Risk analysis involves a process of defining and measuring the potential loss likely to occur because of natural or human caused adverse events. The consequences of risks may be loss of human life or loss of property. Risks may also lead to adverse health impact and damage to the environmental conditions. Risk analysis characterizes, manages, and informs about the existence and magnitude of potential losses likely to be caused by several uncertainties associated with a project, a business or the life of an individual.
With the rapid growth in technology and engineering applications, there is the need to adopt improved systems of working. This adaptability of systems to function in line with the requirements of external and internal environments has lead to emergence of progressively complex systems. These systems are intelligent and they function more independently giving rise to multiple chances of harming the health, safety, and environmental conditions. It also has a potential financial implication if something goes wrong. This characteristic feature of working with new and improved system underpins the importance of analyzing the risks associated with any project or business.
The opportunities available for people to earn more and live a longer life have become the cause of worry and consequently it has exerted a pressure on the manufacturers, policymakers and regulators to ensure that the systems, products and technologies aid people to live safe and healthy (Modarres, 2006). They also are expected not to affect the environment. Therefore, the need for demonstrating safety in the complex system has formulated the required approaches to formal risk analysis.
One of the ways to categorize risk is by consequence categories. Health risk, safety risk, security risk, financial risk and environmental risk are all risk categories which are based on the consequence (Ayyub, 2003, p 101). In order to perform risk comparisons it is essential that the risks are categorized.
Quantitative risk analysis involves a numerical determination of the probabilities of various adverse events, whereas the qualitative risk analysis defines the various threats in order to determine the extent of vulnerabilities. Qualitative risk analysis also enables devising countermeasures for meeting the eventuality of an event occurring. It is also possible to use a hybrid method combining quantitative and qualitative analyses. Under this mixed method a selected combination of qualitative and quantitative methods are used based on the availability of information (Meritt, 1999). The objective of mixed method is to minimize the metrics to be collected and is also less numerically intensive.
An effective risk management employs a number of techniques, methods and tools for assessing the likely consequences of risks. These include “trade-off analysis, cost-benefit analysis, risk effectiveness, multiattribute decision analysis and predictive future analysis”. These tools have the main advantage of enabling a better decision-making environment by continually assessing the risk and deciding on the significance of risks based on magnitude. It also helps in identifying the strategies for averting, controlling or minimizing the risks.
The economic-based methods for assessing the risk are made use of by assigning monetary values to the net benefits which is measured in terms of risk reduction. Some of the economic methods used are benefit-cost analysis, cost-effectiveness analysis and risk-effectiveness analysis.
The review of the available literature indicates that risk assessment can be performed in a better way using quantitative analysis, since it involves numerical determination of the probabilities of various adverse events (Meritt, 1999). However, the method is expensive and time-consuming in the context of assessing the cost-effectiveness of rehabilitation of spoilt coal mine areas making the research beyond a workable proposition. Therefore this analysis will be conducted using a mixed analysis method which is easy to accomplish. The quantitative data available from the previous studies can be used along with a qualitative analysis to complete the assessment.
Work Plan
The concept of risk management based on effective risk assessment using a mixed analysis method will be used to assess the risk and cost-effectiveness of rehabilitating open cut coal mine spoil areas during the semester. The basic ideas about risk and risk assessment techniques and tools provided an insight into the work that needs to be undertaken in the semester. Wherever possible quantitative details will be collected for analyzing the associated risks and cost-effectiveness of rehabilitating the spoil areas will be determined for taking decisions to continue with the efforts. This primer has provided an idea as to the way in which the risk assessment can be proceeded with.
Bibliography
- Ayyub, B.M., 2003. Risk Analysis in Engineering and Economics Volume 174. New York: CRC Press.
- Meritt, J.W., 1999. A Method for Quantitative Risk Analysis. [Online] Web.
- Modarres, M., 2006. Risk Analysis in Engieering: Techniques, Tools, and Trends Volume 174. New York: CRC Press.