Getting on the Same Page

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November 2005


With the winter season fast approaching, it's time to revisit the R word.
You know that a lawsuit devours time and money and places an overall drag on your operation. If the case is a serious one, then the length and breadth of the engagement can be downright discouraging. That's why you do everything you can to avoid incidents. And that's why you should embrace a relatively new concept called enterprise risk management (ERM).

Consider, for a moment, a serious incident in your terrain park. The allegations might include the negligent design, construction and maintenance of a feature. The potential list of witnesses could include any or all of the following: the general manager, the snowmakers, grooming machine operators, ski patrol who did trail check before the incident, ski patrol who responded to the incident, ski patrol who did the investigation, park rangers, marketing personnel, lift attendants, rental technicians and the person who sold the lift pass.

Are all of those people who work at your operation sophisticated enough to respond to tough questions and represent your resort in your time of need? Do they even know that they could be drawn into a lawsuit? Aside from the GM and ski patrol, most probably are not. That's why it is time to adopt enterprise risk management.

Simply stated, ERM is a holistic approach to managing all of the risks facing your resort. The term "risk" in ERM refers to all aspects of your operation, including finance, information technology, marketing, weather, operations and legal, as well as general liability. The ERM approach treats each of these traditionally distinct arenas as part of the whole and develops a management strategy that bridges departments. This is a different and potentially more effective way of dealing with everyday problems.

Traditionally, risk management is divided among several departments. The CFO, accountant, or bookkeeper solicits and selects the liability insurance. The patrol director, often a seasonal position, ensures that the slopes are safe. The lift manager makes sure the lifts are maintained and functioning properly. And so on. At most resorts, these department heads have very little day-to-day interaction.

ERM recognizes and stresses the obvious-what happens in one department can and will affect other parts of your operation.

The Traditional Model
Let's use a terrain park operation as an example. In the traditional risk management model, snowmakers and groomers are in charge of building the features, a park ranger is responsible for designing the layout, and ski patrol performs daily inspections of the features. How many of those people actually use the features? What interaction, and perhaps more importantly, what authority do they have in working with one another? Does the park ranger, for example, have any authority over the snowmakers and groomers? Do the patrollers know what the features are supposed to look like and where they should be located?

And then there's the marketing department, which promotes the terrain park. Does the marketing person frequent the terrain park? What is he/she basing the ad and PR copy on? It is easy to see that under a traditional risk management model, there are several places where problems could arise, even though each department is attending to its responsibilities.

The ERM Model
In contrast, ERM uses an integrated approach. The GM brings together employees from all segments of the operation to develop a unified plan. The planning session for building and managing a terrain park might include marketing, ticket sales, snowmaking, grooming, ski patrol, ski school, rentals and park rangers. The goal is to make each person or department aware of their role and how it relates to every other person and department.

With the team assembled, the next step is to identify the risks and opportunities. For a terrain park, the opportunities might include the chance to market your resort to a new segment and to improve sales. The risks might include the potential for an increased number of injuries, both large and small, and for alienating a portion of your existing clientele. Talk about these advantages and disadvantages and get the assembled team to share their perspectives.

The next step is to determine how much risk the resort is willing to take. Do you want to build the biggest and "baddest" terrain park, or a mellower one? How many parks do you want to have? Do you have the resources and personnel to build and maintain more than one terrain park?

Then it's time to assess the balance between the opportunities and the risks. Will the risk be worth the reward? For example, if the halfpipe in the terrain park is to be the focal point of a new marketing campaign, do you have the snowmaking capacity to complete it? If the terrain park improves ticket sales, will there be a corresponding increase in injured customers?

The next step is to prioritize your opportunities and risks. What are your biggest opportunities? What are the greatest risks? Again, by assembling personnel from several departments, you benefit from diverse viewpoints. In the end, you will also get everyone on the same page with a unified goal, message and delivery.

Here's a key step: After you prioritize your risks, outline what you can do to mitigate them. For example, do your season pass agreements have the appropriate release language? Does the terrain park have the necessary gate and warning signs? Should you post additional messages? Are the features inspected and maintained on a regular basis? Each aspect of your terrain park operation should be carefully scrutinized before the first snowflake falls.

The last step is to ensure that the initial meeting is not the only meeting. Assemble your inter-departmental team regularly throughout the season to encourage timely communication. For example, has ski patrol noticed an increase in injuries from a particular feature? Is ski school getting more requests to teach lessons in the park? Is rental seeing an increase in damage to equipment used in the park? Each of these developments provides information that can help you serve your guests better and in the safest manner possible-but only if everyone knows what's happening and makes the necessary adjustments.

This regular interaction allows you to continually improve your ability to manage risk. That's the real benefit of ERM.
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