RISK ASSESSMENT

World-wide, much is said about the “falling price boom” - reduction of prices for products and services, rather than an increase. The need for improved efficiency and effectiveness is bigger than ever before, and the need will continue to grow. Risk management is fast becoming one of the vital functions within organisations of today, in enhancing profitability through reduction of loss. It was Peter Drucker who said:

“The first duty of business is to survive, and the guiding principle of business is the avoidance of loss - not the maximisation of profit”

Risk Management is seen to be one of the few remaining areas of business management with major cost reduction potential. 

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Risk Management is not new. It has its origins in many disciplines; it encompasses occupational health and safety, but it is more than injury prevention, it includes fire protection and prevention, but it is more than fire prevention, includes engineering and maintenance, quality assurance, human resources management, insurance, but it is more than that:

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Risk Management is an holistic and integrated approach

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There is a growing understanding and acceptance that there are principles that are common to all these disciplines - managing risk in order to reduce losses. There is a need for a structured approach towards managing risk, as resources have been allocated in the past for the reduction of injuries and other forms of loss, without always first establishing the level of risk involved - often resulting in either inadequate control measures or an ‘overkill’ - sometimes literally wasting money on safety, quality, maintenance, etc.

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‘You cannot manage risks until you have assessed them.’

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Without assessment of risks, it would not be possible to decide what risk control and financing measures and more specifically, the extent of these risk control and financing measures that would be required to manage these risks. Until recently, risk assessment was considered the domain of science;  public opinion was regarded as naïve and irrelevant - except for communicating the risk. Today, both risk science and the values of society are regarded as core to sound risk management.

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There are essentially three forms of risk assessment, which are part of a risk management system and need to be carried out under legislation. These are: (not in order of priority):

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1. Baseline Risk Assessments

Organisations have to assess where they are in terms of risk, identifying the major risks and thereby establishing their priorities and a system for future risk control. This baseline risk assessment needs to be comprehensive and may well lead to further, separate, more in‑depth risk assessment studies. The baseline risk assessment must be periodically reviewed, say every one to two years, to ensure that it is still relevant and accurate. 

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2. Issue Based Risk Assessments 

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As circumstances and needs arise, separate risk assessment studies  need to be conducted. These are normally be associated with a system for the management of change. An additional risk assessment needs to be carried out.

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3. Continuous Risk Assessments 

This is the most important and powerful form of risk assessment which must take place continually, as an integral part of day to day management.   It will mainly be conducted by front‑line supervisors and it is essential that formal training is provided to enable this process to be efficient. 

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Contact IRCA Global to assist with your Risk Assessment Needs!