Risk can be defined as the measure of the probability of danger occurring from internal or external factors together with its adverse consequences. It is synonymous to a hazard, the chances that it will occur, and the results of its happening. However, the phenomenon can be avoided through preventive action. An example is the risk of contracting a certain disease due to continued exposure to the pathogens or general elements that cause the particular disease.
Risk management is the process of identifying, assessing of risks and thereafter developing strategies to counter the risks. It engages the use of specific managerial and engineering tools to control the dangers resulting from specific tasks, especially at the workplace. Its application helps reduce the probability of hazardous events and their adverse effects while increasing that of positive events and their consequences. A team of people involved in risk management aims at providing solutions to risks by coming up with methods for their contingency or mitigation. It is important to note that the application of risk management strategies is usually systematic, meaning that it follows a particular procedure.
Human factor considerations is a terminology used to refer to human or employee factors which helped in the creation of the 5M model of risk management. These considerations offer a guideline to the use of this model in the current job industry, as it elaborates the relationship between certain elements that come together to perform tasks such as humans and machines at a workplace. Some of these considerations include selection of employees, their performance and their personal views on the jobs they are doing. Selection of employees focuses on their physical and psychological capability regarding the job at hand. Their performance is measured according to various factors such as their skills of adaptive skills to certain tasks, perception and how well they handle pressure due to workload. Their personal judgments on the job are also important including their expectations, job satisfaction and what they learn from their work experience.
Environmental considerations are inclusive of both internal or operational factors and external ones. They are factors that create an overview of the place where the job is performed. This implies that they describe a working atmosphere. Such considerations comprise of climatic, operational and hygienic factors at a workplace. Climatic factors are external and include humidity and darkness. Operational factors are those for instance caused by human obstructions, how equipment is configured and the design of the work place. Hygienic considerations include contaminants and noise pollution. All these considerations determine the way employees relate with the workplace and the potential risk they pose.
Tools/equipment/material considerations take into perspective the items handled by the employees in their daily tasks, and they risk they pose to these workers. Some of the factors taken into consideration include the design, maintenance, logistics and technical data of these items. Design is how they are made and their performance levels. Maintenance involves how they are taken care of to make work easier and create easy access, while logistics are the means of purchase and supply and their safety. Technical data measures the accuracy, usability and availability of the items.
The policy, procedures and management considerations, are based on the input of management in the process of risk management. It includes the policies made by management and the procedures that govern the interactions between other aspects in the organization such as with employees. Consideration is also given to the structure of management with regard to how various levels of management are involved in risk management.
Job step and task considerations mainly focus on the activities undertaken, the clearly defined steps involved in these activities and the objectivity of functions undertaken in each step. These are put into consideration to determine the amount of risk if any encountered when performing certain job operations. All the above considerations help in identifying potential risks and coming up with methods to contain them before they can occur.
A benefit is an achievement. Therefore, in defining risk versus benefit we analyze the achievements made from managing risks. Risk management considers potential costs of losses beside the potential benefits arising from control of certain risks. The benefits of risk management are not only realized through control of hazards but also in the efficiency of such control measures. This means that benefits are not only derived from a decrease in damages caused by risks but also in the long-term increase in efficiency in terms of performance of tasks and future management of such risks. Effective handling of a particular risk can reduce the chances of it ever happening again or in the event that it is repeated, there is a ready solution for it.
Principles of risk management provide guidelines or act as foundations that govern the way the process should be conducted. Some of them include, risk assessment and development of risk reduction strategies, proper selection of acceptable and unacceptable risk based on benefit, motivation of employees to use methods of risk management, delegation of risk management tasks to high level of management and putting budgetary and time factors into consideration. These are meant to help in coming up with the best options for dealing with risk effectively.
Risk management communication refers to the exchange and transfer of information between different levels of an organization. Much of this communication is between those responsible for risk management and the people that are likely to be affected by the risk. The importance of this communication is to assist in planning of risk assessment and development of methods to be used in averting the risk. Through it, possible risks are identified, the impact of these risks is evaluated and possible solutions arrived at. It also helps in risk boosting preparedness among the management and employees of an organization.