PHPrac3: Pharmacy Administration and Management

RISK MANAGEMENT
GROUP 3
Amin, Salman Ebrahim, Bai Eusrah
Amoloria, Adolf French, Donna
Camisura, Krizza Jereme, Katrina Mae
Delima, Samantha Desiree Kusain, Moh’d Yusoph Jr.
Ebon, Jewel Lyre Santiago, Sittie Julaifa Nekesha
 OBJECTIVES
At the end of this chapter, the students should be able to:
1. Define risk management.
2. Outline the types of criminal and non-criminal business risks faced by
pharmacies.
3. Explain the process of reducing risks.
4. Examine the pharmacist’s role in monitoring pharmacy’s compliance
with applicable rules and regulation in all pharmacy practice settings.
5. Assess the pharmacy manager’s role in preventing and managing
medication errors.
 ICE BREAKER:
Instructions:
 WHAT IS RISK?
• Risk is described as the uncertainty about possible damage, injury, or loss. It is an unavoidable part of
life. It is a concept that denotes potential negative impact on an asset or some characteristic of value
that may arise from some present process or future event.
• Risks are associated with negative outcomes. A risk is anything that threatens the ability of a person
and the organization to accomplish their objectives. Exposure to risks is a part of daily life. For a risk to
be a threat, there must be some statistical chance (probability) that a negative event will occur. One
may or may not be exposed to a risk that may diminish or eliminate the risk as a real threat. To be a
risk, it also must constitute a hazard. The severity or consequences must also be negative to be
considered as a risk, for example:
 A drug may have a small probability of causing anaphylactic shock, but it may result in death.
 A new computer virus could destroy all the patients’ files and records stored in the pharmacy
computer system.
• Individuals, as well as businesses can take steps to guard themselves against risks. Almost any type of
risk can be prevented or managed. For small firm owners, competence demands that they give serious
attention to what risks they assume when they start operations. Losses, damages, or injury can
critically hinder the success of the business.
 WHAT TO DO ABOUT RISK COMMON RISK

When an existing risk is made known, Most common risks are generally recognized
managers and/or staff turn their attention to but a serious investigation may reveal some that
developing a course of action to minimize its are not usually noted. These are:
effect. Given the varying cases of risks, some 1. Damage to property
risks are easier to manage than others. The
objectives of good risk management are to: 2. Liability to employees.
1. Eliminate risks 3. Liability to the public
2. Minimize risks 4. Death of key employees:
3. Shift risks 5. Excessive loss of bad debts
4. Absorb risks 6. Faulty title to real estate
7. Shoplifting
8. Loss through dishonest employees
9. Financial hardship
10. Marketing risks
 DEVICES TO COPE WITH RISKS
a. Good Planning and Good Management
b. Purchase outside Insurance
c. Risk Avoidance
d. Loss Prevention Control
e. Accept the Risk
GOOD PLANNING AND GOOD MANAGEMENT
 Good planning and good management are probably the best protection against most
risks. Prices of regular retail inventory may fluctuate, but good management will assure
the business with updates on price trends. Study of population trends and business
activities will warn business owners about any risks involving the loss of values of their
location or property. A good record of accounting and study of operations will alert
management of any adverse trends. Personnel policies will ensure employers of the
honesty (and integrity) of their employees.
 Risks involving financial issues/hardships can be managed with proper planning. These
risks have caused the collapse of firms that otherwise had profitable ventures. Good
planning along with keeping track of the key financial ratios in the financial statements,
the capital adequacy ratio, the investment in receivables, as well as having a cash flow
statement are methods of protection against these risks. Having a good performance
record for honesty and fair dealing will help the business person secure financial help
when it is needed.
 PURCHASE OUTSIDE INSURANCE
 An insurance policy allows for less risks for the business and shifts them to the insurance
company. Insurance can be purchased from established insurance firms to cover many of
the normal business risks.
 As you review the 10 risks listed earlier and consider the case of typical business firm, it
would appear that there is no alternative to buying insurance to protect inventory and
building against various possible losses such as fire, theft, floods, or typhoons. Business
owners are required by law to carry workers’ compensation insurance. If key personnel
are sufficiently valuable to the business, owners may buy life insurance on their lives.
Fidelity bonds may be purchased to protect any firm from losses incurred by employee
thefts. Losses incurred by business firms from merchandise stolen by employees are
often to far exceed losses in the form of cash. This situation suggests that fidelity bonds
should be used more widely to cover losses of both cash and merchandise.
 RISK AVOIDANCE
 Risk avoidance is simply to avoid the risk. For a person, this might mean not smoking or
not flying. For a firm, it might mean taking an effective but dangerous product off the
market even though it does the job well when used safely. Risk avoidance is an effective
way to cut losses. The problem is that in avoiding the risks of some activities, one also
avoids the benefits. For example; Firms that avoid new products because they might be
risky cut themselves off from markets that might be profitable. Risk avoidance may not
always be the answer in risk management.
 LOSS PREVENTION CONTROL
 Losses caused by unavoided or unavoidable risky activities that one chooses not to avoid
can often be either prevented or controlled. To prevent a loss means to keep it from
happening, to control means to limit the damage if a loss does not occur. A good rule of
loss prevention for a person is not to drive after drinking. But since some accidents
happen even when one is sober, it is also a good idea to wear a seatbelt to limit injuries.
A gas station owner might try to prevent loss from robbery by keeping the office well-lit
after dark. However, since there is a chance that even a well-lit station will be robbed,
losses can be controlled by limiting the amount of cash kept in the office.
 ACCEPT THE RISK
 The last method of risk management is to absorb the risk; that is, to accept the risk of
loss without spreading it by insurance. A person or firm may decide to absorb risk for
reasons that there are cases in which other methods of risk management are not worth
the cost. This is often the case for risks that involve small losses. For example, people
who drive old cars do not find it worthwhile to buy collision insurance.
 THE PROCESS OF RISK
MANAGEMENT
 Many large firms employ full-time risk managers. In small firms, risk management is one
of the many jobs of the proprietor. Whoever is in charge of risk management, the process
can be broken down in six steps:
1. Setting goals
2. Identifying risks
3. Evaluating the risks
4. Choosing methods of managing the risks
5. Carrying out these methods
6. Reviewing the results
 SETTING GOALS IDENTIFYING RISKS

The first step in the process of risk The next step is to identify the risks that a
management is to create a set of goals. For a household or firm is exposed to and strive to
household, those goals might include access to find ways of preventing or controlling them such
good health care, maintenance of the family as consulting legal advisers on how to avoid
standards of living, a plan in case of death or liability losses. For a company department,
disability of an income earner; and protection there should be a representative who monitors
of major assets like the car and the house. all business activities and makes reports to the
For a business, the chief goal is to ensure the manager or immediate supervisor.
survival of the firm in case of losses caused by
events such as fires or liability suits. With this,
the company should plan on how to determine
or identify the risks within their proximity or
location.
 CHOOSING METHODS
EVALUATING THE RISK OF MANAGING THE RISKS

After the risks have been identified, the next If the chosen method of risk management is
step is to evaluate how serious they are. For a insurance, the most logical step is to purchase
household, the illness or death of an income insurance. It is recommended that the policies
earner is the most serious risk. offered by different companies be compared.
They may either differ in terms of price,
coverage, or both. The amount of coverage
chosen depends on the firm’s/household’s goal
and its ability to absorb some losses from its
own assets.
 CARRYING OUT THESE METHODS REVIEWING THE RESULTS

Besides insurance, every firm’s risk The final step in risk management is reviewing
management strategy should include a program the results. A strong information system is
to prevent and control losses. Every function of needed to keep track of losses and take action
management-planning, organizing, leading, and when it is needed. Changes in a household’s
controlling-comes into play. Managing for loss financial state or a firm’s strategy may also call
prevention and control is in many ways like for changes in its approach to risk management.
managing for productivity and quality of a
business and its operations.
 REFERENCES
• Bautista, L.M.A., Tubon, N.T., Cera, E.N.D. (2019). Pharmacy administration, leadership, and management. C&E
Publishing Inc.