| The formal introduction of risk management to | | | | to allocate limited resources in an objective manner in |
| improve health and safety in the workplace changed | | | | order to reduce the risk. |
| the face safety management forever. This change | | | | Risk Management in Context |
| was necessitated as a result of the introduction of | | | | In order to make sense of the various types of risk |
| the concept of "Duty of Care" into Occupational | | | | assessment it is necessary to understand where in |
| Safety, Health and Environmental legislation in the | | | | the organisation each of the types are mostly utilised. |
| International arena. | | | | It is not the intention to discuss all the various types |
| This change in legislation focus was a distinct | | | | of risk assessment, but merely to give them some |
| departure from the specific compliance legislation | | | | context in relation to some of the main activities |
| framework what previously exited that required | | | | taking place in the organisation. The following model |
| managers to comply with a set of rules. Once the | | | | should serve to explain these relationships: |
| rules were complied with, no legal action could be | | | | To view the model click here |
| instituted against these managers. The duty of care | | | | As can be seen from the model, in the operational |
| type of legislation requires managers as well as | | | | management activities of the organization hazard |
| company owners to establish the significant risks and | | | | identification and continuous risk assessment is an |
| institute controls that will reduce the risks to tolerable | | | | activity mostly associated with operation and |
| levels. | | | | supervision tasks, while workplace risk assessment is |
| The definition of risk differs from one discipline to | | | | normally associated with operational management |
| another, and even within the same field there are | | | | while baseline and issue based risk assessment is |
| sometimes contradictory definitions. In the context | | | | normally activities that influences decision and control |
| of business management, risk can be defined as the | | | | actions. Strategic management activities draw on |
| chance of loss or gain. However, the probability of | | | | both operational management and corporate |
| occurrence of a particular adverse effect of harm | | | | governance aspects of risk management as a matter |
| and suffering, as viewed from the safety, health and | | | | of course. As part of the corporate governance |
| environmental viewpoint, only negative risk is | | | | activity, executive management, business risks, such |
| considered. | | | | as strategic, financial, market and operational risks |
| Risk Assessment the Concept | | | | management forms an integral part. |
| The term 'risk assessment' is commonly used in | | | | The utilization of risk management also extends into |
| various ways to describe some method of | | | | the realm of corporate accountability through the |
| identifying, understanding and controlling risks. Risk | | | | requirement for enterprise wide risk management. |
| Assessment can be described as a detailed and | | | | This consists mainly of the activities of ownership |
| systematic examination of any activity, location or | | | | and commitment, executive leadership, enabling |
| operational system to identify risks, understand the | | | | frameworks and the continuous process |
| likelihood and potential consequences of the risks and | | | | improvement activities. |
| to review the current or planned approaches to | | | | Finally risk management is utilized as one of the tools |
| controlling the risks, resulting in instituting additional | | | | to manage the sustainability of the company by |
| controls where required. Successful risk control can | | | | managing the reputation of the organization. This is |
| include outcomes such as improved productivity, | | | | achieved through financial as well as non-financial |
| safety, health, production, environmental protection, | | | | activities that corporate managers engage in. To |
| community acceptance, etc. | | | | indicate how the various levels of risk management is |
| There are many ways to conduct risk assessment. | | | | interrelated it would suffice to say that, during an |
| One of the most common and accepted approaches | | | | operational audit, the operational risk assessments |
| in the operational activities of an organization is | | | | are evaluated, and at the conclusion of the audit, |
| qualitative risk assessment. Qualitative risk | | | | non-conformances in the risk assessment process are |
| assessment is part of regulatory requirements in | | | | identified for rectification. These non-conformances |
| many countries for the improvement of occupational | | | | and they way they are managed provides a platform |
| health and safety standards. Qualitative methods of | | | | for the sustainability management of the organization. |
| assessing risks do not try to establish numbers and | | | | It is a known fact that the introduction of risk |
| 'black and white' tolerability of a particular risk like | | | | assessment concepts in business has significantly |
| quantitative risk assessment. Qualitative risk | | | | changed their approach from a reactive management |
| assessment attempts to establish levels of risk only | | | | approach to a more objective management style |
| in relation to other risks, or a total system risk. As | | | | that includes a more realistic way of allocating |
| such, methods such as risk ranking are commonly | | | | resources to address specific risks in an objective |
| used to establish relative levels of risk, ranging from a | | | | manner. |
| high rank to a low rank. This risk ranking is then used | | | | |