Risk Management Overview and Process

Risk Management Overview

• Risk management is the process of identifying, assessing, and controlling threats to an organization's capital and earnings.
• These threats can stem from various sources, including financial uncertainty, legal liabilities, strategic errors, accidents, and natural disasters.
• The aim of risk management is to minimize the adverse effects of risk on the organization.
• Risk is defined as a situation involving exposure to danger.

Risk Management Process

• The risk management process involves several key steps: Identify, Assess, Evaluate, Control, and Monitor.
• Identifying potential risks that endanger human life, property, and food safety is crucial. Enterprise standards and legislation related to protecting lives and property must be applied. This isn't limited to customers, but also includes personnel, stakeholders, visitors and the wider public. Injuring anyone or losing property can be a threat.
• Assessing risks involves determining potential impacts (e.g., injury, illness, loss of property) and the likelihood of each risk occurring.
• Evaluating involves examining whether the identified risks are significant and if they can affect the organization's overall objectives.
• Controlling risks involves implementing strategies to mitigate risk. This could include actions like reducing the consequence of risk, making areas safer, and implementing better procedures. Correcting weak points and threats is critical.
• Monitoring risks involves tracking and reviewing risk levels, and re-evaluating them periodically to determine if new risks are emerging or if existing risks have intensified.

Risk Assessment

• Risk assessment is a crucial aspect of risk management. It involves analyzing the likelihood of an event, and the severity of the consequences, to quantitatively measure risks within an organization.
• Determining possible impacts like injuries, sickness, loss of property, or death is common in risk assessment.
• A risk matrix, often a 5x5 matrix, lists likelihood of occurrences on one axis and severity of consequences on the other axis.
• The example matrix provided demonstrates how to assess risk based on likelihood and severity.
• Qualitative data, like observing and analyzing risk, is used to determine the risk level.

Risk Matrix Example

• A 5x5 matrix assesses risk levels, relating likelihood and consequence.
• Likelihood categories (Rare, Unlikely, Possible, Likely, Almost Certain) are paired with consequence categories (Insignificant through Extreme).
• The intersection of these categories defines a risk level.

Controlling Risk

• Controlling risk involves actions to reduce likelihood and the consequence of risks through various strategies.
• Control methods include improving workplace hygiene, implementing proper food safety procedures, and ensuring equipment is functional, as well as preventing or minimizing accidents and disasters.
• Additional security measures and training are needed in risk control.
• Regular risk assessments and reviews are important to stay apprised of new developments and threats.

Risk Monitoring

• Risk monitoring is essential for continually tracking the effectiveness of risk management plans.
• This ongoing monitoring improves current and future management by continually assessing progress, outcomes, and impacts of risk management programs.
• It involves keeping track of identified risks, residual risks, and new risks.

Risk Reassessment

• Risk reassessment involves reviewing identified risks and the effectiveness of risk response plans.
• Organizations should scrutinize the identified weaknesses and strengths associated with threats and capitalize on the strengths and positive outcomes.
• Prioritization of risks is important to focus on those with high impact and likelihood first.
• Tools like audits, variance analysis, and trends analysis are used during risk reassessment, and reserve analysis to evaluate the contingency measures.
• Feedback mechanisms and regular meetings support ongoing risk management.

Evaluating Risk

• Evaluation of a risk plan's relevance, effectiveness, efficiency, and impact, is crucial.
• Risk evaluation should be compared with pre-defined goals, and a thorough examination of potential problems during implementation is essential.
• Risk mitigation, avoidance, transfer, and acceptance are various methods for dealing with risks in an organization depending on various factors.

Case Study: Hospital Sterile Supply Department (CSSD)

• The case study details the scenario of a hospital CSSD, listing hazards like unsafe floor conditions, bending concerns, and limited staff.

Activity #2 (Picture Analysis):

• Apply risk management to the pictured scenario (e.g., motorcycle transporting pigs).
• Use the process - identify, assess, evaluate, monitor, and control.

Activity #3 (What is NOT Acceptable):

• Use a 5x5 risk matrix to determine risks that are not acceptable/not worth considering.