Risk management aims to reduce the costs of adverse events. In entities such as hospitals, risk managers do this in two ways: reducing the likelihood or seriousness of adverse events and reducing the costs of these events when they do happen. Activities aimed at the latter present direct conflicts of interest between protecting the institution and respecting the interests of the clients served by the institution—so-called institutional conflicts of interest. Activities aimed at the former would appear to benefit all parties--those at risk of accidents (because the risk is reduced) and the institution (because reducing risks also reduces the costs of adverse events)--and thus escape problems of conflicts. This appearance may also misleading, however, if efforts to reduce risks to agents of the institution (such as hospital staff) conflict indirectly with efforts to reduce risks to clients (such as patients). Here, too, institutional conflicts of interest may arise for the risk manager.
This chapter discusses the role of the risk manager in handling institutional conflicts of interest in health care organizations. When risk managers attempt to reduce the costs of adverse events to the institution, conflicts of interest are likely to arise and to present ethical issues for the risk manager. These conflicts are institutional ones that are built into the risk manager’s role: the risk manager’s goal is to settle potentially expensive claims on terms that are favorable to the institution rather than on the terms that might be most beneficial to the patient. These conflicts must be identified and managed ethically.
Francis, Leslie P., "Risk Management and Conflicts of Interest" (2015). Utah Law Faculty Scholarship. 151.