Risk Management

In the On-Line Safety Library you will find a large amount of information covering specific risk management programs as well as hazard specific information.

Using a Risk Management approach to lowering accidents and injuries in the workplace us an essential tool for managers. A systematic approach to an objective look at the work environment and occupational hazards is the first Risk Management step towards actually managing workplace risk to prevent accidents that can result in damage to facilities, product and people

The Risk Management process is devoted to assessments and controlling risks that can result in business losses either through acts of nature or acts by people or from poor engineering design of a process or piece of equipment.
Steps in risk management will allow you to develop procedures and strategies that reduce the effects of risk-related situations, risk avoidance and identification of those risks that may be acceptable after all possible steps have been taken.

Using an approach that implements engineering controls to create an initial low- hazard environment is the first step for effective risk management. Engineering controls are those things you do to ensure safety by design and include elements such as machine guards, proper lighting, security systems and environmental controls.

Administrative risk management control is a less effective means for controlling risk, however engineering controls cannot be implemented for all events.  Administrative risk management is the second line of defense for prevention and mitigation of potential hazards. Administrative controls include written policies and procedures to ensure employees follow safe practices and include identification and implementation of an effective employee training program.

Once the overall concept has been accepted, listing all risks is the initial step needed to allocate resources for developing risk management controls. Each specific risk should be viewed as a potential event that could cause loss or injury. Evaluation of each risk source is needed to understand the possibility and potential for each risk-event. After initial identification and 'rating" of all risk-events, you can developed specific engineering and administrative controls to eliminate the risk or at least drive the probability of an event to a lower, acceptable level.

Assessment of each risk and potential loss is required to make the best impact relationship between it and all other risks so you can properly address the highest, most probable events and those that would have the most negative effects.  This can be done on a company level, department level, or even for a specific work area or task.  Using engineering controls can achieve a zero probability of a risk management event.

Risk Categorization
Before choosing risk-specific steps, each risk-event should be grouped into general areas for the type of possible actions.  These include avoidance or elimination, reduction of possibility, transfer of risk, such as outsourcing or leasing of equipment or facilities, and risk retention which is the least effective risk management approach because you must either accept the loss or insure against the loss to include process and business interruption loss recovery.

Avoiding or Elimination of Risk
All business operations will carry some risk, however specific industrial processed can be engineered to prevent specific risk-events.  Prior to establishing a new process or installing new equipment, a team consisting of management, maintenance and purchasing professionals should evaluate the risk-impact of the equipment and process to ensure all steps will be taken to select equipment and materials that are no or low risk by design.  Also consider how the new systems and equipment will fit in the current facility design in regards to ease of maintenance, flow of  materials and people through the proposed location and placement of system equipment.  Evaluation of support systems, such as lighting, ventilation and drainage must also be evaluated as part of the risk management process.

Reducing Risks
Risk reduction in the risk management process can reduce the overall effect of a risk-event.  These steps include such things as install of fire suppression systems, guard rails, reduction of the amount of hazardous materials and specific procedures and policies that prohibit risky activities.  In conjunction with administrative risk management controls, personal protective equipment, when properly selected and maintained can significantly reduce employee exposure to workplace hazards.  Personal protective equipment (PPE) controls include the necessary employee training on the use, limitations and maintenance of PPE as well as the management of the PPE program.

Transfer Risks
By using outside sources for high-risk material, processes and services you are effectively transferring the risk to another company.  Evaluation of the loss-effect versus the increased financial costs of outsourcing risk should be considered.  Any risk transfer also includes the effect on your operations if the company providing the outsourced risk activity fails due to risk-events.  To minimize this secondary effect, your risk management plan should include identification of resources and organizations that could provide the outsourced material, process and services with little interruption to your operations.

Project Risk Management
This aspect of risk management must address very specific risk management tasks such as evaluation, responsibilities, operations and financial resources allocated to risk management.

Consider:
Assigning a safety and risk manger who reports directly to the project manager and is responsible for not only project site safety, but also tasked with evaluating activities to ensure risk-events are foreseen and addressed before a risk related problem occurs.

Establish a risk management database. Each risk should have an evaluation sheet that records the date identified, description of risk, probability and importance and specific steps implemented to eliminate or reduce the effect of the risk.  Any outstanding actions related to each specific risk should be assigned to a specific person for action and tracked to ensure completion

Implement a process for reporting of unsafe conditions and processes.  Involve all employees by actively encouraging involvement of all employees under a continuous  improvement plan that recognizes participation and reporting of unsafe or risky situations.

Risk Management Plan
An effective risk management plan includes not only identification and reduction or elimination of specific risks.  It must also include a management and leadership component that sets the tone for continued evaluation, effective security controls, supervisor training and implementation of workplace safety programs as well as employee training.  An effective risk management program will yield results in not only lowering exposure to risk-events, but also improved efficiencies, increased productivity, employee retention and overall improvement in all company operations.  The philosophy used in developing your risk management program can spill over into day-to-day actions by all employees that results in a continuous improvement cycle.  Your risk management plan should also incorporate historical data as well as development of retention of specific risk management actions for future reference.  Risk management plans and procedures need not be static in nature.  A periodic review should be conducted annually to ensure the plan continues to address all current risk or changes in risk exposure. In the event of a risk loss, using risk management historical data to determine where the system failed can be used to fine tune your risk management plan in areas other than just the specific risk-event that caused the loss.  Ask, what decisions were made and how were they made that resulted in failure of the risk management system.  You can then make corrections to all aspects of your risk management plan.

More detailed information on Risk Management
can be found in the Members Area