1. Risk Assessment: A Practical Guide to Assessing Operational Risk
Chapter 5:
Fundamental Techniques

2. Risk Assessments: Fundamental Techniques
Objectives
Introduce Fundamental Hazard Analysis and Risk Assessment
Review Hazard Analysis and Risk Assessment Process
Review Informal Techniques
Review Formal Techniques
Examine the Use of Techniques, their Strengthens and Limitations
Provide Guidance on the Use of Fundamental Risk Assessment Techniques

3. Introduction to Fundamental Hazard Analysis and Risk Assessment
The act of identifying operational hazards, assessing their risk exposures, and applying appropriate control measures, is the key to risk management, and one of the most important functions performed within an operational risk management system.

4. Introduction to Fundamental Hazard Analysis and Risk Assessment

5. Introduction to Fundamental Hazard Analysis and Risk Assessment
Since there are many different types of risk exposures and levels of complexities in organizations, it is rare that a single method of risk assessment would adequately address every type of risk in a workplace. However, as a general rule, when selecting a risk assessment tool, the simplest method that provides sufficient information to make an appropriate risk management decision is advised.

6. Introduction to Fundamental Hazard Analysis and Risk Assessment
Fundamental methods commonly used by organizations, front line workers, supervisors and safety, health and environmental professionals include: • Informal Pre-task Hazard Analyses methods • Task/Job Hazard Analysis • Job Risk Assessment

7. Assessments within an Operational Risk Management System
Hazard analysis and risk assessments are stated core elements in standards and guidelines addressing occupational health, safety and environmental management systems and are a recognized best practice for managing risk. Such models should be extended to encompass all operational risks to an organization such as liability, business interruption, employment practices, business practices, and compliance among others – referred to as an Operational Risk Management System (ORMS).

8. Assessments within an Operational Risk Management System
Several key components commonly found in Operational Risk Management Systems include: 1) management commitment and employee involvement, 2) hazard analysis and risk assessment, and 3) risk management and control. Fundamental risk assessment methods and practices play a large role in these components.

9. Hazard Analysis vs. Risk Assessment
There are subtle but significant differences between hazards and risks. Hazards can be defined as having the “potential for harm” and include aspects of technology and activity that if left uncontrolled, can create risk. Hazards are produced by the use of equipment, technology, energy sources, substances and chemicals, materials, and by human actions and inactions. Basic workplace hazard classifications include physical and mechanical, chemical, biological, ergonomic, and psychosocial.

10. Hazard Analysis vs. Risk Assessment
Risks are derived or produced from hazards when their exposures to people and/or assets pose a chance for loss. This chance for loss or ‘risk’ is measured by the likelihood of the event occurring and the resulting severity or consequence of the loss. If the risk level exceeds the organization’s acceptable risk level, risk control and management efforts are applied.

11. Hazard Analysis vs. Risk Assessment
The fact that a hazard exists, does not necessarily mean that a risk is produced. For a risk to exist, the exposure to a hazard must pose a severity of loss or harm, and a likelihood of occurring. If no person or no asset is exposed to the hazard then there is no risk.

12. Hazard Analysis vs. Risk Assessment
Analysis - a careful study of something to learn about its parts, what they do, and how they are related to each other: an explanation of the nature and meaning of something. Assessment - the act of making a judgment about something: the act of assessing something. Risk Analysis – process to comprehend the nature of risk and to determine the level of risk. (ANSI Z690.1) Risk Assessment – overall process of risk identification, risk analysis, and risk evaluation. (ANSI Z690.1)

13. Hazard Analysis vs. Risk Assessment

14. The Hazard Analysis and Risk Assessment Process

15. Fundamental Methods
Fundamental hazard analysis and risk assessment techniques include informal pre-task hazard analysis techniques and more formal methods such as job hazard/safety analysis, and job risk assessment. These basic methods are considered an essential component to managing risk within an operation because of their ease of use, and adaptability, especially where non-routine tasks occur and where tasks have potential changes or variables. For these reasons, these analysis and assessment techniques have become some of the most widely used in the workplace.

16. Fundamental Methods

17. Informal Methods
Informal methods are practiced when employees are asked to ‘think’ about the steps and potential hazards of a task, and properly prepare for the job. Informal analyses and assessments of hazards are made consciously and sub-consciously by stakeholders in many situations every day. Informal pre-task hazard analyses, sometimes referred to as ‘field level’ analyses are typically used by front line workers, supervisors, remote operators, and workers that perform high risk, non-routine activities.

18. Informal Methods
Pre-task analyses are particularly useful in mentally preparing the worker for tasks that may have variations or changes to an activity, and for non-routine jobs such as maintenance, service, installation, setup, and teardown. These process steps normally include the following: • Pause before starting task • Look for hazards and how they can harm • Consider the risks • Act to reduce unacceptable risk (or do not proceed with the task) • Report any unacceptable risk that needs further action.

19. Informal Methods
Stop-Look-Analyze-Manage (SLAM): a mental process that requires the worker to stop and consider the work process before beginning, and during the task; examine the work environment; analyze the work process; and manage the risk. Take 5 for Safety: a brief (five minute) mental process sometimes supported with a pre-task checklist that requires the stakeholder to stop, think through the job steps, identify hazards, and ensure safety procedures are in place before commencing, and during the work. Step Back 5 X 5: is a simple mental exercise method that requires the worker/work group to ‘step back’ five steps from the job and spend five minutes reviewing and planning the tasks to be performed.

20. Formal Methods
A formal hazard analysis is defined for the purpose of this text as one that is conducted according to a defined methodology to identify and analyze hazards and existing controls, and recorded in a prescribed document format to be used for decision-making, training and managing operational risk. Fundamental methods of hazard analysis common in the workplace include task and job hazard analysis, and personal protective equipment (PPE) hazard analysis or assessment.

21. Pre-Task Hazard Analysis
Similar to an informal analysis, a pre-task hazard analysis is performed in the field by the individual prior to conducting the task. However, unlike informal techniques, the analysis is documented on a small card that is kept by the individual throughout the day. This method is used in high hazard environments where small crews or individuals perform various tasks in the field, such as construction, repair, maintenance and service work.

22. Pre-Task Hazard Analysis
Variations of this technique include Pre-shift Safety Task Analysis, Daily Hazard Analysis, Safety Task Analysis Card (STAC), and TASK Assessment Card. They are used to:
Identify the anticipated task steps, hazards, and needed controls in new tasks.
Reinforce workers’ knowledge of the specific task steps, hazards and necessary controls to perform the task safely in routine tasks.
Identify task scope changes, new hazards and needed controls when tasks or conditions change.

23. Job Hazard Analysis
Likely the most common hazard-based analysis technique used in operational risk management is the job hazard analysis (JHA) or sometimes referred to as job safety analysis (JSA). Job hazard analysis is a simple hazard analysis tool that is used to help stakeholders identify, analyze and manage existing and potential hazards in the tasks they perform. These methods are often used to review job tasks and identify hazards that may have been overlooked in the design or re-design phase of the machinery, equipment, tools, workstations, or processes.

24. Job Hazard Analysis
Typically, job hazard analyses are documented on a spreadsheet with three columns consisting of 1) the task or step, 2) existing or potential hazards, and 3) control measures.

25. Fundamental Risk Assessment
Generally, a task or job risk assessment follows a larger assessment of the workplace that has identified hazards and risks, and prioritized tasks, jobs, and operations that require a more ‘job-specific’ assessment. Fundamental risk assessments are used to determine a risk rating or score to express the risk level associated with a particular task or job.

26. Fundamental Risk Assessment
Qualitative risk assessment methods define the severity, likelihood, and level of risk by levels of significance such as “High”, “Medium” and “Low”. These qualitative or subjective methods of evaluation use descriptive definitions for risk categories, ranges or ratings of severity and likelihood based on judgments, informed opinions and beliefs. Their ease of use and application make qualitative methods the most common method used in fundamental assessments.

27. Fundamental Risk Assessment
Semi-quantitative risk assessment methods use numerical scoring systems for severity and likelihood, and combine the two to produce a level of risk using a formula. Rating scores or scales may have a linear, logarithmic or other numerical relationship. Although this method uses numerical values, the resulting scores are largely based on qualitative definitions to assist estimation, rather than quantifiable or empirical data.

28. Fundamental Risk Assessment
Quantitative risk assessment methods assign fixed numerical values to both the severity and likelihood of an outcome using quantitative values such as statistical or historical data. It is important to note that it is objective only if the probabilities and severity outcomes are objective. True quantitative analysis is generally limited to more complex systems where there is sufficient data and information of the systems analyzed.

29. Job Risk Assessment
Similar in process to the job hazard analysis, a job risk assessment follows the steps described previously, and includes an additional component: risk estimation. When determining risk, the hazards identified in the job risk assessment are analyzed and evaluated to estimate both severity and likelihood of risk.

30. Job Risk Assessment
Risk Matrix Example

31. Job Risk Assessment
Generally, a job risk assessment includes a brief description of job steps in sequence, a description of hazards and their effect in each step, recommended control measures, and job risk ratings. Some risk assessments include both a pre-control risk rating and post-control rating as illustrated.

32. Conclusion
To summarize, fundamental hazard analysis and risk assessment methods are considered the foundation for all operational risk assessment methods. Their results often indicate the need for further more detailed and quantitative assessment techniques. Their strength of effectiveness is based in their simplicity and ease of use, acting as a quick filter for the numerous risks that need to be assessed.