Risk Financing Program: Five Things to Consider

​When it comes to understanding and guiding an organization's risk financing program, "the philosophy is the important starting point," said Pamela Popp, MA, JD, DFASHRM, CPHRM, DSA, AIM, executive vice president and chief risk officer, Western Litigation, speaking on October 12 at the American Society for Health Care Risk Management's (ASHRM) 2020 annual conference. Popp presented an overview of five elements to consider regarding a healthcare organization's risk financing program. The first element, philosophy, helps identify what the risk financing program will accomplish and how it will achieve those goals. It guides approaches to everything from reserving through litigation or settlement and beyond. The second element, coverage, involves an assessment of the organization's risks and what the risk financing program includes. Risk managers should read important parts of existing policies, such as the declarations page. This helps identify key details such as what the policy requires (e.g., regarding notice), what exclusions or endorsements apply, whether expenses are included in or excluded from coverage limits, whether various policies provide occurrence or claims-made coverage, and which individuals have coverage or excess insurance. The third element is self-insurance. Most organizations' risk financing programs fall in the middle, with some layers of commercial insurance and some layers of retention.