Question

The Oxford English Dictionary depicts risk as a chance or possibility of danger, loss, injury or other adverse consequences. Risk is used primarily to signify negative consequences. However, in some cases taking a risk can generate a positive outcome. What is meant by the terms ‘risk assessment’ and ‘risk management’? Why are they considered two very important concepts? Explain the differences between risk assessment and damage assessment.

Answer 1

RISK ASSESSMENT : -

Risk assessment is a term used to describe the overall process or method where you:

• Identify hazards and risk factors that have the potential to cause harm (hazard identification).
• Analyze and evaluate the risk associated with that hazard (risk analysis, and risk evaluation).
• Determine appropriate ways to eliminate the hazard, or control the risk when the hazard cannot be eliminated (risk control).

Importance of Risk Assessment : -

Risk assessments are very important as they form an integral part of an occupational health and safety management plan. They help to:

• Create awareness of hazards and risk.
• Identify who may be at risk (e.g., employees, cleaners, visitors, contractors, the public, etc.).
• Determine whether a control program is required for a particular hazard.
• Determine if existing control measures are adequate or if more should be done.
• Prevent injuries or illnesses, especially when done at the design or planning stage.
• Prioritize hazards and control measures.
• Meet legal requirements where applicable.

RISK MANAGEMENT : -

Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings. These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters. IT security threats and data-related risks, and the risk management strategies to alleviate them, have become a top priority for digitized companies. As a result, a risk management plan increasingly includes companies' processes for identifying and controlling threats to its digital assets, including proprietary corporate data, a customer's personally identifiable information and intellectual property.

Importance of Risk Management : -

• Saving valuable resources: time, income, assets, people and property can be saved if fewer claims occur
• Creating a safe and secure environment for staff, visitors, and customers
• Reducing legal liability and increasing the stability of your operations
• Protecting people and assets from harm
• Protecting the environment
• Reducing your threat of possible litigation
• Defining your insurance needs to save on unnecessary premiums.