OPERATIONAL RISK MANAGEMENT (ORM)

OBJECTIVES Describe what ORM is and why the USCG is using it. Describe when and why to apply ORM. Use the seven step USCG ORM process. Use USCG ORM tools and job aids.

WHAT IS OPERATIONAL RISK MANAGEMENT (ORM)? A systematic approach to optimizing risk to support best mission outcomes. A specific seven step process supported with tools and job aids.

USCG ORM VISION “Increase mission success while reducing the risk to personnel, resources and the environment…” “Change from a compliance based to a risk-based philosophy…” “Provide logical process to identify & exploit opportunities producing greatest return on our investment…”

WHY IMPLEMENT ORM? ORM applications are proven to offer mission supportive breakthrough potential. Force reductions make every USCG person and item of equipment more critical to mission success. ORM can significantly increase USCG operational capabilities and training realism.

4 KEY ORM PRINCIPLES 1. Accept no unnecessary risks. 2. Make risk decisions at the appropriate level. 3. Accept risks when benefits outweigh costs. 4. Integrate ORM into operations and planning at all levels. KEY POINTS: * By understanding these key ideas, you understand the basis of ORM. STUDENT NOTES: _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________________________________________________________ ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

BUT.... NOBODY TAKES “UNNECESSARY” RISKS? 1. Accept No Unnecessary Risks BUT.... NOBODY TAKES “UNNECESSARY” RISKS? If all the hazards that could have been detected have not been detected then unnecessary risks are being accepted. The single greatest advantage of ORM over traditional risk management is the consistent detection of 50%+ more hazards.

2. Make Risk Decisions at the Appropriate Level Factors below become basis of a decision-making system to guide leaders Who has operational control & responsibility? Who is the senior person at the scene? Who possesses best insight into the full benefits and costs of a risk? Who has the resources to mitigate the risk? What level makes the most operational sense? KEY POINTS: * In our discussion of step four - Make Control Decisions, we will outline the procedures for building effective risk control decisions systems in your organization. These systems resolve these various factors into a consistent routine process. STUDENT NOTES: _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________________________________________________________

3. Accept Risks When Benefits Outweigh Costs. MAINTAINING A BOLD, RISK-TAKING ORGANIZATION IS ALWAYS A CHALLENGE. ORM HELPS. KEY POINTS: * In the late 1960’s, the USAF failed to take the risks associated with realistic air-to-air combat. As a result, the kill ratio with the NV Air Force reached nearly 1 to 1. The risks were taken when Red Flag was developed. - Result: The kill ratio quickly increased to a favorable 10 to 1 or more. ORM can assure that we never make a similar mistake. STUDENT NOTES: _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________________________________________________________ _______________________________________________________________ Taking calculated risks is essential for an organization to grow and capitalize on its capabilities.

4. Integrate ORM Into Operations and Planning At All Levels. This is the one we want!! Loss Control Staff Injects Operational Leaders Add-On Operational Process Operational Process Operational Process Loss Control Occurs Within The Process 2-21

HOW WILL THE COAST GUARD IMPLEMENT ORM? Apply the seven step ORM process and the supporting tools In a consistently mission supportive way Through a highly integrated and decentralized approach

HOW DO WE ASSURE THAT ORM IS ALWAYS MISSION SUPPORTIVE? Target optimum mission risk, not minimum risk. Involve operators to insure risk controls are mission supportive. Use only the amount of ORM dictated by the risk. Low risk - less ORM, high risk - more ORM.

USING THE 7-STEP PROCESS THE RISK MANAGEMENT CONTINUUM PLANNING OPERATIONS AFTER-ACTION -Deliberate ORM -Detailed Hazard ID -Integrated -Largely Time-Critical -Change Analysis -Real Time -Highly Decentralized -Assess Indicators -Integration -Feedback We try to get most ORM done here But continue the process here and here

WHAT IS THE SEVEN STEP ORM PROCESS? A decision-making technique A job aid & tool Optimizes risk

Step 1 - Identify Mission Task (COMDTINST 3500.3, Encl 1) Clearly state the mission objective. Define what tasks are required to accomplish the mission. Define the conditions under which to accomplish the task.

UNDERSTANDING THE FLOW OF EVENTS THE MISSION ANALYSIS UNDERSTANDING THE FLOW OF EVENTS 3 5-2

MISSION ANALYSIS The “MA” is a must do! METHOD: List the events in sequence. RESOURCES: Mission planners & operators. COMMENTS: ORM must cover all aspects of an operation. The Mission Analysis supports that. The “MA” is a must do! 5 5-4

MISSION ANALYSIS Advance Rescue Ops Beach party on scene. Launch aircraft. Enroute considerations. Approach to water. “Survivor” & RS events. Aircraft Switch-Out Subsequent Scenarios Recovery all elements 8 5-7

Step 2 - Identify the Hazards (COMDTINST 3500.3, page 4) Hazard: Any real or potential condition that can cause mission degradation, injury, illness, or death to personnel or damage to or loss of equipment or property.

HAZARD ANALYSIS What can go wrong? Focus on the critical OVERALL MISSION Focus on the critical components of your mission: Equipment Personnel/Experience Environment Timeline 3-3

HAZARD ANALYSIS P.E.A.C.E. What Can Go Wrong? Planning Event Asset Equipment Personnel Environment Timeline What Safe Guards Exist? How Effective Are They? P.E.A.C.E. Planning Event Asset Communication Environment 3-9

Step 3 - Assess the Risks The Process which associates “hazards with 3-12

HAZARD VERSUS RISK HAZARD RISK A description of a condition that can impair mission accomplishment. No indication of its mission significance. HAZARD A hazard for which we have estimated the severity, probability, and exposure to determine the scope with which it can impact our mission. RISK 3-14

ASSESS RISKS SEVERITY - What are the effects? PROBABILITY - Can this happen to us? EXPOSURE - What is the event frequency or degree of involvement?

SEVERITY Potential Consequences measured in terms of degree of impact on: Mission Man Machine/Materiel 3-16

SEVERITY CATEGORIES CATASTROPHIC - Complete mission failure, death, or loss of system. MAJOR - Major mission degradation, severe injury, occupational illness, or major system damage. SIGNIFICANT - Minor mission degradation, injury, minor occupational illness, or minor system damage. MINIMAL - Less than minor mission degradation, injury, occupational illness or minor system damage. NONE - No impact to personnel or mission outcome. 3-17

Acknowledge “uncertainty” PROBABILITY Likelihood that potential consequences will occur: Very likely to happen Likely, greater than 50% chance Occasional, about 50-50 chance Unlikely under normal conditions Remote under any conditions Acknowledge “uncertainty” 3-18

EXPOSURE Duration/repetition/number of people &/or equipment involved in event: Great Above Average Average None or below average 3-18

THE RISK PRIORITY LIST Biggest hazard By ranking the hazards, we can work them on a worst first basis. This is vital because risk control resources are always limited and should be directed at the big problems first to assure maximum bang for the buck. Least hazard worthy of action 3-21

USCG Aviation Risk Assessment Simplifies SPE assessment through use of Model Simplifies SPE assessment through use of Green Amber Red (GAR) Model 3-20

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Use Risk Priority List - Attack “Worst First” Step 4. Identify Options Are risks acceptable or unacceptable? Can we modify the mission to reduce risk? Are any safeguards missing? What new options should we consider? Use Risk Priority List - Attack “Worst First” 5 5-4

Mission Priority & Time Criticality Often Drive Options IDENTIFY OPTIONS S.T.A.A.R Spread Out Transfer Avoid Accept Reduce Mission Priority & Time Criticality Often Drive Options 3-25

Step 5. Evaluate Risk vs Gain Seek optimal risk management Gain should balance or outweigh the Risk Risk Decision made at lowest appropriate level Command validates Assessment & Management Equates to “Reality Check” 5 5-4

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Risk vs Gain 3-31

Step 6. Execute Decision Control Options must be implemented Decision Rational must be communicated Facilitates S.A. regarding Risk Management process 5 5-4

Step 7. Monitor Situation Insure Control Options are effective ID changes requiring further RA/RM Capture “Lessons Learned” Failure to respond to changes can become Links in the Mishap Chain 5 5-4

Questions?

USING THE 7-STEP PROCESS LEVELS OF EFFORT “TIME CRITICAL” “DELIBERATE” “STRATEGIC” Little: - Time - Complexity - Risk Lot of: - Time - Complexity - Risk ORM is applied proportionate to operational complexity, criticality, and risk!