Four Practical Things Aged Care Providers Can Do Right Now in Response to the Royal Commission’s Interim Report

Unless you’ve been living under a rock for the past few weeks, you would have heard something about the Interim Report of the Royal Commission into Aged Care Quality and Safety. And it probably wasn’t good news.

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Aged Care Homes and the Risk in Not Practising Enterprise Risk Management

Despite appearing only seven times in the Aged Care Quality Standards, the word ‘risk’ should be leaping off the page as a priority that is fundamental to the way Aged Care Homes conduct their business and operations.

Preliminary results from our survey indicate that risk management is a major concern for managers in Residential Aged Care Homes. In this first part of our two-part discussion of risk management, we will explore what ‘Enterprise Risk Management’ means, why it matters, and how risk is referenced in the Aged Care Quality Standards. In Part 2, we will take a closer look at how to do enterprise risk management in practice.

 

What is Enterprise Risk Management and Why Does it Matter?

Risks are a normal part of life in an Aged Care Home, and risk management is something that aged care staff do every day whether they realise it or not. Recording a dose of medication is risk management. So is training new staff and cleaning a kitchen.

But there are key differences between everyday, ad hoc risk management and Enterprise Risk Management (ERM).

ERM is an organisation-wide process that helps organisations predict future events that may impact (positively or negatively) on their activities, and take appropriate actions to address the impact of these events. Unlike ad hoc risk management, ERM is a proactive and strategic process that provides boards, management and staff with a common language and process to help them efficiently and collectively manage risk.

Imagine if your Aged Care Home had a crystal ball that allowed the Board and Management Team to look into the future and see events and their impact before they occurred. With this knowledge not only could you minimise, and even prevent, the effects of these ‘yet to occur’ negative events, you could also maximise your chances of achieving strategic goals and objectives.

An effective ERM program can be your Home’s crystal ball!

ERM should be a key organisational process at the core of an Aged Care Home’s Corporate Governance Framework, Clinical Governance Framework and Continuous Improvement Framework. Without ERM, risks are managed in silos with staff unable to learn from each other, work together, spot patterns or see the bigger picture. Aged Care Homes that are not practising ERM are at increased risk of:

  • exposing themselves to adverse events and resulting outcomes that can harm consumers, the public and staff
  • not meeting several requirements within the Aged Care Quality Standards (particularly Standard 8, requirement 3(d))
  • decreasing operational efficiencies by wasting management time ‘fighting fires’, which can lead to a possible competitive disadvantage.

 

Enterprise Risk Management and the Aged Care Quality Standards

References to ‘risk’ in the Aged Care Quality Standards (the Standards) are rare but critically important. The most explicit reference is in Standard 8, requirement 3(d), which says that an Aged Care Home should have “effective risk management systems and practices” in place to:

  1. manage high-impact or high-prevalence risks associated with the care of consumers
  2. identify and respond to abuse and neglect of consumers
  3. support consumers to live the best life they can.

Risk is also explicitly mentioned in Standard 1, requirement (3)(d), which requires an Aged Care Home to ensure that “Each consumer is supported to take risk to enable them to live the best life they can.”

These are the explicit references. Implicitly, risk affects every single one of the 40+ requirements in the Standards. This is because the Standards require Aged Care Homes to act, and any action involves consideration of risk.

 

How Can I Implement an Enterprise Risk Management Program in My Aged Care Home?

The International Organisation for Standardisation (ISO) is the world’s largest publisher of standards. They release hundreds of guidelines, including the International Risk Management Standard ISO 31000: 2018 Risk Management Guidelines. All ERM Programs should be designed according to ISO 31000: 2018.

ISO 31000:2018 is built around three interrelated building blocks, which work together to ensure any ERM Program is effectively implemented: 

  • Eight Principles that should be followed to effectively manage risk
  • a Risk Management Framework which provides a structure to assist in the management of risk
  • an Eight Step Risk Management Process that helps management identify, manage and treat risks at all levels of the organisation.

You can obtain a copy of ISO 31000: 2018 online for about $130 and follow the steps that it lays out to build your Risk Management Program. However, many Aged Care Homes will not have the expertise or resources to build and maintain a program themselves, especially when they consider the burden of ongoing monitoring and updating.

Aged Care Homes seeking to obtain a Risk Management Program from an outside provider should ensure that the program is designed in accordance with ISO 31000: 2018 and regularly updated to keep pace with any changes to the standards.

We will publish Part 2 of this article in November, where we will focus on ‘the how’ for enterprise risk management.

 

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Robert Seale
ABOUT THE AUTHOR | Robert Seale
Rob is a Senior Consultant at CompliSpace. Rob has nearly 10 years’ experience consulting in a range of industries, including aged care, education, commercial, private and not-for-profit sectors in areas of governance, risk management and compliance. Rob holds a Bachelor of Business from the University of Technology Sydney, and a Graduate Certificate of Applied Risk Management from the Governance Institute of Australia.

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