Curing Homelessness with Risk Management

The Risk Management Perspective

It's overly evident that most, if not all, local public and political officials have little clue about how to mitigate—if not eliminate—this growing risk. Nor do they seem to understand how to reduce their community's total cost of risk (TCOR). Their focus understandably is on how to help and to rehabilitate those on their streets to restore such lives and their city streets to previous levels of quality of life each previously enjoyed but now have lost.

Why risk managers? Should city and county risk managers take a leadership role in addressing this issue? My response is a resounding "YES!" What's wrong with that? Such humanitarian needs must be addressed, correct? Absolutely! However, as risk managers, we view this overall challenge much differently. Others seem to treat only surface symptoms. They throw dollars upon dollars at the problem. However, doing so only perpetuates this horrendous condition.

Risk managers not only identify and measure risks, we also "drill down" to discover the root cause(s) of each. Then, we take steps to effectively control and mitigate the risk(s) if not totally eliminate each. Finally, we take steps to continually lower each risk's TCOR as opposed to draining public coffers of dollars that have no hope for applying a permanent solution. As indicated above, to treat symptoms only perpetuates the problem.

Root cause analysis (RCA) is a prevalent practice in Lean Six Sigma; however, it's also a fundamental tool found in risk management practices. It's key and critical. When you address and remove root causes, your outcome is permanent, and your solution is permanent. In short, too many politicians and nonprofit leaders are being reactive. Risk managers are proactive in virtually all they do.

It needs to be clearly reiterated that rehabilitation efforts, however reactive they may be, are essential from a humanitarian perspective—and help lower the numbers of homeless; yet, ongoing homelessness will continue to come "on stream" if solely surface symptoms are addressed. The flow will be reduced dramatically only if root causes are proactively identified, measured, and mitigated—if not eliminated. At the same time, the overall costs of the homeless are dramatically reduced.

Root Cause Analysis

So, just to be certain we are each "on the same page," what is RCA? It's a leadership tool used in organizations all over the globe to permanently resolve problems within its organizational culture. It avoids ongoing investments of scarce staff time as well as investments of significant amounts of dollars—private and taxpayer funded.

Many techniques can be used. Each helps assure that certain problems do not persist. That's the "what" of RCA. Our pronounced need is also to understand the "how" of RCA through effective risk management. Let's start with the easiest tool—the "Five Whys"—as an illustration. Assume the conveyer belt on the production line has stopped. Now begin "Five Whys" by asking the following.

1. Why has the conveyer belt stopped?

   The main pulley rotating the belt is not working.

2. Why is the main pulley not rotating?

   Because it's not getting enough power from the motor.

3. Why is it not getting enough power from the motor?

   Because the motor has stopped working.

4. Why has the motor stopped working?

   The windings of the motor have burned out.

5. Why have the windings burned out?

   The motor was loaded beyond its power capacity.

6. Why was the motor overloaded?

   Although there were specifications about the permitted load frequency every hour, there were no instructions about the maximum load weight.

You can now see this problem's root cause—even though it required six "Whys." Common sense and good judgment are always part of this process.

Turning to homelessness, the National Law Center on Homelessness and Poverty says the two major root causes are the following.

• Insufficient income coupled with lack of affordable housing
• Domestic violence

A more definitive list comes from the most recent annual survey by the US Conference of Mayors.

• Unaffordable housing
• Unemployment
• Poverty

Still other root causes unique to each community may be discovered as RCA is applied to homelessness within each community's own culture.

Developing Action Plans

Action plans may—and no doubt shall—vary from city to city; however, the fundamental risk management format should prevail. The key (always present in risk management) is a combination of prevention and early intervention. Be proactive, not reactive.

Obviously, no single organization can identify and address all root causes of homelessness. Yet collaboration of local pastors, rabbis, and other faith-based leaders, plus healthcare professionals and other counselors, family members, and still others can identify early signs for prevention and early intervention. Then appropriate services to head off homelessness can be addressed before reaching irreversible and costly stages.

Identify. Intervene. Improve.

My hope is this proactive risk management approach will spark risk managers in affected communities to step into a leadership role to encourage their local leaders to apply prevention and early intervention—plus other risk management actions—to make a major difference in the lives of others, saving both individuals and families from devastating outcomes. That's saving both private and public funding and, at the same time, removing the outcome from its otherwise perpetual path. And, in the process, restore streets and communities to their former, presumably pristine conditions.