Risk Management and Safety - An Overview

Risk management and safety processes are closely aligned. Risk management deals with the identification and treatment of risk. Safety programs are a way to treat the exposure of risk of injury to workers. While intertwined they are separate disciplines that require expertise for programs to perform at a high level.

For this discussion risk management is defined as the “insurance risk management” as discussed by International Risk Management Institute “IRMI” definition page that follows.

“Risk Management: The practice of identifying and analyzing loss exposures and taking steps to minimize the financial impact of the risks they impose. Traditional risk management, sometimes called "insurance risk management," has focused on "pure risks" (i.e., possible loss by fortuitous or accidental means) but not business risks (i.e., those that may present the possibility of loss or gain). Financial institutions also employ a different type of risk management, which focuses on the effects of financial risks on the organization. For example, interest rate risk is a bank's most important financial risk, and various hedging tools and techniques such as derivatives are used to manage banks' exposure to interest rate volatility”

Source: http://www.irmi.com/online/insurance-glossary/terms/r/risk-management.aspx

The risk management process is also important to understand as safety also follows a similar path. "The risk management process is the process of making and implementing decisions that will minimize the adverse effects of accidental business losses on an organization. Making these decisions involves a sequence of five steps: identifying and analyzing exposures to loss, examining feasible alternative risk management techniques to handle exposures, selecting the most appropriate risk management techniques to handle exposures, implementing the chosen techniques, and monitoring the results. Implementing these decisions requires performing the four functions of the management process: planning, organizing, leading, and controlling resources.”

Source: http://www.irmi.com/online/insurance-glossary/terms/r/risk-management-process.aspx

(Note: IRMI.com is a fabulous web-site as a reference tool and I highly recommend it and their product offerings for the risk management and insurance professional.)

It is important to emphasis the steps of Identifying, Examining, Selecting, Implementing and Monitoring form a continuous process loop. Risk management and safety cycles, like other businesses cycles such as accounting, never end. It needs to be though of as a circular process, as demonstrated by the visual below. If the process stops, the process will falter and eventually fail.

Source: http://strikingprojectmanagement.com/qualitative-risk-analysis/

The steps involved in addressing safety are the same as risk management, but may use different core methods under each step to achieve a optimal outcome. The safety steps include:

1.  Identify Hazards, a review of job analysis and hazard assessments need to be completed.
2. Examine the hazard and the risk the employee is exposed to.
3. Select a treatment to address the hazard. Can the process be re-engineered or can protection such as guards be put in place? Is training and personal protective equipment feasible?
4. Implementation of the agreed upon treatment of the risk needs to be made, with the                     communication to all of the stakeholders.
5. Monitor the results of the treatment. Are injury rates down? Is production efficiency maintained? Is the treatment such that employees are following established protocols? Is data collected to make monitoring credible to management?

The process is simple enough, when put into charts and written on paper, but the “devil is in the details” of implementation. The largest of those details is gaining the commitment of the senior management of an organization. Without senior management’s commitment, safety programs will be difficult to manage successfully and are destine to fail. But more on that in the next post, where the steps of implementing a safety program will be discussed.