AS 111

Reading Notes

Risk Assessment and Risk Management

Learning Objectives:

At the end of the lesson, the students shall be able to:

1. Differentiate Hazard and Risk

2. Explain the principles of Risk Assessment and Risk Management

What is Risk?

A common definition of risk is that it is the combination of a specific hazard and the
likelihood that the hazard occurs (probability) x (hazard) = risk. That likelihood may
be expressed as a rate or a probability. For example the risk of a ship accident
(hazard) can be expressed as one accident per hundred voyage (likelihood).

Risk can be objectively defined so that two people can take the same data and come
up with a similar result. Risk can be expressed in many ways, so long as it combines a
hazard with a likelihood.

Other definition of Risk

Risk is defined as the product of a hazard (such as damage costs) and the probability
that this hazard occurs. In other words, (probability) x (hazard) = risk. The first two
values must be known or at least estimated in order to define risk.

What is Risk Assessment?

Risk assessment is the process where you:

 Identify hazards
 Analyze or evaluate the risk associated with that hazard
 Determine appropriate ways to eliminate or control the hazard

In practical terms, a risk assessment is a thorough look at your workplace to identify

those things, situations, processes, etc that may cause harm, particularly to people.
After identification is made, you evaluate how likely and severe the risk is, and then
decide what measures should be in place to effectively prevent or control the harm
from happening.
What are the Goals of Risk Assessment?

The basic goals of risk assessment include the following:

 Identify potentially hazardous situations,

 Apply appropriate methods to estimate the likelihood that a hazard occurs, and
the uncertainty in that estimate,
 Provide alternative solutions to reduce the risk doing one or more of the
following:
- Eliminating any possibility of the hazard occurring
- Reducing the likelihood that the hazard occurs
- Limiting any negative consequence of the hazard
 Estimate the effectiveness of those solutions
 Provide information to base a risk management decision, and
 Estimate the uncertainty associated with the analysis

What is the Procedure for Performing a Risk Assessment?

Risk assessment consists of four general steps:

1. Hazard identification
2. Evaluating relationship between exposure to a risk and adverse effects
3. Exposure assessment - evaluating the conditions that lead to exposure to a risk
4. Risk characterization - describe the nature of adverse effects, their likelihood, and
the strength of the evidence behind these characterizations (often done by using
probability and statistics).

Why is Risk Assessment important?

Risk assessment are very important as they form an integral part of a good
occupational health and safety management plan.

They help to:

 Create awareness of hazards and risks
 Identify who may be at risk (employees, cleaners, visitors, contractors, the
public, etc)
 Determine if existing control measures are adequate or if more should be done
 Prevent injuries or illness when done at the design or planning stage
 Prioritize hazards and control measures.

What is the Point of Doing a Risk Assessment?

The risk assessment for a particular issue forms the foundation for making a decision
about future actions. That decision may be to perform additional analyses, to
perform activities that reduce the risk, or to do nothing at all.
Hazard Identification

Hazard identification is the process of identifying all hazards in the workplace.

Definition of a Hazard

A hazard is simply a condition or a set of circumstances that present a potential for

harm. Hazards are divided into two broad categories:

 Health hazards (cause occupational illness)

 Safety hazards (cause physical harm - injuries)

Hazards are the main cause of occupational health and safety problems. Therefore,
finding ways of eliminating hazards or controlling the risks is the best way to reduce
workplace injury and illness.

Hazards may be identified by:

 Observation - use your senses of sight, hearing, smell and touch - combined with
knowledge and experience
 Hazard and risk surveys - conduct hazard spotting surveys of main work areas.
Talk to others about their safety concerns
 Record analysis - keep records of identified hazards, near misses, injuries and
workers’ compensation claims to help identify possible trends
 Discussion groups - are useful for identifying hazards and recommending
solutions
 Safety audits - consider creating a safety committee to investigate safety and
help prepare a management plan
 Information - keep informed of hazards in the industry through the latest
available information.
 Regulations and best practice

Assess the Risk

Once a hazard has beenn identified, the likelihood and possible severity of injury or
harm will need to be assessed before determining how best to minimize the risk.
High risk hazards will need to be addressed more urgently than low risk situations.
You may decide that the same hazard could lead to several different possible
outcomes. For each hazard consider how likely each possible outcome is, and record
the highest priority.

Ranking or Prioritizing hazards

Ranking or prioritizing hazards is one way to help determine which hazard is the
most serious and thus which hazard to control first. Priority is usually established by
taking into account the employee exposure and the potential for accident, injury or
illness. By assigning a priority to the hazards, you are creating a ranking or an action
list.

There is no one simple or single way to determine the level of risk. Ranking hazards
requires the knowledge of the workplace activities, urgency of situations, and most
importantly, objective judgment.

What is Risk Management?

Risk management is a core element of sustainable development. The three pillars of

sustainability - social, economic, and environmental- present various risks and
thereby provide a complex and often inter-related mix of risks and opportunities
that shipping companies or for educational purposes, maritime higher educational
institutions need to address.

Risk management is not a singular process but a complex mix of multiple views,
values, perceptions and qualitative or quantitative approaches. This means that
sound risk management must involve components of stakeholder engagement ,two-
way communication and responsiveness.

Risk management is the process of combining a risk assessment with decisions on

how to address that risk, and doing so in ways that consider the technical and social
aspects of the risk assessment. Risk management is part of a larger decision process
that considers the technical and social aspects of the risk situation. Risk assessments
are performed primarily for the purpose of providing information and insight to
those who make decisions about how that risk should be managed. Judgment and
values enter into risk assessment in the context of what techniques one should use
to objectively describe and evaluate risk. Judgment and values enter into risk
management in the context of what is the most effective and socially acceptable
solution.

How Do You Combine Risk Assessment with Risk Management?

The combined risk assessment and risk management process can be described as a
six step process. The first three steps are associated with risk assessment and the
last three with risk management.

1. Formulate problem in a broad context

Do this by answering questions like: what is the problem? Who must manage
the problem? And who are the Stakeholders? Also, establish relationships among the
problems and rely on stakeholders for problem identification and characterization.

2. Perform the risk analysis

 Evaluate the risk in order to determine the hazard, the likelihood of the
hazard occurring, and any uncetainties in the estimate.

3. Define the options

Determine what can be done about the risk issue and the ways that it could
be done. Determine potential consequences, costs and benefits.

4. Make sound decisions

Determine the best solutions and how they could be implemented in ways that
are feasible, cost effective and socially acceptable.

5. Implement decisions
Find out what actions are needed to implement and deal with any objections
or reassessments.

6. Evaluate actions taken

Determine what is an acceptable and effective means of evaluating the
effectiveness or appropriateness of the risk management actions.
Ms. ATAD, MBA