Factors that Effect Risk Management in Healthcare

Proper risk management in healthcare is essential to both patients and healthcare organizations, as it helps minimize both risks to health and protects the hospital from financial losses.

Through the application of clinical and administrative risk management processes, hospital and care facilities can better detect, monitor, assess, and mitigate risk – ultimately reducing potential damages for health care organizations and ensuring patient safety.

In honor of Health Care Risk Management this week (June 15-19), we have created a risk management guide. In this blog, we will investigate the roles, processes, and key risk management tools in healthcare.

According to an Arlington TX dentist Mark C. Marchbanks, D.D.S., risk management in healthcare is a broad term that encompasses any activity, process, system, or policy designed to reduce risk. In healthcare, risk management includes checking for faulty equipment, mitigating medical malpractice, and monitoring management processes to discover and reduce potential risks.

Essentially, risk can be defined as anything that could result in loss, which can include severe risks such as patient death or injury, but which also encompasses financial loss, such as corporate liability.

What Is Risk Management in Healthcare?

Risk management in healthcare can be an intricate, multi-faceted process.

A range of systems, technology, and processes can be deployed to mitigate these risks, including:

  • Incident reporting
  • Clinical audit indicators
  • Patient trackers
  • Test result reports
  • Satisfaction surveys
  • Proper storage of medical equipment

However, not every health care organization has the same needs, which is why the development and implementation of a risk management plan and strategy that will work in your particular facility is so important.

Overall, there are three vital components to managing risk in your organization:

  1. Hiring a qualified, dedicated risk manager (with experience in healthcare risk) who can proactively evaluate and identify risks to your organization and can ensure that the systems, technologies and processes to facilitate risk management are created, updated, and adhered to.
  2. Incorporating a centralized reporting system that enables information to be shared across all departments, and enables employees to more readily analyze, report on, and pinpoint areas for improvement. It also ensures that everyone is on the same page with policy requirements and follows compliance standards.
  3. A risk management plan that is created by the dedicated risk manager. The manager is continuously assessing and monitoring risks in the organization, and the goal of an effective risk management strategy is to decrease exposure.

Concepts of Risk Management in Healthcare

Patient safety is at the heart of risk management in healthcare, but it is not the only aspect that should be looked at when evaluating risks.

According to the American Society for Healthcare Risk Management, hospitals and care facilities are adopting Enterprise Risk Management (ERM) – a more comprehensive approach to managing risks and uncertainty in the health system that addresses eight, interrelated areas:

  •   Operational – The goal is for your healthcare facility to deliver safe and efficient care to patients. Risks associated with operational deficiencies are documentation errors, staffing issues, lack of structure, and procedures not being followed.
  •   Clinical & Patient Safety – Risk management for clinical & patient safety helps reduce medical errors and ensures that the hospital can avoid medical liability. This type of risk management can involve notifying patients about refilling expired prescriptions, creating a plan to follow up about missing or lost test results, and generally creating better avenues of communication with the patients.
  •   Strategic – This area has to do with the focus and direction of the organization. Since this aspect is related to change and unpredictability, risks associated with this area can include the reputation of the organization, the inability to fulfill customer priorities, the organization’s inability to adapt to changes, and negative effects on company reputation.
  •   Financial – Reducing exposure to risks in the financial domain protects the hospital’s bottom line, ensuring that the organization will function well financially and has access to capital. Risks associated with this area include costs associated with malpractice claims, investment in equipment and facilities, corporate compliance, and billing.
  •   Human Capital – Hiring and retaining qualified employees is crucial to the proper functioning of an organization. Risks in this area can include issues with employee turnover and retention, workplace injuries and compensation, lack of productivity, and absenteeism.
  •   Legal & Regulatory – These risks are associated with the failure to comply with regulatory mandates. Risks in this area include liability, fraud, and issues with intellectual property, licensing, and accreditation.
  •   Technology – This area covers everything from machines, equipment, and devices, to processes and management tools such as Risk Management Information Systems and Electronic Health Records, which help the organization run more efficiently. Potential risks associated with this area include systems failures, cyberthreats, loss of data, and lack of proper training and knowledge of the systems.
  •   Hazards – These risks include both environmental and business hazards, such as fires, natural disasters, building facility risks, and loss of valuables, which can have an impact on all of the above.

Organizations that have a strong health care risk management strategy in place that addresses all of these fundamental areas of risk can improve operations, reduce costs, and better ensure patient safety and that compliance standards are met.

Risk Management in Healthcare

Key Practices of Risk Management in Healthcare: Tools & Process 

A thorough, well-thought-out risk management strategy can be your best weapon to minimize potential risk exposure in your hospital.

With the following five-step risk management process healthcare strategy, healthcare organizations can create a comprehensive and successful plan. (If you are interested in learning more about the processes of risk management in healthcare, the Elyns Group has an excellent guide).

1: Establish the Context

This broadly involves identifying the context of the risk, such as the ICU (Intensive care unit), O.R (Operation room),  and other areas. It is imperative to identify all potential contexts of risks so that any identified risk (see step 2) can be appropriately designated and controlled.

2: Identifying Risks

Healthcare professionals should communicate between the team to identify potential risks in each stage of the business. Identified risks should be entered into a Risk Management Tool (RMT), which will track all risk management plans so they can be treated progressively.

The RMT should include information regarding the nature of the risk, the extent of the risk, chances of the risk occurring, the individual responsible for the risk, and a timeframe for establishing controls, and should be maintained long-term by the risk manager.

When identifying risks, health organizations can get information from a number of sources, including previous patient records, executive reports, and patient and staff complaints.

3: Analyzing Risks

The objective of this stage is to understand the nature of the risks identified in step 2, and assign each entry in the RMT a risk value, cause of risk, and existing control measures designed to mitigate the risk.

Risk value: A score that combines the cost of the risk with the chances of it occurring, such that Risk Value = Cost * Chance.

To accurately calculate both the likelihood and the cost of the risk, consider whether the risk has happened before within the organization and the resulting cost. If no such incident has occurred inside the company, consider external sources. Are there other medical practices where such an event did occur, and if so, what was the cost to the company and patient?

Cause of risk: To determine the cause of the risk, utilize a Root Cause Analysis (RCA) to determine the events that led to an incident. This information can also be used to help treat the risk.

 4: Evaluating Risks

Evaluate the identified risks to create an order of priority. From there, determine which risks should be accepted and which should be treated. Note that accepting a risk does not mean ignoring it, but rather that it is of lesser importance compared to other risks identified in the RMT, or that there is no presently known way of treating the risk.

5: Creating A Plan To Mitigate Risks

Create a plan to control the risk. Identify potential solutions and necessary equipment, establish a timeframe and an individual responsible for the action.

Having a risk management plan in place that is continuously evaluated and improved upon by a risk manager will help you be better prepared to handle potential risks to your organization.

The following best practices can help with constructing a plan:

  • Educating staff about risk management protocols.
  • Creating and maintaining adequate documentation.
  • Staff implementation of risk management strategies.
  • Procedures for handling unforeseen risks
  • Procedures for handling complaints

If risk treatment is deemed impossible, steps should be taken to control the risk instead, such as by redesigning systems and processes in order to minimize the chance of a risk occurring and / or the severity of its impact.


Proactive risk control and treatment can be achieved through a strong risk management plan, which can include staff training, quality assurance programs, the acquisition of improved tools and technology, and the proper handling of medical equipment.

When storing medical devices such as surgical headlights and other reusable surgical equipment, it is important that the following is done to mitigate risk and to keep the equipment protected:

  • Store equipment in a safe area with enough storage space, so that it remains unharmed
  • Environmental controls are in place to keep humidity in the space between 30-60%
  • Shelves are solid and closed to protect the equipment from debris dust, moisture, and other contaminants
  • Keep equipment clean and if the equipment needs to be stored in open shelves, the shelves should be at least 25cm off of the ground

As a leading global medical device supplier, BFW Inc. can provide your team with best-in-class surgical headlights, camera systems, and effective storage and charging solutions.
BFW’s educated and professional sales people will work with you and your team to help select, store, and care for your headlight and camera systems – decreasing the equipment’s exposure to risk and increasing the benefits to your hospital.