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Risk Management Plan for Childcare Centers

Learn how you can create a risk management plan to protect your children, staff, and business from unexpected circumstances.

Risk Management Plan for Childcare Centers

Risk Management Plan for Childcare Centers

Running a childcare business is a rewarding venture that requires a great deal of commitment, passion, and responsibility. Childcare providers have the crucial task of caring for children while ensuring their safety and protection from potential risks. Understanding how to manage these risks is crucial to maintaining a successful and sustainable business.

Risk management refers to the process of identifying, assessing, and controlling risks that businesses face. Many businesses have some sort of risk management plan in place to minimize potential risks and protect their business. In the case of childcare businesses, risks can range from accidents, injuries, and illnesses to legal liability and reputational damage. The risks can seem daunting, but taking the time to develop a comprehensive plan can help ensure the safety and well-being of the children in your care. 

Continue reading to learn more about what risk management is in relation to child care, its importance, and how you can create a plan to protect your children, staff, and business.

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What is risk management in child care?

Risk management is the process of identifying, assessing, controlling, and treating potential risks or threats by finding ways to minimize, transfer, or eliminate them and their impact. In child care, the most apparent risk is to the health and safety of the children in your care; however, the risks don’t end there. In addition to the health and safety risks, which also pose a threat to your entire staff, there are various sources that risks can stem from.

Additional risks to consider include financial, operational, and compliance risks. For example, financial risks stemming from fraud and property liability exposure may lead to financial losses for your childcare center. While compliance risks related to record keeping and hiring, for example, impact compliance on the local, state, and federal levels.

To properly anticipate risks, there are several factors to consider as you work toward building and executing your risk management plan.

Health and safety risks

Health and safety risks can cause a person to suffer harm or adverse health effects—physical, mental, or social—when exposed to hazards. Some of the most common safety hazards in childcare centers and schools come from slips, trips, and falls on things like stairs, wet floors, and elevated surfaces.

Additional risks that children may face during child care include life-threatening allergies and bullying. It is important that you identify any possible security, environmental, or public health risks that your children and staff might be exposed to at your center.

In the event of any accident or injury occurring at your program, it's a good idea to have an incident reporting procedure in place. With brightwheel's childcare incident reports, you can create digital incident report templates that your staff can easily use in the event of an incident and share instantly with families, keeping everyone informed and protecting your business.

Operational risks

Operational risks can affect how your business runs its day-to-day activities. Four factors usually cause operational risk: people, processes, systems, or external events. 

At your childcare center, an operational risk caused by people can stem from staff shortages. A process-based operational risk might look like a breakdown in your meal program after placing a late order. If your center relies on manually entering customer information, this creates another operational risk that might affect billing, tracking attendance, and more. Lastly, external events can also pose issues to your daily operations. For example, a storm could cause a power outage or damage to your building, preventing your center from functioning fully.

Strategic risks

Strategic risks include the possible losses your childcare business may face based on decisions made at a strategic level. This can negatively affect your ability to meet your company goals. Similar to operational risks, strategic risks can include both internal and external factors that will affect how you strategize. 

Within your childcare business, strategic risks can come from important decisions regarding location, management, and cash flow. External events, such as new technology and consumer demand changes, can also pose a risk to your childcare center and the ability to meet your goals and objectives.

Compliance risks

Depending on the location of your childcare center, there are specific local, state, and federal laws that your business must comply with to maintain proper licensing. Compliance risks are risks that affect your ability to comply with these regulations. Examples of compliance risks include maintaining the proper staff-to-child ratios, hiring employees with the appropriate education and experience, and following the minimum requirements for zoning and fire codes.

Financial risks

Financial risks refer to the liabilities that may cause your childcare center to lose money. These risks can also affect your ability to fulfill your financial obligations. The most obvious financial risk comes from cash flow. Is your business generating enough money to pay your employees? Are you able to pay for your daily operations? Additional financial risks can come from insurance liability, employee misconduct, and financial mismanagement.

Reputational risks

Reputational risks are any risk that impacts your business reputation. While this may seem less tangible than the other risks your childcare center is facing, it’s necessary to keep a positive reputation in the eyes of your stakeholders: your children, their families, your employees, and any investors. Your business image can boost or damage your public perception, which greatly impacts the success of your business.

There are many risks to consider when building a risk management plan; however, it is an irreplaceable step in operating an effective, profitable childcare center.

Why is risk management important?

The most efficient way for your childcare center to deal with potential risks is to know that they exist. Risk management is important because it equips you, your staff, and your business with the tools to identify and eliminate risks. Child care is an unpredictable industry. If the COVID-19 pandemic acts as any indication, it’s impossible to prepare for every situation. However, risk management puts your business in a better position to survive and thrive through perilous circumstances.

Other various benefits come with creating a plan. Risk management:

  • Forecasts potential issues
  • Increases risk awareness
  • Improves operational efficiency
  • Improves childcare and workplace safety and security
  • Minimizes loss
  • Reduces negative risk impact

Risk is a natural part of running any childcare business. Use the steps outlined below to create your risk management plan and enjoy the benefits of preparing your center for potential risks.

How to create a risk management plan

It’s important to create a risk management plan that will protect the children in your care, your staff, and your business. While the process may seem challenging, the benefits far outweigh the time spent creating the plan or the difficulties you’d face without one. To create a risk management plan, you will need to:

  • Identify the risks
  • Assess the risks
  • Develop a risk response
  • Develop contingency plans
  • Document and communicate your plans

1. Identify risks

The first step to creating your risk management plan is to brainstorm. Ask yourself, “What are the risks to my childcare center?” You might find it beneficial to consult with multiple groups of people at this stage. While your teachers might be a greater source of information on the day-to-day risks posed on the children, other staff and administration can help broaden the list to incorporate all potential risks for operating the center.

2. Assess the risks

After you identify the risks, assess them. Evaluate their probability and impact. It is impossible to eliminate all risks; however, prioritizing them can ensure that you create the proper plans and responses for the most critical ones. During your assessment, use this time to determine the cause of the risks, which will help in the next step—developing a risk response.

3. Develop a risk response

How do you plan to deal with the risks that occur in your childcare center? There are four common responses to risk:

  • Risk avoidance: The elimination of hazards or activities that can negatively impact your business. An example of risk avoidance in child care would be the removal of all elevated playground equipment to prevent children from falling.
  • Risk reduction: The process of minimizing the loss associated with risk rather than eliminating it. Having a plan in place for reducing the spread of infectious diseases is an example of risk reduction in childcare settings. While you can’t eliminate the spread of the flu, you can have measures in place to reduce it.
  • Risk transfer: The process of contractually shifting the responsibility of risk from one party to another. Purchasing insurance and acquiring liability waivers from parents are examples of risk transfer.
  • Risk acceptance: The acknowledgment of potential loss from risk. Also known as residual risk, it is the risk that remains after risk reduction and risk transfer measures have been implemented.

4. Develop contingency plans

Your risk response can cover most situations or events; however, you will need to develop contingency plans when risks can’t be avoided or transferred. Create a plan for how you will continue or resume business operations in the face of a crisis or emergency. 

5. Document and communicate your plans

The final step in creating a risk management plan is documenting it and communicating it to the appropriate parties. The people connected to your childcare center—the children, teachers, families, and staff—should be aware of your plans and their role in risk management.

A tool like brightwheel’s childcare management software can help streamline administrative tasks and easily scale your childcare program, allowing you to share documents—risk management plan, handbooks, and menus—with staff and families. In addition, brightwheel is the most secure all-in-one childcare and preschool software with the highest financial data security and compliance levels for payments, offering two-factor authentication, data privacy with data encryption, and 24x7 fraud monitoring.

You might find it beneficial to keep both physical and digital copies that your staff can access. Once all relevant people have been informed, make sure you train your staff in the procedures and regularly review and practice any drills.

Risk management plan template

The format you use for your risk management plan is up to you; however, you might find it useful to start building yours with a template as a reference. 

The following templates are great tools to use as a guide.

Centers for Disease Control and Prevention (CDC)

The CDC provides a straightforward 10-page risk management template that walks you through the steps to create your own. It is divided into three sections: the purpose, procedure, and tools and practices. After describing your purpose for creating your risk management plan, the template guides you through risk identification, risk analysis (qualitative and quantitative), response planning, and monitoring and reporting. The CDC also includes a risk management plan approval sheet for acquiring necessary signatures from relevant parties acknowledging their review of the plan.


Smartsheet offers an extensive collection of risk management plan templates. In addition to the risk assessment matrix template seen above, they offer:

  • Risk management plan template: Includes typical sections such as risk identification, analysis and monitoring, and roles and responsibilities

  • Risk register template: Includes a register to create a detailed log of who owns a risk, the level of impact and probabilities, planned actions, and response status

  • Risk management matrix: Includes a risk assessment matrix for getting an overview of risk ratings and a management matrix for identifying and assessing risks, describing mitigation strategies, and monitoring control efforts

Smartsheet Risk Assessment Matrix Template


Connecticut Department of Social Services

The risk management plan template from the Connecticut Department of Social Services is ideal for your childcare center if you’re new to creating a risk management plan. It not only provides instructions for the author of the plan, but it also provides the definition and purpose of risk management, along with additional tools and resources for developing a plan. This document will help you assign roles and responsibilities, outline procedures, and decide how to escalate high-exposure risks.

Less risk, greater reward

It is impossible to eliminate all the risks associated with operating your childcare center; however, it is possible to reduce them and strengthen your business practices. Risk management plans allow you to identify possible risks, eliminate or reduce them, and plan for the future.

Whether you are looking to create a risk management plan or update an existing one, be sure to use the information in this article to protect you, your business, and all those you serve. It is your strongest tool in preventing and handling crises and emergencies.

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