Describing Risks

We know that the size of a Risk can be expressed as a relationship between Frequency of adverse Consequences (how many of a given Value per year) and the Consequence Value of them at that Frequency ($ per case), as is shown by the Risk Diagram. 

We must be able to meaningfully describe (define) the Risk for which we are drawing this Risk Diagram.

How we can go about this is explained in detail in the example below (Steps A to F), which is convenient because it makes the process look easy, but it is not always so. Nevertheless, the discipline involved is helpful in harnessing your thoughts and after persevering you’ll realise the benefit both in your own understanding and in the resulting lack of chaotic clutter in your risk register.

Before you begin, a quick overview of the method will assist you to understand it.

Firstly know what the ‘asset‘ is that could be adversely affected by the risk you have (perhaps loosely) in mind. An asset is something, anything, of value to the organisation (employees, the public, shareholders, production efficiency, plant and equipment, buildings, reputation…). Then be explicit about the nature of adverse consequences (Injury, damage, financial loss) that could be experienced by this asset.

Secondly be clear in your mind about the process (it’s not an ‘accident’, nor is it a ’cause’, nor a failed control measure) that could give rise to the adverse consequences you have in mind. It’s a process necessarily involving energy if damage or injury/ill health is on your mind. If none of these are on your mind but financial or reputation etc loss is, it is necessarily process that does not involve energy, but a non-energy threat to which the asset is vulnerable, such as failure of a major supplier.

Thirdly be conscious of the situation in which this could occur and the conditions and circumstances in which this exists. Situation – the type of work, the location etc. Conditions – things that don’t change much or at all. Circumstances – things that do change, like the weather, the season, the time of day, a plant breakdown etc.

Here’s the process broken down into six steps-

Step A

The adverse Consequences in the Risk Diagram are those experienced by assets of interest to us – people, equipment, the environment, the business (money, reputation, good will etc).  Hence we must be clear about what these assets are for the purposes of estimating the Risk (drawing the Risk Diagram).  For example, if our underlying concern is injury or ill health of people do we include members of the public as well as employees of the organisation within which the Risk exists?  Do we include in Consequences those experienced by the organisation or are we limiting ourselves to just the experience of the injured people?  The choice we make just needs to suit our purpose and be either explicitly or implicitly evident in our description of the Risk.

Example: People – employees

Description:  Risk associated with employees

Step B

With assets identified we need to describe the Consequence types of interest. 

Example: Injury, not ill health.

Description:  Risk associated with employee injury

Step C

What Consequence Values are of interest to us?  These indicate the measures we will make use of.  Measures can be of the cost of injury, the cost of damage repair, the extent of monetary loss.  

Example: The cost of medical treatment; rehabilitation; lost earnings; pain and suffering and loss of future enjoyment of life (courts of law have ways of determining these values), the value of death (there are accounting ways of determining such a figure)

Description:  Risk arising from the company’s costs associated with employee injury, OR Risk arising from the employee’s costs associated with employee injury

Step D

As we know from the theory, such Consequences arise (probabilistically) from the Occurrence process.  These processes involve energy if damage/injury/ill health are of interest or may be non-energy processes if no damage etc. is possible.  Our next step is then to make the nature of the Occurrence process clear.  If an energy-based process, in what energy form are we interested?  

Example: Falls, or it could be all energy forms that give rise to injury.  We choose and decide.

Description:  Risk arising from the company’s costs associated with employee injury as a result of falls in the workplace

Step E

We now need to describe the situation in which the risk of interest to us exists.  This situation is a statement of the type of work or place or organisation.  Doing this enables us to pin point our data sources and gives us and the reader an immediately useful image of the nature of the risk.

Example: The high rise building construction industry

Description:  Risk arising from the company’s costs associated with employee injury as a result of falls in the high rise building construction industry

Step F

Finally, we need to say something about the circumstances and conditions of interest to us.  This provides a more specific understanding of our work.  If I talk about risks to pedestrians from cars it is immediately obvious to you that these will vary from congested urban environment to remote rural ones.

Example: In repairing war-damaged buildings in Palestine

Description:  Risk arising from the company’s costs associated with employee injury as a result of falls in the high rise building construction industry in repairing war-damaged buildings in Palestine.

The underlined statement says something about the Conditions of interest to us.

I could add a statement of Circumstances to further restrict the statement of my interest, for example:

Description:  Risk arising from the company’s costs associated with employee injury as a result of falls in the high rise building construction industry in repairing war-damaged buildings in Palestine during a heat wave/during an air attack/during hours of darkness (etc.)

The underlined statement says something about the Circumstances of interest to us.

You will note that right up until this final step the risk description is relevant to the high rise building construction industry in general. This statement “Risk arising from the company’s costs associated with employee injury as a result of falls in the high rise building construction industry” is of general applicability and could readily be used to compare experience of this risk in any country or situation. The appending of “repairing war-damaged buildings in Palestine during a heat wave” immediately gives us a precise statement of relevance to understanding the nature and size of this risk.

Leave a Comment