FZ1704-Risk Management

ASSIGNMENT-1

A Critical Analysis on Risk Assessment Process

University of Central Lancashire

Bachelor of Science with Honours

Emergency & Crisis Management

STUDENT NAME:
Student Number:
Date:
School of Forensic & Applied Science

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Contents:

Topics Page No.

Introduction 3
Aims & Objectives of the Study 3

Student Profile 3

Submission Purpose and Course Tutor 3

Course Overview 3

The Major Steps of the Risk Assessment Process 3-4

The Features of Every Key Component of the Risk 4-6

Assessment Process

Relationship between Likelihood and Impact in 7-8

Terms of Risk Assessment

Recommendations 8
References 9

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Introduction
The term ‘risk assessment’ is very commonly used in health, safety and environment (HSE)
management and the failure to conduct the assessment is an offence under the health and
safety legislation. The assessment process helps the employers to take adequate safety
measures for things that may go wrong under any circumstances or at any time in a
workplace. This article shows the various key steps of the risk assessment process and their
significance, the features or parts of every key step and the analysis on the relationship
between likelihood and impact in terms of risk assessment process.

Aims & Objectives of the Study

This study aims to explain the various aspects of risk, identify and analyse the key steps of risk
assessment and provide a analysed description of the risk mitigation and prevention
strategies.

Student Profile
I am Thamer Al-Mohannadi, Class Roll……

Submission Purpose and Course Tutor

This assignment is being submitted as a partial fulfilment of the Bachelor of Science with
Honours and will be supervised by …….

Course Overview
This course educates the learners on the ………

1.The Major Steps of the Risk Assessment Process

The risk assessment process involves a careful consideration of things that may cause harm
to people and taking enough precautions to prevent those unintended happenings. In fact,
the ultimate objective is to ensure that no one is hurt or wounded by any unseen hazards that
may arise from activities, external factors or due to the faulty systems of the workplaces or
projects.Thus, the risk management or assessment requires adoption of precautions
considering the extent of risks involved.
The risk assessment process generally involves five simple steps1 which should be structured
in the following order:

I.Risk Identification
An organisation requires up- to- date information to identify probable risks . The purpose of
identification includes recognising and describing risks, sources of risks, causes and effects,
vulnerabilities and other probable challenges, while developing strategies according to the
extent of those risks.

II.Risk Analysis
Risk analysis means identification and analysis of probable factors that would cause harm to
a project or organisation. Following this process, an organisation can avoid risks or mitigate
risks.

1ISO 31000:2018(en); Aven,,2016, Risk assessment and risk management: Review of recent advances on their
foundation, European Journal of Operational Research, Vol.14, No.25, pp.1-13.

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III.Risk Evaluation
Risk evaluation helps to compare the probable risks and set priorities while measuring the
extent of risks. For an effective risk treatment, evaluation of risks is helpful.

IV.Risk Treatment
The process of risk treatment requires selection and implementation of effective measures to
modify risks by reducing, removing or retaining risks based on a number of factors.

V.Monitoring & Review

Monitoring and review is another important step of the risk assessment process which
requires regular checks and surveillance on a project or organisation to develop the risk
management strategies and reduce risks.

VI.Recording and Reporting

The ISO guideline also includes recording and reporting as another step of risk assessment for
improving risk management strategies. Either external or internal recording and reporting
should contain the results attained by following the other steps.

2.The Features of Every Key Component of the Risk Assessment Process

Every key component of the risk assessment process follows some methods or has some
features which are being described hereinafter.
Risk Identification Methods or Features: Identification of risks in a project is the primary duty
of an organisation for the fulfilment of its objectives and plans. The identification process
involves some common features or methods 2 that include brainstorming, interviewing, Delphi
technique3, risk questionnaires and surveys, flowchart method and SWOT analysis.

Risk Treatment Methods or Features: Risk treatment includes a number of options 4 for an
organisation to assess the available options, prepare and implement the action plans, and
mitigate risks. The treatment process is carried out depending on priorities where the risks
with high impacts are addressed primarily.

The various parts of a treatment plan include the following:

Avoid: When there is high risk, an organisation should avoid certain types of activities in a
project to reduce the risks and look for alternative approaches that meet the organisation’s
objectives and business plans.

Reduce: An organisation can reduce the probability and impacts of certain risks by following
a number of strategies.

2 DINU, 2012, Modern Methods of Risk Identification in Risk Management, International Journal of Academic
Research in Economics and Management Sciences, Vol. 1, No. 6, pp.67-71.
3 Thorhallsdóttir 2018, Risk Identification Process, DTU, viewed 16 July 2020,

<http://apppm.man.dtu.dk/index.php/Risk_Identification_Process>.
4 Chartered Accountants ANZ (2020),, APES 325 - Risk Management for Firms, Chartered Accountants ANZ,

viewed 16 July 2020, < https://survey.charteredaccountantsanz.com/risk_management/default.aspx>.

4
Share or Transfer: An organisation may share or transfer probable risks to other parties
including service providers, insurers and outsourcing management bodies.

Accept: If there arise risk factors at an acceptable level, and the treatment cost is less than
benefits, an organisation may continue a project. But in this case, those risks should be
monitored on an ongoing basis.

Key Parts of Monitoring & Review: There are certain methods of risk monitoring5 activities
that include gathering information, reporting and providing feedbacks on risk assessment and
response processes.

Key Features of Recording & Reporting

For assessment of risks, two types of documentation 6 or recording are required including
generic documents and visit specific documents. Reporting has two features including internal
risk reporting and external risks reporting7.

5 Gantz and Philpott, 2013, FISMA and the Risk Management Framework, Elsevier, pp.329-365.
6 National Guidance, 2016, Risk Management – What to record and how, viewed 16 July 2020,
< https://www.northamptonshire.gov.uk/councilservices/children-families-education/outdoor-
learning/Documents/4.3g-Risk-Management-what-to-record-and-how1.pdf>.
7 Epstein and Buhovac, 2006, The Reporting of Organizational Risks for Internal and External Decision-Making,

The Society of Management Accountants of Canada and The American Institute of Certified Public
Accountants.

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3.Relationship between Likelihood and Impact in Terms of Risk Assessment
Organisations have to maintain very complex and large projects or businesses which require
an organised and well designed risk assessment process for success and survival. The risk
management department of an organisation must prioritise risks since taking care of all risks
is a time-consuming, resource demanding and expensive task.
The relationship between likelihood and impact of risks can be shown in a diagram which is
known as the risk impact/probability chart or diagram. The probability impact matrix8 gives
an overview of risk assessment depending on priority.
Thus, the risk impact/probability chart represents two dimensions of risks including
probability and impact.

Probability or Likelihood: Probability or likelihood of risks indicates that risks are likely to
occur at any stage of a project. Since risks arise from uncertainties, the probability can range
above 0 and below 100 percent. If the probability is 0 or 100%, then the occurrence is certain
and thus cannot be risks.

Impact:Risks have always some negative impacts on a project or organisation in terms of life,
cost, health and other factors. The risk impact/probability diagram shows the the probability
of risks in one axis and the impacts of risks in another axis.

8Dumbravă and Iacob, (2013 ).

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The chart9 has some features that can be explained in the following ways:

Low Impact and Low Probability: Risks can be ignored when they are in the bottom left
corner, since these risks are unlikely to happen and thus, they have low impact on a project.

Low Impact and High Probability: The chart shows that risks in the top left corner have
moderate impacts and an organisation can cope up with these risks. These risks should be
reduced by effective planning and process.

High impact and Low Probability: If risks are in the bottom right corner, they must have high
impact though they are unlikely to happen.But an organisation should have mitigation plan
to reduce the impacts in case the risks arise.

High Impact and High Probability: In the diagram, risks in the top right corner are of very high
importance and they must be prioritised. An organisation must identify the sources of high
risks initially and take preventive measures to reduce the risks with high impacts.

Recommendations
Risk assessment is of significant importance for an organisation for its success and thus, it is
mandatory to have a skilled team of professionals for developing effective risk management
system. A successful project must have an informed and skilled management body to follow
all the risks assessment processes depending on priorities.

9Mind Tools, 2020, Risk Impact/Probability Charts, viewed 16 July 2020,

<https://www.mindtools.com/pages/article/newPPM_78.htm>.

7
References
Aven,,2016, Risk assessment and risk management: Review of recent advances on their foundation, European
Journal of Operational Research, Vol.14, No.25, pp.1-13.

Chartered Accountants ANZ (2020),, APES 325 - Risk Management for Firms, Chartered Accountants ANZ,
viewed 16 July 2020, < https://survey.charteredaccountantsanz.com/risk_management/default.aspx>.

DINU ,2012, Modern Methods of Risk Identification in Risk Management, International Journal of Academic
Research in Economics and Management Sciences, Vol. 1, No. 6, pp.67-71.

Dumbravă and Iacob, (2013 )

Epstein and Buhovac, 2006, The Reporting of Organizational Risks for Internal and External Decision-Making, The
Society of Management Accountants of Canada and The American Institute of Certified Public Accountants.

Gantz and Philpott, 2013, FISMA and the Risk Management Framework, Elsevier, pp.329-365.

Horhallsdóttir, 2018, Risk Identification Process, DTU, viewed 16 July 2020,

< http://apppm.man.dtu.dk/index.php/Risk_Identification_Process>.

How to Perform a Risk Assessment, 2015, Praxiom Research Group Limited, viewed 16 July 2020,
< https://www.praxiom.com/risk-assessment.htm>.

ISO 31000:2018(en)

Mind Tools, 2020, Risk Impact/Probability Charts, viewed 16 July 2020,

<https://www.mindtools.com/pages/article/newPPM_78.htm>.

National Guidance, 2016, Risk Management – What to record and how, viewed 16 July 2020,
<https://www.northamptonshire.gov.uk/councilservices/children-families-education/outdoor-
learning/Documents/4.3g-Risk-Management-what-to-record-and-how1.pdf>.