The Institute of Medicine has recommended a change in culture from “name and blame” to patient safety. This will require system redesign to identify and address errors, establish performance standards, and set safety expectations. This approach, however, is at odds with the present medical malpractice (tort) system. The current system is outcomes-based, meaning that health care providers and institutions are often sued despite providing appropriate care. Nevertheless, the focus should remain to provide the safest patient care. Effective peer review may be hindered by the present tort system. Reporting of medical errors is a key piece of peer review and education, and both anonymous reporting and confidential reporting of errors have potential disadvantages. Diagnostic and treatment errors continue to be the leading sources of allegations of malpractice in pediatrics, and the neonatal intensive care unit is uniquely vulnerable. Most errors result from systems failures rather than human error. Risk management can be an effective process to identify, evaluate, and address problems that may injure patients, lead to malpractice claims, and result in financial losses. Risk management identifies risk or potential risk, calculates the probability of an adverse event arising from a risk, estimates the impact of the adverse event, and attempts to control the risk. Implementation of a successful risk management program requires a positive attitude, sufficient knowledge base, and a commitment to improvement. Transparency in the disclosure of medical errors and a strategy of prospective risk management in dealing with medical errors may result in a substantial reduction in medical malpractice lawsuits, lower litigation costs, and a more safety-conscious environment.