[BCM] [NUHS] [ERM] [C2] Foundations of Healthcare Risk Management

Chapter 2

Foundations of Healthcare Risk Management

Introduction

Healthcare is inherently complex and high-stakes. The intersection of clinical care, operational logistics, regulatory frameworks, and human lives creates a risk landscape unlike any other industry.

For the National University Health System (NUHS), understanding and managing these risks systematically is essential—not only to safeguard patient outcomes but also to preserve operational continuity, institutional trust, and compliance integrity.

This chapter introduces the foundational elements of healthcare risk management, with a focus on key risk domains, processes, and practical strategies employed within an extensive hospital system.

Key Risks in the Healthcare Environment

Healthcare organisations face a broad spectrum of risks that span both clinical and non-clinical domains.

Understanding these risk categories is the first step in building a resilient and responsive risk management framework.

Each of these risks can cascade into others. For example, a ransomware attack (IT risk) may halt clinical services (operational risk), delay treatment (clinical risk), and result in reputational fallout.

Risk Categories Relevant to NUHS

While all risk domains are significant, NUHS must prioritise and contextualise its risk management according to its unique institutional profile.

Below are several risk categories especially pertinent to NUHS institutions:

• Patient Safety Events
  • Examples: falls, hospital-acquired infections, wrong-site surgery
  • Tools: Root Cause Analysis (RCA), Clinical Risk Committees

• Data Breaches & IT Disruptions
  • Includes unauthorised access to patient data, system outages
  • Tools: Cyber risk frameworks, IT recovery plans, role-based access controls

• Pandemic and Public Health Threats
  • Infectious disease outbreaks (e.g., COVID-19, dengue)
  • Tools: Outbreak response protocols, surge capacity planning

• Human Resource Risks
  • Burnout, industrial action, and absenteeism
  • Tools: Workforce contingency planning, staff wellness programs

• Supply Chain Disruptions
  • Critical drugs or PPE shortages
  • Tools: Dual sourcing strategies, inventory buffers

Risk Identification, Assessment, and Mitigation

Healthcare risk management follows a structured lifecycle, aligned with enterprise risk management principles.

Risk Identification

• Methods: Incident reporting systems, audits, clinical governance meetings, interviews, and horizon scanning.
• Outputs: Risk register entries, early warning signals.

Risk Assessment

• Qualitative Tools: Risk matrix using Impact × Likelihood
• Quantitative Tools: Failure Mode and Effects Analysis (FMEA), Key Risk Indicators (KRIs)

Risk Mitigation

• Preventive Controls: Clinical protocols, checklists, dual verification
• Detective Controls: Alarms, surveillance audits
• Corrective Actions: Post-event reviews, policy changes

Each risk should have an owner, mitigation plan, timeline, and KPIs for tracking effectiveness.

Case Example: Managing Clinical Risks in a Large Hospital System

Scenario

A tertiary NUHS hospital identifies a rising trend in medication errors within its cardiology department.

Step-by-Step Risk Management Response

1. Identification
   • Incident reports and a sharp uptick in near-miss events trigger a departmental review.

2. Assessment
   • Risk scored as High Impact, Medium Likelihood.
   • Root causes: similar packaging of drugs, workload-induced fatigue, and lack of double-checking.

3. Mitigation Actions
   • Redesigning medication packaging
   • Mandatory two-nurse checks for high-risk medications
   • Rotational scheduling to reduce cognitive overload

4. Monitoring and Review
   • Monthly error rate tracking
   • Real-time alerts in the EHR system
   • Quarterly audit reporting to Clinical Risk Committee

Outcome

Medication error rate drops by 40% within six months. The model is later scaled to other departments.

Summing Up ...

Risk is intrinsic to healthcare—but it need not be unmanaged. By adopting a systematic and proactive approach to identifying, assessing, and mitigating risk, healthcare institutions like NUHS can transform vulnerabilities into strengths.

The foundations of risk management provide a platform for safer patient care, more robust operations, and organisational resilience.

In the next segment, we will examine how Business Continuity Management (BCM) aligns with these risk principles to ensure uninterrupted care delivery, even in the face of significant disruptions.

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