Introduction to Risk Management

Terminal Learning Objectives Upon completion of this lesson, you will be able to: Define Operational Risk Management (ORM) Describe the levels of ORM Discuss the link between the ORM and successful events. Apply ORM to everyday Young Marine Activities.

What is Operational Risk Management? The term Operational Risk Management(ORM) is defined as a continual cyclic process which includes risk assessment, risk decision making, and implementation of risk controls, which results in acceptance, mitigation, or avoidance of risk.

The ORM Process Is a decision making tool used by Registered Adults and Young Marines at all levels to increase effectiveness by identifying, assessing, and managing risks Increases our ability to make informed decisions. Minimizes risk to acceptable levels. Applies to all activities. “ORM must be practiced 24 hours a day, 7 days a week, 365 days a year.”

Principles of ORM Accept risk when benefits outweigh the costs. Accept no unnecessary risk. Anticipate and manage risk by planning. Make risk decisions at the right level. The goal of ORM is not to eliminate risk, but to manage risk so that the mission can be accomplished with the minimum amount of loss. Only take risks that are necessary to accomplish the mission. Risks are more easily controlled when they are identified early in the planning process. When the leader responsible for executing the mission determines that the risk associated with that mission cannot be controlled at their level, or goes beyond the commander’s stated intent, they shall elevate their decision to their chain of command.

ORM Process Cycle Identify the Hazards YM Activities Analyze Activity Determine Hazard Root Causes List Hazards YM Activities Lessons Learned New Hazards Assess the Hazards Assess the severity Assess Probability Complete Risk Assessment Supervise Monitor Review Feedback Adjust Controls The first step in the ORM process is to identify the hazards. Implement Controls Make Implementation Clear Establish Accountability Provide Support Make Risk Decisions Identify Control Options Determine Control Effects Determine Residual Risk

Identify the Hazards A hazard is any condition with the potential to negatively impact an event or cause injury, death, or property damage. To identify the hazards: Analyze the event – Review the plans and details describing the YM activity to ID all tasks, requirements and conditions then create a sequential or chronological list of all major events or tasks in a YM activity. List the hazards – Review each event in the sequence of tasks for hazards. Involve operators and those with applicable experience. Brainstorming is useful for this preliminary hazard analysis. Ask “what if” to think about what could go wrong. Determine the root cause - Make a list of the causes associated with each identified hazard. The root cause is the first link in the chain of events leading to Activity or task degradation.

ORM PROCESS CYCLE Identify the Hazards YM Activities Analyze Activity Determine Hazard Root Causes List Hazards YM Activities Lessons Learned New Hazards Assess the Hazards Assess the severity Assess Probability Complete Risk Assessment Supervise Monitor Review Feedback Adjust Controls The second step in the ORM process is to assess the hazards. Implement Controls Make Implementation Clear Establish Accountability Provide Support Make Risk Decisions Identify Control Options Determine Control Effects Determine Residual Risk

Assess the Hazards For each hazard indentified, determine the associated degree of risk in terms of probability and severity. The result of the risk assessment is a prioritized list of hazards, which ensures that controls are first identified for the most serious threat to the activity or task accomplishment. Risk: An expression of possible loss due to a hazard in terms of severity and probability. Severity: Determines how bad the results would be if the hazard caused a mishap. Qualitatively categorized from 1 to 4, with 1 being the most severe. Probability: Determines how likely the hazard could cause a mishap. Qualitatively categorized from A to D, with A being the most probable.

Severity Categories Cat I: Death, loss of facility/asset or result in grave damage to national interests. Cat II: Severe injury, illness, property damage, damage to national or service interests or degradation. Cat III: Minor injury, illness, property damage, damage to national or service interests or degradation. Cat IV: Minimal threat to personnel safety or health, property, national, service or command interests use of assets.

Probability Criteria Subcategory A: A mishap likely to occur immediately or within a short period of time. Subcategory B: Will cause a mishap in time. Subcategory C: May cause a mishap in time. Subcategory D: Unlikely to cause a mishap.

Risk Assessment Code Matrix The Risk Assessment Code (RAC) Matrix is used to determine the RAC for a hazard. You must cross probability and severity to obtain this code.

ORM PROCESS CYCLE Identify the Hazards YM Activities Analyze Activity Determine Hazard Root Causes List Hazards YM Activities Lessons Learned New Hazards Assess the Hazards Assess the severity Assess Probability Complete Risk Assessment Supervise Monitor Review Feedback Adjust Controls The third step in the ORM process is to make risk decisions. Implement Controls Make Implementation Clear Establish Accountability Provide Support Make Risk Decisions Identify Control Options Determine Control Effects Determine Residual Risk

Criteria for Establishing Effective Controls Suitability Feasibility Acceptability Explicitness Support Standards Training Leadership Individual

Control Options Reject the risk Avoid the risk Delay an action Transfer the risk Compensate for the risk

Types of Controls Engineering Controls: examples include material selection or substitution. (i.e. poor quality rope swing, ineffective tents, etc.) Administrative Controls: examples include warnings, markings, placards, signs, written policies, instructions, SOPs, additional training. Physical Controls: examples include PPE, fences, special oversight personnel (i.e. NRA instructor at range, proper running shoes, boots that fit, quality socks, etc.)

ORM PROCESS CYCLE Identify the Hazards YM Activities Analyze Activity Determine Hazard Root Causes List Hazards YM Activities Lessons Learned New Hazards Assess the Hazards Assess the severity Assess Probability Complete Risk Assessment Supervise Monitor Review Feedback Adjust Controls The fourth step in the ORM process is to implement controls. Implement Controls Make Implementation Clear Establish Accountability Provide Support Make Risk Decisions Identify Control Options Determine Control Effects Determine Residual Risk

Implement Controls Implementing Controls Requires: Clearly communicating the plan to all involved personnel Establishing accountability Guaranteeing necessary support is available Careful documentation of each step in the RM process facilitates risk communication and the rational processes behind the RM decisions.

ORM PROCESS CYCLE Identify the Hazards YM Activities Analyze Activity Determine Hazard Root Causes List Hazards YM Activities Lessons Learned New Hazards Assess the Hazards Assess the severity Assess Probability Complete Risk Assessment Supervise Monitor Review Feedback Adjust Controls The fifth step in the ORM process is to supervise. Implement Controls Make Implementation Clear Establish Accountability Provide Support Make Risk Decisions Identify Control Options Determine Control Effects Determine Residual Risk

Supervise Supervision is a key step in the ORM process. It involves determining the effectiveness of risk controls throughout the YM activity or task. This involves three actions: Monitoring the effectiveness of risk controls Determining the need for further assessment of all or a portion of the mission or task due to an unanticipated change Capturing lessons learned (AAR)

How do we do it?

Take advantage of what is already out there. DD form 2977 http://www.parks.army.mil/training/docs/dd2977.pdf Newest Version

Older version DD form 7566

Examples