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HomeMy WebLinkAboutCOM 0158.011 2002-2004Harry Kim Mayor Lincoln S.T. Ashida Corporation Counsel Gerald Takase Assistant Corporation Counsel COUNTY OF HAWAII OFFICE OF THE CORPORATION COUNSEL 101 Aupuni Street, Suite 325 • Hilo, Hawaii 96720-4262 • (808) 961-8251 . Fax (808) 961-8622 Nm1r-Wz411X Honorable Aaron S. Y. Chung Chair, Committee on Finance Hawaii County Council 25 Aupuni St. Hilo, HI 96720 Ms. Susan Caseria Legislative Assistant Legislative Auditors Office 25 Aupuni St. Hilo, HI 96720 Dear Chairman Chung and Ms. Caseria: RE: Cost of Government Commission Report dated February 20, 2003 On June 3, 2003, our office received a copy of your memorandum dated March 21, 2003, as a second request for input concerning the report submitted by the Cost of Government Commission. On February 27, 2003, our office prepared a responsive report for Mayor Harry Kim and Commission Chair Joel Gimpel. A copy of this report was forwarded to Council Chair James Arakaki via memorandum dated March 14, 2003. A copy is attached hereto for your reference. Since the opportunity presents itself, I would like to supplement our February 27, 2003, report with the following information. The recommendations by the Cost of Government Commission are the italicized numbered headers. 1. The Office should continue to refine its risk management program in order to further reduce the risks of litigation, and continue its efforts to add staff and resources in order to more effectively provide preventive legal services to County agencies. Comm. No. Ref. Toe M. Data O W 0c) Z -� :. u -e N = O RE: Cost of Government Commission Report dated February 20, 2003 On June 3, 2003, our office received a copy of your memorandum dated March 21, 2003, as a second request for input concerning the report submitted by the Cost of Government Commission. On February 27, 2003, our office prepared a responsive report for Mayor Harry Kim and Commission Chair Joel Gimpel. A copy of this report was forwarded to Council Chair James Arakaki via memorandum dated March 14, 2003. A copy is attached hereto for your reference. Since the opportunity presents itself, I would like to supplement our February 27, 2003, report with the following information. The recommendations by the Cost of Government Commission are the italicized numbered headers. 1. The Office should continue to refine its risk management program in order to further reduce the risks of litigation, and continue its efforts to add staff and resources in order to more effectively provide preventive legal services to County agencies. Comm. No. Ref. Toe M. Data Honorable Aaron S. Y. Chung Ms. Susan Caseria June 4, 2003 Page 2 In our February report, we proposed the two following action plans: Examine the possibility of creating a permanent "risk manager" position for our County. In the interim time, look forward to new staff (attorney and legal clerk) to mitigate the burden on our existing legal staff, so risk management may be more aggressively managed by our attorneys. Our office manager submitted the attached report on the creation of a Risk Manager position for our County. Her work reflects a significant amount of research. As you can see, our next step will be to initiate a meeting between all members of the risk management committee, amend and refine the 1992 policy as necessary, and seek the creation and funding of a Risk Manager for our County. With respect to our earlier proposal to add staff, we are happy to report we have been successful in this regard. Through the cooperative and generous efforts of the Department of Water Supply, we will have a new attorney position funded effective July 1, 2003. Through the generous efforts of the Hawaii County Council, a Legal Clerk III (secretary) position will also be funded effective July 1, 2003, in order to support this attorney position. As we have previously advised the Council, despite not having a Risk Manager for our County, we have tasked our attorneys with overseeing risk management activities for their respective County clients. The following represent efforts taken by our staff: Housin Our assigned attorney reviewed the past history of the office with respect to worker's compensation claims and OSHA complaints. A office wiring problem was corrected. Housing also identified a staff member to be their office liaison with respect to the development of the formal risk management program. Water Our assigned attorney reviewed all "form" documents in the department and updated them consistent with any changes in the law. Parks Our assigned attorney accompanied department staff on site inspections, and made recommendations for physical changes at Walter Victor Stadium, Hilo Armory, Ainalako Park, and Ainako Park. Honorable Aaron S. Y. Chung Ms. Susan Caseria June 4, 2003 Page 3 A site inspection was conducted and signage recommendations made at the lava viewing area in the Puna district. Signage recommendations were made for Ahalanui Park. Finally, physical changes were recommended and implemented at Higashihara Park. Litigation Our litigation attorneys have worked cooperatively with our attorneys in our advisory division to provide feedback and corrective recommendations arising from issues in our litigation cases. Examples include the implementation of recall training for police officers in excessive use of force claims, and the remedying of road hazards in cases of alleged design and maintenance failures. 2. The Office should continue efforts to create an office manager position. The benefits of our recently created office manager position are already obvious. In addition to ensuring the proper functioning of day-to-day operations (thereby freeing our attorneys to focus on legal work), our office manager has taken on special projects, such as the development of a risk manager proposal for the administration and Council. 3. The Office should, if necessary, recommend legislation that assigns liability for litigation losses to the responsible County agency. As expressed in my February letter, we are somewhat "lukewarm" on this proposal. Perhaps the implementation of a comprehensive risk management program administered by a full-time risk manager may serve to mitigate some of the concerns expressed in this recommendation by the Cost of Government Commission. 4. The Office should reconsider the practice of periodically and routinely reassigning secretarial staff to different departments and agencies. The development of a "clerical pool' for boards and commissions has not yet been initiated with the Department of Civil Service. Thank you again for allowing our office to respond to the recommendations of the Cost of Government Commission. Honorable Aaron S. Y. Chung Ms. Susan Caseria June 4, 2003 Page 4 If you require further information or data, please contact me at 961-8304, extension 26, or via e-mail at lashida@co.hawaii.hi.us. Thank you. Very truly yours, LINCOLN S. T. ASHIDA Corporation Counsel Encls. cc: Mayor Harry Kim (w/ encls.) Corporation Counsel Staff (w/ encls.) S: Departments/Corporation Counsel/LSA Misc. Corresp./Letter to A. Chung re COG 6-3-03/LSAmr Harry Kim Mayor uncoln S.T. Ashlda Corporation Counrei Gerald Takase Asrix(anr Corporation Caan.rel Cluufg of P'n(Vttii OFFICE OF THE CORPORATION COUNSEL 101 Aupuni Street, Suite 325 • Hilo, Hawaii 96720-4262 • (808) 961-8251 • FAX (808) 961-8622 March 14, 2003 MEMORANDUM TO: JAMES Y. ARAKAKI Chair, Hawaii County Council FROM: LINCOLN S. T. ASHIDAVK Corporation Counsel RE: Corporation Counsel Response to Cost of Government Commission Report I again apologize to the Chair and members of the Hawaii County Council for failing to address the response by our office to the Cost of Government Commission Report to the Hawaii County Council. Enclosed please find a copy of our letter dated February 27, 2003, addressed to Mayor Harry Kim and Chairman Joel Gimpel of the Cost of Government Commission. Please contact me if there are any questions or concerns regarding the report or ourresponse. Thank you. Encl. S: Departments/CoundVLSA Misc. Corresp./Memo to Council re COG Commission Report 3-14-03/LSAmr Harry Kim Mayne Uncoln S.T. AsWda Cnrywratina Coaarel Gerald Talose Assistau Corporation Co el (gauu#g of pttfuttii OFFICE OF THE CORPORATION COUNSEL 101 Aupuni Street, Suite 325 • Hilo, Hawaii 967204262 • (808) 961-8251 • FAX (808) 961-8622 February 27, 2003 Honorable Harry Kim Mayor, County of Hawaii 25 Aupuni St. Hilo, HI 96720 Mr. Joel E. Gimpel Chair, Cost of Government Commission 101 Aupuni St., Ste. 325 Hilo, HI 96720 Dear Mayor Kim and Mr. Gimpel: CCCv RE: Report on Office of the Corporation Counsel The Office of the Corporation Counsel thanks the Cost of Government Commission for its work and final report dated February 26, 2003, regarding our office. At the onset, we thank the Cost of Government Commission for a very complimentary report, and for recognizing our office "operates economically and efficiently." This is directly attributable to our dedicated staff who are second to none vis -d -vis any other law association in our State, if not the country. The purpose of this communication is to update and provide feedback to the Office of the Mayor and Cost of Government Commission with respect to the recommendations contained in the report. For reference purposes, I have attached a copy of the Cost of Government Commission report. 1. The Office should continue to refine its risk management program in order to further reduce the risks of litigation, and continue its efforts to add staff and resources in order to more effectively provide preventive legal services to County agencies. There is no question an aggressive and comprehensive risk management program for our County is long overdue. Our office thanks the Commission for recognizing efforts taken by our existing legal staff to pioneer and implement a Honorable Harry Kim Mr. Joel E. Gimpel February 27, 2003 Page 2 program for our County. We have gathered position descriptions for risk managers from the State and City and County of Honolulu, and will be evaluating whether proposing the creation of such a position for our County would be prudent and feasible. In the interim time, our attorneys are tasked with the responsibility of developing risk management programs for each of their County clients. As a practical matter, since this is a not a "crying baby," it often is not picked up, in favor of more pressing day-to-day legal demands placed upon us by our County clients. We envision some relief in this area in the near future, as we are in the process of creating a new attorney position, and accompanying legal clerk (secretary) position. The attorney position will be funded by the semi -autonomous Department of Water Supply. Thus, there will be no financial burden placed upon our General Fund. The Managing Director as already approved the creation of this position. The legal clerk position will need to be funded through our General Fund. We are awaiting approval from the Managing Director to create this position. In sum, we look at our proposed risk management program as being proactive. In other words, we will not wait until a claim is filed against our County before we address risk and take corrective action. We need to be proactive in our approach, and continually meet and counsel our clients on areas of potential risk. Our proposed plan of action: • Examine the possibility of creating a permanent "risk manager" position for our County. • In the interim time, look forward to new staff (attorney and legal clerk) to mitigate the burden on our existing legal staff, so risk management may be more aggressively managed by our attorneys. 2. The Office should continue efforts to create an office manager position. We are pleased to report we have done so. Through the proper reallocation of existing positions within our office, which had the approval of the Department of Civil Service, we have a Supervising Legal Clerk II, who functions as an office manager. This was effective January 1, 2003. Our office manager has been delegated a number of administrative responsibilities, as well as been given the Honorable Harry Kim Mr. Joel E. Gimpel February 27, 2003 Page 3 "green light" to explore projects which may allow our office to do our work better, faster, and more efficiently. This has reduced the amount of time our attorneys spend on "administrative" matters, and allows them to focus their energies on the practice of law. Our proposed plan of action: • Further develop the job duties of the office manager to take on more administrative tasks, allowing the attorneys to focus on the practice of law. 3. The Office should, if necessary, recommend legislation that assigns liability for litigation losses to the responsible County agency. This is a recommendation well taken. As I recall, part of my presentation before the Commission highlighted the fact that not only does our office provide the legal service for our County clients, we pick up the tab on any judgment or settlement! At the onset, I do not believe legislation would be necessary to effectuate your proposed change. However, since the time of our meeting with the Commission, I thought of a concern regarding your proposed change. The present system wherein there is essentially a "centralized" account managed by our office for litigation settlements has an advantage. Allowing one agency (here, the Office of the Corporation Counsel) to monitor the amount of monies spent yearly on litigation judgments and settlements may be prudent. Allowing each agency to have its own account to manage such judgments or settlements may result in disparate treatment among the many cases facing the County. Further, decisions to settle cases may be affected by a department's present budgetary situation, which although should be a consideration, should not be controlling. The present practice appears to be working financially well. Our office has enjoyed recent success in many cases, and there has not been a significant "drain" on our settlement account. I agree wholeheartedly with the philosophical reason for "shifting" the responsibility to the client. However, perhaps these concerns may be addressed through aggressive risk management instead of a shifting of the financial burden. Honorable Harry Kim Mr. Joel E. Gimpel February 27, 2003 Page 4 We will continue to examine this very important issue, and initiate discussion with Mayor Kim in order to receive his guidance. Our proposed plan of action: • Continue to monitor judgment and settlements through our office account. • Address "responsibility" of the departments through our comprehensive risk management program. Further discuss with Mayor Kim the proposal of "decentralizing" settlement monies and placing them within individual departments. 4. The Office should reconsider the practice of periodically and routinely reassigning secretarial staff to different departments and agencies. I believe this concern centers around the assignment of some of our secretarial staff to boards and commissions. At the time these assignments were made, our County faced a significant budget shortfall. In order to assist our County, we asked our secretarial staff to take on additional responsibilities. This was done with the understanding these assignments would be temporary. Mayor Kim has tasked my office with developing a secretarial "pool" to service County boards and commissions. Hopefully, with the creation of such a pool, secretarial staff from our office will no longer have these additional duties and responsibilities. What is envisioned is a pool of secretaries annexed to a County department (the present Information and Complaints office is a logical suggestion), that would provide secretarial support for all County boards and commissions. Our proposed plan of action: • Work with the Department of Civil Service to develop the clerical "pool." In closing, I would like to thank the Cost of Government Commission on behalf of our office for a very complimentary report. We are very proud of our computerized records management system (B.R.A.I.N.: Best Record Access Information Network), which we developed with the assistance of the Department of Data Systems at an outside cost of zero dollars. Such an accomplishment is evidence of the tremendous human resources we enjoy within our County workforce. Honorable Harry Kim Mr. Joel E. Gimpel February 27, 2003 Page 5 We are also very optimistic of the future of our County, and the role our office will play in providing "top notch" legal services to our County clients. We can only accomplish this through necessary staffing and resources, and we are optimistic our present staffing increase request (one attorney and one legal clerk) will improve the level of service we are providing, by expanding our comprehensive risk management system, and constantly "raising the bar" in our service. Thank you again for your service on this very important Commission, and for your kind attention to this matter. Very truly yours, LINCOLN S. T. ASHIDA Corporation Counsel Encl. cc: Corporation Counsel Staff (w/ encl.) S: Departments/Corpomfion CounseMSA Misc. Corresp./Letter to COG 2-27-03/LSAmr O Harry Kim r anunlu of Puf raft COST OF GOVERNMENT COMMISSION 101 Aupuni Street, Suite 325 -Hilo, Ha"I 96720.4262 • (808) 961.8251 • Faa (808) 961.8622 February 26, 2003 Mr. Lincoln S. T. Ashida, Corporation Counsel Office of the Corporation Counsel 101 Aupuni Street, Suite 325 Hilo, Hawaii 96720 Dear Mr. Ashida: Thank you and your department for the information and assistance provided at your August 22, 2002 appearance before the Hawaii County Cost of Government Commission. We greatly appreciate the cooperation and forthrightness demonstrated by those who appeared and testified, which has proved invaluable to us in performing the task before us. We've enclosed for your information a copy of our report on your department, which will be included in our final report to the County Council and Mayor to be submitted in February 2003. We acknowledge that since your appearance before the Cost of Government Commission, you may have already independently considered and acted on some of the recommendations. Nevertheless, we believe it appropriate to retain them in our report, if for no other reason than to demonstrate that your department and the Cost of Government Commission were of like mind. Sincerely yours, IMPEL, Chair V IEG:jmk Fnclosum a:16_ctcogc\drall tplskotp counsel oov IM2-26-03VEGjmk.doc ac: Members, Cost ofGovcmmcnt Commission OFFICE OF THE CORPORATION COUNSEL (August 22. 2002) Organization and Responsibilities The Office of the Corporation Counsel, a major staff agency headed by the Corporation Counsel who reports to the Mayor, provides legal representation and support for all County departments, boards, commissions, officers and employees. Its primary purpose is to empower County agencies and employees to perform their duties effectively. The office is organized into three divisions: Counseling and Drafting; Litigation; and Family Support. It also supports the Board of Ethics. The Corporation Counsel maintains three offices. The main office in Hilo houses the Counseling and Drafting Division and the Litigation Division, and provides services island -wide. The other two offices, one in Hilo and one in Kealekekua, house Family Support Division staff. The Counseling and Drafting Division provides legal advice and counsel to all County agencies and staff, drafts and reviews documents, including appellate briefs, and appears before and represents boards and commissions. The Litigation Division helps County employees, officers, agents and departments, and when necessary, resolve legal disputes through formal litigation and informal dispute resolution methods such as mediation and arbitration. The Division provides civil liberties training for new police recruits and ongoing in-service training on relevant legal issues for all County departments. The Division also evaluates and investigates claims for damages against the County, and pursues the County's claims against private parties or other government entities. The Family Support Division's primary work consists of collecting child support debts owed the State and custodial parents. Findings Following its review of documents, including organization charts, the 2001-2002 and 2002-2003 Budgets, the Corporation Counsel's August 21, 2002 letter to the Commission, the Office's Functional Statement, and testimony furnished by the Corporation Counsel and selected staff, the Cost of Government Commission finds: The Office operates economically and efficiently, having returned more than $200,000 to the general fund in the last fiscal year, and adding only three attorneys since 1987, despite the greatly increased demand for legal services. 2. The new Best Record Access Information Network (`BRAIN") program has improved the flow of needed information within the office and between the office and other departments. 3. The Office has developed a risk management program in an effort to reduce exposure to liability. 4. County Departments are not accountable for litigation losses. Attorneys are charged with supervising support staff. Attorney and support staff (secretarial) departmental assignments are changed periodically to afford a broad range of experience. Recommendations Having considered and reviewed the documents and testimony provided by the Office of the Corporation Counsel, the Commission recommends as follows: The Office should continue to refine its risk management program in order to further reduce the risks of litigation, and continue its efforts to add staff and resources in order to more effectively provide preventive legal services to County agencies. Rationale: The cliche, "An ounce of prevention is worth a pound of cure," is especially apt with respect to the provision of legal services. Awareness of the legal issues associated with various activities and situations can significantly reduce the County's risk exposure. By assigning an attorney to serve as the "primary" counsel for each County agency, the Office fosters greater reliance on legal advice before actions are taken, thereby minimizing exposure to risk and maximizing monetary savings. 2. The Office should continue efforts to create an office manager position. Rationale: An office manager will relieve attorneys from time-consuming staff management responsibilities, allowing them to concentrate on legal matters, and enhance support staff efficiency. 3. The Office should, if necessary, recommend legislation that assigns liability for litigation losses to the responsible County agency. Rationale: Making County agencies responsible for litigation losses will enhance agency awareness of and sensitivity to risks, and give great incentive to minimize risk. 4. The Office should reconsider the practice of periodically and routinely reassigning secretarial staff to different departments and agencies. Rationale: Although routine, periodic reassignment of attorneys may be appropriate to afford staff counsel with valuable experience'in dealing with varied legal issues, similar reassignment of secretaries can result in loss of efficiency and continuity for the "client" department or agency. Harry Kim Mayor Date: To: From FX - Lincoln S.T. Ashida Corporation Counsel Gerald Takase Assistant Corporation Counsel COUNTY OF HAWAII OFFICE OF THE CORPORATION COUNSEL 101 Aupuni Street, Suite 325 • Hilo, Hawaii 9672014262 • (608) 961-8251 • Fax (808) 961-8622 May 1, 2003 Lincoln Ashida Corporation Counsel Myra Ochi vv2�--, Supervising Legal Clerk II Creation of County Risk Management Position I have reviewed a vast amount of material and also discussed the subject matter with several risk managers. I am awaiting more information from the State Risk Manager, however, I have put together a brief report from what I have gathered so far. Also, I have attached a copy of the old proposed risk management plan (1992) for the County of Hawaii as a reference. Please let me know your thoughts on the above and advise me as to what other information you would like to have. /mo t:ltr to lincoln re risk management 5-1-03 RISK MANAGEMENT What is risk management? Risk management is "using common sense to prevent accidents, injuries, and oversights." It.is a discipline for dealing with the possibility that some future event will cause harm. It provides strategies, techniques, and an approach to recognizing and confronting any threat faced by an organization in fulfilling its mission. By identifying risks and implementing an action plan to address them, public entities can protect their financial stability and their ability to provide services. Because risk is inherent in most productive activities, even the most conscientious efforts cannot eliminate all risk, but the impact of risk on their operations can be reduced. Risk management may be as uncomplicated as answering three basic questions: • What can go wrong? What will we do (both to prevent the harm from occurring and in the aftermath of an "incident")? • If something happens, how will we pay for it? What is the risk management department responsible for? The department may manage litigation, coordinate safety programs, and undertake the complex analyses required to set monetary reserves for future claims. The functions of continuous risk management would be to: Identify: Search for and locate risks before they become problems. Analyze: Transform risk data into decision-making information. Evaluate impact, probability, and timeframe, classify and prioritize risks. Plan: Translate risk information into decisions and mitigation actions (both present and future), and implement those actions. Track: Monitor risk indicators and mitigation actions. Control: Correct for deviations from the risk mitigation plans. Communicate: Provide information and feedback, internal and external to the project, on the risk activities, current risks, and emerging risks. Developing a Risk Management Program The first step in creating a risk management program is to identify and establish the purpose for creating a risk management program. It may include items such as to reduce the cost of insurance and/or financial losses, minimize interruption of vital County services, provide a safe environment for the public and employees and reduce the number and cost of accidents. The next step would be to designate an individual or team responsible for developing and implementing the organization's risk management program. The team would be principally responsible for the risk management plan, while successfully integrating risk management within all levels of the organization. 2 County personnel from management on down to regular employees should assist in identifying risks and managers and/or supervisors should develop suitable loss control and intervention strategies. Insurance and Risk Management When losses do occur, organizations must pay for them somehow. Insurance is one of many methods available for financing losses. However, insurance does nothing to prevent a loss from occurring. The least costly accident in terms of time, money, and morale is the one that never happens. Practicing risk management is living with the commitment to prevent harm. Any misstep or event that brings negative attention to the organization can have a lasting impact on an organization's ability to fulfill its mission. The success of most nonprofits depends on the support of the public (volunteers, members) and risk management is an effective way to help maintain the public trust. The Role of the Risk Management Department The risk management department would oversee the execution of a five-step risk management process: Acknowledge and identify risks. The operation of any organization involves some degree of risk or uncertainty of future events. The first step would be to identify these risks. These may include a very wide variety of incidents, such as someone slipping on a wet floor, vehicular accidents, injury while playing at a park, accident while performing job related duties, etc. No matter how improbable a risk may seem, if the organization can envision an incident happening, this should be listed during the first stage of developing a risk management program. Evaluate and prioritize risk. Assessment of the probability of each risk becoming reality and estimating its possible effect and cost to the County would be the next step. Past accidents and near misses should be evaluated. Checking with similar organizations that have developed a probability and cost estimate should be looked at. Also take into consideration the possible public reaction to an adverse event. Priority areas of concern will include those risks that are most likely to occur and are very expensive when they do happen. Lower priority risks are those that seldom occur and are not likely to cost as much when they do happen. 3. Decide how to manage your risks using risk management strategies. Development of a written plan, which outlines how the organization will manage its major risks, is the next step. The plan should describe the suggested strategy or combination of strategies that the organization will employ. The four basic strategies for controlling risk are: • Avoidance. Do not offer or cease to provide a service or conduct an activity because it is considered too risky. • Modification. Change the activity so that the chance of harm occurring and impact of potential damage are within acceptable limits. • Retention. Accept all or a portion of the risk, and prepare for the consequences. • Sharing Risks. Consider sharing the risk with another organization. This may include purchasing insurance or sharing responsibility for a risk with another service provider through a contractual arrangement. • Implement The Plan. Once the appropriate governing body or management personnel has reviewed the plan, the agency should formally adopt and implement it. This would involve distributing and explaining the plan to everyone affected by it. Employees and volunteers may need training to enable them to meet their specific risk management responsibilities. Review And Revise Plan As Needed. The County must adapt to changes such as funding constraints, new services to address public needs, and the establishment of new laws. The Risk Management Department needs to evaluate its strategies at least once a year and evaluate the risk management plan to ensure its continued relevancy, comprehensiveness and effectiveness. Having a risk management committee that meets periodically can help ensure that the issue of risk management receives ongoing attention. In evaluating the effectiveness of the program, answers to various questions should be reviewed, such as: Have the risk management techniques had the desired impact? Were injuries or accidents reduced? Did the program have a positive effect upon insurance requirements? Are greater or fewer resources available for controlling risks? Are revisions necessary to achieve the desired impact? The basic steps of risk management would be: Identification: Identifying services and assets that could cause a loss to your local government. Evaluation: Placing values on potential losses by determining how frequently a loss is likely to occur and how severe it could be. Treatment: Examining ways to handle risks by securing insurance coverage, preventing accidents, minimizing losses after an accident, and exploring ways to manage uncovered losses financially. Selection and Implementation: Choosing and putting into practice the methods selected to deal with risks. Program Monitoring: Overseeing the results to ensure the program is effective. Benefits of Risk Management More effective use of public funds—instead of paying medical claims, liability suits, and property damage, put dollars toward public programs and services. Decreased costs and increased productivity—preventing worksite accidents and injuries reduces medical expenses, as well as costs related to lost work days, replacement workers, etc. Reduced losses from natural disasters, lawsuits, and other unexpected occurrences. Identification of exposures you may prefer to cover through means other than insurance—or avoid completely. Increased potential for economic development and rural revitalization resulting from improved efficiency and effectiveness. Establishing a Written Risk Management Policy Statement A written policy statement is an effective tool for communicating the purpose of the risk management role to others throughout the organization. It also identifies specific actions that employees can take to contribute to and help promote the organization's overall efforts. A risk program is more likely to succeed if it is based on a policy statement endorsed by _ the governing body or chief executive officer or mayor. A strong policy statement would: (1) define risk as a priority for all employees, (2) empower a risk team to identify risks and develop a plan to address them, and (3) require the participation of all operational departments. Although the policy statement should be distributed throughout the organization, it is particularly important to communicate risk policy to department heads or others who will be asked to contribute resources (primarily manpower or employee time). Advantages of a Written Statement • Establishes the general goals and objectives of the risk management function within the organization • Defines the duties and the authority/responsibility relationships of the risk management department • Coordinates the treatment of loss exposures on a reasonably standardized basis among the various departments • Establishes and/or improves existing communication changes and management information systems within the organization • Provides for program continuity and facilitates a smoother transition during changes in administration and/or personnel The policy statement is a continuing guide and would be especially helpful to new employees. Furthermore, for the risk management professionals and staff, a written statement: Provides the framework for assessing responsibility for controlling and/or financing loss expenses • Emphasizes the importance of the risk management function • States the position of the risk management department within the overall organizational chart Contents of a Written Statement The risk management policy statement: Begins with a general description of risk management and its importance to the organization Discusses the position of the risk management department within the overall organizational structure Defines reporting relationships Outlines the scope of the authority and responsibility of the risk management professionals in dealing with others within the organization May describe the internal structure of the risk management department Clearly states senior management's objections for making appropriate use of risk control and risk financing techniques Specifies particular decision rules for various risk management techniques, depending on the level of detail the organization typically uses in policy statements regarding other functions COUNTY OF HAWAII DEPARTMENT = FINANCE PROCEDURES MANUAL. RISK MANAGEMENT SUBJECT: RISK MANAGEMENT PROGRAM I. Risk Management is a planned approach to protecting the County from loss. II. The objectives of the County of Hawaii's risk management Program are: 1. To protect County assets. 2. To minimize the interruption of vital County services. 3. To provide a safe environment for the public and employees. 4. To reduce the cost of accidents and other financial losses. III. Risk Management Policy The County of Hawaii shall endeavor to reduce the risks of accidental losses or other financial losses which in the aggregate during any fiscal year would significantly affect personnel, property, the budget, or the ability of the County to continue to fulfill its responsibilities. The County of Hawaii will apply to risks of accidental loss the risk management process, which includes a systematic and continuous identification of loss exposures, the analysis of these exposures in terms of frequency and severity probabilities, the application of sound risk control procedures, and the financing of risk consistent with financial resources. In recognition of its financial resources and the spread of its physical assets, the County will accept retention of uninsured losses of less than approximately one-tenth of one (0.1t) percent of the annual budget and accept retention of catastrophic loss in excess of approximately ten (10%) percent of the annual budget; losses between those limits shall be controlled by the purchase of insurance, consistent with availability of coverage and reasonableness of premium cost in relation to perceived risk, probability of loss and generally accepted industry practices. 1 8 COUNTY OF HAWAII DEPARTMENT: FINANCE PROCEDURES MANUAL- RISK MANAGEMENT SUBJECT: RISK MANAGEMENT PROGRAM IV. 1. Identification of exposures - a continuous discovery process to identify County resources and the loss exposures that could affect them materially. 2. Analysis of risk - a continuous process to measure financial impact of loss exposures by analyzing past loss frequency and severity, and by estimating future loss frequency and severity. 3. Control of risk - the planned and coordinated program to eliminate or reduce losses and risks by the methods of avoidance, transfer or retention. 4. Funding of risk - the provision of sufficient funds to pay for - losses by the most effective use of County resources, including the purchase of insurance. 5. Administration of risk management program - the development of personnel and an administrative management program to effectively use County resources. V. Responsibilities 1. Agency heads, other officers responsible for carrying out by: and supervisors shall be primarily the County's risk management program a. Identifying and analyzing the probable financial impact of exposures within their areas of responsibility and interest. b. Taking appropriate action to avoid or minimize loss which might result from identified exposures. c. Reporting all loss exposures -- as well as actual losses, accidents or incidents -- occurring in their area of responsibility and interest. d. Assisting in carrying out the County's risk management program. 2 8 COUNTY OF HAWAII DEPARTMENT. FINANCE PROCEDURES MANUAL- RISK MANAGEMENT SUBJECT: RISK MANAGEMENT PROGRAM 2. A risk management committee for the County of Hawaii is hereby established. a. The committee shall consist of the managing director, the finance director, the corporation counsel, the safety coordinator, and the risk manager, who shall be designated by the committee and shall be a civil servant to maintain continuity of the program. b. The risk management committee shall establish, coordinate and maintain a county -wide risk management program. It shall formulate a program for the elimination or reduction of loss, including the purchase of insurance. c. The risk management committee shall arrange periodic risk management reviews and audits of claims and other administrative programs. 3. The Director of Finance shall establish, coordinate and maintain a county -wide risk management program and, with the risk manager and assistance from other officials, shall: a. Analyze the cost of insurance services. b. Monitor cost to determine cash flow advantages. C. Build reserves to support retained risks. d. Obtain loss probability and actuarial studies to determine funding requirements. e. Develop a risk management budget to be approved by the risk management committee, including accumulation of funds in a trust fund for payment of claims. f. Maintain log of insurance policies, costs, coverage dates, agents, and other appropriate data. YAUt UY 3 8 COUNTY OF HAWAII DEPARTMENT FINANCE PROCEDURES MANUAL-- RISK MANAGEMENT RISK MANAGEMENT PROGRAM 4. The Corporation Counsel shall: a. Investigate liability claims filed against the County and investigate accidents that might result in a lawsuit or filing of claims. b. Take appropriate action to settle claims within limits authorized by the County Council. c. Recommend settlement of other claims or lawsuits for County Council action. d. Defend County against all suits. e. Review contract terms and conditions for adequacy in protecting County against losses. f. Provide legal advice to agencies in avoiding or transferring risk, including equal employment. g. Estimate probable loss payments for establishment of reserves. h. Maintain liability claim files. S. The Safety Coordinator shall: a. Develop, implement and maintain a county -wide safety program. b. Administer the County workers' compensation program. C. Maintain county -wide workers' compensation claim files. d. Estimate probable workers' compensation payments for establishment of reserves. e. Establish, implement and maintain an employee assistance program to counsel and assist employees as necessary. 6. The Equal Employment Opportunity/Affirmative Action Officer shall: a. Advise departments in employment interview and selection process to avoid equal employment violations. b. Review cases filed for corrective revisions to practices and procedures. 4 8 COUNTY OF HAWAII DEPARTMENT. FINANCE PROCEDURES MANUAL- RISK MANAGEMENT SUBJECT: RISK MANAGEMENT.PROGRAM 7. The Personnel Director shall: a. Establish, implement and maintain physical standards for employment. b. Develop policies and procedures in cooperation with the Safety Coordinator and the Equal Employment Opportunity/Affirmative Action Officer to address risks associated with diseases, substance abuse and other health-related issues. 8. County Physicians shall: ✓/ a. Review workers' compensation claims and advise Safety Coordinator on payment. b. Review physical standards for employment. c. Conduct pre-employment physical examinations and advise appointing authority on risks of hire. VI.. Self -Insurance Fund 1. Ordinance 86-35 (Section 2-156, Hawaii County Code) established a self-insurance fund for the County, funded by an initial appropriation of $500,000. 2. When the fund balance is less than $3,000,000, the self- insurance fund may be used only to pay claims, settlements, and judgments -- exclusive of workers' compensation claims -- against the County where the amount of such claim, settlement, or judgment is in excess of $1,000,000. When the fund balance is $3,000,000 or more, the self-insurance fund shall be used to pay all claims, settlements, and judgments against the County, exclusive of workers' compensation claims. .:. I PAGE 5 OF $ COUNTY OF HAWAII DEPARTMENT : FINANCE PROCEDURES MANUAL- RISK MANAGEMENT SUBJECT: RISK MANAGEMENT PROGRAM 3. In accordance with Ordinance 86-35 (Section 2-157, Hawaii County Code), an annual appropriation shall be made to the self-insurance fund in the amount to be determined by the Mayor and the County Council. The Director of Finance may also, with the approval of the Mayor and County Council, transfer prior to year end, all or a portion of the appropriation not needed in the miscellaneous insurance, claims and judgments account to the self insurance fund. 4. The self-insurance fund may only be dissolved or used for purposes other than those specified herein unless the dissolution or non-specified use is approved by the unanimous vote of the County Council. 5. The Director of Finance shall administer the self-insurance fund, which shall include investment of the fund. Investment income of the fund shall accrue to the self-insurance fund. VII. Policy and Procedural Guidelines• The Risk Manager, with the guidance and approval of the risk management committee, shall develop policies and operating procedures for the following: 1. Transfer of Risk: a. Wherever possible and financially prudent, risk shall be transferred to insurance companies consistent with the risk management policy. b. A consistent policy shall be developed to transfer risk contractually, through the use of hold harmless and indemnity clauses and requirements for contractors to name the County as an additional insured on the contractor's insurance policies and/or obtaining a waiver of subrogation on contractors' workers' compensation insurance policies. 6 8 COUNTY OF HAWAII DEPARTMENT: FINANCE PROCEDURES MANUAL- RISK MANAGEMENT SUBJECT: RISK MANAGEMENT PROGRAM 2. Avoidance of Risk a. A continuing program of audit and analysis of potential risks shall be developed and operated to monitor all County departments and agencies. b. Where possible, risk shall be eliminated or minimized. c. Where not practical to eliminate or minimize, risk shall be transferred to other public or private entities whenever possible. d. Efforts of the Safety Coordinator, the Civil Service Director, and other educational and training efforts of the County shall be coordinated by the risk manager to maximize the avoidance of risk. 3. Retention of Risk a. The risk manager shall annually determine the amount of aggregate self-insured retention and deductibles from insurance coverages to be retained as risk and likely to become an expense. b. The risk manager shall also calculate the acceptable amount of losses from small claims which arise from a reasonably predictable number of small losses. c. The estimated total amount of retained risk shall then be incorporated in the annual budget in the Miscellaneous Insurance, Claims and Judgments account. : I PAGE ' OF $ COUNTY OF HAWAII DEPARTMENT: FINANCE PROCEDURES MANUAL - SUBJECT: RISK MANAGEMENT PROGRAM RISK MANAGEMENT 4. Purchase of Insurance a. The risk manager shall continually monitor the insurance industry to determine those risks more appropriately transferred to insurance as opposed to those more appropriate for self-insurance, as well as suitable levels of coverage, deductibles and/or self-insured retention in relation to premium costs. b. The risk manager shall formulate procedures for the handling of exceptions to policy regarding purchase of specialized coverages required by contractual relationships, other government agencies, lessors and other parties. 5. Risk Management Information System a. The risk manager shall develop or otherwise acquire an information system to include: (i.) The reporting of losses, claims & incidents (ii.) A database from which loss experience and other statistical data may be effectively utilized. (iii.) Financial information regarding current and future costs of the risk management function. b. The risk manager shall also coordinate record keeping & retention with other departments and agencies as necessary. c. The risk manager shall develop and implement such internal office procedures as necessary to assure an efficient and secure filing system for manual and electronic risk management information. I EFFECTIVE DATE: I REVISION NO.: IPAGE UY8 I Jtujivn-�vuc-mrruw.A I 8