MANAGING RISK AND RECOVERY

Submitted by: Ma. Christina D. Ladao

Operations Management

MBAN 2201 (Sat 12:00-3:00)

Submitted to: Mr. Erwin M. Caparas, MBA

Property managers are faced with many different risks, and a Deloitte survey has shown that risk
management is now one of the top three worries for property managers. The amount of property
and tenant hazards is growing with their portfolio. Every step there are legal risks, as is the
general exposure to the market that nearly every company must face. Three alternative methods
exist in each risk scenario: avoidance, control, and transfer. Risk avoidance is the refusal to
participate in an action that is seen as too dangerous. A property manager, for example, may opt
not to acquire any property with a pool in order to minimize the related hazards. Risk control
measures are used to limit or manage risk, such as regular checks to avoid severe harm from
developing. Risk transfers include the transfer to another party, such as an insurance company or
renter of responsibility for possible risk. In order to battle their varied risks, property managers
might employ a mix of these tactics.

Transferring the risk to an insurer is the most obvious answer. General liability insurance, among
other things, protects a company from property damage. Aside from insurance, property
managers should take proactive initiatives to discover minor physical concerns before they
become major ones. Periodic inspections, for example, will enable management to monitor high-
risk locations such as the quarterly inspection of elevators and fire detection and alarm system.
Keep careful records of these inspections, including pictures, to see whether regions are
deteriorating over time or if they are ever required as a defense in the event of a claim.

Property managers must manage a large amount of information at any given time, such as
contracts, resident lists, rent, incidents and claims, maintenance jobs, costs, and so on. It is
difficult to just handle all of this data; it is even more difficult to display it in a way that enables
timely action. Things are likely to be missed if there is no effective mechanism in place. A
contract clause may be neglected, a claim may be handled incorrectly, or a deadline for insurance
or taxes may be neglected until it is past due.

Risk management entails determining the most effective methods for avoiding, controlling, and
transferring risks. Depending on the circumstances, property managers can employ any of these
tactics. Most hazards may be avoided with insurance and careful practices. An excellent Risk
Management Information System may be incredibly advantageous in both financial and
operational aspects, regardless of the type of risk.