Define the term “risk management”.
Risk management is a logical process of weighing the potential costs of risks against the possible benefits of allowing those risks to stand uncontrolled. It is a decision making process designed to identify hazards systematically, assess the degree of risk, and determine the best course of action.
What four basic principles of risk management are useful when trying to determine what constitutes an “acceptable” level of risk?
- Accept no unnecessary risk - Unnecessary risk is that which carries no commensurate return in terms of benefits or opportunities.
- Make risk decisions at the appropriate level - The decision-maker must be authorized to accept levels of risk typical of the planned operation.
- Accept risk when benefits outweigh the costs - All identified benefits should be compared against all identified costs.
- Integrate risk management into planning at all levels - Risks are more easily assessed and managed in the planning stages of an operation.
What is the risk management process?
Risk management is a simple process which identifies operational hazards and takes reasonable measures to reduce risk to personnel, equipment, and the mission.
Explain the six steps involved in risk management process.
- Identify the hazard - Experience, common sense, and specific analytical tools help identify risks.
- Assess the risk - Determine the probability and severity of an accident that could result from exposure to the hazards.
- Analyze risk control measures - Investigate specific strategies and tools that reduce, mitigate, or eliminate risk.
- Make control decisions - The decision-maker must choose the best control or combination of controls, based on the analysis in steps 1 and 2.
- Implement risk controls - A plan for applying the selected controls must be formulated, and the time, materials, and personnel needed to put these measures in place must be provided.
- Supervise and review - Once controls are in place, the process must be reevaluated periodically to ensure their effectiveness.
How will you implement the risk management process?
- Apply the steps in sequence -
