ABSTRACT
Risk is the possibility of loss from a hazard such as personal injury, property damage, or economic loss. Risk cannot be eliminated from the environment, but with careful planning it can be managed. Risk is best understood as the product of the consequence (severity) of an event and the probability (frequency) of the event occurring, also represented as:
Risk = Probability x Consequence Severity
Risk increases as the consequences and probability of occurrence increases (see Figure 14.1). When risk probability is low and consequence severity is low, the risk level is depicted in Figure 14.1 as RP1, CS1. As the level of risk probability and level of consequence severity increases, the risk level increases to RP2, CS2. The three main types of risk are mission (function) risks, asset risks, and security risks. Mission risks prevent an organization from accomplishing its mission. Asset risks may harm an organization’s physical assets, and security risks have the potential to harm actual data and people. Quality risk management practices are imperative to reduce legal exposure, prevent financial and human loss, protect sport facility assets, ensure business continuity, and minimize damage to the sport organization’s reputation. First and foremost, a sport facility owner or operator must act in a prudent manner. He or she has a duty of care to provide a reasonably safe environment for patrons. In the event of an incident, organizational plans and policies will be reviewed to assess the standard of care provided. Sport facility managers tend to understand the need and value of risk management but fail to do the necessary planning thereby exposing their programs to risk and eventual financial loss. Sport facility managers tend
CHAPTER OBJECTIVES
to react to events and circumstances rather than taking a proactive approach and implementing effective plans and policies to prevent catastrophic losses. Sport facility managers must develop an effective risk management program to reduce risks and mitigate consequences of incidents.
