How to Control Losses From Financial Liabilities

How to Control Losses From Financial Liabilities

February 25, 2013

Losses from Workers' Compensation and liability exposures (such as employee and visitor injury) can be controlled to a great degree. As mentioned in the definition of Risk Management, University employees must manage the risks associated with their unit operations in order to prevent property damage and injuries, which in turn helps to control the associated costs.

How does Loss Control Work at UCLA? 

Loss control is a simple risk management process that helps units eliminate or reduce losses. The example below discusses the steps in the left column and applies them in the right column.

Loss Control and the Sliced Bagel Scenario

Examining the Loss Control Steps

1. Identify a loss.This is done through reviewing losses after they occur or targeting an area and observing the potential for a loss before it occurs.

2.  Examine alternatives.

  • Eliminate the loss exposure.
  • Keep the exposure but try to avoid losses.
  • Reduce the severity of the losses that do occur.
  • Transfer the possibility of any loss to another party.

The loss control process is ongoing. Everyone needs to be a Risk Manager!

3. Select and implement the appropriate loss control method.

4. Monitor the results and make changes as needed.

Applying the Loss Control Steps

1. You have identified that employees have cut themselves slicing bagels (prior loss), or given the sharp knife and awkward hand posture you have observed, you suspect that a loss will occur.

2. Examine alternatives.

  • Eliminate the loss - do not serve bagels.
  • Keep the exposure but try to avoid losses - buy a bagel cutter and train employees to use it properly.
  • Reduce the severity of the losses - if after the training an employee gets hurt, have first aid materials handy
  • Transfer the possibility of any loss -purchase pre-sliced bagels.

3. Select and implement one of the alternatives in step 2.

4. Monitor the results and make changes as needed. If you select to buy a bagel cutter and train employees how to use it properly and injuries continue, you may want to purchase (or consider contracting with a company that delivers) pre-sliced bagels.