Basic Concepts of Risk Management

• Risk Identification and Analysis: This is the process of recognizing, identifying, analyzing and evaluating potential loss exposures. Identifying these conditions and situations must be an ongoing effort by every member of every chapter and colony of Phi Sigma Phi. Hazardous conditions, dangerous acts, activities, or situations occurring which may provide the potential for risk and loss exposure, or any other hazardous or special risk condition or activity that needs to be corrected should be brought to the attention of the Executive Board of the chapter or colony, or the National Fraternity immediately.
• Risk Avoidance: Risk and loss exposure can be prevented and eliminated by the membership of the chapter or colony by refusing to accept the situation, program, activity, location, property, or service for which the risk is associated. Although this may not be possible or practical all the time, the chapter or colony should always be examining situations to avoid or eliminate the possibility for exposure to unnecessary risk, or those actions with risk inherent to them.
• Risk Assumption: Generally, Risk Assumption means the chapter or colony accepts some level of risk consequences inherent with situations in which risk exposure may occur. For example, if the chapter or colony owns or leases equipment for fraternity use, the chapter or colony may forgo purchasing insurance on the equipment, choosing to assume the financial responsibility for the equipment, rather than paying insurance premiums to protect the equipment. Risk Assumption does NOT mean “Let’s have a party, and if anything breaks, we’ll pay for it.” Situations such as these are to be AVOIDED, not prepared for.
• Loss Prevention: When a situation arises where risk cannot be avoided, techniques to modify the activity to provide loss control and minimize the impact on the chapter or colony must be implemented. The National Fraternity Umbrella Liability Insurance Program has specific guidelines to follow in the event of such and occurrence. However, the best way to handle a loss situation is to PREVENT it from happening.
• Risk Transfer: The most common method of risk transfer is through the purchase of a liability insurance policy. This transfers the actual financial responsibility for litigating against a potential loss, but not the actual risk responsibility, to an insurance company for a set annual premium. Again, risk transfer does NOT remove responsibility from the chapter or colony and its officers for any and all monetary and/or incarceration judgments leveled against members.

Some Legal Terms:

• Tort Liability: A tort is an unprivileged interference with another so as to cause that person harm. Intentional torts occur when a person intentionally causes harm to another person. However, tort liability is not limited to intent. If someone can assign value to damages caused to them by the actions or omissions of another, whether inflicted intentionally or not, that action or omission can be grounds for legal actions.
• Respondeat Superior: What this means is the chapter or colony can be held ultimately responsible for action or inaction of the chapter or colony. So the chapter or colony can potentially be held liable for the acts or omissions of chapter or colony members. Respondeat Superior liability does not necessarily release an individual from personal liability.
• Negligence: Negligence is defined as “Failure to use such care as a reasonably prudent and careful person would use under similar circumstances.” When a person is injured due to the negligence of others, the person injured can hold the person or people who are negligent liable for damages. People are negligent if they have prior knowledge of a situation, or should have knowledge of a situation, that has the potential to cause injury and/or damage, and take no action to remedy the situation before an incident occurs. The responsibility of chapter and colony officers and membership is called “duty to care”, and is to provide a safe environment for all activities and events