Controlling risks — and costs

Kevin Kortokrax

When a business is struggling to stay profitable, there are two strategies to follow: increase revenues and cut costs.

Recent statistics from the National Golf Foundation make it clear for superintendents that increasing revenues may be an uphill battle as the recession continues to dampen enthusiasm for discretionary spending. NGF reports that while the number of golfers remained steady in 2008 compared with 2007, their time at the tee decreased 1.6 percent — a total of about 8 million rounds never played and/or never paid for. That means it’s time to get creative about cutting costs. Increasing risk management efforts, an often overlooked area, can yield a payoff both immediately (fewer loss claims that require deductibles to be paid) and in the long-term (the impact on insurance premiums from a lower loss record).

The first step is awareness of the risks and patterns of losses that are most common at golf courses. A study of about 21,000 golf course claims over a 16-year period indicates that the most frequent type of property claim involves theft, while the costliest property claims involve fire and wind. For general liability claims, slips, trips and falls account for about one-third of the claims and approximately 42 percent of the costs. Being hit by an object — a wayward ball or an errant swinging club — trails a distant second in general liability claim costs.

The second step is to take these patterns, understand how they relate to a specific golf facility, and then create a rigorous risk management program that’s customized to meet the course circumstances. The following are some common core components of an effective program.

Accountability. Assign specific responsibilities for safety management in each department, hire qualified staff and provide appropriate training, including how to handle emergencies.

Protocols. Establish safe work practices for regularly performed tasks. Provide the right tools and equipment for safe work practices to be followed. Then, audit the process to ensure the procedures are followed by every employee and that the procedures are correct and current.

Maintenance. Ensure that buildings and grounds are well-maintained. Good housekeeping is critical for preventing both fires and falls. Have a formal inspection program to identify and resolve hazards before someone is injured.

Analysis. Investigate all incidents to identify root causes. In order to prevent recurrence, review existing procedures, controls and training and implement the needed changes to address the problem.

Risk transfer. Obtain certificates of insurance and ask to be named as an additional insured on insurance policies of organizations that use the golf course for special events. Outside companies that perform services, such as cleaners, snow removers and mechanical contractors, also should be required to demonstrate coverage.

Superintendents who want to create an effective risk management program should check with their insurer for assistance. Insurers with golf course expertise offer risk control services that can help the superintendent create an environment that is every bit as safe as it is entertaining. And reducing costs, both now and in the future, is an added benefit of risk management that is too good to ignore in today’s economy.

Kevin Kortokrax is the director of risk control services for Travelers national programs. He coordinates risk control support for several programs, including Travelers golf-related lines of business.