Risky Business

The Ins and Outs of Risk Management

By Dawn Klingensmith


t is well understood, or ought to be, that risk management plays a vital role in any sports and recreation program, and that the consequences of not assessing, controlling and financing risks range from increased lawsuits and insurance claims to financial devastation. But have you considered how poor economic times make risk management all the more important? That's because during a downturn "economic motivation leads people who have debts or are unemployed to pad insurance claims or develop insurance fraud schemes," said attorney and consultant Katharine Nohr, Nohr Sports Risk Management, Kaneohe, Hawaii.

Even in the best of times, organizations must protect themselves and maintain a safe place for all participants, she added. As it happens, though, "We see an increase in lawsuits in economic downturns," in part because budget constraints and being short-staffed can lead to inadvisable shortcuts and omissions, said Nohr, author of "Managing Risk in Sport and Recreation: The Essential Guide for Loss Prevention" (Human Kinetics, 2009). "If an organization chooses to skimp on safety and risk management practices, they likely will see an increased incidence of injuries and worker's compensation claims," she added.

We All Fall Down

For example, in a 2007 lawsuit against a golf course, "There was a handrail in very poor condition, which the golf course knew about but didn't repair," Nohr said. "As a consequence, an injury occurred. This might seem relatively insignificant, but with the poor economic times, facilities that are struggling to remain in business must consider the consequences of delaying repair of known hazards."

In a downturn, individuals who encounter a faulty handrail may stage a fall or, if they have a legitimate injury, exaggerate its severity. Even if an organization maintains a comprehensive risk management program and uses safe practices, insurance fraud might increase in the form of padded claims and staged or deliberate accidents.

Nohr also stressed that in this day and age, emergency disaster planning is particularly important. Terrorism is an ongoing threat, for example, and flooding and other natural disasters have increased in some areas, perhaps as a result of global warming, she said.

Though some geographic regions are more at risk than others, it is critical for all organizations to think about weather-related emergencies and other potential disasters when evaluating their loss exposures.

All things considered, "I believe that facilities and organizations could be more proactive," Nohr said. "My concern is with budget reductions and economic problems, which face so many organizations. Proactive risk management takes a back seat to what appear to be more pressing problems. Reacting to lawsuits and insurance claims is a normal way to approach risk management, but not the best way."

Inherently Risky

"Where there are fitness, recreation and sport activities, there are injuries. And unfortunately where there are injuries, there are lawsuits," said Doyice Cotten, professor emeritus in sport management at Georgia Southern University and owner of Sport Risk Consulting, Statesboro, Ga.

A risk management program is a proactive approach to protect your organization from legal action as well as guarding against injuries in the first place. Risk management involves making decisions and implementing plans and policies so as to minimize injuries and loss and their effects on your organization, facility or event, Nohr explained.

Risk management consists of risk assessment (identifying and analyzing the risks or loss exposures that are involved in your sport or recreation program and then considering ways to reduce those loss exposures), risk control (putting initiatives in place to address risks and loss exposures) and risk financing (preparing and budgeting for the eventuality that someone will get hurt and file a lawsuit).

In her book, Nohr uses as an example a hypothetical football stadium that attracts many older spectators. After a risk assessment reveals, among other things, that three people have had heart attacks in a year's time, risk control measures are taken including making automatic external defibrillators available throughout the facility and training staff to use them. Other risk control measures might include having more ambulances on-site and providing better signage leading to first aid stations.

The results of risk control measures must be monitored and your risk management plan revised as needed, Nohr said.

Nohr recommended appointing a risk manager as well as a risk management team, but cautions that people within an organization usually lack the expertise to develop a comprehensive risk management program without legal counsel or help from a consultant. An organization should also continually offer training to employees in risk management and stay abreast of relevant court decisions and changes in the industry, Nohr said.

Put it in Writing

To reduce and prevent losses, every sports facility, organization and event should have in writing carefully thought-out safety plans, safety rules and emergency procedures. Specifics will vary from one sport or recreational pursuit to another.

"Before reinventing the wheel, check with the applicable national governing body for your sport and with other organizations to see if they have established standards," Nohr writes in her book.

For example, USA Swimming has safety action plan samples on its Web site, usaswimming.org. And the Red Cross provides plans for lightning safety and other useful information on its Web site, redcross.org.

Risk control techniques will differ from one activity to another, but certain control measures apply broadly if not across the board. According to Nohr, the measures include: improving organizational attitudes regarding safety; inspecting facilities; cleaning, maintaining and repairing facilities; preparing facilities for play; managing crowds; requiring players or participants to wear protective gear; and inspecting, maintaining and repairing equipment.

Inspecting facilities is an important means of loss prevention and reduction. Inspection can take place at regular intervals or before and during events; for example, a soccer field should be inspected for holes and foreign objects before practice or a game, Nohr said. Documenting each inspection helps in your defense in the event a lawsuit is filed. In addition, each area of a facility should have a documented cleaning, maintenance and repair schedule.

Sports and recreation equipment should be regularly inspected and tested for damage or defects. Until necessary repairs are made, a piece of equipment should not be used, and it's safest to obtain replacement parts from the same manufacturer who made the equipment. Helmets repaired using face masks from different manufacturers allegedly have caused injuries or increased their severity, Nohr said, and have given rise to litigation. As with facility inspections, it is important to document equipment cleaning, repairs and maintenance.

Self-Protection on Paper

Generally, an organization or a facility can be held liable for injuries resulting from its own negligence, but not for injuries resulting from the inherent risks of an activity. A waiver can offer some protection from liability for injuries caused by such negligence. Therefore, "It is worth the effort to develop a good waiver and use it for protection," Cotten said.

A waiver is a written contract between a service provider and the participant wherein the participant agrees to absolve the provider of any fault or liability for injuries resulting from the ordinary negligence of the provider, its employees or its agent, Cotten explains on his Web site, SportWaiver.com. Though there are minor differences, a waiver essentially is essentiallythe same as a release, or an exculpatory agreement.

An informed consent agreement, on the other hand, is a different type of document used to protect the provider from liability for risks associated with a treatment or program to which the individual agrees to be subjected. In general, "they are used when something is 'done to' the individual," such as medical treatment or research, Cotten said. Lately, though, personal trainers have begun making clients sign them before starting an exercise program.

The effectiveness of waivers differs by state, though Cotten emphasizes that a well-written waiver signed voluntarily by an adult is usually enforceable. But a number of factors can cause waivers to fail, including ambiguity. In fact, "The most common reason waivers fail is because they are poorly written," Cotten writes.

Fine Print = Flimsy Protection

Waiver language must be clear, unambiguous and specific as to the intent of the parties to release the provider from liability or negligence, Cotten added. Otherwise, the court likely will not enforce the waiver.

Waiver language should also be conspicuous to the signer. It is better for a waiver to be a stand-alone document than a paragraph or two included in a membership contract, although setting the waiver language apart with larger text or a box or subhead might protect against signers' claims that they failed to realize they had signed away legal rights.

Waivers should list the inherent risks of an activity; some state courts require this, and in any case without such a list a waiver may fail.

"This actually works to the advantage of the provider," Cotten said, "because including inherent risks in a waiver provides evidence that the signer was aware of the inherent risks of the activity and assumed those risks."

Keep all discussion relating to inherent risks separate so that the signer will not confuse inherent risk with the negligence risks, Cotten advised.

Duty of Care

The legal concept "duty of care," often shortened to "duty," means there is a relationship between two parties such that one party owes the duty to exercise reasonable care to the other, said Kaneohe, Hawaii-based risk management consultant Katharine Nohr. Failure to do so could result in a negligence case in the event the owed party suffers an injury or damages. In an athletic setting, duties of care might include:

Planning for potential hazards such as weather-related emergencies
Assessing the fitness level of fitness club patrons
Providing equipment that meets applicable safety standards
Maintaining safe conditions (e.g., no trip hazards)
Providing safe transportation to and from an event
Duty to supervise
Duty to select, provide and train coaches
Duty to appropriately match athletes in competition
Duty to warn of unsafe practices (e.g., allowing football fans to tear down goalposts after a win)
Duty to warn of inherent dangers in practice and competition (e.g., helmet-to-helmet contact in football)
Duty to make sure athletes are covered by injury insurance
Duty to develop and implement an emergency response plan (e.g., when to call off a ballgame in inclement weather)
Duty to provide emergency care

According to Nohr, courts commonly will rule that there is no duty where participants have assumed the risks inherent in the activity they are engaged in and, often, the only way a person or entity will be found liable is if the injured person is able to prove that the conduct of the defendant was intentional or grossly negligent.

"More often than not, courts rule in favor of defendants where there is an allegation of simple negligence," she writes. "However, this should not in any way encourage lack of safe practices and sound risk management."

Waivers in the Virtual World

In this day and age, parties often enter into waiver agreements electronically--via an online registration process, for example. But will courts validate such waivers, or must they be printed and signed in ink to be enforceable?

"There's no definitive answer," said Alexander "Sandie" Pendleton, attorney, Kohner, Mann & Kailas, Milwaukee.

But online waiver agreements have raised issues such as what constitutes consent sufficient to form a binding contract; whether it's necessary for the signer to actually have read the terms; what constitutes a sufficient signature and how can you prove a particular person clicked "I agree"; how to prove that agreed-upon terms weren't changed after the fact if there's no paper trail; and how to prove an agreement existed in the event of data loss.

In cases stemming from the recreation sector, courts have enforced online waiver agreements even in instances where the original online agreement was later lost. For example, in a 2009 Minnesota case, "the court allowed enforcement of an online waiver agreement, even though the defendant lost the 2005 version of the original agreement and could only produce the 2007 version with testimony by an individual that the terms of the 2005 form and the 2007 form were the same," Pendleton said.

If you are using or considering using an online registration process with a waiver agreement, consult a lawyer who has experience with online forms and procedures, he advised.

In fact, whether on paper or in pixels, "Waivers are legal documents that should be prepared by or reviewed by an attorney who is familiar with the law in the applicable jurisdiction," Nohr said.

Legal Defenses

Safety rules and regulation also should be put in writing, clearly communicated and consistently enforced, because you may be able to successfully defend a lawsuit if you can prove the plaintiff knowingly violated rules.

According to Nohr, the primary way to defeat a negligence action is to show that one or more of four legal criteria for negligence have not been met. The four defenses are demonstrating the defendant did not owe a "duty of care" (see sidebar) to the plaintiff; establishing that the duty of care that was owed was not breached; when breached, showing the defendant's act or omission was not the proximate cause of the plaintiff's injury; and showing that the plaintiff suffered no real harm or injury.

"Negligence cases are frequently won or lost on the availability of documentation," Cotten said, so incident, or accident, reports are crucial.

Incident reports record information about a particular injury or incident when the incident is fresh in everyone's minds and when witnesses and facts are readily available. These reports are helpful in communicating the facts to any insurance carriers that are considering the application of coverage. They also serve to provide important facts if a lawsuit should be filed at a later date, Nohr said.

Incident reports should stick to the facts and not assign blame or causation, Cotten stressed.

The Roar of the Crowd

At any sporting event, players and organizers like to see the crowd fired up. But all it takes is a bad call or a winning goal, and a fired-up crowd can become a five-alarm catastrophe for which a facility or an organization can be held responsible.

"If they are aware of the potential problem and they have not taken reasonable actions to prevent the problem, they may be found liable," Nohr said.

For example, in a college football championship game, it's a safe bet that students will try to tear down the goalposts as a show of victory. But this can be discouraged and perhaps prevented.

Precautions include investing in goalposts designed to withstand abuse, increasing security, limiting the amount of alcohol sold to one person, ejecting intoxicated spectators, and cutting off alcohol sales some time before the completion of the event to allow time to pass before spectators drive home, Nohr said.

"One example that comes to mind is when the Universityof Hawaii was enjoying an undefeated season, and fans hadstarted acting rowdy," Nohr said.

In response, the coach made television public service announcements and ads ran in electronic and print media to curb fans boorishness and potential violence.

"His good-sportsmanship message urged the fans to show their 'aloha spirit' and specifically asked, 'For the safety of players, please refrain from throwing paper or other objects on the field,'" Nohr said.

Security was significantly beefed up for subsequent games, she added, and there was no repeat of the previous problems.

In other words, everyone from the players and spectators to the school's administrators came out as winners.

Safety Consideration

Each sport and recreational activity has its own set of risks, which you must assess, manage and finance. But there are some considerations that apply broadly if not across the board. This is by no means a comprehensive list of risks arising from sports and recreation.

Playing Fields
Are rules and regulations posted conspicuously?
Are weather conditions monitored before and during a game or practice?
Have criteria been established as to when evacuation should occur, if and when a game should resume, or whether a game or practice should be canceled?
Has an evacuation plan been made in case of severe or catastrophic weather?
Are there holes in the turf?
Is the drainage system adequate?
Do sprinkler heads pose a hazard?
Are goals sturdy and well-anchored?
Are goals and posts padded?
Have rocks, clumped mud and foreign objects been removed?
If used at night, are lights bright enough to illuminate the entire field?
Is the parking lot well-lit?
Have light poles been inspected for stability and safety?
Have bleachers and public areas been inspected for slippery surfaces, broken benches and other hazards?
Are fences or netting designed to protect spectators free of holes?
Are fences surrounding play areas brightly colored and marked with a warning track or lines so that players are less likely to run into them?
Gymnasiums and indoor courts
Are rules and regulations posted conspicuously?
Does the floor have proper shock absorption?
Does the gym have sufficient room around the court so that players won't run into walls?
Do walls and other objects around the court have sufficient protective padding?
Is there sufficient space separating courts?
If there are glass doors or windows, are they protected or made of safety glass?
Are electrical control panels, light switches, etc., padded or recessed into the wall?
Is the gym adequately ventilated?

Source: "Managing Risk in Sport and Recreation: The Essential Guide for Lost Prevention" (Human Kinetics, 2009), by Katharine M. Nohr

Golf: A Most Dangerous Sport?
Perhaps it's fitting that world-famous dare devil Evel Knievel played golf, given the high frequency and severity of injuries that arise from hazards that are fundamental to the game. Statistically, is golf riskier than, say, jumping canyons on a motorcycle?

"I was surprised that most published appellate court decisions in sport and recreation [were] related to golf," said Kaneohe, Hawaii-based risk management consultant Katharine Nohr, who researched court decisions for her book and website, nohrsports.com.

But when you think about it, it makes sense.

Though obviously not as violent as football or hockey, nor as fastpaced, golf "uses expansive areas of land made up of various types of potentially slippery grass surfaces, water hazards and sand traps," Nohr said. "Add to this the use of golf carts driven by potentially intoxicated players on uneven, hilly and curvy land. Then, factor in that players can hit others with balls and clubs and that those steel clubs can serve as lightning rods."

Certainly, "There are more dangerous sports than golf," Nohr added. "However, one reason why there are a lot of litigated injuries in golf is that people who play golf may have greater access to the legal system."

In other words, golfers aren't the greatest risk-takers among athletes, but they are among the wealthiest.

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