Department for Education and Skills

1
Department for Education and Skills

• Risk Ranking

2
Proposition SummaryRisk Ranking

• Proposition Definition
• A complete understanding and awareness of
  insurable risk at all levels from schools, LAs,
  up to DfES and the insurance market that will
  enable effective and informed risk management and
  insurance decisions to be made by all relevant
  stakeholders

• Deliverables
• Risk Ranking template and overview of a schools
  report
• Applications of Risk Ranking for LAs and schools
• Risk Ranking delivery model
• Risk Ranking process and RACI
• Risk Ranking Benefits Tracking and KPIs
• Feedback from schools testing on Risk Ranking

• Scope
• The Risk Ranking addresses all classes of
  insurable risk, with focus on the main root
  causes of claims and key physical interventions
• It applies to all Local Authorities and Schools

• Who it is targeted at?
• Risk Ranking will apply to every school. Each
  school will own their Risk Ranking score, but the
  results will be held centrally by each LA, and
  shared nationally. Schools will use it become
  aware of risks and plan what to do, and LAs will
  use the authority results to support their risk
  management decisions.
• Prioritisation for Implementation
• Ideally, high risk LAs and schools (often
  secondary) would be targeted first

• How it links to the other propositions
• The inherent risk section is used for the
  recommended budgeting process
• The controllable risk and physical intervention
  sections are used for the recommended Weighed
  Premium calculation
• The Risk Ranking categories are directly linked
  to the content on the toolkit if the Risk
  Ranking identifies a risk, schools will be able
  to find the relevant content on the toolkit to
  support them in addressing it

• Dependencies
• Adoption by the insurance market, all LAs and
  schools and commitment of necessary resources and
  funding
• Capacity to deliver consistent and rigorous
  results in a continuous programme
• Supports current assessment and review activities
  in schools
• Creation of a strong link between Risk Ranking
  and the Toolkit

3
The objective of Risk Ranking is to improve the
visibility and understanding of risk
To have a complete picture and understanding of
risk across all schools over time, to enable a
number of risk management decisions to be taken
effectively
4
Risk Ranking will generate a number of benefits
to Local Authorities and Schools
Key benefits to Local Authorities
Key benefits to Schools

• Identify risk priorities across all schools and
  all risks e.g. Schools X,Y and Z are my highest
  fire risk, and 60 of schools dont have bin
  compounds
• Understand trends in risk over time and
  communicate this to the insurance market e.g. my
  LA has improved our liability risk by 20 over
  the last year
• Understand how one LA compares to another e.g.
  our 10 worst schools are in the top quartile for
  the entire country
• Targeting of LA (insurance team and other)
  resources and funding e.g. we will conduct our
  10 termly school visits to these schools because
  they need our help the most
• Enables premiums to be weighted so that schools
  pay a price that is representative of their risk,
  and thus drives accountability of risk within
  schools

• Raise awareness and understanding of prevalent
  risks within a particular school e.g. my
  schools bins are a big fire risk
• Understand trends in risk within a school e.g.
  my schools fire risk has got progressively
  worse over the last 3 years
• Understand how one school compares to another
  e.g. my school is the best comprehensive of this
  size in the region
• Helps schools to prioritise resources and funding
  e.g. I will focus our school on fire risk
  because I know this is a priority and will give
  the greatest reward
• Enables premiums to be weighted so that schools
  can be rewarded for positive risk management
  actions

The school benefits have been validated by the
testing visits
The LA benefits have been validated by members of
the Test Panel
The real value of doing Risk Ranking comes from
the way in which it is used to support decisions
and change behaviours in LAs and schools.
5
Risk Ranking could be managed slightly
differently in each LA, however, the core content
and principles will remain consistent

• Key questions that could be answered differently
  by each LA
• Who is accountable and responsible for Risk
  Ranking within the LA?
• Is Risk Ranking part of an existing team members
  job, or is somebody new recruited?
• How are the costs of Risk Ranking covered?
• What additional information is captured beyond
  the core template? And how is this recorded in
  the database?
• How will we update and validate the information
  in the annual update? (when it is not updated by
  risk consultants)
• What weightings are given to the Risk Ranking
  areas for the purpose of weighted premiums?

6
Department for Education and Skills

• Risk Ranking Template and Schools Report

7
The Risk Ranking template has been designed with
a number of principles in mind

• The template will address all the main areas of
  risk, identifying the key root causes of claims
  within each school
• LAs will have the flexibility to add additional
  questions for their locality if required
• Schools will receive points for risks that are
  prevalent in their school and be rewarded for
  positive physical interventions that address
  those risks e.g. fencing
• We will minimise the burden of Risk Ranking by
  only asking for information that is required, and
  only as frequently as we need to
• We will seek to re-use information that is
  already collected wherever possible
• We will only ask questions once, but may use the
  information to score across different categories
  of risk, where appropriate
• We will clearly distinguish between risk that is
  within schools control, and risk that is inherent
  in the building and/or out of schools control
• This will be seen by the insurance industry as
  the tool for assessing risk in schools
• We will ensure that the questions and answers are
  worded and defined clearly, and provide a
  supporting guide for those completing the
  template, so that questions and answers are not
  open to interpretation across schools and LAs
  (N.B. The template guide will be a phase 3
  deliverable)

8
On that basis, the template is structured such
that it is clear to schools what they are
accountable for
Scoring Categories
Question Categories
Questions Answers
Fire and Building
Security
Visitor Control
Liability
Info Risk
1. Risk Factors

• Q1
• Q2
• Q3
• Q4
• Q5

• 0
• 3
• 4
• 1
• 0

• 1
• 2
• 0
• 3
• 1

• 4
• 0
• 0
• 2
• 6

• 0
• 0
• 1
• 0
• 0

• 0
• 0
• 0
• 0
• 0

1a. Inherent

• Q6
• Q7
• Q8

External support required
Schools aware of what is inherent, and what is
within their control, and where they are likely
to need support
Questions only asked once but scored more than
once as appropriate
1b. Controllable
Controllable by Schools

• Q9
• Q10
• Q11

• Q12
• Q13
• Q14

2. Physical Measures to Reduce Risk
External support required
Scores totalled by appropriate categories to be
used for weighted premiums
Clear differentiation between risk factors and
physical interventions that could address those
risk factors
2a. Controllable

• Q15
• Q16
• Q17

Controllable by Schools
Fire TOTAL
Security TOTAL
VC TOTAL
Liability TOTAL
Info TOTAL
9
The questions in the template were reviewed and
refined by the test panel

• Sample of the template

How this could be progressed in the next phase

• Engage wider stakeholders to review and sign off
  the template e.g. other insurers via the ABI
• Produce training material and guidance for those
  delivering Risk Ranking, to ensure a consistency
  in the response and completion of the template
• Complete the template for a sample of schools,
  review and refine, before rolling out to all
  schools

There is more work to do in defining how the
template should be completed but the questions
themselves are at a stage where we can start
using them.
10
Shortly following the completion of the Risk
Ranking, schools will receive their results and a
report

• What schools will see following the Risk Ranking
  exercise

Date of Visit 26th November 2002 Name of
School High School Person interviewed
position Bursar Telephone No. School
Number 4602

• A copy of the completed Risk Ranking template
  with scores and comments
• A summary report, containing
• The purpose of the exercise, whats in it for
  them and how the results will be used
• The strengths of the school
• What they need to do now Prioritised areas for
  improvement
• A simple business case for addressing the
  priority areas
• Points of contact and further information e.g.
  the toolkit where they can find out more
• What will happen next how this will be updated
  and when it will be reviewed
• Recommendations for how the schools should use
  this

• Our Surveyor visited your school on the above
  date in order to complete this assessment which
  is part of an exercise being carried out at
  schools in the Council area.
• We should like to express our appreciation of the
  courtesy extended to us on our visit and for the
  assistance provided by the school.
• The primary purpose of the exercise is to carry
  out a site inspection related to fire, security
  and visitor control features in order to provide
  risk ranking tables showing the comparative
  exposure of every school to the risks under
  consideration.
• However, for the specific benefit of your school,
  within the limitations of the relatively short
  time available on site, there are two other
  important aims in connection with these visits.
• One is to comment constructively on favourable
  aspects of good risk preventative and
  precautionary measures and good management
  practice. This clearly benefits not only the
  school but will also be of interest and
  assistance to other schools in Norfolk facing
  similar threats and challenges.
• The other is to draw your attention to any areas
  of concern, or features of hazard immediately
  apparent to us, and provide recommendations for
  improving these risks.
• Good features for controlling risks at your
  school include the following measures-
• Rural Location with reasonably good loss
  experience
• The school has the benefit of partial automatic
  fire detection.
• PCs are all prominently and permanently security
  marked
• Extensive intruder alarm protection
• Well sited reception with an internal lobby
  preventing callers entering the main part of the
  building without authorisation by the
  receptionist
• The areas of concern have been prioritised for
  your guidance as follows
• Priority 1 (P1) Urgent, those which should be
  implemented in the short term
• Priority 2 (P2) Desirable those which should be
  implemented in the medium term
• Priority 3 (P3) Those for longer term planning or
  which can be incorporated into future alterations
• Areas of concern noted included the following
  points-
• External storage bins to be located at least 8m
  from the school building (P1)

Example report
A template for the report needs to be developed
in the next phase.
11
Department for Education and Skills

• Applications of Risk Ranking

12
Principles for the use and applications of Risk
Ranking

• Data and information should be collected once and
  used many times
• All data and information should be relevant and
  of use to LA insurance team and/or schools
• Risk Ranking data should be used to support LA
  insurance team and/or school risk management
  decisions
• Risk Ranking data should be used as a
  communication tool with other stakeholders and
  the insurance market

The real value of doing Risk Ranking comes from
the way in which it is used to support decisions
and change behaviours in LAs and schools.
13
LAs can conduct a series of analyses on the Risk
Ranking data to support their decision making
14
For schools, the Risk Ranking can be used as a
basis to plan their risk management actions
There are many other applications of Risk Ranking
for a wider group of stakeholders e.g. LEA, LA,
Police, Fire Brigade etc.
15
Department for Education and Skills

• Risk Ranking Delivery Model

16
Risk Ranking needs to be delivered in a cost
effective but consistent way

• Risk Ranking delivery principles
• We need to deliver Risk Ranking in a cost
  effective way i.e. minimal cost to deliver the
  required standards and information
• We need to allow for the different resource
  levels and schools within each LA
• The information is collected in a consistent and
  rigorous way to enable benchmarking and is of use
  to insurers
• We need to ensure those delivering Risk Ranking
  have adequate capability and capacity to deliver
  what is required
• The Risk Ranking results must be auditable by a
  3rd party
• Risk Ranking should be positioned as Schools own
  their Risk Ranking but are supported by experts
  to complete it and provide appropriate advice
• Risk Ranking should be delivered with minimal
  impact to the school
• Risk Ranking should be a continuous improvement
  process, with regular informal and formal updates
• In the longer term, we should look to join up
  Risk Ranking with the delivery of other property
  visits and surveys e.g. AMP

17
There are capacity and capability barriers to
delivering Risk Ranking in all schools

• There is a resource constraint across the entire
  country to deliver this as a continuous process
  across all schools
• It will take time to build capacity and
  capability
• This is akin to building a whole new industry
• The majority of Local Authorities do not have the
  capability or capacity to deliver risk ranking,
  but this could be built over time
• Schools are not well placed to deliver Risk
  Ranking they dont have the capability, results
  would be inconsistent and inaccurate, it provides
  little value without expert input and it is an
  unreasonable resource constraint
• There would be value in asking schools to review
  results and update existing information that
  could be independently validated
• The current pool of external risk consultants is
  limited but could be grown over time. They would
  provide the necessary capabilities and
  consistency to make the results comparable across
  LAs and of use to the insurance market. They
  already survey a number of LAs and schools
• If there are initial capacity constraints, we
  should focus efforts where most claims occur i.e.
  secondary schools and property claims

Under these constraints and the principles by
which we want to deliver Risk Ranking, it is
clear that external support from risk consultants
is required.
18
Risk consultants will establish the baseline with
initial visits, followed by a 5-year rolling
programme
Overview of the Role of Key Stakeholder Groups
Risk Consultants
LA Insurance Team
Schools

• Conduct initial visits to all schools to set up
  risk ranking and identify initial priorities. The
  timeframes for this are resource dependent but we
  would aim for 3 years
• Conduct follow up visits every 5 years to audit
  existing information and provide updated
  recommendations
• Share learnings across Local Authorities and
  provide advice on how to adapt the template as
  risk priorities change
• Potential coaching role with LAs and schools to
  transfer skills, such that they become more
  independent over time

• Arranges visits, owns database containing
  information across LA, and feeds back results and
  recommendations
• Owner of the overall risk ranking template for
  the LA
• Owner of the relative weighting of questions
• Where possible, conducts annual visits to
  all/priority schools to review information/progres
  s and plan subsequent activities
• Validates changes communicated from school, where
  possible
• Communicates results back to insurance market and
  other stakeholders

• Owner of the risk ranking template for their
  school
• Works with experts (risk consultants and LA) to
  complete the template and agree actions
• Reviews results and progress annually, to inform
  subsequent plans
• Builds results and recommendations into annual
  planning processes and action plans
• Seeks information from the Toolkit and LA
  insurance team to act on results
• Feeds back changes/updates to the LA for
  validation

In the longer term, LAs can look to join up and
utilise other departments to update elements of
the template
Its important that schools own the template in
their school, yet are given the necessary
independent support to ensure national
consistency and rigour.
19
The costs of doing this are not prohibitive,
especially when compared to schools total
insurance costs

• Key Assumptions
• Using risk consultants to visit all schools will
  cost 100k per LA (on average)
• Risk consultants will cover all schools in the
  first 3 years and then commence a 5-year rolling
  programme across all schools
• The administrative burden on LAs will cost an
  average of 5k per LA

Starts from the year of the first Risk Ranking
visits i.e. year 1,2 or 3
At the start of phase 1, there would need to be
some further work to validate the template and
develop the supporting training and communication
materials.
20
It is anticipated that Local Authorities will be
able to fund these costs through monies raised
from schools
Potential funding options open to Local
Authorities

• Add the costs of Risk Ranking to the annual
  management charge made to schools with their
  premium
• Risk Ranking then acts as an additional service
  that comes with insurance cover taken through the
  LA

Added charge to school premiums
Invest reserves

• Use LA insurance reserves for future claim
  payments/ a rainy day, to invest in Risk Ranking
  on behalf of schools
• Any benefits that come from investing to save,
  could then be fed back into the reserves

Invest risk management budget

• Assign some of the risk management budget raised
  by the LA to Risk Ranking

Critical to engaging LAs with Risk Ranking, is
getting strong direction and consensus that this
is the right thing to do. LAs can then explore
the best funding option for their circumstances.
21
Department for Education and Skills

• Risk Ranking Process and RACI

22
Risk Ranking Process and RACI Initial set up and
delivery
5
1
2
3
4
Set up and delivery of Risk Ranking
6
Set up database to hold and analyse results
Review template, agree additional questions and
applications
Develop internal and external resource and
delivery model
Identify funding to support exercise
Finalise delivery framework and commercials with
risk consultants
Inform schools and other stakeholders of
objectives, process and requirements
A Insurance Manager R Insurance team
A Insurance Manager R Insurance team
A Insurance Manager R Insurance Manager
A Insurance Manager R Insurance Manager
A Insurance Manager R Insurance team
A Insurance Manager R Insurance team
10
11
8
9
7
Set up visit dates with schools
Conduct school visits
Write schools specific report with results and
actions
Feedback report and results to schools
Enter data onto database
A Insurance Manager R Insurance team
A Insurance Manager R Risk Consultants
A Insurance Manager R Risk Consultants
A Insurance Manager R Risk Consultants
A Insurance Manager R Insurance team
13
12
Calibration of scores across schools population
Share school position relative to others
LA Risk Management Strategy and Awareness work
A Insurance Manager R Insurance team
A Insurance Manager R Insurance team
23
Risk Ranking Process and RACI Ad-hoc updates
from schools and within LA
1
2
3
4
Ad-hoc updates from schools
Feedback updates and changes
Validate updates and changes
Update information on database with dates and
comments
Confirm revised Risk Ranking scores with school
A head Teacher R School
A Insurance Manager R Insurance team
A Insurance Manager R Insurance Team
A Insurance Manager R Insurance Team
1
2
3
4
Ad-hoc updates by LA
Observed change/ update communicated to insurance
team
Validate updates and changes
Update information on database with dates and
comments
Confirm revised Risk Ranking scores with school
A Insurance Manager R LA departments
A Insurance Manager R Insurance team
A Insurance Manager R Insurance Team
A Insurance Manager R Insurance Team
24
Risk Ranking Process and RACI Annual update
2
3
4
5
1
Annual Update with internal surveyor resource
Select schools/ questions to be updated
Decide what schools will complete and what LA
will complete
Communicate visits objectives, process and
timescales to schools
Send data request to schools
Set up and conduct visits
A Insurance Manager R Insurance team
A Insurance Manager R Insurance team
A Insurance Manager R Insurance Team
A Insurance Manager R Insurance Team
A Insurance Manager R Insurance Team
6
8
9
10
7
Enter updated data
Write schools specific report with results and
actions
Feedback report and results to schools
Calibration of scores across schools population
Share school position relative to others
LA Risk Management Strategy and Awareness work
A Insurance Manager R Insurance Team
A Insurance Manager R Insurance Team
A Insurance Manager R Insurance team
A Insurance Manager R Insurance Team
A Insurance Manager R Insurance Team
Annual Update without internal surveyor resource
2
3
4
5
1
Select schools/ questions to be updated
Communicate objectives, process and timescales to
schools
Send data request to schools
Complete update and send back results
Enter updated data
A Insurance Manager R Insurance team
A Insurance Manager R Insurance team
A Insurance Manager R Insurance Team
A Head Teacher R Schools
A Insurance Manager R Insurance Team
6
8
9
7
Write schools specific report with results and
actions
Feedback report and results to schools
Calibration of scores across schools population
Share school position relative to others
LA Risk Management Strategy and Awareness work
A Insurance Manager R Insurance Team
A Insurance Manager R Insurance Team
A Insurance Manager R Insurance team
A Insurance Manager R Insurance Team
25
Department for Education and Skills

• Benefits Tracking and KPIs

26
During phase 1 of implementation, it is important
to track the benefits of the propositions
Reasons why we need to track benefits
The challenges in tracking benefits in the next
phase

• Understand if implementation of the propositions
  is working and to what extent
• Inform LAs how best to refine the propositions
  and their use to have the greatest impact on
  costs
• Identify successes
• Communicate successes and lessons learned to all
  stakeholders, including LAs who we would want to
  encourage to deploy the propositions in the
  future
• Understand the impact by stakeholder group e.g.
  LAs and schools

• Financial benefits will occur with a lag and not
  within the timescales of the next phase
• Premiums will not be reduced in the short term
  and the impact on claims will not be measurable
  in these timescales
• Many risk management actions identified will take
  time to plan and implement
• We need to understand and measure the enablers to
  these financial benefits and better risk
  management e.g. changes to actions, levels of
  information, attitudes and behaviours etc.
• There is no scientific link between risk
  management and claims
• Many adverse (uncontrollable) factors can
  influence claims and premium

Measuring benefits will be a challenge throughout
implementation, however, due to the timescales
involved, demonstrating success in phase 1 will
be especially difficult.
27
The benefits logic of the business case, shows 3
key levers that we need to impact to reduce costs
Propositions
Benefit lever
Impact on costs
Additional capital funding for risk Management
Reduction in claims(LA retained/school retained)
Risk ranking
More effective use of Risk Management capital
funds
Reduction in External Premium
Weighted premiums
Additional and more effective RM that does not
require funding
Riskmanagement toolkit
During phase 1 of implementation, we need to
measure what we have done that will start to
impact these 3 levers both immediately and in the
future (post implementation).
28
By exploring the enablers to these benefit
levers, we can measure successes in phase 1
Aware of risks to be addressed
Benefit lever
Aware of need to invest
Aware of options to mitigate risk
Can justify additional spend
Additional capital funding for risk Management
Understand costs/benefits
Invest in the right schools/ interventions
Understand priority
More effective use of Risk Management capital
funds
Use expert advice
Successfully implement
Appraise options
Better procurement
Additional and more effective RM that does not
require funding
Aware of what can go wrong/ how best to implement
Remove duplication of work/ do it quicker
Aware of what to procure and best suppliers
We can measure the pink enablers qualitatively
and quantitatively, via school and LA
questionnaires before, during and after to
identify the impact of the propositions.
29
Beyond phase 1, we can use KPIs to measure
coverage and adoption of the propositions
30
In the longer term, KPIs can determine whether
the propositions are feeding through to the
bottom line
31
Department for Education and Skills

• Feedback on Risk Ranking from the School Testing
  Visits

32
Schools believe that Risk Ranking will increase
their awareness of risk and the ability to
prioritise
Things that schools like about the concept of
Risk Ranking

• Risk Ranking will reaffirm what schools already
  suspect and open their eyes to risks that
  wouldnt have otherwise seen
• It draws attention to areas I may be blind to
• By simply conducting a regular exercise as part
  of a formal exercise will raise the schools
  general awareness of risk
• Otherwise we wouldnt focus on insurance risk
• Having access to an expert will make schools more
  aware
• Very good to have someone walk us through it

Raises Awareness
Schools Specific

• Schools like the fact that the Risk Ranking
  generates results and recommendations that are
  specific to their school
• Good to be able to answer questions and make
  comments as some things are school specific
• Schools like the fact that this can differentiate
  between primary and secondary schools, and
  identify those that have high/low levels of
  inherent risk

• The template and scoring system would help
  schools to identify their priorities
• I really like it it points out the areas we
  need to concentrate on
• A good idea. It helps prioritise our risk

Prioritises Risk
Risk Ranking will add value to schools current
risk activities, especially if it is delivered by
an expert who can provide a fresh pair of eyes
and specific actions for the school.
33
The testing also raised some top tips for how
Risk Ranking can be delivered and implemented

• Schools want to ensure that the template is
  completed in the same way by every school and
  that the results are fair, consistent and
  validated
• How will there be quality control? How will you
  measure and compare between schools and check
  schools are doing what they say?
• How are you going to prove they have adequate
  lighting?

Make it fair and consistent

• Risk management can be seen as an unwelcome
  distraction to Schools, and so it is important to
  minimise the impact of Risk Ranking
• Could be time consuming may need to hunt down
  the answers
• Where possible, we should strive for a joined up
  approach with other Local Authority property
  services
• Id like to see a more joined up approach on
  property

Ensure it has minimal impact

• Schools would like to make sure that Risk Ranking
  highlights factors that are out of their control
• It needs to recognise things that are outside of
  schools control

Make it clear what schools can control

• The value of the exercise is reduced if it merely
  identifies what the issues are. i.e. we need to
  ensure this is joined up with the Toolkit and any
  funding
• It would be frustrating to identify issues and
  not be able to fund interventions
• If I need to do it, I then need to know how

Make sure issues identified can be addressed

• Schools would prefer to see the template online
  so that it can be referred to and updated over
  time
• Id like to see it all online, including the
  Risk Ranking

Make it online
We have responded to these top tips in our design
of the delivery and implementation model.