In this article, we will discuss the different roles people play in risk management, community managers, board of directors, insurance agents, and others. Risk management is about how you prepare your community’s future by identifying risks and addressing critical issues. With a proactive approach in place for risk management, the community association can be prepared to protect itself.
As community managers, you are assigned the task of knowing your community. You do this by reviewing your association’s governing documents, performing property walks and inspections. In addition, utilizing tools performed by subject matter experts, such as engineers who produce reserve studies, insurance brokers who provide insight on how to minimize your insurance loss by taking proactive measurements throughout the community. Managers also seek the help of legal counsel to aid in the interpretation of the legal language in certain documents. They also keep us informed of new case laws or new legislative updates that would affect the community regarding risk management.
A property inspection report should be completed when a manager performs a property inspection, and that report should be provided to the board of directors for review and consideration. This can help with identifying possible risks that may arise. Community managers should if applicable, should work with their maintenance team to help identify issues, put together preventative maintenance plans, and assist with coming up with a plan of action to address issues that have been identified.
The board has a duty to review and understand these risks. The board should consider working with the subject matter expert relating to their issues to come up with a game plan to address the situation. The board should also be aware of the time frame and urgency of the risk as it may need to be an issue that needs immediate attention.
Depending on the degree of the matter and magnitude of the impact to the community the board may need to bring in multiple subject matter experts to evaluate one issue. They may need to discuss additional funding with a financial institute, there may need to be a discussion with legal counsel, your insurance broker may also need to be brought in on the issue.
Insurance brokers can serve as a great partner when it comes to understanding how an issue identified would impact the community from an insurance perspective if not addressed. Insurance companies can also assist with identifying issues that may be of great concern to the association. In addition, they can provide input on what should be addressed to help reduce the chance of risk or issue. The insurance carriers play a critical role in ensuring that the association is properly protected with coverage for the association.
The community manager and board of directors should seek the assistance of a subject matter expert on the issue identified as a risk. The expert can help with explaining the issue in greater detail and assist with the game plan to address the issue.
In the end, the cornerstone to risk management is to make sure the community manager, board of directors and all necessary parties are working together to identify risks and creating a thorough plan to address them efficiently. Being proactive with a strong preventative maintenance plan is a great start to identifying the risks. Coming up with a game plan on how to address the issues that have been identified along with working with the appropriate subject matter experts to perform the task.
By Christopher T. Dibble, CMCA, AMS, PCAM
Christopher is regional director at FirstService Residential. His portfolio consists of communities throughout Northern Virginia and the Washington, D.C. area. Chris has been an active member of WMCCAI and committees for many years. He also holds a Virginia real estate license.