Risk Management Is A Essential Component Of Any Business

Risk Management is a vital component of any business, especially health care. Risk management can be generally defined as recognizing, preventing, and monitoring situations that could result in injury or liability, monetary loss, or noncompliance of regulations (Chubb Health Care, 2004, 9). In a basic risk management system, risks are identified in separate risk area. Each risk area is handled by a different department. It addresses the risks to an organization at the department level. In the basic risk management system, the risks are evaluated at a reactive approach rather than a proactive approach. In comparison, the Enterprise Risk Management (ERM) system addresses risks as an organization, or enterprise, level and is proactive†¦show more content†¦Significant risk events must be identified. The risks are analyzed based on impact and evaluated as an inherent basis or a residual basis. Risk response is determined by the method that best fits the organizationâ€⠄¢s objectives and risk tolerances. This can be by avoidance, acceptance, reduction, or sharing. The organization implements policies to respond to the risk and carry out the policy. Communication of the risk and its response is timely and appropriately disseminated through the organization. The ERM system allows for monitoring, updating, and maintaining through ongoing evaluations of processes and policies (Brannan and Taylor, n.d). The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) has moved their focus to patient safety. JCAHO now performs unannounced surveys of accredited facilities to ensure that their standards are being followed and patient safety is being addressed. When a survey is being conducted, the surveyor evaluates compliance with JCAHO standards through staff responds and documentation review as if they were a patient in that facility that was receiving care. Health care organizations must be in the mode of continual readiness and compliance and National Patient Safety Goals. The National Patient Safety Goals address slips and falls, communication,