A Pinch of Prevention is Worth a Pound of Heartache:
Risk Management for Rental Housing Providers
By: Montgomery Fletcher- North Carolina Licensed Senior Associate Attorney with Brownlee Whitlow & Praet, PLLC
This article will answer three questions: (1) what is risk management? (2) how can risk management help my apartment community, resident experience, and my organization? and (3) how can I, as a housing provider, effectively implement risk management into the day-to-day operations of my community or organization?
What is Risk Management?
Although there are entire business courses (and indeed careers) dedicated to the concept of risk management, a simple definition is that risk management is method by which individuals and organizations weigh the value of an action or inaction compared to the outcomes that are produced from the same.
A good way to think about risk management is to think about your daily life. Your car ride to the office, drinking that cup of coffee a little too soon, when you know you should wait, or the small act of lighting a candle at home: these are decisions that we all make every day that carry some degree of “risk”. In making these everyday decisions, we all weigh the benefits of a certain behavior alongside the potential “risks”.
For businesses and organizations, thinking about risk management may help guide the decisions of the organization in a way that both accomplishes the goals of the organization, but also mitigates the possibility of negative outcomes or risks associated with the decisions made.
How Can Risk Management Help my Apartment Community?
Risk management is an incredibly effective tool that not only helps businesses and organizations, but also improves the experience, outcomes, and satisfaction of the clientele.
For businesses and organizations, risk management can help in the following ways¹²:
- Protect your business or organization’s reputation
- Minimize costly business losses (business losses or litigation)
- Protect your assets
- Make better informed decisions
- Improve performance
However, good risk management practices can also¹²:
- Attract and retain residents
- Improve resident experience and community involvement
- Prevent unnecessary or frustrating experiences or outcomes for residents
¹ What Is Risk Management & Why Is It Important?
² Risk Management: A Critical Part of Business Success
How Can Housing Providers Implement Risk Management Principles
There are many different methods of implementing risk management into a business, but a short and effective way to implement risk management into daily business practices is to ask three (3) questions:
- Are there any practices or procedures I can think of at my apartment community that carry a risk I would like to try and limit?;
- What can I do to limit the risk that I identified?; and
- How can I weigh the risk of a certain decision alongside the goals of my apartment community?
For the first question, each community is different and carries its own potential risks. That said, every community, no matter how efficient or excellent, always has areas to improve. If there are any policies/procedures/methods that come to mind when you think of risk management, then those might be the very same policies/procedures/methods that might be beneficial to address first.
In limiting the risk you identified, this again will have to be a case-by-case determination. However, a helpful way to consider how to limit the risk is to think about what could go wrong when making a decision. By working backward, you can more proactively identify risk, and in turn take positive steps to change how you think about certain decisions or policies.
Lastly, when evaluating how to weigh the risk of a certain decision alongside the goals/resources of your apartment community, a good example is to think like a hospital triage nurse. Every day, hospital triage nurses intake numerous patients, each with their own individual health conditions, and they have to decide which patient gets allocated certain resources when resources are limited. Although day-to-day operations of an apartment community are (typically) not life-threatening, it is important to identify how to best employ your community’s resources to the most important problems that your community faces. By keeping in mind, the outcomes and problems that matter most, and then focusing on how you can limit the risk associated with the decisions/policies that create those outcomes or fix those problems, you maximize your ability to use risk management to achieve your goals.
Final Thoughts
As discussed, risk management is an incredibly broad topic, and there are many different methods that have been studied to implement risk management into businesses. However, by simply being mindful of risk management or trying to implement risk management principles into your operations, you are already on the right track to helping achieve more positive outcomes for your apartment community.
*The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information in this article is for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information. Viewers of this material should contact their attorney to obtain advice with respect to any particular legal matter. No viewer of this material should act or refrain from acting on the basis of information in this presentation without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this article does not create an attorney-client relationship between the reader and Brownlee Whitlow & Praet, PLLC or any contributing law firms. All liability with respect to actions taken or not taken based on the contents of this article are hereby expressly disclaimed.