Risk Control Section 5 CISR

risk control

Any conscious action or inaction to minimize, at the optimal cost, the probability, frequency, severity, or unpredictability of loss

exculpatory agreements

pre-event exoneration of the fault of one party that results in any loss or specified loss to another
Ex: you're not responsible (absolves tort liability)

Waivers of Subrogation

pre-event agreement to waive the right to seek recovery from a responsible party's insurance carrier for loss payments made to the insured (does NOT absolve tort liability)

limits of liability clause

pre-event limitations of the amount, type or method of calculation of damages available by one or both parties to an agreement (has a "caps" recovery amount)

hold harmless agreements

arrangement whereby one party (the indemnity) assumes the liability inherent in a situation, thereby relieving the other party (the indemnitee) of that liability (123OCP - YES)
Ex: Construction agreements

risk control techniques

avoidance, prevention, loss reduction, segregation/separation/duplication, & transfer


only technique that works solely on its own. Avoid the chance of a loss
Ex: after crash test on new development are performed, management has decided to discontinue the product line


reduces the frequency
Ex: install a server firewall and conducts regular training and maintenance in prevention of cyber-attacks

loss reduction

reduces the severity of a particular loss
Ex: automatic sprinkler system for fire

pre-loss approach

reduction of activities applied BEFORE the loss

post-loss approach

reduction activities applied AFTER the loss


isolating an exposure from other exposures, perils, or hazards
Ex: university has a lab where flammable chemicals are used but stored in a detached building


spreading exposures or activities over several locations
Ex: online retailer with separate warehouses able to fulfill orders to the same geographic area


having backups for critical systems or operations
Ex: important documents are backed up on "the cloud" as well as the company's physical server


moving all the risk to another party
Ex: organization leases employees rather than hiring employees

physical transfer

shifts some or all of an operational function or exposure to an outside source

contractual transfer

shifts responsibility of certain liabilities to another party
Ex: hold harmless contract