Risk & Hazard Management
"If you don't invest in risk management, it doesn't matter what business you're in, it's a risky business."
[Quote: Gary Cohn]
Risk Management has become one of the vital functions within organizations; in enhancing profitability through the reduction of loss, and protecting the organization from avoidable and potentially catastrophic loss.
What are risks and hazards? Hazard can be defined as anything that has the potential to cause harm. Risk is how great the chance is that someone will be harmed by the hazard.
Businesses and industries have variable risks and hazards - some have extreme exposures while others have lesser exposures to potential harm. For instance, comparing the petrochemical, mining and nuclear industry with an industry perceived to have less significant risk, such as food processing plant, actual events proved otherwise in the case where contaminated foods were sent into a marketplace which caused serious illnesses and deaths. Industrial disasters in recent times have resulted in the implementation of international standards and risk management systems to enable better control of potential hazards associated with these risks.
Before we can manage risks and hazards, it must first be identified. This can be done with an effective risk management process.
STEP 1: IDENTIFICATION OF HAZARDS
In order to manage risk, the first step is to identify hazards. Hazards can be people, equipment, material, etc. Hazards are those things that has the potential to result in injury, harm, damage to property, etc.
STEP 2: RISK ANALYSIS
Once the hazard has been identified, the level of risk needs to be analysed and determined.
STEP 3: JUDGMENT OF THE RISK
With the risk known, a decision must be made whether or not the risk is accessible with the existing safeguards, or does one need to do more to mitigate the risk.
STEP 4: RISK REDUCTION
This process is where the strategy is formed for dealing with the specific risk, either eliminate, manage or reduce the risk so that it can be tolerated.
STEP 5: IMPLEMENTING AND MONITORING THE SYSTEM
When work is identified and standards are set, the required control measures must be implemented.
STEP 6: MEASURE AND AUDIT
Control measures should always be revised and audited, not only when major incidents occur.
STEP 7: EVALUATION
Following the audit, the results should be analyzed, this is to ensure that the system is in place and to make recommendations that needs to be implemented.
Nothing can be done free of risk, there are always degrees of risk - the way we manage it, is the key.