OPERATIONAL RISK MANAGEMENT Hello ladies and gentlemen, it is now time to talk about ORM. Now before you take your eyeballs out with a rusty spoon and stick your fingers in your ears, this brief is adapted to what we do in NJROTC. You’ve all practiced Risk Management during your careers, or you wouldn’t be here. Operational Risk Management doesn’t just reduce mishaps, but it improves our ability to accomplish training efficiently and effectively. Note the term “operational” on this slide...it doesn’t say “safety”. ORM has the following advantages over the standard approach. - ORM is more systematic. Frequently, hazard identification and assessment is random, and highly dependent upon an individual’s past experience and organizational skills. ORM requires the operator(s) to focus on one piece of the puzzle at a time, completing each step before moving on to the next. - ORM is more proactive. It requires an attempt to identify ALL hazards, not just the things that have happened in the past. - ORM addresses all types of risk which could threaten our ability to accomplish the mission during the planning process. This allows effective prioritization of risks, which helps focus limited time/assets on the most important issues, rather than addressing safety threats as an after-thought, once the plan has been formulated. - ORM enhances communication about risk by providing a common process and set of terms. Provides a means to articulate concerns/justify decisions. ORM calls for a conscious decision to accept or reject the assessed risk, based on the potential cost and benefit to the overall mission. It also requires a leader to communicate with the COC when risk > benefit. OPERATIONAL RISK MANAGEMENT 1

As military personnel, we have all experienced risk. We understand the impact of driving a ship into a hurricane or running a ship aground. Sometimes there are risks that we don’t plane for. Imagine the thoughts running through this British sailor conducting exercises in South Africa and then this appears. Or, how about being soooooo busy you forgot where you left your kids before you got into the car. Risk Management is serious business and even as instructors we face risk decisions.

Why have ORM for NJROTC? Summer Camp Drill PRT NJROTC picnic How do we use ORM in NJROTC? Think about what we do with teenagers. Is not no inherently safe. If you have your own teen, you know what I am talking about. Let’s check some of the things we do. ORIENTEERING (for us, in the desert) CAMPOUTS (Survival and Land navigation Training) AIR RIFLE DRILL/PRACTICE (early morning because of heat considerations) PRT NJROTC Picnics Orientation trips INSPECTIONS (AMI, standing for long periods) SWORD TEAMS NJROTC picnic Orientation trip AMI Sword Teams

What we’ll cover today… * 5-Step ORM Process * Causes of Risk * 4 ORM Principles * 3 Levels of ORM * Risk Assessment Matrix Here’s a summary of what we’ll cover in the training. 2

Operational Risk Management ORM is the process of dealing with risk associated with NJROTC Unit operations, which includes risk assessment, risk decision making, and implementation of effective risk controls. THIS IS WHAT ORM IS ABOUT!!!! NOTE: It is does not ELIMINATE RISK, instead it is simply …..

ORM A Decision Making Tool Increases Ability to Make Should we do this or not? Increases Ability to Make Informed Decisions Reduces Risks to Acceptable Levels A TOOL!!! The ORM process: - is a decision making tool which can be used by people at all levels to increase operational effectiveness. - increases the ability to make informed decisions by providing the best baseline of knowledge and experience available. - minimizes risks to acceptable levels by systematically applying controls to each risk which is not acceptable. The amount of risk we will take in war is much greater than that we should be willing to take in peace, but the same systematic process should be used to evaluate risks in both situations. 13 3

ORM Goal The goal of ORM is to optimize operational capability and readiness by managing risk to accomplish the mission with minimal loss. What this means is we want to optimize the NJROTC experience by instilling a sense of citizenship, respect, and responsibility while ensuring each cadet is safe and has fun.

ORM Terms 10 3

ORM Terms Hazard: A condition with the potential to cause personal injury or death, property damage, or mission degradation. Read definition. Most of us think of injury or damage when we think of hazards. But, remember the last part of this definition...anything which can cause mission degradation is a hazard. That includes enemy threats, security threats, inefficient use of assets, training degradation, something which could damage command image and credibility, etc. 11

An expression of possible loss in terms of severity and probability. ORM Terms Risk: An expression of possible loss in terms of severity and probability. Read definition. What do we mean when we say severity and probability? 12

consequence which can occur ORM Terms Severity: The worst credible For the purposes of ORM, severity is the worst credible consequence which can occur as a result of a hazard. It is the potential degree of loss. It is an expression of how serious the injury or illness, how much equipment damage, how much lost time, money, man-hours or credibility could be experienced as a result of the hazard. consequence which can occur as a result of a hazard. 6

that a hazard will result in a ORM Terms Probability: The likelihood The probability (or likelihood that a hazard will result in a mishap or loss) is based on factors such as location, exposure, personnel, experience and historical information. that a hazard will result in a mishap or loss. 7

Physical Training Example Hazard Risk Bad Weather Slipping on track Chance of muscle strain Improper Stretching Before Exercise Let’s talk about the difference between a hazard and a risk for a moment. Many people confuse these two terms. Here are some examples: Bad weather is a hazard for a PT even - the associated risk might be that there’s a significant chance of canceling the event or an injury. Improper preparation is a hazard. Risk again is the chance of injury/muscle strain. Chance of knee injury Running on Hard Pavement

Control: ORM Terms A method for reducing risk for an identified hazard by lowering the probability of occurrence, decreasing potential severity, or both. During the GW battle group’s last deployment the staff was required to present both types of controls for significant risks. The first would lower the probability of something bad happening; the second would decrease the severity if the event did occur. 10 14

The process of detecting hazards and assessing associated risks. ORM Terms Risk Assessment: The process of detecting hazards and assessing associated risks. Risk assessment is the first two steps of the five step risk management process (identify hazards and assess hazards) 9 13

ORM Process 1. Identify Hazards 2. Assess Hazards Risk Assessment 1. Identify Hazards 2. Assess Hazards The operational risk management process is a simple five-step process. The concept of applying a standard, systematic approach to minimizing risk was originally developed to improve safety in the development of weapons, aircraft, space vehicles and nuclear power.. The five steps are: 1 Identify potential causes of injury, damage or mission degradation. 2 For each hazard identified, determine the associated risk in terms of severity and probability. 3 Develop risk control options, then decide if benefit outweighs risk. Seek further controls or guidance from CoC, if necessary. 4 Once risk decision is made, implement selected controls. 5 Follow-up to ensure controls are working and watch for changes. Definitions: Hazard: A condition with the potential to cause personal injury or death, property damage, or mission degradation. Risk: An expression of possible loss in terms of severity and probability. Severity: The worst credible consequence which can occur as a result of a hazard. Probability: The likelihood that a hazard will result in a mishap or loss. Risk Assessment: The process of detecting hazards and assessing associated risks. Control: A method for reducing risk for an identified hazard by lowering the probability of occurrence, decreasing potential severity, or both. 3. Make Risk Decisions 4. Implement Controls 5. Supervise 2 12

Causes of Risk * Change - The “Mother” of Risk * Resource Constraints * New Technology * Complexity * Stress Risk is not always obvious to us as this sign indicates. We tend to become comfortable with our surroundings and then it something happens. These are some of the things we face which tend to cause risk: - Change is the big one... Changes should alert us to new hazards and increased risk. - “Doing more with less” how long can we keep stretching our resources? What’s the risk involved? - New technology is great, but sometimes the gain from increased capabilities is offset by our human abilities to absorb all the new information or adapt to the new equipment. - The more complex the problem, usually, the riskier. There are more ways for things to go wrong. We see in an analysis of mishap causal factors that human error occurs in 80% of mishaps. Stress significantly affects the ability of those humans to perform! And finally, by biggest cause of risk is the teenager’s own concept of immortality. * TEENAGERS!!!! 15 5

* Societal Constraints Causes of Risk * Societal Constraints * Environmental Influences * Human Nature * Speed/Tempo of Operation * High Energy Levels Society’s standards and expectations drive public opinion, which has an important bearing on our budget and livelihood. Our teenagers are strongly influenced by image, opinion, etc.. Environment (e.g. weather) is always a significant consideration in training/ operations. Humans tend to make mistakes, miscommunicate, have personality conflicts, get fatigued, get complacent and so on. DOES THIS SOUND LIKE SOME OR MOST OF YOUR CADETS? We need to recognize the potential for human nature to present risk in our operations. Risk certainly increases when the tempo of training/operations is high. It can also increase when the tempo is low, due to complacency. Nervous energy, excitement associated with new situations and perceived pressure to perform can all increase risk. 16 6

Four ORM Principles 1. Accept risk only when the benefits outweigh the probable costs. 2. Accept no unnecessary risk. 3. Anticipate and manage risk by planning. 4. Empower and train subordinates to make risk decisions at the right level. 1. Risk is related to gain. Normally, the greater the potential gain, the greater the risk. 2. Risks are more easily controlled when they are identified early in the planning process. 3. Get the cadet leadership involved. Many have two to three years of experience and their experiences add to your own. 4. Normally, this is the leader directly responsible for the operation. However, when that leader determines that the risk is too high, or goes beyond the commander’s stated intent, he should seek additional guidance from the chain of command. 17 7

ORM Levels of Application 1. Time-critical - On the run consideration of the 5 Steps 2. Deliberate - Application of the complete 5-Step Process 3. In-depth - Complete 5-Step Process with Detailed Analysis The amount of time and level of detail involved in the five steps varies, depending upon the circumstances. Time-critical ORM entails a quick, mental review or discussion using the five steps during the execution phase of the operation/training and for crisis response planning. Deliberate ORM is a slightly expanded, more detailed application of the five steps in planning for an operation or reviewing procedures. This process level is used when there is a good understanding of the issues based on experience. In-depth ORM is basically the same as deliberate, but with a more thorough risk assessment (first two steps). It is used to more thoroughly explore the hazards and their associated risk in a complex operation or system, or one in which the hazards are not well understood. The goal is to keep most of the decision processes in the In-depth application level. To drive the frequency down. f 20 16

Risk Assessment Matrix When conducting a risk assessment, you must factor in the severity of the hazard, the probability of occurrence, and assign a risk assessment code to determine the risk level.

Risk Assessment Matrix Severity: Category I (Critical) Hazard may cause death, loss of facility/asset or result in grave damage to national interests.

Risk Assessment Matrix Severity: Category II (Serious) Hazard may cause severe injury, illness, property damage, damage to national or service interests or degradation to efficient use of assets.

Risk Assessment Matrix Severity: Category III (Moderate) Hazard may cause minor injury, illness, minor property damage, minor damage to national, service or command interests or minor degradation to efficient use of assets.

Risk Assessment Matrix Severity: Category IV (Minor) Hazard presents a minimal threat to personnel safety or health, property, national, service or command interests or efficient use of assets.

Risk Assessment Matrix Probability: Sub Category A Likely to occur immediately or within a short period of time. Expected to occur frequently to an individual item or person or continuously to a group.

Risk Assessment Matrix Probability: Sub Category B Probably will occur in time. Expected to occur several times to an individual item or person or frequently to a group.

Risk Assessment Matrix Probability: Sub Category C May occur in time. Can reasonably be expected to occur some time to an individual or several times to a group.

Risk Assessment Matrix Probability: Sub Category D Unlikely to occur.

Risk Assessment Matrix Risk Assessment Code (RAC): The RAC is an expression of risk which combines hazard severity and mishap probability. Using the matrix, the RAC is expressed as a single number that can be used to help determine hazard abatement priorities.

Risk Assessment Matrix PROBABILITY OF OCCURENCE Likely Probably May Unlikely A B C D Severity: Category I: Hazard may cause death, loss of facility/asset or result in grave damage to national interests. Category II: Hazard may cause severe injury, illness, property damage, damage to national or service interests or degradation to efficient use of assets. Category III: Hazard may cause minor injury, illness, property damage, damage to national, service or command interests or degradation to efficient use of assets. Category IV: Hazard presents a minimal threat to personnel safety or health, property, national, service or command interests or efficient use of assets. Probability: Sub Category A: Likely to occur immediately or within a short period of time. Expected to occur frequently to an individual item or person or continuously to a fleet, inventory or group. Sub Category B: Probably will occur in time. Expected to occur several times to an individual item or person or frequently to a fleet, inventory or group. Sub Category C: May occur in time. Can reasonably be expected to occur some time to an individual item or person or several times to a fleet, inventory or group. Sub Category D: Unlikely to occur. Risk Assessment Code: The RAC is an expression of risk which combines the elements of hazard severity and mishap probability. Using the matrix, the RAC is expressed as a single number that can be used to help determine hazard abatement priorities. Training Time Out (TTO) is a safety procedure that allows cadets and instructors to stop a training evolution to address and correct any safety discrepancies and if possible, continue the performance. Normally, without penalty. S E V R I T Y Critical 1 1 2 3 Serious 1 2 3 4 Moderate 2 3 4 5 3 4 5 5 Minor

ORM vs. Non-standard Approach Systematic Random, Individual-Dependent Proactive Reactive Although the five steps of ORM are a lot like the decision-making process that good leaders have always used, applying a standard process is different in some important ways. - ORM is more systematic. Frequently, hazard identification and assessment is random, and highly dependent upon an individual’s past experience and organizational skills. ORM requires the operator(s) to focus on one piece of the puzzle at a time, completing each step before moving on to the next. - ORM is more proactive. It requires an attempt to identify ALL hazards, not just the things that have happened in the past. - ORM addresses all types of risk which could threaten our ability to accomplish the mission during the planning process. This allows effective prioritization of risks, which helps focus limited time/assets on the most important issues, rather than addressing safety threats as an after-thought, once the plan has been formulated. - ORM enhances communication about risk by providing a common process and set of terms. Provides a means to articulate concerns/justify decisions. - ORM calls for a conscious decision to accept or reject the assessed risk, based on the potential cost and benefit to the overall mission. It also requires a leader to communicate with the COC when risk > benefit. Safety As After-thought Once Plan is Done Integrates All Types of Risk Into Plan Common Non-standard Process Terms Conscious Decision “Can Do” Regardless of Risk Based on Risk & Benefit 18 8

> Reduction in Mishaps > Improved Mission Effectiveness The Benefits of ORM > Reduction in Mishaps Risk Management has been highly successful in other organizations. Civilian companies drastically reduced workman’s compensation costs using risk management. (XTRA corporation, international shipping container and tractor trailer leasing co, $2.85 million in 1982, $63,000 in 1994.) Army’s class A aircraft mishap rate was 0.64 in FY96, down 83% from their FY91 rates, and lower than any other service. The Army also demonstrated a 64% reduction in casualties during battalion training cycles, using risk management. > Improved Mission Effectiveness 19 9

Questions?? Risk Management has been highly successful in other organizations. Civilian companies drastically reduced workman’s compensation costs using risk management. (XTRA corporation, international shipping container and tractor trailer leasing co, $2.85 million in 1982, $63,000 in 1994.) Army’s class A aircraft mishap rate was 0.64 in FY96, down 83% from their FY91 rates, and lower than any other service. The Army also demonstrated a 64% reduction in casualties during battalion training cycles, using risk management. 19 9