Risk management strategies are vital to a modern company’s safe operations. Every employee in your organization – including project managers, business owners and front-line employees – can and should use risk assessments to perform their work and safeguard against HSE incidents.
Implementing a thoughtful, clear policy around risk assessments (including Risk Matrices and Job Risk Assessments) will help your employees work more safely and improve the overall safety metrics of your organization.
Job risk assessment or job safety analysis is a critical undertaking once a job has been identified as necessary. Gaining a better understanding of the risks (a measurable part of uncertainty) or potential hazards associated with the job enriches the decision-making process and offers additional insight during the planning stage.
Operations managers have a duty to their subordinates to perform job risk assessments before scheduling any work. They should understand the risks associated with the specific job functions and any simultaneous operations (sim-ops) that could cause additional hazards with otherwise routine work (e.g., hot work being performed in the vicinity of a job that could cause the release of flammable chemicals).
Experts calculate the level of downside risk as the likelihood that harm occurs (e.g., a construction accident) multiplied by the harm’s severity (e.g., the extent of the accident’s damage). In practice, a risk matrix serves as a helpful tool in situations where predicting the severity or probability of damage is difficult.
Measuring Risks with a Matrix
A risk matrix (also known as a risk diagram) visualizes risks as a diagram. Project managers use it to divide risks based on two factors – the likelihood of a risk and the extent of the damage associated with that risk. This helps them foresee worst-case scenarios at a glance and allows for risk mitigation before work begins. One notable example of this would be identifying tasks with high potential for cuts due to the handling of sharp tools. The response to the risk would be the use of gloves with a cut rating as well as using extra care when handling hazardous equipment.
The risk matrix is the result of analysis and evaluation; therefore, it is an important component of any job planning procedure. This easy-to-use tool is also effective at promoting audience participation during strategy and management programs. Compared to other risk management tools, a risk matrix is easier to make on the fly and understand for the work being performed.
“We should stop talking about “safety” and talk about “risk”. If we want words to describe how we help people to manage risk then perhaps “care” and “empathy” are more appropriate than “safety” – What is Safety
Creating a Risk Matrix (Risk Diagram)
The first step in creating a risk matrix is to evaluate the probability of a hazard and the extent of the potential injury or damage. After quantifying these values, individual risks are entered into a coordinate system.
Evaluation of the Extent of Potential Injuries or Equipment Damage
The extent of potential injury or equipment damage can also be classified using four or five levels, which are often company or industry specific. For example:
- Critical, very high, high, middle and low
- Minor (one first aid level injury), marginal (one severe injury or multiple minor injuries), critical (one fatality or multiple severe injuries) and catastrophic (multiple fatalities)
Each level of damage must be described precisely to allocate the corresponding risks. This requires taking into account unprecedented events that have short-term consequences or could lead to undesired results.
Evaluation of the Likelihood of Occurrence
In most cases, there are four to five levels in the likelihood of occurrence. Health, safety and environment (HSE) professionals express these in semantic concepts or percentages. For example:
- Highly likely, likely, possible, unlikely and impossible
- Very high, high, moderate and low
There should be a precise definition of the level of likelihood where a risk is situated, as well as the reference values (e.g., dollars per occurrence).
When evaluating the risk level of a proposed job, if the likelihood and severity of a negative outcome places the potential outcome outside of the acceptable risk level, some form of mitigation must be put in place to prevent that event from occurring.
This is an important point, as many HSE professionals believe that the severity of a negative outcome cannot be mitigated – only the likelihood of the negative outcome itself.
As an example, the severity of dropping a two-ton suspended load from 30 feet (see dropped object prevention) would be a potential fatality. There is no mitigation that could reduce the severity of this outcome; that much weight dropped from such a height would always result in a fatality. Making sure you have adequate barriers, make announcements of the lift, have a designated “flagger” and post workers in potential traffic areas, you effectively mitigate the likelihood of a dropped load hitting a person.
Risk Matrix Communication: What Should It Look Like?
Although standard risk diagrams exist for certain organizations like NASA, ISO and the United States Department of Defense (DOD), individual companies or organizations are free to create their own matrix or customize an existing one.
Typical diagrams use the five-level evaluation format for a matrix that consists of 25 fields. Operations or HSE managers can determine the x- and y-axes as either the extent of injury/damage or the likelihood of occurrence. Also, risk matrices are only suitable for the visualization of a limited number of risks. Experts recommend visualizing only selected risks. Using a risk matrix for every conceivable risk or potential hazard would create too much noise in an individual or group’s decision-making process.
It is also important to have different colors to distinguish the values. Most diagrams use red, yellow (or orange) and green. What do the colors mean?
- Red indicates areas where risks are not acceptable in any case. These risks must be mitigated if the work is allowed to continue.
- Yellow or orange signifies areas where risks have been reduced. It’s also referred to as As Low As Reasonably Practicable (ALARP). This level of risk is often acceptable, but extra care and attention should be paid to these operations.
- Green indicates areas where risk reduction is no longer necessary. The mitigations in place keep the risk level in the acceptable range, and no further action is needed. This does not mean there is zero risk; the removal of a safeguard could cause this level of risk to cross into an unacceptable range.
The division simplifies and makes the process of risk management more transparent. Operations personnel who find risks in the red risk level must implement safety measures immediately to bring them into the ALRAP area. If this proves impossible, a cost-benefit analysis of the determined risks is the next step and some form of deviation of approval is likely required by corporate policies.
The extent of a hazard’s potential damage only measures the likelihood of occurrence, however. It is better to determine how to reduce the extent of a risk’s damage using the likelihood of occurrence (as stated previously) and the resulting measurements to assess the risk matrix. For example, if a risk is less likely to occur but results in the greater extent of damage, it should be on the yellow section of the diagram.
Simplifying the Risk Assessment Matrix Process
Identify the Risk Universe
The first step is to identify the company or organization’s risk universe. Risk universes usually contain items unique to the operations being performed – all potential risks that could affect their specific activity. Industry-related risks are also included on the list. Brainstorming sessions and other convergent thinking techniques should speed up idea generation. It is also advisable to use industry best practices for operations with which your crew might have not had experience in the past.
Determine the Risk Criteria
Before the risk assessment, it is important to develop criteria to evaluate the risk universe. As mentioned, risk assessment diagrams use “consequence” and “likelihood” as the main criteria. Some companies, however, add other factors such as “speed of onset” and “vulnerability.” This critical step drives the discussion throughout the risk assessment process. Assessors must understand the importance of reaching a consensus before implementing the criteria.
Assess and Prioritize Risks
The next step is to assess risks according to the pre-determined criteria. This step requires a quantitative approach. Apply the three-tiered scale (which uses high, medium and low) to identify the type of risk.
The risk matrix is also helpful in comparing the different levels of risk according to the set criteria. These might include company-wide risks or internal policies.
Continuous Process Improvement
Risk assessment and the matrix creation process should undergo constant evolution. The diagram should keep up with the changes to the company or organization’s risk environment. Failure to update the matrix on a regular basis could result in unnoticed emerging risks. One smart practice for ensuring these updates are made is requiring after action reviews (AAR) for all activities that require a risk matrix, permit to work or job risk assessment.
Risk management is an essential requirement for the completion of any project. Failure to recognize or evaluate risks keeps the business from addressing threats that can affect the company. Investing in this simple tool can make the difference between an organization’s success and its failure.
While hand safety should be a part of every risk assessment, there are numerous potential hazards to be aware of and mitigate so they don’t happen to you or anyone else in the workplace.
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If you need assistance with your risk matrix or work site assessments, get in touch with us today and we can help you find the right partner.