Two factors -- the element of risk and the likelihood of injury -- comprise the source of potential liability. Police managers need to recognize the relationship between liabilities, negligence, and sound rule-making. Police rule-making should begin with listing and prioritizing problems confronting the department, then determining the necessary operational reach for the exercise of police authority or discretion, drafting the policy in accordance with legal strictures, and enforcing the policy. Two new areas of litigation involve personnel functions and negligent police investigations. The recommended methodology for police management of liability consists of identifying and anticipating those types of emergencies, accidents, or situations which occasion liability; developing policies; recognizing responsibility for liability; training; supervision and police enforcement; documentation; and regular review of police operations. 55 notes and 25 references