PREPARED BY MS. ROSITA ARMAN MICHAEL ANNIAH MBA IN STRATEGIC MANAGEMENT (UTM) BA. ESTATE MANAGEMENT (UITM)

1.0 WHAT IS RISK?  Risk is defined as the probability and severity of accident or loss from exposure to various hazards, including injury to people and loss of resources  Risk should be identified and managed using the same disciplined process that governs other aspects of a Company’s endeavors, with the aim of reducing risk to personnel and resources to the lowest practical level.

1.0 WHAT IS RISK?  Risk management must be a fully integrated part of planning and executing any operation,  Routinely applied by management, not a way of reacting when some unforeseen problem occurs.

1.0 WHAT IS RISK?  Careful determination of risks, along with analysis and control of the hazards identified;  they create results in a plan of action that anticipates difficulties that might arise under varying conditions, and pre- determines ways of dealing with these difficulties.

1.0 WHAT IS RISK  Managers are responsible for the routine use of risk management at every level of activity, starting with the planning of that activity and continuing through its completion

1.1 TYPES OF RISKS  Identified risk: That risk that has been determined to exist using analytical tools.  Unidentified risk: That risk that has not yet been identified. Some risk is not identifiable or  measurable, but is no less important for that. Mishap investigations may reveal some previously unidentified risks.

1.1 TYPES OF RISKS  Total risk The sum of identified and unidentified risk. Ideally, identified risk will comprise the larger proportion of the two.  Acceptable risk: The part of identified risk that is allowed to persist after controls are applied.

1.1 TYPES OF RISKS  Unacceptable risk: That portion of identified risk that cannot be tolerated, but must be either eliminated or controlled.  Residual risk: The portion of total risk that remains after management efforts have been  employed. Residual risk comprises acceptable risk and unidentified risk.

2.0 RISK AND ITS MANAGEMENT  Risk management is the logical process of weighing the potential costs of risks against the possible benefits of allowing those risks to stand uncontrolled.

2.0 RISK AND ITS MANAGEMENT  Directs the process by defining standards, procedures, and controls.  Although management provides procedures and rules to govern interactions, it cannot completely control the system elements.  For example: weather is not under management control and individual decisions affect personnel far more than management policies.

2.0 RISK AND ITS MANAGEMENT Acceptability of Risk  Some degree of risk is a fundamental reality  Risk management is a process of tradeoffs  Quantifying risk does not in itself ensure safety  Risk is often a matter of perspective  Realistically, some risk must be accepted

2.1 GENERAL RISK MANAGEMENT GUIDELINES  All human activity involving technical devices or complex processes entails some element of risk.  Hazards can be controlled; they are not a cause for panic.  Problems should be kept in perspective.  Judgments should be based upon knowledge, experience and mission requirements.

2.1 GENERAL RISK MANAGEMENT GUIDELINES  Encouraging all participants in an operation to adopt risk management principles both reduces risk and makes the task of reducing it easier.  Good analysis tilts the odds in favor of safe and successful operation.  Hazard analysis and risk assessment do not replace good judgment: they improve it. ·

 Establishing clear objectives and parameters in risk management works better than using a cookbook approach.  No one best solution may exist. Normally, there are a variety of alternatives, each of which may produce a different degree of risk reduction. 2.1 GENERAL RISK MANAGEMENT GUIDELINES

3.0 OBJECTIVES OF RISK MANAGEMENT  Protecting people, equipment and other resources, while making the most effective use of them.  Preventing accidents, and in turn reducing losses, is an important aspect of meeting this objective. In turn, by minimizing the risk of injury and loss, we ultimately reduce costs and stay on schedule.

3.0 OBJECTIVES OF RISK MANAGEMENT  Thus, the fundamental goal of risk management is to enhance the effectiveness of people and equipment by determining how they are most efficiently to be used.

Figure 15-1 illustrates the objectives of the Risk Management process

4.0 RISK MANAGEMENT RESPONSIBILITIES Managers  Are responsible for effective management of risk.  Select from risk reduction options recommended by staff.  Accept or reject risk based upon the benefit to be derived.  Train and motivate personnel to use risk management techniques.  Elevate decisions to a higher level when it is appropriate.

Staff  · Assess risks and develop risk reduction alternatives.  · Integrate risk controls into plans and orders.  · Identify unnecessary risk controls. Supervisors  Apply the risk management process  Consistently apply effective risk management concepts and methods to operations and tasks.  Elevate risk issues beyond their control or authority to superiors for resolution. 4.0 RISK MANAGEMENT RESPONSIBILITIES