Risk management is often treated as a step-child among management issues until businesses and individuals are stunned to find themselves defendants in lawsuits.  Instead, risk management should be part of the planning and management of every activity.  Even though risk management should be proactive, many times the conditions that caused an accident are not confronted until after an accident occurs.  Most of the principles described in this article can be applied to an accident prevention program or used to analyze why an accident occurred and determine how to prevent recurrence.
 

Risk is any possibility of injury, death, damage, disadvantage, or destruction.  As a technical discipline, risk management encompasses risk avoidance (e.g., releases, waivers, subcontracts), risk shifting (e.g., indemnity contracts, insurance), and risk minimization (e.g., hazard management).  A hazard is anything that might cause a risk.
 

Risk managers and safety professionals debate the theories and philosophies of risk management, but risk management has no value unless the theories and philosophies are placed into practical application.  Most people think of risk management strictly in terms of hazard management and the rest of this article uses the terms risk management and hazard management interchangeably, even though purists might criticize this terminology.
 

Hazards are minimized through a series of observations and judgment calls.  The most basic of risk management plans includes provisions for identification, assessment, and management of hazards employing a systematic approach.
 

Hazards may be grouped by:   (1) job description (i.e., looking at tasks, machinery, equipment, premises, and conditions applicable to each person involved in an activity or business), (2) zone (e.g., grouping hazards that occur on the sales floor vs. hazards that are encountered in the equipment repair and maintenance area vs. hazards in the fill station vs. hazards on the boat), (3) activity (e.g., hazards encountered in filling a tank, hazards encountered in mooring and unmooring), or (4) instrumentality or condition (e.g., hazards applicable to a particular staircase, hazards attributable to a particular substance or chemical).   A  combination of these grouping techniques is generally required to analyze all identified hazards within an organization, business, or venture.
 

Regardless of how hazards are classified, the person performing the risk management function identifies potential hazards by looking at conditions, activities, and things and asking, for each area of doubt (potential hazard), “Does this action, condition, or thing have the potential to hurt me or someone else or cause damage or destruction to property?  If so, how might I, someone else, or some aspect of property be injured or damaged?”  Responsible risk management recognizes that there are risks inherent in almost every activity.  Risks may be naturally occurring, such as weather-related events.  The person performing the risk management function needs to consider all of these different types of risks in an open minded fashion that takes more into account than the potential for injury or damage created by the activities of a particular task or job.
 

Risk assessment is a judgment call in which the risk manager tries to estimate the frequency with which accidents might occur and the probable severity of injury or damage in the event that an accident does occur.  Mathematical certainty is not one of the goals of risk management.  Reasoned judgment on a scale ranging from first aid to death for severity and ranging from unlikely to highly probable for frequency is sufficient.
 

Once risks and hazards are identified and assessed, they should be prioritized based on anticipated frequency and severity of injury or damage and risk management plans developed for the various risks and hazards.  Idealist risk managers might claim that the goal of risk management is to minimize all risks and hazards and to prevent all accidents.  Realistic risk managers recognize that risks and hazards should be lessened, but that reasonable people will accept reasonable risks.

 
Reasonable risks are defined through judgment that might be second-guessed with hindsight by judges or juries.  Often the risk management process creates a paper trail, some of which deals with risk assessment.  Documentation is an important part of the entire risk management process, and an understanding of applicable legal standards is important to proper judgment and documentation.
 

Aspire to do better than the requirements of the legal standard, but do not create an unrealistic standard for yourself or others.  Risk management is a human process with human limitations.  Corporate policies and internal memos should be written with this in mind and should avoid the use of superlatives and statements of unrealistic expectations for the organization and the people who work there.
 

Once the risk is assessed and prioritized, the accepted hierarchy for confronting the effect of a hazard is:

1)     Eliminate the hazard.  In some instances, this means that certain activities will be avoided.   In other circumstances, this means that the hazard will be designed out so that the risk of injury and damage is gone.

2)     Substitution of the hazard.  This may involve the use of different equipment, different surfacing materials, different chemicals, or other changes in the activity or conditions that pose lesser hazards than the original activity or condition.

3)     Isolate the hazard.  Keep people away from the hazard.  This is almost a species of hazard avoidance, but implies that, at times, the original hazard or a substitute hazard may be confronted or may escape isolation.

4)     Engineering controls.  Guards, handrails, and other add-on type modifications of equipment, premises, and conditions fall into the category if engineering controls.  Engineering controls do not fully isolate the hazard, but provide protection from the hazard for nearby people and property.

5)     Administrative controls.  Most administrative controls fall into the realm of job modification.  Changing the allowable time at a specific depth is an example of an administrative control.  Limiting the number of dives per day is another example of an administrative control.  Maintenance procedures, housekeeping procedures, lock out/tag out procedures, and training all fall into the area of administrative controls.  Employee competency is a requirement for safe, productive work.  Management has employee and customer orientation responsibilities and may have training responsibilities within the issue of employee competency.  Management should also evaluate employee competency and performance as an ongoing exercise.
 
6)     Personal protective equipment.  The least and most disfavored option for hazard management is the addition of gloves, earplugs, face shields, respirators, and other personal protective equipment.

7)     Assumption of the risk.  Under this option, the risk is assumed to be minimal so as to require no action.
 

One of the hot topics in risk management is behavioral risk management.  Stated with oversimplification, behavioral risk management presumes that the responsibility for preventing injuries, death, and property damage is shared by all participants in any business, venture, or activity.  This school of thought presumes that accidents are caused by mistakes and focuses on behaviors, habits, and procedures that may lessen the risk of injury, death, and property damage.   Some studies indicate that behavior based safety is the most effective safety technique in reducing injury rates.
 

While there are numerous reports extolling the effectiveness of behavioral risk management, behavioral risk management has its detractors.  Detractors say that behavioral risk management is a rationale by which management ignores efforts to eliminate hazards, guard against hazards, or otherwise follow the long accepted hierarchy of hazard management control measures.  Instead, say the critics, behavioral risk management skips straight to administrative controls as a frontline defense against injuries.

 
In any case, the choice of corrective measures is another judgment call in the hazard management process that may, and in many cases should, employ more than one technique.  Once corrective measures have been implemented, the person responsible for risk management decisions should evaluate the effectiveness of the corrective measures employed.  Assure that the people and property at risk are performing within the parameters of the hazard management control, that they are not defeating guards on machinery, that they are performing tasks as prescribed, and that they are using appropriate personal protective equipment.
 

Follow-up and evaluation may, at first, be accomplished by monitoring employee activities, use of machinery and equipment, and working conditions.  Feedback from employees is important throughout the process and is particularly important in identifying risks, determining whether proposed controls will work within the job setting, and in monitoring the hazard.  In some organizations, statistics, reported injuries, and incident reports play a part in monitoring of hazards.
 

Brushing risks under the rug or refusing to confront risks can be more dangerous than mistaken but good faith attempts to minimize risks.  Seldom will a risk management functionary identify a hazard that is not already known to the people who work around the hazard on a daily basis.  In many circumstances, a judge or jury will not believe management’s claim that an incident was not anticipated.  The ostrich approach may lead to findings of gross negligence or increased liability.
 

Risk management is a constant process.  Reassessment and perpetual evaluation should be part of an organizational routine.  The potential for new risks should be assessed any time new equipment is acquired, any time routines are changed, and any time that conditions of work or equipment are modified.  Hazard minimization is not just a business activity.  Hazard minimization is a humanitarian activity.

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This article is intended only as a generic introduction to legal concepts and is not intended to provide legal advice applicable to any particular situation, set of facts, or jurisdiction. Laws vary widely from jurisdiction to jurisdiction. For specific legal advice, please consult an attorney who is licensed to practice in your jurisdiction.
 

Copyright 2001 Dana Timaeus