What Risk Management Means

This month begins the fifth year of this risk management column, and I think it's a good time to take a broader look at the term "risk management." It is a term everyone uses, but is misused, both in practice and in print. Here are some thoughts I would like to share with you. Too often, owners and managers of fitness centers consider risk management to be an "advanced safety" procedure, but it is much more than just safety. Risk management is an organized plan based on fundamental legal concepts, by which your business attempts to control the risks it faces. There are two major categories of risks you must attempt to control: 1) programmatic risks, which consist primarily of the physical injuries that can result from the program of activities; and 2) financial risks, which can affect the fiscal health of the organization. Both types of risk are critical, and should be seriously addressed in your risk-management plan.

Programmatic risks (physical)

The elimination of programmatic risks is simple: Eliminate all injuries. You can achieve that by eliminating all programs - get rid of group exercise, weights, cardio machines and your locker rooms. That is, of course, an unrealistic solution, but there is no other way to eliminate all injuries. You can, however, do many things that will reduce their frequency, help keep clients safer and manage risk. The following are only a few of the actions that can help manage programmatic risks:

1. Select capable, qualified personnel. Train them and supervise their work.
2. Provide age- and experience-appropriate activities for clients, use proper progression in instruction, instruct them on how to perform the activities and supervise their actions.
3. Provide and maintain safe equipment through wise purchases, follow manufacturer recommendations, provide regular maintenance and keep records.
4. Be diligent in facility maintenance and inspections.
5. Establish emergency procedures and plans, train your staff and practice the emergency procedures.
6. Establish, communicate and enforce rules and regulations that will promote safe participation.

Financial risks

Where programmatic risks deal with the physical health of the client or participant, financial risks deal with the fiscal health of the business. You can't provide a service to clients if you are no longer in business. If your business is bankrupt due to a natural disaster, poor management, embezzlement or a major award in a liability lawsuit, it can provide no fitness or recreational benefit to anyone. You can no longer pay employees, maintain a facility or offer a program of activities to the public. It is, therefore, critical that you take certain actions to protect your business' financial integrity. Here are some actions that can help to provide financial stability:

1. Purchase insurance to protect you from property loss (natural causes and human causes), loss due to employees (theft and embezzlement), contractual losses (vendors and contractors) and lawsuits from injured clients.
2. Develop policies regarding human rights (sexual harassment; employment and termination; rights of disabled persons; and physical and sexual abuse of children, the disabled and the elderly).
3. Use waivers and other protective documents (assumption of risk, indemnification agreements, parental permission forms, informed consent and others).
4. Record and keep detailed records and maintain copies of all important documents and contracts.

Keep your facility and members safe

Strive to learn as much as possible about risk management and then put it into practice. Remember, risk management is two-pronged. It can benefit clients (by keeping them safe from injury) and it can benefit you and your fitness facility (by keeping it financially solvent and in business).