After you’ve completed a thorough risk assessment and analysis for your project or activity you will probably have a list of risks across a range of likelihood and impact. Organisations have different ways of representing these two factors, usually using matrices where likelihood and impact are used as X and Y axes and a combined value is displayed in the appropriate matrix cell.
The next step in the process should be to apply a sensible risk mitigation strategy to each of the risks on that list.
Here are some approaches which can form part of your strategy – they can be applied alone or combined depending on the circumstances:
Risk Avoidance
Risk avoidance involves taking steps to eliminate or prevent a risk from occurring. This strategy is most effective for serious risks – when the potential impact of a risk is significant and the likelihood of it occurring is high. Here are some key avoidance techniques:
Declining a Project or Activity: If the potential risks associated with a project or activity outweigh the potential benefits, it may be best to decline or postpone it. Of course a decision like this may have serious commercial implications which may take time to agree, so it’s important to involve stakeholders as early as possible.
Example: A client asks you to perform a piece of bespoke work without a clear specification – you balance the commercial gain against the risk of running into issues due to unclear requirements, and decide to decline the opportunity.
Diversification: Spreading risk across multiple projects, investments, or markets can reduce the impact of any single failure. This can be achieved through a variety of strategies, such as investing in a diversified portfolio of assets or partnering with multiple suppliers.
Example: An energy company diversifies from oil and gas to geothermal power, as was the case for our client, Star Energy. (Read the detailed case study here)
Risk Reduction
Risk reduction involves implementing measures to reduce the likelihood or impact of a risk. This can be achieved through a variety of strategies, including:
Engineering Controls:
Physical changes to the workplace to reduce exposure to hazards. Examples include:
Ventilation systems: To remove harmful fumes and dust
Soundproofing: To reduce noise levels
Machine guarding: To prevent contact with moving machinery
Ergonomic design: To reduce the risk of musculoskeletal disorders
Administrative Controls:
Changes to work practices, procedures, and organisational structures. For example:
Job rotation: To reduce exposure to specific hazards
Reduced exposure time: Limiting the time spent in hazardous areas
Training and education: Providing employees with training on risk identification, assessment, and control
Personal Protective Equipment (PPE): Equipment worn by individuals to protect themselves from hazards. Examples include: safety helmets, safety glasses, hearing protection, gloves, respiratory protection
Clear Signage: Warning signs, floor markings etc.
Robust Permit to Work system: A PTW system should reduce the risk of tasks buy improving communication and visibility of tasks. An Isolations management system as part of the PTW system will also provide clear indication of equipment status reducing the risk of injury.
Risk Transfer
Risk transfer involves transferring the financial impact of a risk to a third party, such as an insurance company. This can be achieved through a variety of strategies, including:
Insurance: Purchasing insurance policies to cover specific risks, such as public liability, employers’ liability, and property damage.
Outsourcing: Transferring specific activities or functions to third-party providers who may be better equipped to manage associated risks.
Example: A hotel outsources its HR function to a specialist provider due to the complexities of managing a large number of seasonal staff.
Risk Acceptance
Risk acceptance involves acknowledging a risk and deciding to accept its potential consequences. This strategy is typically used for low-risk or residual risks that cannot be eliminated or significantly reduced. However, it is important to monitor these risks and take action if they escalate.
Additional Risk Mitigation Strategies
Continuous Monitoring is core to the success of any risk mitigation strategy. Risks change over time so it’s important to regularly review and update risk assessments to identify new risks and adjust mitigation strategies In addition to the core strategies outlined above, businesses can also implement a number of additional risk mitigation strategies:
Emergency Planning: Develop comprehensive emergency plans to respond to unforeseen events, such as fires, floods, or cyberattacks.
Incident Response: Have a plan in place to respond to incidents and minimise their impact.
Crisis Management: Develop a crisis management plan to respond to major incidents and protect the organisation’s reputation.
Business Continuity Planning: Develop a business continuity plan to ensure that the organisation can continue to operate in the event of a disruption.
Whatever approach you choose, it’s important that risks are properly recorded, regularly reviewed and available to everyone who needs to be involved. The Pisys Task Risk Manager provides a robust web-based approach to risk management as part of the Pisys 360 suite of EHS products.