Introduction
Risk is any event that may occur and when it does has positive or negative implications to an individual, community, profit, and non-profit making firms. Main feature of risk is its uncertainty in that it might occur or not and its timing is not known. Risk management is that process of identifying, assessing, analyzing, quantifying, responding, and monitoring possible risks or disasters. Risk management either looks for ways to avoid risk, reduce its effect, or find ways to cope with the risks’ impact.
Risk management mainly focuses on insurance matters covering areas that may result in losses such as damage to property by fire, storm, burglary and other perils; accident to individuals; or business loses due to interruptions. Risk management is a vital part of a company because it helps guard Company’s reputation, minimizes financial losses, and promotes customers’ loyalty. Reasons for risk management are to take care for our own safety, the safety of people involved in the project and possible litigation.
Main body
According to Schwalbe (2009, p. 459), risk management starts with the identification of the risks laying emphasis on the environment in which the project is situated. Risk identification is the recognition of potential hazards that may affect your project negatively or positively and therefore you need a thorough understanding of that particular project. Risk identification needs to be a continuous process involving reviewing of the management plan and scope.
There are various techniques o f carrying out Risk identification. The risk assessors can review recently documented project information to come up with possible risks that may affect the project. Project team can also apply brainstorming in identifying possible risks whereby members involve themselves in a discussion through which they float possible hurdles that the project may encounter. After that, they come up with solutions to problems mentioned.
According to Schwalbe (2009, p.461), the project team can apply SWOT analysis in identification of potential risks. Strengths, weaknesses, opportunities, and threats analysis on the particular project helps the project team to come up a wide perspective of possible opportunities and the risk that may emerge during project implementation. The project team can also use checklist technique in which they use risks encountered in the previous projects to predict possible risks and solution to the current project. Analysis of project assumptions also help in identification of possible risks the project might encounter. The assumptions may be incomplete, inconsistent, and inaccurate resulting in invalid conclusion leading the failure of the project.
Diagramming technique can also help in risk identification. This technique applies flow-charts, fish-bone diagrams, cause and effect diagrams, and influence diagrams to identify risks. Flow-charts show the interrelationship between different inputs in a project that when problem comes up it easier to trace it to its roots. Influence diagrams helps risk identification by showing major suggestions, decisions, objectives and possible difficulties and how they relate to each other (Schwalbe, 2009, p.461).
Risk identification can be done by carrying out feasibility studies on the project, applying due diligence in project implementation, being careful when designing engineering and construction frame work to avoid commercial risks and use of probability test to find out the likeliness of encountering a hurdle.
Schwalbe (2009, p.461), categorizes risks depending on the source of the risk and the ultimate person to whom the risk affects. Risks can be either pure or speculative. Pure risks are those that you lose or not. There is no possibility of gaining in this situation. Personal risks are those that have a direct effect on the person’s own life such illness, death, and disability. Schwalbe (2009, p.461) Property risk entails personal and real property such as house destruction by fire and car theft. Loss of property has direct loss and consequential loss that result from the property loss. Direct loss is the actual damage to the property (Schwalbe, 2009, p461).
Consequential loss are loses that result due to actual loss of the property like having to use commuter train or hired car as a result of your car theft. Legal risk also known as liability risk is a kind of risk that you may be sued for involving yourself in assault, destruction of someone’s property, malpractice or neglect in your businesses (Schwalbe, 2009, p.461).
According to Schwalbe (2009, p.462), Speculative risks are those risks that one can make either profit or loss. Speculative risks entail mainly financial investments. Speculative risks such as investing in stocks or starting a business have benefit to the society in the sense that they help in job creation and pays taxes to the society. Classification of risks depends on the number of people it affects in that there those that affects many people and those that affect individuals.
Risks that affect a large proportion of people such as job losses, terrorism, and earthquakes are fundamental risks while those that affect individuals such as burglary and vandalism particular risks. Some fundamental risks are insurable, while others cannot. Speculative risks that organizations can encounter are grouped into three types namely; strategic, financial, and operational risks. Strategic risks are those that result due to a company trying to improve on its efficiency or technological advancement. Operational risks are those risks that may result to damage to company’s reputation due leaked data or employee injury (Schwalbe, 2009, p.462).
Stellman (1998, p.123) asserts that there are a number of risks, which can generally be classified as environmental, safety, health, and security risks. Health risks are grouped into two categories; environmental and occupational health risks. Most of the health problems emanate from our surrounding. Environmental and occupational health factors that may affect health are psychological (stress, unemployment, interpersonal relationships, and work), biological (bacteria, fungi, and viruses), physical (adverse weather conditions, noise pollution, and radiation), chemical (dust, skin irritants, food preservative and additives), and accidental (speed, drugs, hazardous activities, and alcohol influence). Safety risk encompasses various factors such food, water, work place environment, and shelter.
According to Stellman (1998, p.123),Environmental risks are many depending on your level of exposure in the work place, our households, transport system that we use, and outdoor activities. One environmental risk that people expose themselves by using unsafe water, inadequate hygiene and sanitation, contact with contaminated water, and poor management of water systems. Air pollution in towns results from fuel combustion used in vehicles, industries, and power generation (Pritchard, 2000, p48).
Other forms of environmental risks are smoke generated by combustion of solid fuels in houses, poor housing exposing people to extreme climatic conditions, exposure to lead due its multiplicity of uses, and traffic or transport carnages and injuries. Other environmental risks occur due to naturally calamities such as floods, earthquakes, and extreme climatic conditions. Security risks are risks such as terrorism, civil wars, and riots resulting from political instability (Stellman, 1998, p.123).
This is the identification of different hazards and what they can destroy incase they occur. Stellman (1998, p.123) informs that the assessment should come up with the critical resources that the community must protect from the risks. This may include essential facilities such schools, hospitals, police stations, fire stations, evacuation centre, and station for emergency operations. transport systems including rail, road, water, and airways; utility systems such as water points, electric and communication lines, gas and oil deposits and sewerages. Other essential facilities includes are high potential community resources such as nuclear plant, military installation, and dams (Pritchard, 2000, p 48) Other areas that project team should look are plants producing hazardous materials such as corrosives, flammables, explosives, toxins, and radioactive materials (Stellman, 1998, p.123).
The assessment must establish the following; areas which may be affected most, where to put operational facilities incase the hazard occurs, visit assets likely to e affected, community natural resources that may be vulnerable, likelihood of reoccurrence, and the importance of mitigation actions
A company had been operating without considerations to occupation health and safety regulation. James who is a worker in this company complained and was sacked by the company. He sued the company through his lawyer Rawal and eventually James was reinstated. The judge recommended that the company adhere to come up with occupational health and safety policy. According to Stranks (2005, p.57), Safety risks can be minimized or eliminated through the establishment of safety standards that governs the organization’s operation. Integration of management of occupational health and safety with other businesses in the work environment help in reduction of work-related risk to employees enhances workers’ performance, and aid organization in establishing good-working environment.
Stranks (2005, p.57)asserts that adoption of safety measures in the work environment has immense effect to the organization in that it consolidate workers commitment to their jobs, eliminate absenteeism due to ill health, lessen insurance premium charges, helps build organization image, and enhance workers output. The best way to get a good health and safety management is by involving everyone in the company in identification of the hazards and strategizing the way forward. It can be a good way to promoting efficiency and effectiveness by allowing workers to suggest ways in which their work environment be improved.
Conclusion
To help improve on occupational health and safety, organizations should come up with health and safety policy that has visible objectives and targets set, thus ensuring training to employees to promote their performances (Stranks, 2005, p.58). The company can be involved in Carrying out frequent review on the occupational health and safety policy, thus ensuring compliance of occupational health and safety policy.
Ensure Involvement of employments in consultation and implementation of health and safety policy. Ensuring that all workers at all levels of the company full understand the occupational health and safety policy thus helps in its implementation and maintenance. According to Stranks (2005, p.58), the organization should be involving managers, from the most senior managers to supervisors in ensuring implementation of the occupation health and safety policy in the organization. Ensuring compliance of the legal requirements thus, allowing improvements in performance that is cost effective coupled with achievement of occupational health and safety adoption. To ensure success in managing risks the organization should try to make it everyone’s responsibility, something done usually, making the process very systematic.
References
Pritchard, P., 2000. Environmental risk management. 2nd Edition. London: Earthscan publication ltd.
Schwalbe, K., 2009. Information Technology Project Management, 6th edition. Boston: Cengage Learning.
Stellman, J., 1998. Encyclopedia of occupational health and safety, Volume 2. Geneva: International Lab or Organization.
Stranks, J., 2005. Manager’s guide to health and safety at work. London: Kogan Page Publishers.