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Hope for the Best, Expect the Worst: Developing a Risk Management Plan

Posted on September 1, 2011 by HSC

What is Risk?

There seem to be as many definitions of ‘risk’ as there are risk managers, but simply put, risk is anything that impacts your ability to achieve your objectives.  Risk can have an upside (like risking a dollar in a slot machine and winning $1,000) or a downside (like crossing the road in the middle of the block and getting clipped by a car).


As a housing provider what are your objectives? What could happen that would impact whether you achieve your goals?  Identifying your risks is the first step in developing a risk management plan. (In the context of developing a risk management plan we are only going to look at downside risk.)



What is Risk Management?

Risk management is a system that provides a framework for analyzing risks, deciding how to treat the risks to reduce their impact on your business, implementing risk controls that make sense from a life safety and cost/benefit perspective, monitoring the results to make sure your tactics are working and then making modifications to improve your plan.  By identifying and managing potential risk factors, you are essentially doing something that you have done since you were a child. Does this smell safe to eat? Is it safe to cross the road? Should I buy winter tires?  Every scenario in life can be analyzed and managed from a risk management perspective.  Risk management may not prevent bad things from happening but you have a better chance of making it across the road if you look both ways than if you just step off of the curb.


Review current management practices and identify risks

Investigate and study potential solutions

Select & implement desired solution

Keep records, monitor results and repeat steps as necessary



Why is Risk Management Important for Housing Providers?

Risk management is an integral part of all business strategies.  By identifying risks and strategies for mitigating risks some incidents can be prevented and the impact of others can be controlled.  For example, inspecting the walkways around your buildings regularly and making repairs, as trip hazards are identified, could prevent a future claim for a broken ankle.  Conducting safety meetings with tenants to discuss the use of candles or overloading electrical circuits or throwing lit cigarettes over balconies, may prevent a fire.  Ensuring that automatic door closers remain connected could limit a fire to a single unit.


Controlling risks to your properties not only improves tenant and staff safety and security but also makes sure that money earmarked for operations and improvements to buildings is not instead diverted to pay a deductible for an insurance claim or higher premiums because of a large loss. Staff contribute far more to your operation when they are on site than when they are sitting in a lawyer’s office testifying about how often they salted the sidewalk the day Mrs. D. fell.



Identifying Risks

It is easy to say that you want to reduce risk but it means nothing until specific risks are identified and managed. Risks can vary greatly between organizations depending on the community where you are located, the demographics of your tenant population and even the construction type of your building.  It is therefore important to first self-diagnose potential risk factors when constructing a risk management plan. Michelle Reid of Canadian Risk Manager Magazine provides a list of ways in which risk can be found;


“Common techniques used to gather and document information about a company’s risk exposures include:

  • Surveys or questionnaires similar to an insurance application
  • Hazard identification and vulnerability workshops where employees get together and brainstorm potential risks
  • Management interviews
  • Environmental scans
  • SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis”



Heat Map

Your first step in developing your plan is to sit down and identify the risks to your operations and to your buildings.  Using any of the techniques listed (personally I like the brainstorming method), write down everything you think could impact your ability to achieve your objectives, from the imposition of new Rent-Geared-to-Income (RGI) calculations under the Housing Services Act to a catastrophic fire to a bed bug infestation. Don’t throw out any idea however wild.


Once you have all of your risks identified, draw a heat map on a piece of paper.  A heat map is just a graph with an x- and a y-axis, where likelihood of occurrence is on the x-axis and severity if it does happen is on the y-axis.


Heat Map

Map all of your risks on the graph by estimating the likelihood that risk could occur and the potential impact if it does.  All your risks will fall into one of four categories or quadrants of your graph:


  • High Frequency/High Severity
  • High Frequency/Low Severity
  • Low Frequency/High Severity
  • Low Frequency/Low Severity


The next step in developing a risk management plan will be selecting which risks to address first, starting with those identified as being high frequency/high severity, and developing tactics to reduce or mitigate those risks.



Looking Forward

One of the fastest growing risks in the housing sector is hoarding. Tenants who accumulate goods and materials in their living space can pose a serious danger to not only themselves and other tenants, but to you as a housing provider. Our next blog will explore the complicated issue of hoarding and how to manage the risk.

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