risk Avoidance--eliminate the exposure completely.
2.Risk Control--reduce chance or size of loss, or make the likelihood more certain.
3.Risk Transfer--via insurance or contractual language.
4.Risk Retention--decide to bear the risk at an acceptable level.

Since the Client's business entity is self-funded for many of the various exposures, it is in our best interest to use risk control, risk avoidance and risk transfer as much as possible to reduce the cost of retention.

4. Implementation of the tool, once chosen, according to developed procedures.
5. Monitoring and fine tuning the risk management tools which have been implemented is necessary to achieve the maximum benefit from the risk management effort.
4. The Hierarchy of Risk Management Responsibility within the Client's business entity:

CRM acts in an intermediary capacity for many risk management programs between each client's risk manager and the United Kingdom Guarantee Company. CRM is fully responsible for the initiation and implementation of programs which are not addressed by UKGC and which affect the Client's specifically. At the individual client the risk manager is responsible for the implementation of all Client's risk management initiatives as well as any programs which are unique to the institution.

1. Client's Administration Risk Management Responsibilities

1.Develop, administer, and supervise Client's risk management policy, procedure and planning which includes the development and operation of complex information of Client.
2.Develop and administer risk control techniques to reduce the frequency and severity of losses.
3.Develop and administer risk financing techniques so that adequate resources exist to cover losses that do occur.
4.Administer and supervise Client's procurement policy as it relates to the special insurance coverage needs of the Client's business entity.
5.Assist Client's business entity in the development and maintenance of appropriate contractual language to be included in all agreements with parties outside of the Client's business entity. This includes insurance requirements, hold harmless agreements and indemnity clauses.
6.Coordinate the UKGC Self-Funded Liability Program in cooperation with client including general education of Client's personnel, claims investigation and adjustment, and liability loss control techniques.
7.Review agent liability coverage request and determine the extent to which employee,  staff, and volunteer actions fall within the mission of the client's business.
8.Implement the UKGC Self-Funded Property Insurance Program including coverage analysis and determination, claims adjustment and settlement, premium allocation, and loss control.
9.Ensure that non-owned and bailed property in the custody of the Client business entity is controlled through inventory and that coverage exists when applicable.
10.Administer the Master List for all institution-owned facilities as a support to Client's property reports, loss settlement, and premium allocation.
11.Coordinate a Client's claims, conduct trend analysis and implement appropriate risk control techniques to minimize future losses.

2. Client's office Risk Management Responsibilities

1.Directly implement all Client's and business entity - specific risk management policies and procedures.
2.Administer risk control techniques in order to reduce the frequency and severity of losses and provide feedback to Client's as warranted.
3.Communicate to business entity departments the Client's procurement policy as it relates to the special insurance coverage needs of the Client.
4.Ensure the use of appropriate contractual language in all agreements with parties outside of the client's business entity. This includes insurance requirements, hold harmless agreements and indemnity clauses.
5.Coordinate the liability program at the client's business entity level by providing in-depth claims reporting and investigation. Provide education to client's business entity personnel of the liability exposure and liability loss control techniques.
6.Review agent liability coverage request and determine, through correspondence with CRM, the extent to which employee, staff, and volunteer actions fall within the mission of the client's business entity.
7.Review the Capital Equipment Inventory and Property Control Program. Ensure that non-owned and bailed property in the custody of the client's business entity is controlled through inventory and that coverage exists when applicable.
8.Coordinate the property program including investigating claims, determining replacement costs, and subrogating against culpable parties.
 

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