Risk Management Flashcards
Types of Risk - Pharmacy
● Business risk
● Financial risk
● Personal risk
Business Risk - Revenue
● Related to commercial and professional aspects of a pharmacy practice
● Risks that could impact profitability or viability of a practice
● Often classified as external or internal risks
○ External - limited to no control
○ Internal - controllable
Revenue Risk (External)
○ Business model changes (dispensing fees / authorized adjustment / pharmacy services
framework)
○ New pharmacy opens across the street - New competition
○ Medical clinic next door moves or closes
○ Drug shortages - manufacturer unable to supply COVID-19 vaccine
Revenue Risk (Internal)
○ Did not buy enough product => lost sales
○ Failed to renew pharmacy license (closure)
○ No contingency plan for staff contracting COVID-19 (temporary closure)
Business Risk - Operational
● Internal Fraud
● Internal Fraud ○ Human resources ■ False credentials ■ Changing time sheets (e.g. someone clocking in for another employee) ■ Abusing breaks ○ Payments ■ False claims - Dispensing to another patient’s record / insurance ■ Stealing cheques / payments ○ Theft ■ Cash / cheques / skimmers ■ Supplies ■ Products ■ Expense claims ■ Coordinated fraud with an external third party
Business Risk - Operational
external
shoplifting credit card draud false invoicing supplier fraud shipping fraud double deposit of cheques health and safety
robbery
brbeak and enter
cyber crime
Business Risk - Operational
● Staff leaves (quits / terminated)
● Computers crash
● Patient safety event
● Patient falling in the pharmacy
● Harm to a staff member (armed robbery)
● Social media posting (defamation claim)
● Staff member suffering harm from a needle stick injury
Financial Risk
Debt Capital
● Money used to support the start up and continuing operations of the
pharmacy
● Loan commitment (contractual obligation between business and lender)
● Typically a fixed payment schedule - interest plus principal amortized over
time
● Lender usually requires “personal guarantee” to secure the loan
○ If the business “defaults” on the loan, the individual(s) named in the personal guarantee is
responsible for the loan
● Personal capital (loan) and shares of a corporation (ownership)
○ Shares for private corporation typically have restrictions regarding redemption / sales
● Shareholder loan
○ Typically a more flexible repayment schedule than a bank loan
● Financial leveraging
○ Risk involved with “other” investments for the business / shareholder
What is Risk Management?
- Identifying / exploring / understanding risks
○ What causes the risk?
○ What are the consequences of that risk? - Risk mitigation
○ Eliminating or decreasing the likelihood of the risk occurring
○ Eliminating or reducing the severity of the outcome of the risk event / activity - Risk transfer or risk sharing
○ Transfer risk to a third party (e.g. insurance)
- Identifying / exploring / understanding risks
○ Create a risk register ■ A listing of potential risks ■ Take a systematic approach ○ Determine potential causes ■ Why / how would they occur? ■ Determine the likelihood of occurrence ■ Do you have controls in place and how likely are those controls to fail ○ What are the consequences? ■ Who is impacted? ■ What type of damage could occur?
Understanding Risks
● Start with looking at historical information (what has happened in the past)
○ Look at sales (revenues) in the pharmacy over the past 5 years and compare that to the gross
profit generated by the pharmacy
■ What level has it been?
■ How often did it deviate from the average?
● Use a risk tool similar to the FMEA tool to calculate a “criticality” score
○ Impact x Likelihood
● More complex calculations / resources to be used
○ Insurance providers have claims / incidence data
○ Bankers
○ Research location specific data
- Risk Mitigation
● Eliminating or decreasing the likelihood of the risk occurring
● Eliminating or reducing the severity of the outcome of the risk event / activity
Avoid - Do not get involved
Keep - Assume the risk
Mitigate - Reduce likelihood or impact
Transfer - Make someone else responsible for any failure
- Risk Mitigation
● Develop strategies to reduce the likelihood and severity of risk
● Start with priority areas (as per Risk Matrix)
● Use resources available specific to the risk
○ Ex.) Medication errors
■ Continuous quality improvement initiatives - root cause / FMEA
○ Ex.) Shoplifting
■ Cameras (prevention, make it super visible) , security staff, locked displays, security tags
○ Ex.) New competition
■ Enhanced marketing plan, focus on niche opportunities
○ Ex.) Disaster
■ Business continuity plan
- Risk Transfer
Transfer the risk to a third party (e.g. insurance)
● Commercial property
● Fire, weather, vandalism, theft
● Business Interruption
● General liability
● Accidents, injuries, negligence, defamation
● Professional liability (errors & omission)
● Malpractice (practitioners)
● Life / disability (key person) ● Automotive - insurance wont cover if you do deliveries and get into an accident ● Cybercrime ● Directors and Officers Liability ● Umbrella
○ Broad coverage
○ Typically applies when other insurance limits are met
Insurance Basics
● Policy Coverage (detailed in the policy / agreement / contract)
○ What is covered
○ How much ($) is covered
○ Exclusions / limits
● Premium
○ How much the insured pays for the coverage
● Deductible
○ How much the insured pays before insurance coverage applies
