The Risk Financing and Insurance department's mission is to support the University's collective, and, as able, each School's individual, educational, research, and societal  pursuits through the deployment of contemporary risk management strategies.

Guided by the University's historic orientation around and cultural disposition toward TUB autonomy, the department plays three important roles in fulfillment of that mission:

1. designer and administrator of the enterprise-level insurance policies protecting all operations against catastrophe type events (e.g. University's Master Property & Casualty insurance program);
2. architect and curator of a specialized suite of risk financing tools intended for mitigating unique, uncommon or TUB-specific operational exposures;
3. expert resource to the entire University community in analyzing exposures, evaluating vulnerabilities, and creating bespoke risk financing solutions aligned with an individual risk situations.

OUR APPROACH and VALUES:

Considering the spectrum of achievements realized by the University over its 370+ year history, the faculty, staff, students, and alumni expect and deserve nothing less than class-leading performance from its risk management teams.  Everyday, using concepts embodied in the continuous improvement / quality assurance movement, we strive to build upon a solid foundation and past successes by:

• Encouraging alignment of risk ownership with opportunity ownership;
• Creating a sense of openness, transparency, and consistency around insurance program features and cost;
• Demonstrating creativity and innovation in program design;
• Emphasizing stability and sustainability over lowest possible short term cost;
• Mastery of subject matter;
• Enhancing the customer experience by emphasizing technology solutions over manual interventions
• Growing and nurturing internal and external resource networks
• Holding ourselves and our vendors to the highest level of efficiency, accuracy and responsiveness
• Motivating others to think about, talk about and behave differently about risk and risk management
• Empowering clients to contribute to and actively participate in the department's service model

 SERVICE MODEL:

Risk financing encompasses the full spectrum of options for pre-planning the source of funds necessary to smoothly recover from any casualty.  However, proper implementation requires consideration of the prevailing business environment, both globally across the entire enterprise and locally within individual or multiple business units, towards predicting the expected financial impact of foreseeable loss events.  Ideally, risk appetite, current financial position, risk bearing capacity, organizational governance, and management philosophy are fully considered prior to embarking on any risk mitigation plan.  While many of the common financing approaches can be applied to a wide spectrum of casualty events, certain methods are considerably more effective when deployed as part of a comprehensive strategy.

The Risk Financing and Insurance department uses a multi-factor analysis model when engaged by a client to investigate custom risk solutions on specific projects.  Given Harvard's cultural environment and decentralized governance model, the Department also uses this same framework as a directional guide when analyzing options for structuring enterprise level risk management schemes to the extent that such approaches are able to satisfy the collective needs of most participants.  When appropriately scaled to account for the different business and governance conditions, the same process is also able to serve as a guide when designing school or department level risk financing options. 

Because of its inherent design, commercial insurance has historically served as the most efficient financing mechanism against high impact, low probability loss events.  Consequently, the Department has instituted a suite of commercial insurance policies as the primary method of protecting core University assets and net income against those perils capable of severely impacting continuity of business operations.  All TUBS are automatically covered under the program with no need for annual (re)enrollment or subscription renewal.  These high limit, high deductible style policies are coupled with an actuary-accepted self-insurance / retained loss financing system available to fund certain business unit losses directly out of internal reserves accounts. The annual cost for maintaining this program is reviewed and set each Fall and allocated back to all TUBS via quarterly charge-backs.  Additional details on these coverages and other participation aspects is available under the Policies & Programs section.

Though governed collectively via collaborative efforts between the Office of the Provost, FAD's Office of Sponsored Research, and Dean's office of the associated School, much of the risk arising out of specific educational and research activities is managed on a local level when undertaken by individual departments.  Thusly, the capability and tolerance for assuming risk is dictated by the local teams who are accountable for the operational outcomes of those activities.  In many situations, local teams don't have sufficient time, resources, or expertise to complete a proper risk analysis before embarking on a particular project.  Consequently, risk transfer via commercial insurance becomes the most practical tool for containing the project's potential risk cost.  In order to be prepared for responding to the high annual volume of these individual requests, the Risk Finance and Insurance department has assembled a comprehensive set of specialized insurance solutions for departments to use as needed in managing these risk exposures.  Anticipating many common situations, the department has already structured this suite of insurance policies to efficiently transfer those exposures most typically experienced by TUBS.  Though coverage parameters are mainly preset, there are limited options available for a TUB to tailor certain terms to meet their situational needs.   Of course, premium and placement costs associated with affecting coverage for any TUB will be assessed back to that TUB, typically through internal journal transfer at time of binding.

When engaged by TUB leadership to assist with determining options on a department-level risk matter, we try to follow a systematic approach to ensure that some degree of governance and compliance commitments are routinely part of each mitigation or insurance transfer dialogue.  If project timing or other local factors preclude a holistic view of alternative risk mitigation solutions, including possible integration with the Master programs, the TUB assumes responsibility for all premiums, deductibles, under-insured losses, uninsured losses, and procurement expense loads to enact the selected plan.  TUBS are not permitted to consciously assume hazard or operational risk on behalf of the University without prior approval of the Vice President of Finance or Executive Vice President.  One of the Risk Financing and Insurance department's duties is to watch for and guard against situations that carry unintended obligations for University, potentially imposing unrecognized financial liabilities. Unless accepted by affirmative action of CADM leadership, liabilities (financial or remedial) arising out of these situations will entirely be the responsibility of the TUB creating the obligation.

While not organized to readily respond to every request for assistance or thoroughly assess all potential risk scenarios arising out of new business ventures, particularly those with low probability of imposing a material impact to the University's balance sheet, the Department is prepared to work with individual management teams to explore risks associated with these new ventures and offer general advice on ways to reduce the impacts of adverse events.  When the predicted risk impact arising out of any given initiative are such that standard mitigation and financing approaches are insufficient to meet a particular risk appetite, the Department is poised to undertake a custom analysis and evaluation designed to consider all pertinent factors and assumptions.  Should a department desire such deeper level of engagement and analysis, Risk Financing and Insurance is prepared to mobilize its pre-vetted team of external experts to aid in fulfilling most any request for help.  Certain costs associated with the use of external talent may be passed along to the requesting department; contact the Department to discuss options for kicking off such an engagement.