This article originally appeared in Fitness Management in January 2008. It has been modified slightly for the website.
Most sport, recreation, and fitness professionals should be able to identify the risks facing their business. The question is, what do you do about a risk once it is identified? Whether the risk involves a property exposure, liability for negligence, or business operations, management must determine the extent of the risk by examining the following: 1) its potential severity (possible impact on the corporation functioning and possible seriousness of a resulting injury), and 2) the likelihood of the risk or injury occurring. After determining the extent of the risk, four control approaches are available.
Transfer of risk
A commonly used method of controlling risk is to transfer responsibility for the risk to someone else. The most common type of transfer is through insurance. By purchasing a liability insurance policy, you transfer much or all the financial risk presented by injuries and negligence to the insurance company. Likewise, the purchase of property insurance protects you against specified types of property damage.
When sport, recreation, and fitness businesses require participants or members to sign a liability waiver, management is attempting to transfer the responsibility for injury due to negligence to the participant or member. Waivers can provide protection from liability for negligence in most states. Another commonly used transfer technique is the indemnity agreement, by which facility managers require those renting or leasing the facility to agree to repay the facility for any losses incurred as a result of the party using the facility. Indemnity agreements are often included within the waiver of liability.
Retention of risk
Another control approach is for the operation to retain certain low-impact risks of financial loss. To insure against all minor injuries can be cost-prohibitive, so some businesses budget funds to cover expenses relating to minor injuries. When the insurance policy includes a deductible, the business or organization retains the expense not covered by the deductible. Be certain that all high-impact risks are covered, and see that there is no unforeseen retention of risk.
Reduction of risk
Reduction of risk is vital in any risk-management program, and can help reduce both insurance costs and the costs involved in retaining the risks. It is vital that all possible steps be taken to reduce risks by reducing accidents and injuries. Some basics include the following:
- Institute a regular, systematic inspection program.
- Conduct timely maintenance of equipment and the facility.
- Train staff to be alert to risk.
- Implement an effective documentation program.
Elimination (avoidance and discontinuance)
If an activity is high risk in terms of both potential severity of injury and the likelihood of injury, the appropriate action may be to eliminate the activity. For example, suppose several patrons have asked about having boxing at your recreation center or fitness center, and you are considering adding it as an activity. In looking at the potential risk, your might find that, even if extreme care is taken, both the severity of injury potential and the likelihood of injury are great. Further, you find that there is no way to control or significantly reduce the likelihood of an injury. Furthermore, you learn that the liability insurance of the business or organization will not cover the activity. In such a case, avoiding the activity would be the wise course, regardless of member demand. Similarly, if an activity is currently producing a high injury rate, and efforts to reduce injuries have failed, discontinuance of the activity might be in order.
You should examine the risks faced by your business or organization and decide which risks are to be transferred and which risks are to be retained. Involve your entire staff in an ongoing risk-reduction program, and remember that elimination of the activity could be a last-resort move. After all, all physical activity involves some risk, and you are in the business of physical activity.
Photo Credit: Kate Gardiner