Question

Compile a 750- to 1,250-word executive summary to be submitted to the executive committee. Within the summary:

1. Briefly summarize the scope and results of the risk assessment.
2. Highlight high-risk findings and comment on required management actions.
3. Present an action plan to address and prioritize compliance gaps.
4. Present a cost/benefit analysis.
5. Explain the risks involved in trying to achieve the necessary outcomes and the resources required to address the gaps.

Answer 1

Answer:-

Briefly summarize the scope and results of the 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).

A risk assessment is a thorough look at your workplace to identify those things, situations, processes, etc. that may cause harm, particularly to people. After identification is made, you analyze and evaluate how likely and severe the risk is. When this determination is made, you can next, decide what measures should be in place to effectively eliminate or control the harm from happening.

The CSA Standard Z1002 "Occupational health and safety - Hazard identification and elimination and risk assessment and control" uses the following terms:

Risk assessment – the overall process of hazard identification, risk analysis, and risk evaluation.

Hazard identification – the process of finding, listing, and characterizing hazards.

Risk analysis – a process for comprehending the nature of hazards and determining the level of risk.
Notes:
(1) Risk analysis provides a basis for risk evaluation and decisions about risk control.
(2) Information can include current and historical data, theoretical analysis, informed opinions, and the concerns of stakeholders.
(3) Risk analysis includes risk estimation.

Risk evaluation – the process of comparing an estimated risk against given risk criteria to determine the significance of the risk.

Risk control – actions implementing risk evaluation decisions.
Note: Risk control can involve monitoring, re-evaluation, and compliance with decisions

Highlight high-risk findings and comment on required management actions

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.

Present an action plan to address and prioritize compliance gaps.

Assessments should be done by a competent person or team of individuals who have a good working knowledge of the situation being studied. Include either on the team or as sources of information, the supervisors and workers who work with the process under review as these individuals are the most familiar with the operation.

In general, to do an assessment, you should:

• Identify hazards.
• Determine the likelihood of harm, such as an injury or illness occurring, and its severity.
  • Consider normal operational situations as well as non-standard events such as maintenance, shutdowns, power outages, emergencies, extreme weather, etc.
  • Review all available health and safety information about the hazard such as Safety Data Sheet (SDS), manufacturers literature, information from reputable organizations, results of testing, workplace inspection reports, records of workplace incidents (accidents), including information about the type and frequency of the occurrence, illnesses, injuries, near misses, etc.
  • Understand the minimum legislated requirements for your jurisdiction.
• Identify actions necessary to eliminate the hazard, or control the risk using the hierarchy of risk control methods.
• Evaluate to confirm if the hazard has been eliminated or if the risk is appropriately controlled.
• Monitor to make sure the control continues to be effective.
• Keep any documents or records that may be necessary. Documentation may include detailing the process used to assess the risk, outlining any evaluations, or detailing how conclusions were made.

When doing an assessment, also take into account:

• The methods and procedures used in the processing, use, handling or storage of the substance, etc.
• The actual and the potential exposure of workers (e.g., how many workers may be exposed, what that exposure is/will be, and how often they will be exposed).
• The measures and procedures necessary to control such exposure by means of engineering controls, work practices, and hygiene practices and facilities.
• The duration and frequency of the task (how long and how often a task is done).
• The location where the task is done.
• The machinery, tools, materials, etc. that are used in the operation and how they are used (e.g., the physical state of a chemical, or lifting heavy loads for a distance).
• Any possible interactions with other activities in the area and if the task could affect others (e.g., cleaners, visitors, etc.).
• The lifecycle of the product, process or service (e.g., design, construction, uses, decommissioning).
• The education and training the workers have received.
• How a person would react in a particular situation (e.g., what would be the most common reaction by a person if the machine failed or malfunctioned).

It is important to remember that the assessment must take into account not only the current state of the workplace but any potential situations as well.

By determining the level of risk associated with the hazard, the employer, and the health and safety committee (where appropriate), can decide whether a control program is required and to what level.

Present a cost/benefit analysis.

A cost-benefit analysis is a process businesses use to analyze decisions. The business or analyst sums the benefits of a situation or action and then subtracts the costs associated with taking that action. Some consultants or analysts also build models to assign a dollar value on intangible items, such as the benefits and costs associated with living in a certain town.

Before building a new plant or taking on a new project, prudent managers conduct a cost-benefit analysis to evaluate all the potential costs and revenues that a company might generate from the project. The outcome of the analysis will determine whether the project is financially feasible or if the company should pursue another project.

In many models, a cost-benefit analysis will also factor the opportunity cost into the decision-making process. Opportunity costs are alternative benefits that could have been realized when choosing one alternative over another. In other words, the opportunity cost is the forgone or missed opportunity as a result of a choice or decision. Factoring in opportunity costs allows project managers to weigh the benefits from alternative courses of action and not merely the current path or choice being considered in the cost-benefit analysis.

By considering all options and the potential missed opportunities, the cost-benefit analysis is more thorough and allows for better decision-making.

KEY TAKEAWAYS

• A cost-benefit analysis (CBA) is the process used to measure the benefits of a decision or taking action minus the costs associated with taking that action.
• A CBA involves measurable financial metrics such as revenue earned or costs saved as a result of the decision to pursue a project.
• A CBA can also include intangible benefits and costs or effects from a decision such as employee morale and customer satisfaction.

The Cost-Benefit Analysis Process

A cost-benefit analysis (CBA) should begin with compiling a comprehensive list of all the costs and benefits associated with the project or decision.

The costs involved in a CBA might include the following:

• Direct costs would be direct labor involved in manufacturing, inventory, raw materials, manufacturing expenses.
• Indirect costs might include electricity, overhead costs from management, rent, utilities.
• Intangible costs such as customer impact of pursuing a new business strategy, project, or construction of a manufacturing plant, delivery delays of product, employee impact.
• Opportunity costs such as alternative investments, or buying a plant versus building one.
• Cost of potential risks such as regulatory risks, competition, and environmental impacts.

Benefits might include the following:

• Revenue and sales increases from increased production or new product.
• Intangible benefits, such as improved employee safety and morale, as well as customer satisfaction due to enhanced product offerings or faster delivery.
• Competitive advantage or market share gained as a result of the decision.

An analyst or project manager should apply a monetary measurement to all of the items on the cost-benefit list, taking special care not to underestimate costs or overestimate benefits. A conservative approach with a conscious effort to avoid any subjective tendencies when calculating estimates is best suited when assigning a value to both costs and benefits for a cost-benefit analysis.

Finally, the results of the aggregate costs and benefits should be compared quantitatively to determine if the benefits outweigh the costs. If so, then the rational decision is to go forward with the project. If not, the business should review the project to see if it can make adjustments to either increase benefits or decrease costs to make the project viable. Otherwise, the company should likely avoid the project.

With cost-benefit analysis, there are a number of forecasts built into the process, and if any of the forecasts are inaccurate, the results may be called into question.

Limitations of Cost-Benefit Analysis

For projects that involve small- to mid-level capital expenditures and are short to intermediate in terms of time to completion, an in-depth cost-benefit analysis may be sufficient enough to make a well-informed, rational decision. For very large projects with a long-term time horizon, a cost-benefit analysis might fail to account for important financial concerns such as inflation, interest rates, varying cash flows, and the present value of money.

Alternative capital budgeting analysis methods, including net present value, could be more appropriate for these situations. The concept of present value states that an amount of money or cash in the present day is worth more than receiving the amount in the future since today's money could be invested and earn income.

One of the benefits of using net present value for deciding on a project is that it uses an alternative rate of return that could be earned if the project had never been done. That return is discounted from the results. In other words, the project needs to earn at least more than the rate of return that could be earned elsewhere or the discount rate.

Explain the risks involved in trying to achieve the necessary outcomes and the resources required to address the gaps.

Risk assessments differ from gap assessments in their essential purposes. According to the ANSI/ASIS/RIMS risk assessment standard, risk assessments include the identification, analysis and evaluation of uncertainties to objectives and outcomes of an organization. Risk assessments provide a comparison between the desired and undesired outcomes and expected rewards and losses of organizational objectives. Risk assessments analyze whether an uncertainty is within acceptable boundaries and within the organization’s capacity to manage risk. The results inform decision-makers of the choices available to manage risk effectively to achieve the organization’s objectives, given its priorities.

Risk assessments take into account the dynamic nature of the organization’s external and internal environments. While considering and possibly evaluating the effectiveness of current controls, risk assessments generally focus on the future, at times using multiple scenarios in light of emerging issues.

Gap analyses, on the other hand, are intended to identify differences and considerations between “what is” and “what should be.” They tend to represent a point in time, focusing on specific controls or activities as they exist for the single purpose of improving the current environment. Gap analyses generally are not suitable for more complex issues that require a deeper understanding of risk and the use of more sophisticated risk assessment techniques. If used as a risk assessment, gap analyses may give a false impression that filling gaps will be enough to manage all potential future risk events and trends. Gap analyses may give equal weight to any type of control or activity, without regard to the respective impact that each control or activity may have, or on possible related upstream and downstream interdependencies.