Risk Management

Organizing a Risk Management Program for Local Government

To achieve long-term results, a risk management program must be structured for long-term consistency. Critical components include:

  • Senior Management Involvement: The governing body must play an active part in the program from the beginning, as management communicates its priorities by what it monitors. The status of the risk management program should be a monthly topic on the governing body’s workshop agenda. Members of the governing body should also complete periodic risk management training. PERMA offers this training each year throughout the state.
  • Safety Committee: The safety committee plans and implements the risk control program. The committee should be collaborative and include representatives from management, collective bargaining units and non-union employees along with the risk management consultant.
  • Litigation Risk Committee: Every local government should also have a litigation risk committee comprised of the local unit’s attorney, manager, senior managers and risk management consultant. The committee should monitor the status of lawsuits and put plans into place to reduce potential liabilities. An example of the complete model program is on the MEL website.
  • Risk Management Consultant: Unlike other states, most New Jersey local governments are too small to have an in-house risk management department and depend on an appointed risk management consultant (often a local insurance agent). These professionals are responsible for numerous risk management functions detailed in JIF bylaws. Among their responsibilities are review of exposures, completion of underwriting surveys, assistance in claims processing, development of safety programs and review of contracts. Risk managers are selected local units in accordance with the public contracts law including “pay to play” regulations. The fees paid are typically less than half of the commissions paid by commercial insurance companies.