Managing Risk in Big Business

Whenrisk management systems methods are used correctly they can provide tremendous benefit to an organization. Through a systematic process we learn about the system in ways we had never thought of, and most importantly learn about the ways in which that system can potentially be harmful to people, property, and the environment. Risk management systems processes can help us focus our resources in an effort to improve risk management.

Poor risk management systems analyses can lead us down the wrong path, with the result being that we use precious resources on low risk activities while missing or ignoring larger risks. The majority of formal tools work to avoid this. When applied inappropriately, risk management systems methods can lead to overconfidence and result in an underestimation of certain important risks. Therefore, we should be skeptical enough to ask questions about our own risk management analyses and about risk management analyses performed by others. We should understand the ways that these analyses can provide misleading results.

Treating risk management systems as just another requirement: If risk management systems are simply done to meet a requirement or to show compliance with a regulation, it is often just done once and is not part of a continuous development process, like poorly designed tools. In fact, experience has shown that if a hazard analysis is only done once on a project, it is usually performed at the end of the development process, when it is least effective. It is rare that the basic design will be altered to improve risk management if the risk management analysis reveals an issue late in the development cycle. When that design is altered, the impacts can be significant in terms of cost and schedule. Typically, operating procedures are implemented instead, which are less effective than designing out the hazard.

Confusing identification of failures with identification of hazards: Often there is confusion between a failure analysis and risk management analysis. Hazard analyses that are organized by failures of systems or components may identify failures that are not truly risk management problems. Therefore, hazard analyses organized by failure can lead to overdesign of the system, providing controls for failures that don’t lead to a hazard. Worse, by only designing for failures, the hazard analysis might miss the conditions that cause an accident where no component has failed, such as conditions where software or human interactions are concerned.

It is healthy and inevitable that we take risks. Our species must take risks to achieve great things. Without taking risks, we would not have made great discoveries or so rapidly adapted the earth to suit our nature. We should however not take those risks without sufficient information to help us understand what we are up against. For the sake of our families, our friends, our coworkers, and our communities, we owe it to ourselves to manage risk effectively. However, in most cases, a small fishing lodge doesn't control risk like the big companies.

Article Source: http://www.seoserviceprovider.com/articles

NWDS supports this Alaska business and we are Database Consultants in Anchorage Alaska. They also specialize in aviation safety management systems, ICAO SMS, FAA SMS, IS-BAO SMS

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