ABSTRACT
The decision to implement enterprise risk management (ERM) for the King County, Washington, government was motivated by several large liability claims in 2010 and 2011. These incidents resulted in a shift in the county’s insurance structure by increasing premiums and forcing the county to hold a higher level of retained self-insurance liability. This shift was not sustainable in the long term given the county’s risk exposure, and the county council ordered an external audit of the county’s risk management program. A primary recommendation of that audit was for the county to establish an ERM program. This chapter provides insights into the approach King County took to establish its ERM program and reviews some of the steps taken to overcome organizational cultural barriers. The chapter demonstrates how King County leaders have shifted the ERM program’s emphasis from risk reduction to risk optimization using a risk–value curve.
