Risk is risk

Although the NHS is one of the most complex organisations in the world, the basic principles of managing risk in the health service are the same as in any other organisation.
    
Uncertainty attends the decisions we make and processes we operate, and when uncertainty materialises, it becomes risk because there is the potential for an effect on objectives. The risk could be a surgical error or contaminated food products arriving from abroad. Risk is risk.
    
Containing negative impacts from risk, by elimination or mitigation, remains at the heart of risk management, but we also believe the same process can be used to identify and exploit opportunities to enhance services, generate income and cut costs.
    
The traditional approach to risk management is to identify and eliminate or reduce the effect of adverse events. Compensation claims for negligence are an indicator of some failure in that process.

In the UK the NHS Litigation Authority (NHSLA) handles all negligence claims made against NHS bodies, both clinical and non-clinical, such as liability for injury to staff and visitors, and property damage, through five schemes funded by contributions from members. In 2007/08, these five schemes paid out a total of £661 million, of which £633.3 million was for clinical negligence, including the settlement of long standing claims. The balance was for non-clinical negligence, such as employer’s and public liability, and a small amount for property damage.
    
A compensation payment, however, is only the visible tip of a very large iceberg, and when something goes wrong enough that there is a claim, there will be other negative consequences and these are rarely quantified. The investigation and resolution of a serious surgery claim will, for example, absorb days of consultant and senior management time. A particularly aggravated incident or a series of medical errors will affect a Trust’s reputation even without headlines.
    
Claims for employee injuries and sickness are the most common cause of negligence claims that NHS trusts receive. The amounts involved are nothing like so severe as for clinical negligence, but they are likely to lead to staff absence, and according to the Comptroller and Auditor General in a 2003 report, A Safer Place to Work, staff shortage is the biggest constraint on NHS services. The report notes that accidents and other health and safety issues, such as violence and aggression against NHS staff, are major factors in staff absences, because they result in time off work due to minor injuries, stress and temporary or permanent disability.
    
Even without an employer’s liability claim, they incur substantial costs, for example sickness absence payments, staff replacement costs, staff turnover, ill health retirement and compensation payments, fines and higher insurance contributions. Studies by the Health & Safety Executive (HSE) have put the ratio of insured to uninsured costs from workplace accidents in general in a range from 1:8 to 1:36.

Risk management applied
The NHS first introduced a risk management approach over a decade ago. Today, there are NHSLA risk management standards for each type of NHS health care organisation: acute, ambulance, mental health and learning disability, primary care trusts and independent sector providers of NHS care. The standards are designed to address organisational, clinical and non-clinical/health and safety risks.
    
All NHS acute and specialist hospital trusts, primary care trusts and independent sector providers of NHS care must be assessed against these standards, updated versions of which came into effect from 1 April 2009. New risk standards for maternity have also been introduced this year. An independent certification body, DNV is responsible for performance assessment.
    
The NHSLA sets three levels of performance criteria:
1. policy – the process for managing risks has been described and documented;
2. practice – the documented process for managing risks is in use;
3. performance – the organisation is monitoring the application of the process and has drawn up action plans and implemented measures to reduce the risks identified.
    
Trusts receive discounts rising from ten to 30 per cent on their contributions to the liability schemes as they progress from level 0 to level three.
    
By May 2009, ten trusts had reached stage three for acute service assessment levels; 78 were at level two, but another 78 were only at level one. For mental health and learning disability services, however, only one trust had reached level three, ten were at level two and 35 at level one.
    
As risk management’s professional education and training body, the Institute of Risk Management has a good representation of health service personnel among its members. Their view is that the NHSLA standards do not so far appear to have led to a reduction in the number of incidents, and but that the culture is changing. They say there are fewer unreported incidents and more openness, which should produce better results. The nature of personal injury claims of any sort is that they often take years from incident to settlement, so there will be a lag in the statistics before improvements are conspicuous.  
    
Standards
The standards create a framework against which policies and performance can be benchmarked, because they concentrate managers’ minds and reduce the temptation of lip service. There has been progress and there is more to do. The range of risks that need to be identified and evaluated is vast and the complexity and variety of organisations extensive.
    
At the same time, we believe the underlying principles of risk management are not specific to any one business sector, organisation type or even unit function. Our core qualification is the post-graduate level International Diploma in Risk Management. We believe that the core knowledge and skills our students learn transcend specific sectors and that they can learn from each other.
    
In the health service, clinical and patient safety is the top risk management priority. The numbers also indicate that cutting the number of employee sickness and injury absences could pay great dividends. A trust that reduces staff shortages and turnover will be in a stronger position than others to take advantage of opportunities to improve and expand services. The more the health service takes a business-like approach, the more risk management becomes an essential aspect of its business management.

About the author
After graduating in chemistry from Oxford, Steve joined Sun Alliance as a risk engineer. Ten years later, Steve set up the business systems function. Responsibility for managing the merger with Royal for multinational and specialist business followed, then promotion to Commercial IT Director where Steve developed an integrated business-led approach.
   
In recent years, Steve has been involved with a range of business change assignments culminating in joining the Institute of Risk Management (IRM) as Chief Executive Officer in 2002. During his stewardship the Institute has more than tripled its membership and turnover and has also significantly increased the range of services it offers.
   
Steve is a Fellow of the IRM, a Fellow of the CII and a Chartered Member of IOSH. Steve also chairs the education panel of the International Federation of Risk and Insurance Associations.

About the IRM
The Institute of Risk Management (IRM is risk management’s leading professional education body. Governed by its members as a not-for-profit organisation, it is sector independent with members and students from all branches of the risk profession IRM’s distance learning qualifications incorporate the best risk management knowledge, tools, techniques and standards.
   
Go to www.theirm.org for more information.