Every activity performed in this life has an inherent associated risk, but what does that mean?
Risk is the combination of the severity produced by the outcome of a particular situation with the likelihood of occurrence. In that sense, every activity that we perform indeed has an associated risk. For example, walking in the street or driving your car to work has the potential and a probability of causing a personal injury or leading to an economic loss (e.g., car damage). However, the way we approach every situation is dependent on that combination between what can happen and the possibility to take place, known as risk.
Every situation in life is unique, presenting different conditions and, speaking from an engineering perspective, has various parameters, which can change over time. In that sense, considering the same rules for every situation is not an effective risk control. These rules tend to
overestimate or underestimate the risk control measures. Control underestimation leads to inadequate risk control, potentially leading to a loss. In contrast, overestimation leads to a higher cost.
A successful risk control approach should consider these unique situations and parameters to define the needed risk control. The risk-based approach identifies situations or conditions that could lead to that unfortunate event. It evaluates the strategy implemented for specific circumstances.
This approach provides a better understanding of the implemented risk controls. It gives a measure of the effectiveness of how we are controlling the situation. This management approach is more efficient than blindly comply with a requirement, known as a prescriptive mandate. For example, speed limits are a prescriptive mandate when driving a car to get to work. However, this speed limit does not consider the actual condition of the road or the weather on a particular day. Using the risk-based approach, the driver can assess the road condition and the weather identifying the likelihood of having an accident. The driver can modify its behavior, controlling the risk (e.g., changing the route or reducing velocity), ensuring that it will safely get to the workplace. In this particular example, following the speed limit would not guarantee a safe outcome, especially if the road is in poor condition, and there is inclement weather.
We can translate the same concept to modern manufacturing and production facilities where the situations are more complicated due to the interaction between operators and production technology. A prescriptive approach in this environment would not necessarily guarantee accident-free operations. Additionally, it would be challenging to integrate the prescriptive approach into operations performance. In contrast, a risk-based approach will lead to a risk understanding, increasing the effectiveness and appreciation of the implemented controls, ensuring a safe and reliable operation. Furthermore, the risk-based approach enables the integration of the business performance, reliability, and safety aspect of the activities, allowing their combination to reach a common business objective.
This approach may seem to oppose the enforcement of policies and procedures that are in place to reduce the likelihood of mistakes. However, this is not the case; the risk-based approach allows you to develop your policies and procedures efficiently and fit for purpose. Implementing procedures designed for a nuclear reactor to a storage warehouse would not be adequate. Policies and procedures need to take into consideration the events that may happen in your facility and considers the likelihood that these events could take place; in other words, your risk.
One great benefit of the risk-based approach is that it is not only for safety purposes. One of the most misunderstood aspects of an incident or accident is the indirect cost, that economic loss that the organization experienced after they had an accidental event. In the previous car example, after a car accident, the driver loses his transportation means, potentially affecting its income, and consequently, its family finance. That loss of income and family financial crisis is the indirect cost of the car incident. The risk-based approach allows the consideration of these potential indirect losses suffered from a particular accidental event enabling the analysis of their influence in the business model to ensure production continuity and organizational resilience.
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