LearnerGuide.pdf

Learner Guide

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BSBRSK501

MANAGE RISK

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T A B L E O F C O N T E N T S

TABLE OF CONTENTS............................................................................................................................... 3

COURSE INTRODUCTION ........................................................................................................................ 6

ABOUT THIS GUIDE ..................................................................................................................................................................... 6 ABOUT THIS RESOURCE ..................................................................................................................................................... 6 ABOUT ASSESSMENT ............................................................................................................................................................ 6

ELEMENTS AND PERFORMANCE CRITERIA ...................................................................................... 9

REQUIRED SKILLS AND KNOWLEDGE ................................................................................................ 10

KNOWLEDGE EVIDENCE .......................................................................................................................................................... 10 PERFORMANCE EVIDENCE ....................................................................................................................................................... 10

PRE-REQUISITES ....................................................................................................................................... 11

TOPIC 1 – ESTABLISH RISK CONTEXT .................................................................................................. 12

REVIEW ORGANISATIONAL PROCESSES, PROCEDURES AND REQUIREMENTS FOR

UNDERTAKING RISK MANAGEMENT .................................................................................................. 12

OUTLINE ORGANISATIONAL POLICIES, PROCEDURES AND PROCESSES FOR RISK MANAGEMENT .......................... 12 THE LEGISLATIVE AND REGULATORY CONTEXT OF THE ORGANISATION IN RELATION TO RISK MANAGEMENT

....................................................................................................................................................................................................... 14 Anti-Discrimination and Equal Employment Opportunity (EEO) ......................................................................................... 14 Consumer Protection, Fair Trading and Trade Practices ........................................................................................................... 15 Employment and Industrial Relations ....................................................................................................................................... 16 Environment and Sustainability................................................................................................................................................ 18 Financial Services ..................................................................................................................................................................... 18 Occupational Health and Safety (OHS) ................................................................................................................................... 19 Privacy ...................................................................................................................................................................................... 20

THE PURPOSE AND KEY ELEMENTS OF CURRENT RISK MANAGEMENT STANDARDS ................................................ 21

DETERMINE SCOPE FOR RISK MANAGEMENT PROCESS .............................................................. 22

THE SCOPE DOCUMENT AND ITS COMPONENTS .................................................................................................................. 23 RISK ASSOCIATED WITH PROJECT MANAGEMENT ............................................................................................................... 24

IDENTIFY INTERNAL AND EXTERNAL STAKEHOLDERS AND THEIR ISSUES ........................ 25

REVIEW POLITICAL, ECONOMIC, SOCIAL, LEGAL, TECHNOLOGICAL AND POLICY

CONTEXT ................................................................................................................................................... 26

SPECIFIC RISK AREAS ................................................................................................................................................................. 26

REVIEW STRENGTHS AND WEAKNESSES OF EXISTING ARRANGEMENTS ............................... 31

CONDUCTING A SWOT ANALYSIS ......................................................................................................................................... 31

DOCUMENT CRITICAL SUCCESS FACTORS, GOALS OR OBJECTIVES FOR AREA INCLUDED

IN SCOPE .................................................................................................................................................... 34

OBTAIN SUPPORT FOR RISK MANAGEMENT ACTIVITIES ............................................................. 36

CREATING A SUPPORTIVE WORK ENVIRONMENT ................................................................................................................ 36 INDIVIDUAL OR TEAM APPROACH .......................................................................................................................................... 37 THE IMPORTANCE OF TRAINING ............................................................................................................................................ 38

COMMUNICATE WITH RELEVANT PARTIES ABOUT THE RISK MANAGEMENT PROCESS

AND INVITE PARTICIPATION ............................................................................................................... 40

TOPIC 2 - IDENTIFY RISKS ...................................................................................................................... 42

INVITE RELEVANT PARTIES TO ASSIST IN THE IDENTIFICATION OF RISKS.......................... 42

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RESEARCH RISKS THAT MAY APPLY TO SCOPE ............................................................................... 44

USE TOOLS AND TECHNIQUES TO GENERATE A LIST OF RISKS THAT APPLY TO THE

SCOPE, IN CONSULTATION WITH RELEVANT PARTIES ................................................................ 45

RISK IDENTIFICATION TECHNIQUES ..................................................................................................................................... 45 PROCESS CHARTING .................................................................................................................................................................. 46

Scenario analysis ....................................................................................................................................................................... 47 BENCHMARKING SIMILAR ORGANISATIONS AND ACTIVITIES ........................................................................................... 47

TOPIC 3 - ANALYSE RISKS ....................................................................................................................... 49

ASSESS LIKELIHOOD OF RISKS OCCURRING ..................................................................................... 49

ASSESS IMPACT OR CONSEQUENCE IF RISKS OCCUR ..................................................................... 50

EVALUATE AND PRIORITISE RISKS FOR TREATMENT ................................................................... 51

TOPIC 4 - SELECT AND IMPLEMENT TREATMENTS ....................................................................... 55

DETERMINE AND SELECT MOST APPROPRIATE OPTIONS FOR TREATING RISKS ................ 55

KEY OUTCOMES STEPS .............................................................................................................................................................. 55 Identify treatment options .......................................................................................................................................................... 55

DEVELOP AN ACTION PLAN FOR IMPLEMENTING RISK TREATMENT .................................... 58

SAMPLE RISK TREATMENT ACTION PLAN .............................................................................................................................. 59

COMMUNICATE RISK MANAGEMENT PROCESSES TO RELEVANT PARTIES ............................ 60

COMMUNICATION FACTORS SUCH AS LANGUAGE AND LITERACY ................................................................................... 60 DIVERSITY OF WORKERS .......................................................................................................................................................... 60

ENSURE ALL DOCUMENTATION IS IN ORDER AND APPROPRIATELY STORED ..................... 62

STORAGE OF WHS/OHS INFORMATION.............................................................................................................................. 62

IMPLEMENT AND MONITOR ACTION PLAN .................................................................................... 63

EVALUATE RISK MANAGEMENT PROCESS ........................................................................................ 66

SUMMARY ................................................................................................................................................... 68

REFERENCES ............................................................................................................................................ 69

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C O U R S E I N T R O D U C T I O N

ABOUT THIS GUIDE

This resource covers the unit BSBRSK501 Manage risk.

This unit describes the performance outcomes, skills and knowledge required to manage risks in

a range of contexts across the organisation or for a specific business unit or area.

This unit addresses the management of the risk across the organisation or within a business unit

or area. It does not assume any given industry setting.

This unit applies to individuals who are working in positions of authority and are approved to

implement change across the organisation, business unit, program or project area. They may or

may not have responsibility for directly supervising others.

ABOUT THIS RESOURCE

This resource brings together information to develop your knowledge about this unit. The

information is designed to reflect the requirements of the unit and uses headings to makes it

easier to follow.

Read through this resource to develop your knowledge in preparation for your assessment. You

will be required to complete the assessment tools that are included in your program. At the back

of the resource are a list of references you may find useful to review.

As a student it is important to extend your learning and to search out text books, internet sites,

talk to people at work and read newspaper articles and journals which can provide additional

learning material.

Your trainer may include additional information and provide activities. Slide presentations and

assessments in class to support your learning.

ABOUT ASSESSMENT

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Throughout your training we are committed to your learning by providing a training and

assessment framework that ensures the knowledge gained through training is translated into

practical on the job improvements.

You are going to be assessed for:

 Your skills and knowledge using written and observation activities that apply to your

workplace.

 Your ability to apply your learning.

 Your ability to recognise common principles and actively use these on the job.

You will receive an overall result of Competent or Not Yet Competent for the assessment of this

unit. The assessment is a competency based assessment, which has no pass or fail. You are either

competent or not yet competent. Not Yet Competent means that you still are in the process of

understanding and acquiring the skills and knowledge required to be marked competent. The

assessment process is made up of a number of assessment methods. You are required to achieve

a satisfactory result in each of these to be deemed competent overall.

All of your assessment and training is provided as a positive learning tool. Your assessor will

guide your learning and provide feedback on your responses to the assessment. For valid and

reliable assessment of this unit, a range of assessment methods will be used to assess practical

skills and knowledge.

Your assessment may be conducted through a combination of the following methods:

 Written Activity

 Case Study

 Observation

 Questions

 Third Party Report

The assessment tool for this unit should be completed within the specified time period following

the delivery of the unit. If you feel you are not yet ready for assessment, discuss this with your

trainer and assessor.

To be successful in this unit you will need to relate your learning to your workplace. You may be

required to demonstrate your skills and be observed by your assessor in your workplace

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environment. Some units provide for a simulated work environment and your trainer and

assessor will outline the requirements in these instances.

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E L E M E N T S A N D P E R F O R M A N C E C R I T E R I A

1. Establish risk context 1.1 Review organisational processes, procedures and requirements for

undertaking risk management

1.2 Determine scope for risk management process

1.3 Identify internal and external stakeholders and their issues

1.4 Review political, economic, social, legal, technological and policy

context

1.5 Review strengths and weaknesses of existing arrangements

1.6 Document critical success factors, goals or objectives for area

included in scope

1.7 Obtain support for risk management activities

1.8 Communicate with relevant parties about the risk management

process and invite participation

2. Identify risks 2.1 Invite relevant parties to assist in the identification of risks

2.2 Research risks that may apply to scope

2.3 Use tools and techniques to generate a list of risks that apply to the

scope, in consultation with relevant parties

3. Analyse risks 3.1 Assess likelihood of risks occurring

3.2 Assess impact or consequence if risks occur

3.3 Evaluate and prioritise risks for treatment

4. Select and implement

treatments

4.1 Determine and select most appropriate options for treating risks

4.2 Develop an action plan for implementing risk treatment

4.3 Communicate risk management processes to relevant parties

4.4 Ensure all documentation is in order and appropriately stored

4.5 Implement and monitor action plan

4.6 Evaluate risk management process

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R E Q U I R E D S K I L L S A N D K N O W L E D G E

This describes the essential knowledge and skills and their level required for this unit.

KNOWLEDGE EVIDENCE

To complete the unit requirements safely and effectively, the individual must:

 Outline the purpose and key elements of current risk management standards

 Outline the legislative and regulatory context of the organisation in relation to risk

management

 Outline organisational policies, procedures and processes for risk management.

PERFORMANCE EVIDENCE

Evidence of the ability to:

 Analyse information from a range of sources to identify the scope and context of the

risk management process including:

o Stakeholder analysis

o Political, economic, social, legal, technological and policy context

o Current arrangements

o Objectives and critical success factors for the area included in scope

o Risks that may apply to scope

 Consult and communicate with relevant stakeholders to identify and assess risks,

determine appropriate risk treatment actions and priorities and explain the risk

management processes

 Develop and implement an action plan to treat risks

 Monitor and evaluate the action plan and risk management process

 Maintain documentation

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P R E - R E Q U I S I T E S

This unit must be assessed after the following pre-requisite unit:

There are no pre-requisites for this unit.

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T O P I C 1 – E S T A B L I S H R I S K C O N T E X T

REVIEW ORGANISAT IONA L PROCESSES, P ROCE DU RES AND

REQUIREMENTS FOR UND ERTAKING RISK MANAGE MENT

Most organisations are exposed to some level of risk. Some of these risks are consistent across

organisations, and some are organisation-specific. Risks may relate to:

 Commercial relationships

 Economic circumstances and scenarios

 Human behaviour

 Individual activities

 Legislation

 Management activities and controls

 Natural events

 Political circumstances

 Technology

OUTLINE ORGANISATION AL POLICIES, PROCEDU RES AND PROCESSES

FOR RISK MANAGEMENT

Before beginning a project to manage the various risks to which your organisation is exposed, it

is important to take the time to review your organisation’s risk management policies, procedures

and processes. Read the following definitions:

 A policy is a written statement which explains why workers within an organisation should

undertake a task in a certain way

 A procedure is a written statement which explains how workers within an organisation

should undertake the task

 A process is a series of actions or steps which workers should undertake to achieve a

particular outcome; processes for different tasks, including those related to risk

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management, may be outlined in your organisation’s procedures, or they may exist as

separate documents

You must be familiar with where your organisation’s risk management policies, procedures and

processes are stored – for example, they are often located in soft-copy on a shared computer

drive, or in hard-copy in folders in a main office, etc. You must know how to access these key

documents, and how you are expected to apply them in your work – and in particular, when

assessing risk, and when planning to manage risk.

Your organisation’s policies, procedures and processes for risk management will provide you

with the following types of important information:

 They will tell you about the risks associated with specific areas or the organisation as a

whole, and these should be included in your risk management assessment. They may also

provide information on how risks change over time, in response to different

circumstances and events in your organisation

 Different organisations create different levels of expectation for risk management

strategies, along with specifying cost effectiveness versus acceptable risk; knowing this

information means you can keep the risk management project in line within the

company’s guidelines and objectives

 They may provide information on past risk management activities undertaken in your

organisation, and the impacts these had on organisational risk

When reviewing risk management procedures you should also look for specific formatting

requirements for contingency plans. Areas such as emergency services (Ambulance, Fire, SES

and Police departments) often create contingency plans for different potential emergencies. They

always follow the same format in all of their plans. This allows the reader of the plan to quickly

find the information that they need.

If you need to implement contingency plans, then following standard formats may save time.

People will not have to search for information or understand the format before implementing

their part of the plan the only thing they need to do is open the plan to the section they need,

and find what they are looking for.

If there are other risk management assessments that have been done in parallel parts of the

organisation, you may need to consider accessing a copy of them in order to help you with the

new plan. Often, the risk management plans created for other areas of the company can be

adapted to suit your needs. This also provides for a cost saving to the company, because it means

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work already done does not need to be repeated.

Your organisation’s policies, procedures and processes for risk management should also provide

you with a great deal of information about how your final documentation should be filed, who

should receive copies, where they should be located, and how they should be distributed. All are

important factors in a risk management project.

THE LEGISLATIVE AND REGULATORY CONTEXT O F THE

ORGANISATION IN RELA TION TO RISK MANAGEM ENT

In your role, it is important that you are familiar with the legislation and regulations which apply

to your organisation in relation to risk management. Working within legislation and regulations is

essential to reducing the risks to which your organisation is exposed, and it can also assist you to

identify strategies to effectively manage risks.

There may be particular pieces of legislation and regulations that apply in the organisation /

industry or the State / Territory where you work. If this is the case, it is essential that you

familiarise yourself with this – for example: by reading about it online (e.g. on the Federal

Register of Legislation), or by speaking with relevant people (e.g. your work supervisor /

organisation manager, legal professionals, etc.). Read the following about some more general

legislation / regulations which may apply to you:

ANTI-DISCRIMINATION AND EQUAL EMPLOYMENT OPPORTUNITY (EEO)

Discrimination refers to the unjust or prejudicial treatment of a person on the grounds of a point

of difference (e.g. race, colour / ethnicity, gender, sexual preference, age, physical or mental

disability, marital status, family / carer responsibilities, pregnancy, religion, political opinion,

national extraction, social origin, etc.). Under a range of legislation, discrimination is illegal in

Australia. Read the following:

Over the past 30 years the Commonwealth Government and the state and territory governments have introduced laws to

help protect people from discrimination and harassment.

The following laws operate at a federal level and the Australian Human Rights Commission has statutory responsibilities

under them:

 Age Discrimination Act 2004

 Australian Human Rights Commission Act 1986

 Disability Discrimination Act 1992

 Racial Discrimination Act 1975

 Sex Discrimination Act 1984.

The following laws operate at a state and territory level, with state and territory equal opportunity and anti-discrimination

agencies having statutory responsibilities under them:

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 Australian Capital Territory – Discrimination Act 1991

 New South Wales – Anti-Discrimination Act 1977

 Northern Territory – Anti-Discrimination Act 1996

 Queensland – Anti-Discrimination Act 1991

 South Australia – Equal Opportunity Act 1984

 Tasmania – Anti-Discrimination Act 1998

 Victoria – Equal Opportunity Act 2010

 Western Australia – Equal Opportunity Act 1984.

Commonwealth laws and the state/territory laws generally overlap and prohibit the same type of discrimination. As both

state/territory laws and Commonwealth laws apply, you must comply with both. Unfortunately, the laws apply in slightly

different ways and there are some gaps in the protection that is offered between different states and territories and at a

Commonwealth level. To work out your obligations you will need to check the Commonwealth legislation and the state or

territory legislation in each state in which you operate.1

A concept closely associated with anti-discrimination is equal employment opportunity.

Diversity in the workplace means having employees from a wide range of backgrounds. This can include having employees

of different ages, gender, ethnicity, physical ability, sexual orientation, religious belief, work experience, educational

background, and so on.

In Australia, national and state laws cover equal employment opportunity and anti-discrimination in the workplace.

You're required by these laws to create a workplace free from discrimination and harassment. It's important that as an

employer, you understand your rights and responsibilities under human rights and anti-discrimination law. By putting

effective anti-discrimination and anti-harassment procedures in place in your business you can improve productivity and

increase efficiency.1

Equity and diversity principles state that all people must be treated equally and fairly, regardless

of diversity such as gender, disability, etc. This applies also in relation to employment. All States

and Territories in Australia have equal employment acts; you should familiarise yourself with

those which apply to you in your role.

CONSUMER PROTECTION, FAIR TRADING AND TRADE PRACTICES

Australian consumer laws protect consumers in relation to the products and services they

purchase. They require people / organisations selling products and services to utilise fair trading

/ fair trade practices. Under the Australian consumer laws, organisations have a responsibility to

offer guarantees on the products and services they sell. Read the following:

Products must be of acceptable quality, that is:

1 Australian Human Rights Commission, 2017.

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 Safe, lasting, with no faults

 Look acceptable

 Do all the things someone would normally expect them to do

Acceptable quality takes into account what would normally be expected for the type of product and cost. Products must also:

 Match descriptions made by the salesperson, on packaging and labels, and in promotions or advertising

 Match any demonstration model or sample you asked for

 Be fit for the purpose the business told you it would be fit for and for any purpose that you made known to the

business before purchasing

 Come with full title and ownership

 Not carry any hidden debts or extra charges

 Come with undisturbed possession, so no one has a right to take the goods away or prevent you from using them

 Meet any extra promises made about performance, condition and quality, such as life time guarantees and money

back offers

 Have spare parts and repair facilities available for a reasonable time after purchase unless you were told otherwise

Services must:

 Be provided with acceptable care and skill or technical knowledge and taking all necessary steps to avoid loss and

damage

 Be fit for the purpose or give the results that you and the business had agreed to

 Be delivered within a reasonable time when there is no agreed end date2

There are some exceptions to these guarantees; you can read more about these on the Australian

Competition and Consumer Commission’s (ACCC) website.

In some circumstances when an organisation has failed in relation to its responsibilities when

selling a product or service, a customer may be entitled to a refund or an exchange. To refund a

customer means to return the money they have paid for the product or service they are

dissatisfied with. To exchange means to provide the customer with another product or service to

replace the one they are dissatisfied with.

EMPLOYMENT AND INDUSTRIAL RELATIONS

The Australian national workplace relations system establishes a safety net of minimum terms

and conditions of employment, and a range of other workplace rights and responsibilities. Read

the following:

2 Australian Competition and Consumer Commission, 2016.

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The national workplace relations system is established by the Fair Work Act 2009 and other laws and covers the

majority of private sector employees and employers in Australia. As set out in the Fair Work Act 2009 and other

workplace legislation, the key elements of our workplace relations framework are:

 A safety net of minimum terms and conditions of employment

 A system of enterprise-level collective bargaining underpinned by bargaining obligations and rules governing

industrial action

 Provision for individual flexibility arrangements as a way to allow an individual worker and an employer to

make flexible work arrangements that meet their genuine needs, provided that the employee is better off overall

 Protections against unfair or unlawful termination of employment

 Protection of the freedom of both employers and employees to choose whether or not to be represented by a third

party in workplace matters

Australia’s workplace relations laws are enacted by the Commonwealth Parliament. The practical application of the Fair

Work Act in workplaces is overseen by the Fair Work Commission and the Fair Work Ombudsman:

 The Fair Work Commission is the independent national workplace relations tribunal and has the power to

carry out a range of functions in relation to workplace matters such as the safety net of minimum conditions,

enterprise bargaining, industrial action, dispute resolution and termination of employment

 The Fair Work Ombudsman helps employees, employers, contractors and the wider community to understand

their workplace rights and responsibilities and enforces compliance with Australia’s workplace laws3

It is important that you are familiar with the industrial relations laws and processes which apply

in the context in which you work

3 Australian Government Department of Employment, 2017.

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ENVIRONMENT AND SUSTAINABILITY

We all have a moral and ethical responsibility to safeguard the environment. For many

organisations, environmental protection is also a legal responsibility. Read the following:

The Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) is the Australian Government's key

piece of environmental legislation which commenced 16 July 2000. The EPBC Act enables the Australian Government

to join with the states and territories in providing a truly national scheme of environment and heritage protection and

biodiversity conservation. The EPBC Act focuses Australian Government interests on the protection of matters of

national environmental significance, with the states and territories having responsibility for matters of state and local

significance. The Australian Government Department of the Environment (the Department) administers the EPBC Act.

The objectives of the EPBC Act are to:

 Provide for the protection of the environment, especially matters of national environmental significance

 Conserve Australian biodiversity

 Provide a streamlined national environmental assessment and approvals process

 Enhance the protection and management of important natural and cultural places

 Control the international movement of plants and animals (wildlife), wildlife specimens and products made or

derived from wildlife

 Promote ecologically sustainable development through the conservation and ecologically sustainable use of natural

resources

 Recognise the role of Indigenous people in the conservation and ecologically sustainable use of Australia's

biodiversity

 Promote the use of Indigenous peoples’ knowledge of biodiversity with the involvement of, and in cooperation

with, the owners of the knowledge4

It is important that you work in a manner consistent with the EPBC Act, as well as any other

environmental protection legislation which applies to your context of practice.

FINANCIAL SERVICES

Your organisation may provide a variety of different financial services; in your role, you may be

responsible for managing these financial services. When considering financial services, it is

important that you consider financial probity. Probity is a strict adherence to a code of ethics,

and undeviating honesty, in commercial (monetary) matters. It is important that you familiarise

yourself with your organisation’s policies and procedures for financial probity. Financial probity

involves considerations such as:

4 Australian Government Department of Environment and Energy, 2017.

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 Acting in a manner consistent with the real estate code of ethics / code of conduct

relevant to the context in which you work; there are a variety of general codes of ethics /

conduct online, and you are encouraged to read these

 Not making improper use of your position – for example, avoid placing yourself in a

situation where there is the potential for claims of bias

 Not accepting hospitality, gifts or benefits, etc., from any potential suppliers

 Not seeking benefit from practices that may be dishonest, unethical or unsafe

 Treat all people equitably – this means fairly, not necessarily equally

 Manage conflict of interest and risks appropriately and effectively

 Keeping comprehensive documentation about financial matters

OCCUPATIONAL HEALTH AND SAFETY (OHS)

Occupational health and safety (OHS) refers to the legislation and guidelines in place to keep

yourself and others safe in the workplace. Formerly, each Australian State and Territory has its

own work health and safety (WHS) laws. However, as of 1 January 2012 a number of Australian

states and territories are working collaboratively to develop a harmonised Occupational Health and

Safety (OHS) Act which can be applied consistently across these jurisdictions. States and

Territories which follow this harmonised legislation – known as the Work Health and Safety

(National Uniform Legislation) Act 2011 – include the Australian Capital Territory, New South

Wales, the Northern Territory, Queensland and South Australia. The Work Health and Safety

(National Uniform Legislation) Act 2011 underpins a number of other legislation and regulations.

Under the Work Health and Safety (National Uniform Legislation) Act 2011, your legislative

requirements may include those related to:

 Provisions of federal, state / territory OHS Acts / regulations

 Guidelines and procedures administered by statutory / regulatory authorities

 Industry OHS standards and guidelines

 Health and safety representatives, committees, supervisors

 Licences, registration or certificates of competency

 National safety standards

Acting within your scope of practice to ensure the health and safety of all those attending the

organisation you work for is a fundamental aspect of your duty of care. You should familiarise

yourself with the Work Health and Safety (National Uniform Legislation) Act 2011 and / or the

applicable legislation in your State or Territory, as well as the organisational policies and

procedures which explain how you are expected to apply this legislation in your day-to-day work.

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PRIVACY

Under The Privacy Act (1998) (Commonwealth), and related State / Territory legislation, you are

required to maintain the confidentiality of the clients who attend your organisation, as well as

that of other staff members, the program itself and the wider community (as applicable).

Fundamentally, this means protecting their right to privacy, and avoiding sharing private

information unnecessarily. Confidentiality is an important aspect of your duty of care.

Amendments to the Privacy Act (1988) – the Privacy Amendment Act (2000) – describe how services

should treat their clients’ personal information. These principles include:

 Only collecting information necessary to provide a service

 Not using this information other than to providing a service

 Collecting such information lawfully, fairly and unobtrusively

 Obtaining informed consent to collect and store records

 Maintaining people’s rights to request access to their records

 Ensuring records are kept safe (e.g. in a locked filing cabinet)

 Ensuring records are shared appropriately, with relevant people

 Ensuring records are shared with the consent of the client

 Ensuring records are not discussed in public spaces

 Informing clients about the reasons why records are collected

 Informing clients of what is done with the records collected

 Ensuring that clients are informed about situations where disclosure of confidential

information without their consent is legally mandated

In essence, confidentiality is about protecting a client’s right to privacy. However, there are

circumstances where you are legally permitted to disclose information without the client’s

consent. This includes situations where you required by law to disclose confidential information

– for example, where you are subpoenaed (ordered) by a court to do so. Depending on your role,

you may also have a legal obligation to disclose confidential information if you have a reasonable

belief that a client may be at risk of harming themselves or others, for example. You may also be

legally required to disclose situations where you believe a colleague is impaired to the extent that

they may cause harm to clients. You should familiarise yourself with your legal obligations related

to your role as a mandatory reporter in your State or Territory.

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THE PURPOSE AND KEY ELEMENTS OF CURRENT RISK MANAGEMENT

STANDARDS

The previous section of this unit discussed the legislative and regulatory context of your

organisation in relation to risk management. Closely related to legislation and regulations are

standards. Read the following about standards:

Standards are documents setting out specifications, procedures and guidelines. They are designed to ensure products, services

and systems are safe, reliable and consistent. They are based on industrial, scientific and consumer experience and are

regularly reviewed to ensure they keep pace with new technologies. They cover everything from consumer products and

services, construction, engineering, business, information technology, human services to energy and water utilities, the

environment and much more. There are three kinds of standards:

 International standards are developed by International Organisation for Standardisation (ISO) and other

organisations. Countries can adopt these standards directly for their national use. Wherever possible, Standards

Australia embraces the development and adoption of international standards

 Regional standards are prepared by a specific region. Joint Australian/New Zealand standards can be

considered regional standards

 National standards can be developed by a national standards body (like Standards Australia) or other

accredited bodies5

The current risk management standard in Australia is AS / NZS ISO 31000 : 2009. This standard

provides important principles and general guidelines which should be considered when you are

developing risk management frameworks and programs.

It is likely that your organisation will have a copy of AS / NZS ISO 31000 : 2009 – either in

hard-copy, or in soft-copy. It is important that you access this standard, and read it for

understanding. In particular, you should understand how you can – and, indeed, are expected to

– apply this standard in your work managing risk in your organisation.

5 Standards Australia, 2017.

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DETERMINE SCOPE FOR RISK M ANAGEMENT PROC ESS

Every risk management project has limitations. It is impossible for one person to identify all

possible risks that exist for a company. This process is usually broken down into sub-projects.

It is important to determine the scope of the risk management project first because there are

always risk factors which arise, that are outside of the person or teams authority who are

performing the risk analysis.

If you try to be all inclusive in your scope, you’ll never complete the project. Each new risk that

presents itself can open the doors to whole new areas of risks to plan for.

The scope that you create or that is assigned by the organisational policies will create the limits

for your risk management project. Anything that doesn’t fall within that scope is not your

responsibility and you should not begin developing plans for these areas.

You should forward the list of risks that are outside your scope of management to the person

who is responsible for risk management within your organisation; this could be the Health and

Safety Rep.

When determining the scope of your risk management process, you need to think along practical lines that are in agreement with your organisations operational plan. Trying to develop a risk management program that extends across geographical separation, business units or different projects can be extremely difficult. Your scope may apply to:

 A specific project

 An individual business unit or area

 Specific functions such as:

o Financial management

o WHS

o Governance

 External environment – for facilities

 Internal environment – also for facilities

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 Or, in the case of a small organisation, it can cover the whole organisation

As you proceed in your risk management process, be sure to keep that scope in mind. It might be a good idea to print it out and have it by your side. That scope becomes the rule to which you compare every risk you encounter. If it is within the scope, you deal with it if it is outside the scope; you pass it on to others.

THE SCOPE DOCUMENT A ND ITS COMPONENTS

A scope document shows the extent, of a project. Below is an example:

The scope document includes the following key sections:

 Scope statement - This clearly states the project goal, objectives and deliverables.

 Project constraints - These are any limiting factors that prevent the project from

moving in a particular path.

 Assumptions - These are aspects that the project manager builds into the scope

document to allow for any uncertainties that may occur.

 Tasks list - You need to specify a list of tasks (and deliverables) to be achieved during

the project.

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 Estimates - You need to make initial estimates in relation to cost, time and human

resource requirements.

 Contract statement - This will include the names of those authorised to initiate

contract work, sign contracts and completion acceptances.

RISK ASSOCIATED WITH PROJECT MANAGEMENT

Risk management is a vital part of project management. It is important to identify as many risks

as possible and be prepared if something happens that is out of the ordinary.

Here are some examples of common project risks:

 Time and cost estimate too optimistic

 Customer review and feedback cycle too slow

 Unexpected budget cuts

 Unclear roles and responsibilities

 Stakeholder input is not sought, or their needs are not properly understood

 Stakeholders changing requirements after the project has started

 Stakeholders adding new requirements after the project has started

 Poor communication resulting in misunderstandings, quality problems and rework

 Lack of resource commitment

Risks can be tracked using a simple risk log. Add each risk you have identified to your risk log

and write down what you will do in the event it occurs and what you will do to prevent it from

occurring. Review your risk log on a regular basis adding new risks as they occur during the life

of the project. Remember, when risks are ignored they don't go away.6

6 http://www.gru.edu/ie/epmo/documents/steptwoplanprojectpdf.pdf

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IDENT IFY INTE RNAL AN D EXT ERNAL STAKEH OLD ERS AND

THEIR ISSUE S

The term “stakeholders” typically, refers to the people who have an interest or share in the project. In the case of risk management, we can include anyone and everyone whose lives and businesses can be negatively impacted by the risks or actions of the business.

This means that stakeholders can be either internal or external. Stakeholders may includeee:::

 Staff and employees

 Owners,

 Shareholders

 Customers

 Suppliers

 The community

Anyone who could be affected by your company taking a negative turn can be considered a

stakeholder. Different stakeholder groups will have different concerns and not all will be

financial.

The most important of these is health. Risks to health can be extremely dangerous, even to the

point of death. While that is rare, it does exist more so in some industries than others.

Nobody can see all possible risks that exists, that is why you need to involve others in the risk

management process, it should not be your responsibility alone.

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REVIEW P OLIT ICAL, E C ONOMIC, SOCIAL, LEGAL ,

TECHNOL OGICAL AND P O L ICY CONTEXT

Many factors external to your company can create risks. While you must accept that these exist and that they are outside of your control; that doesn’t mean that you should just ignore them, or hope that they will never be a problem.

Therefore, as part of your risk management analysis, you need to take into account as many outside influences as you possibly can. These may include:

 Political climate

 What effect a downturn in the economy will have to your company or project

 New applications for existing technologies that can invalidate existing products

 How trends, fads and other changes in society can negatively affect your company

 Potential upcoming changes in the political climate

 The state of the economy

 Proposed legislation, and how it can affect your company

 New technologies being introduced into the marketplace7

SPECIFIC RISK AREAS

Commercial and strategic risks arising from:

 Competition

 Market demand levels

 Growth rates

 Technological change

 Stakeholder perceptions

 Market share

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 Private sector involvement

 New products and services and

 Site acquisition

Economic risks arising from:

 Discount rate

 Economic growth

 Energy prices

 Exchange rate variation

 Inflation

 Demand trends

 Population growth and

 Commodity prices

Contractual risks arising from:

 Client problems

 Contractor problems

 Delays

 Insurance and indemnities and

 Joint venture relations

Financial arising from:

 Debt/equity ratios

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 Financing costs

 Taxation impacts

 Interest rates

 Investment terms

 Ownership

 Residual risks for government and

 Underwriting

Poverty arising from:

 Weak governance

 Remoteness

 Low incomes

 Gender inequalities

 Social and ethnic inequalities

 Low education

 Poor infrastructure

 Weak institutions

 Inadequate policy framework and

 Human rights infringements

Environmental arising from:

 Amenity values

 Approval processes

 Community consultation

 Site availability/zoning

 Endangered species

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 Conservation/heritage

 Degradation or contamination

 Environmental emergencies and

 Visual intrusion

Political risks arising from:

 Parliamentary support

 Community support

 Government endorsement

 Policy change

 Sovereign risk and

 Taxation

Social arising from:

 Community expectations and

 Pressure groups

 Activity initiation

 Analysis and briefing

 Functional specifications

 Performance objectives

 Innovation

 Evaluation program and

 Stakeholder roles and responsibilities

Procurement planning arising from:

 Industry capability

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 Technology and obsolescence

 Private sector involvement

 Regulations and standards

 Utility and authority approvals

 Completion deadlines and

 Cost estimation

Procurement and contractual Arising from:

 Contract selection

 Client commitment

 Consultant/contractor performance

 Tendering

 Negligence of parties

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REVIEW ST RENGTHS AND WEAKNESSES OF EX IST ING

ARRANGEMENT S

In most cases, there will be an established risk analysis from which you will begin. However, even

if you are creating a totally new analysis, there are probably some contingency plans already in

existence.

There may be already plans in existence for some of the risks that you are going to be working

on. If so, there is no reason not to use them. However, if this plan is not strong enough, you will

have to revise it.

Realistically speaking, there’s no such thing as a perfect plan. All plans have strong points and

weak ones. Experience in creating plans can help reduce the number of weak points in a given

plan, but the fact that there are too many variables which are outside of your control precludes

creating a perfect plan.

So, once you have identified the risk, there are two general approaches that you can choose from

to begin the decision-making process.

Will you:

 Control the risk?

 Transfer the risk?

CONDUCTING A SWOT ANALYSIS

To determine the best control measures for risks you should perform a SWOT analysis. A

SWOT analysis is the best tool to identify the internal strengths and weaknesses and external or

environmental threats and opportunities to any organisation. The SWOT allows an organisation

to answer the question: ‘where are we now?’

When analysing the best control measures for risk, you should ask the following questions:

 What are the strengths of this control measure?

 What are the weaknesses of this control measure?

 What are the opportunities provided by using this control measure?

 What are the threats involved in using this control measure?

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The SWOT analysis can comprise five major categories and can be compiled using the following

matrix:

When reviewing existing contingency plans, it is helpful to identify which items are flexible and which are rigid. A good plan will often have the first elements rigid and consistent, so that the people who have to react to those plans won’t have to think about which option to take. At the same time, follow-up parts of the plan will have the flexibility to overcome weaknesses caused by the difference between the expected emergency used in creating the plan, and the actual crisis that erupts. For example, let’s say that there is an emergency plan for dealing with weather or natural disaster damage to a facility. Since the type of weather damage can vary, we really don’t know all the details of how the facility may be damaged. However, there are some things which should always be done, for reasons of safety. These can include shutting off the assembly line, shutting off power and natural gas to the facility, evacuating personnel and a final sweep through the facility to determine that everyone has vacated. No matter what sort of disaster strikes the facility, these elements are always

done. 8

Once you have completed the above steps you may then be able to move some personnel back

into the facility, key data may be removed from the facility, or materials in the process may be

removed from equipment, to avoid damaging that equipment.

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The method of implementing the flexible elements of the contingency plan will depend upon the

severity of the crisis, how rapidly the crisis is developing and a number of safety factors. It may

seem extreme to force everyone out of the facility but it will ensure everyone’s safety. Machines,

technology and materials can be replaced, people can’t.

As part of your review of existing plans, you need to seek out possible issue related to your plan.

Those things that could put people, material or critical data at risk. Pay special attention to

systems which have been put into place since the creation of that plan, as those are the most

likely places to encounter these issues.

For example, a risk management plan may contain contingency plans for backup of data that is in

the IT computer cloud. However, it might not deal at all with information stored on personal

computers. At the time that the original plan was created, there was no risk of that, because all

critical data was stored in IT; however, changes in operations have created new types of data

storage on departmental servers or individual computers. That creates a “hole” in the plan, which

needs to be “plugged” in the new plan.9

9 http://tae.fortresslearning.com.au/?page_id=4945

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DOCUMENT CRITICAL SU CCES S FACTORS, GOAL S OR

OBJECT IVES FOR ARE A INCLUDED IN S COPE

Risk management, like other aspects of project management, will need success criteria. Without

these, you won’t know if the project has ended. When putting together a project management

plan, if key points or activities on that plan do not have success criteria, then it will be hard to

assess how easily they can be met i.e. where the risk areas are.

Once criteria have been identified, the project management team will need to agree how they are

measured. If the objectives are not clear, criteria for its completion cannot be set. Even if the

objective and success criteria are clear, the measurement may not be easy.

Any difficulty in setting objectives and criteria will result in higher risk as there will be a lack of

confidence in completion. How do we find out the exact nature of the objective, criteria and

measurement techniques? There is no short cut, we have to ask the people that know (for

objectives) and agree criteria and measurement techniques with them.

You can decide which factors are the most critical by determining how great an impact it will

have on your company to not have those things functioning correctly. Some things, like cleaning

the offices, will only create an inconvenience for your staff. Others, like the computer system

going down, can totally shut down your business. Can you imagine the impact of having the

computer system of an e-commerce business go down?

As part of determining the impact of risks, it is important to determine the critical success

factors, goals and objectives. They are the most important factors for your company to have

contingency plans for. The following questions might assist you in this process:

 Where does my company’s income come from?

 What affects my company’s reputation in the marketplace?

 What functions are critical to ensuring that my company can continue operations?

Are there some that we can do without for a day or a week?

 Which company goals are essential to ensure continued operations? How would a

delay in the completion of those goals affect the company?

 How many shareholders are affected by the temporary cessation of this function?

Every risk that you encounter will end up needing to be compared to each of these critical

factors. Any risk factor can affect a number of different factors, each of them to a different

extent, with a different overall impact to the company’s operations.

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OBTAIN SUPPORT FOR R ISK MANAGEMENT ACTIVITIE S

Once risk management activities have been planned, you will need to obtain support to

implement them.

You might obtain support from:

 Management

 Supervisors

 Stakeholders

CREATING A SUPPORTIV E WORK ENVIRONMENT

A supportive work environment is a key component of continuous learning. Valuing is learning

from experience, sharing best practices and lessons learned, and embracing innovation, and

responsible risk-taking characterises an organisation with a supportive work environment. An

organisation with a supportive work environment would be expected to:

Promote learning:

 By fostering an environment that motivates people to learn

 By valuing knowledge, new ideas and new relationships as vital aspects of the

creativity that leads to innovation; and

 By including and emphasising learning in strategic plans

Learn from experience:

 By valuing experimentation, where opportunities are assessed for benefits and

consequences

 By sharing learning from past successes and failures; and

 By using "lessons learned" and "best practices" in planning exercises

Demonstrate efficient leadership:

 By selecting leaders who are great coaches, mentors and trainers

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 By demonstrating commitment and support to employees through the provision of

opportunities, resources, and tools; and

 By making time, allocating resources and measuring success through periodic reviews

INDIVIDUAL OR TEAM A PPROACH

Safety culture is described as the attitudes, values, norms and beliefs which a particular group of people share with respect to risk and safety. All workers are the key to a successful safety culture. Risk Management will only work if all team members are committed to the process. The first step in the process of risk identification is to form a risk management team, as per direction of the governing group. However in some smaller organisation the responsibility of risk identification is allocated to one worker or contracted to an external risk management team. A team approach works better because the diversity of skills that various staff have will strengthen the risk management process. The skills mix in an organisation may include:

 Financial expertise

 OH&S expertise

 Emergency services expertise

 HR expertise

 Legal knowledge

 Board or management committee

 Industry Expertise

 Staff representation

 Board or management committee representation (governance)

 Staff representation from the ground up

 Management

 Volunteer representation

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 Other specialist expertise, depending on the work context, for example, appropriate

responses to violent/potentially violent clients, hazardous chemicals, etc.

Whether the process is driven by a risk management team, more common –even in smaller organisations with few staff or an individual, the role is as follows:

 Identifying risks

 Identifying exposures

 Documenting risks

 Developing an action plan

 Putting it into practice

 Monitoring

 Review

THE IMPORTANCE OF TR AINING

Risk management training is important in the workplace in order for employees:

 To understand the overall Management of Risk Process

 To be able to apply a variety of techniques to determine and quantify potential risks

 To be able to develop alternative solutions and use a variety of techniques to

determine which one(s) to implement

 To understand the importance of planning and implementing identified actions

Topics which should be covered during risk management training include:

 What is 'Risk'?

 Positive Risk taking

 Business Risks versus project Risk

 The 'Management of Risk' model

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 The steps in Risk analysis

 Numeric versus discrete levels when estimating risks

 Evaluating Risks

 The steps in Risk management

 Risk response and action planning

 Risk assessment methods (advanced)

 The people side of Risk

 Putting it into practice

Another important part of the process of risk management is ensuring that managers and

employees can:

 Recognise a hazard when they encounter one

 Assess the risk that each hazard poses

 Develop controls appropriate to the risk

 Implement those controls; for example, carry out safe work procedures accurately

Each of these steps requires skills specific to the task and to the organisation. While recruitment

processes can deliver staff with some of these skills, others will need to be developed during their

employment with you, and will need to be refreshed or increased as part of continuous

improvement.

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COMMUNICATE WITH REL EVANT PART IES ABOUT THE RISK

MANAGEMENT PROCES S A ND INVITE PART ICIP AT ION

Identifying stakeholders and developing communication strategies are critical to the successful

implementation of a risk management plan. It is important to consult with stakeholders and keep

communication pathways open so that you foster a supportive environment for risk management

activities. You must ensure communication is continuous during the process with all those

relevant to the successful implementation of risk management plans.

Earlier we discuss who stakeholders might include so refreshing your memory now would be

beneficial to this section. Briefly stakeholders may include:

 All staff

 Internal and external stakeholders

 Senior management

 Specific teams or business units

 Technical experts

Communication basically means providing information through training, newsletters, emails,

meetings, presentations, etc. The way to communicate information is to make sure you:

 Accept and involve consumers as legitimate partners

 Plan carefully and evaluate your efforts

 Listen to the specific concerns

 Be honest, frank, and open

 Coordinate and collaborate with other credible sources.

 Meet the needs of the media (if required)

 Speak clearly and with compassion

Communication and consultation are essential elements of risk management. They are critical to

every step to ensure all the participants understand and contribute to the process.

Consultation gives everyone the opportunity to influence decisions. It is an effective way to

gather useful input and ensure that all viewpoints are taken into account when identifying and

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evaluating risks. Communication and consultation are essential to the overall risk management

process as well as each individual step in that process.

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INVITE RELEVANT PART IES TO ASSIST IN THE

IDENT IFICAT ION OF RI SKS

Identifying potential risks is best achieved through a brainstorming session. Just like with any

other brainstorming session, the more people you can get involved in the process, the better. By

having a group of people involved, you can generate more ideas.

People who may be involved to assist in the identification of risks are:

Stakeholders:

 Managers

 Supervisors

 Health and safety and other employee representatives

 WHS/OHS committees

 Employees and contractors

 The community

Key personnel is:

 People who are involved in WHS/OHS decision-making or who are affected by

decisions.

WHS/OHS technical advisors:

 Risk managers

 Health professionals

 Injury management advisors

 Legal practitioners with experience in WHS/OHS

 Engineers (such as design, acoustic, mechanical, civil)

 Security and emergency response personnel

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 Workplace trainers and assessors

 Maintenance and trade persons

WHS/OHS specialists:

 Safety professionals

 Ergonomists

 Occupational hygienists

 Audiologists

 Safety engineers

 Toxicologists

 Occupational health professionals

When you encourage people to participate in risks identification procedures you will need to

ensure you use use a wide variety of people. Each department will have its own view of things,

some of which can be quite unique and provide information that you may not have thought of.

Purchasing and engineering don’t see things the same way, nor do production and maintenance.

However, between all those different viewpoints, you are more likely to identify potential risks.

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RESEARCH RISK S THAT M AY AP PLY TO SCOPE

Every idea that is brought forth in your brainstorming session has some merit. You won’t really

know how much merit each idea has until you research the likelihood of that problem happening.

For the ideas that were brought forth in your brainstorming session, you’ll need to research. That

research may include:

 Data or statistical information

 Information from other business areas

 Lessons learned from other projects or activities

 Market research

 Public consultation

 Review of literature and other information sources

Accurate research will provide you with a real image of the risks involve in your area or

organisation. Don’t guess, do your research and get it right the first time.

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USE TOOLS AND TECHNI QUES T O GENE RATE A LIST OF

RISKS THAT APP LY TO THE S COPE, IN CONSUL T ATION W ITH

RELEVANT PARTIES

RISK IDENTIFICATION TECHNIQUES

The terms ‘hazard’ and ‘risk’ tend to be used interchangeably, but risk represents more than a

hazard. Risk takes into account scale, consequences, frequency, duration, extent, the probability

of occurrence, and time range. There are some general tools that can be used to identify risk.

These can be incorporated into established risk management processes in any organisation and

include:

 Inspections: walking through and conducting inspections of each task, location, team, group or

process within an organisation. This can be done by individual managers or team leaders and

supervisors. It can also be done by senior or executive management.

 Consultation: a process that allows evidence on unreported incidents to be gathered, for example,

injuries, machine breakdown. Again these meetings can be held in a local or team or group or senior

management level. The results of a number of these meetings can then be incorporated in further

meetings with managers at different levels.

 Safety or management audits: these can be conducted by individual managers or team leaders

and focus on their own or associated areas, or can be conducted by members of the organisation who

specialise in this area.

 Testing: of plant and equipment in an operational context, or of staff in a service area. This also

can be accomplished as part of the local group or team approach or can be part of a wider

organisation-wide approach.

 Scientific or technical evaluation or expert instruction in up-to-date methods

(service industry): these are usually provided by third parties or consultants and often form part

of the training process of the organisation.

 Collection and evaluation of material: from suppliers, manufacturers, designers, and from

safety organisations, unions, interest groups and employer organisations.

 Expert advice: engaging professional consultants and advisors, lawyers, engineers, safety experts,

process experts.

 Seeking government or regulatory information and help: from government

departments, investigatory and regulatory bodies, royal commissions, commissions of inquiry, coronial

inquests, industrial commission hearings, statistical bodies and ‘think tanks’.

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 Networking: with other members of the market, or users of similar machines or processes.

 Benchmarking is a process of seeking out and identifying the best practices of the organisation’s

competitors, where those best practices represent a higher quality level or performance. The process

means that the organisation, having identified the best practice in the industry then uses that

‘benchmark’ as the quality standard to be obtained within its industry.

 Brainstorming; the brainstorming process can take various forms, but one of the most effective is

in meetings of staff in an environment where there is freedom to experiment with ideas and to express

opinions. Brainstorming is usually a process of energetic interaction with the goal of forming and

discussing ideas and concepts in a round-table or group dynamic. It allows examination of existing

and emerging risk by using the ideas and experience of fellow workers, managers, experts, other

stakeholders and the users of the process or service.

 Audits and physical inspections; Regulatory based risk management procedures often

include regular audits and inspections, for example, Occupational Health and Safety, activities of

brokers and traders on the Australian Stock Exchange register and the regulation of Registered

Training Organisations. 10

PROCESS CHARTING

The fishbone diagram provides a good example of a process chart, sometimes called a cause and

effect diagram. Each line or ‘fishbone’ represents an area that may have caused a problem.

10 http://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CC0QFjAC&url=http% 3A%2F%2Fwww.frontlinecaresolutions.com%2FLiteratureRetrieve.aspx%3FID%3D79124&ei=1t0QVNy jJcnkuQTXlIKQCA&usg=AFQjCNEbqowMjuyZ1sWuyetgB4l7OFmMcQ&sig2=WHkkQk3u5k6MfynEdjfitA& bvm=bv.74894050,d.c2E

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SCENARIO ANALYSIS

Scenario anaysis is a process of examining options and competing scenarios based on an

assessment of future events. The focus is on the future and may take into account past and

present events as elements of the examination.

BENCHMARKING SIMILAR ORGANISATIONS AND A CTIVITIES

Benchmarking is a process of identifying the industry best practice, and setting that as the

standard for the particular organisation. The process involves significant industry knowledge and

an ability to examine competitors’ processes in order to identify why that market is dominant or

produces the leading product or service.

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System or process flow charts are especially useful in recognising and identifying potential areas

of the problem within the process flow.

Influence diagrams –demonstrate the influence that different aspects of a process have on each

other.

All the above are examples of tools that can be used to evaluate or identify risks in the

workplace.

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T O P I C 3 - A N A L Y S E R I S K S

ASSESS LIKEL IH OOD OF RISKS OCCU RRING

The next step of the risk assessment is to determine or estimate both the likelihood of a risk

arising and its potential consequences. All available data sources should be used to understand

the risks. These may include historical records, procurement experience, industry practice,

relevant published literature, test marketing and market research, experiments and prototypes,

and expert and technical judgement and independent evaluation.

The risk analysis involves:

 An estimate of the likelihood of each risk is arising. This might be done initially on a

simple scale from 'rare' to 'almost certain', or numerical assessments of probability

might be made

 An estimate of the consequences of each risk. This might be done initially on a

simple scale from 'negligible' to 'severe', or quantitative measurements of impacts

might be used11

Analysis of risk levels can be conducted on the inherent risks (assuming no controls are in place)

or on residual risk (that remaining after considering existing control strategies). The former ‘zero-

based’ approach would be appropriate at the outset of an activity or when considering a

possibility of revising controls. The latter would be appropriate when monitoring management

action or reviewing implementation.

The purpose of analysing risk is to provide information to enable the evaluation of risks, using

predefined likelihood and consequence criteria. Risk analysis uses judgments and assumptions,

which may involve uncertainty and be based on incomplete information. Therefore, the best

available information sources and techniques should be used. Wherever possible the confidence

placed on estimates of levels of risk should be included.

11 http://portals.wi.wur.nl/files/docs/ppme/ausguidelines-risk_management.pdf

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ASSESS IMPACT OR CON SEQUENCE IF RI SKS OCCUR

Impact itself can be assessed in terms of its effect on:

 Cost

 Quality

 Time

o This includes the time taken to:

 Identify, record and report the risk

 Analyse and assess the risk

 Address the risk

 Either reduce its impact or remove it completely from a potential risk

Risk proximity is about:

 When and where the risk will occur

 It's role in the process or system

 It's damage or potential damage reaches

Our first step in assessing a risk is to determine the likelihood of the risk occurring, meaning

what are the chances. See below for a scale to gauge how likely the risk is:

1. Not likely - 10%

2. Low likelihood - 30%

3. Likely - 50%

4. Highly likely - 70%

5. Near certainty - 90%

Just as we did with the likelihood of a risk occurring, the impact or consequences of the risk

needs to be rated. In this case, we are dealing with the amount of disruption to normal business

operations that the event can cause.

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The following table shows that the impact of risk is generally ranked from ‘minimal’ (level 1) to

‘severe’ (level 5). You can see from the detail descriptions that these levels focus on the degree to

which the business is affected in regards to its financial and service capability.

LEVEL DESCRIPTOR EXAMPLE DETAIL DESCRIPTION

1 Minimal No service impact; low financial loss

2 Minor Minimal disruption to service capability; medium financial loss

3 Moderate Interruptions in service delivery; high financial loss

4 Significant Loss of service capability; major financial loss

5 Severe Loss of business continuity; huge financial loss

Analysing the risk will help you decide the impact of the risk on your company and will enable

you to control for this when required.

EVALUATE AND PRIORIT ISE RIS KS FOR TREATM ENT

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A simplified risk analysis can be conducted using probability theory:

Likelihood X consequence = Risk Score

By using these two scales, any potential risk can be rated with a risk score. For example, if we live

in an area which commonly has severe thunderstorms, which disrupt electrical service to our

distribution facility for 2 to 3 hours, we might assign a likelihood score of 5 and an impact score

of 3. That would give us a risk score of 15, considering the maximum score we can get with this

system is 25, that’s a fairly high-risk score.

The criteria for ranking and recording includes:

 Taking into consideration whether the risk falls within established or accepted

guidelines

 Differentiating between risks that have high impact/consequence/likelihood and

those having low impact/consequence/likelihood

 Assigning value to identified risks using available tools

 Assessing consequences and likelihoods

A risk that has been analysed as having a ‘catastrophic impact’(loss of business continuity; huge

financial loss) is ranked as an ‘extreme ‘level risk if the probability is ‘likely ‘but ‘high ‘if the

probability is ‘rare’. Immediate action is required, involving senior management, to manage the

risk.

Sample Level of Risk Matrix

EXAMPLE OF RISK TABLE OF DEFINITIONS

E Extreme risk; immediate action required

H High risk; senior management attention needed

M Moderate risk; management attention must be specified

L Low risk; manage by routine procedures

Acceptability Risk level

Acceptable Low and Moderate

Not acceptable High and Extreme

Risk Criteria include:

 Scope of the risk policy

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 Internal and external contexts

 Internal and external stakeholders

 Corporate objectives, policies, values and visions

 Standards and laws

 Resource availability

 Social, economic, environmental, and political factors

Another type of scale describes risk in terms of acceptable levels:

 Broadly acceptable level of risk

 Best achievable level of risk

 As low as reasonably practicable (ALARP)

 Generally intolerable level of risk

B.F. Hough (1985)

developed the following

diagram to show the

relationship between cost

and risk. This type of

reference can contribute

to the evaluation and

prioritisation process by

representing different

factors relating to risk.

Each risk decision and its implementation will depend on your organisation and its guidelines on

what is acceptable. The cost of implementing some changes may be so great, that it is not

possible. In those cases, mitigation of the impact may consist of buying insurance against that

event occurring, this then transfers some of the risk to an insurance company and lessens the

load on the organisation.

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T O P I C 4 - S E L E C T A N D I M P L E M E N T T R E A T M E N T S

DETERMINE AND SELECT MOST APPROPRIATE OP TIONS

FOR T REATING RISKS

Risk treatment involves identifying the range of options for treating risk, assessing those options,

preparing risk treatment plans and implementing them. It is probable that a combination of

options will be required to treat complex risks. Once a risk is understood, you will need to treat

the risk, to do this you may need a detailed analysis of treatment options. There are usually be

several options, each with different costs and benefits and each will offer different levels of risk

mitigation.

KEY OUTCOMES STEPS

IDENTIFY TREATMENT OPTIONS

The purpose of evaluating risks is to prioritise the need for the development of a treatment plan.

Once that is completed, it is time to determine the best treatment plan option for that particular

risk.

The control or management of risk can be different on an organisational or industry basis.

However, there are seven commonly used approaches:

APPROACH DESCRIPTION 1. Elimination / reduction

management  In this approach, the risk is either reduced to its lowest

possible level to enable it to be managed or it is eliminated  A variation in this approach is not to eliminate the risk if

that is too difficult or too late, but to reduce or eliminate its effect

2. Assumption of risk  Insurance companies assume risk as part of their operations. Here the expression ‘assume risk’ means to knowingly accept the risk as part of the agreement with the person/company that pays the premium. Organisations unused to risk may assume or accept its effect because to fail to do so might negatively affect the organisation’s operations

 Once again, the decision to assume a risk must be taken bearing in mind the competing issues of cost, proximity and extent of the risk

3. Transfer risk  Insurance is a means of transferring the risk, through the payment of insurance premiums, to an insurance company

 It is important to understand that this is generally a way of managing financially based risk. The insurance company can

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only really assume a financial risk. It is not able to assume risk that relates to culture, personnel or manufacturing for example

 So if the risk of the factory burning down is identified, then the financial risk can be transferred to the insurance company, but the actual risk of losing specific or specialist machinery cannot

 Often organisations only transfer part of the financial risk having assessed the insurance premium cost as too high to transfer it all

 To offer a personal example, this may be compared with a householder insuring the contents of the house against fire, but not paying extra for the loss of specialist jewellery or stereo equipment. It then falls on the householder to fund the replacement of such items

4. Changing processes  Risk can be avoided by changing processes, or refraining from an activity. This is often an ongoing process of change from risk identification

 Organisations with a positive risk identification and management culture are ready and willing to change or remove processes that demonstrate a greater degree of risk or risk potential

 Changing a process to avoid an activity also requires a positive risk management culture as this can be confronting and expensive, particularly if the process needs to be replaced

 The change or replacement of a process in order to manage a risk must also be undertaken using risk management procedures. In other words, the new process must not create or support the same or similar risk it was designed to eliminate

5. Delaying  An organisation may defer a risk, by delaying it until such time as it is able to assume the risk or deal with it in a better and more positive way

 An organisation may believe that research or development  It’s undertaking will make it more able to deal with the risk

at a later time

6. Sharing risk  Organisations may seek to share risk with other organisations by way of joint ventures or cooperative options

 A good example of this is seen in the construction and maintenance of motorways in capital cities where government and private industry come together to share the expense

 Similarly in recent times wine and beer companies have combined with manufacturing industries associated with wine and beer production when entering new markets such as China

7. Spread and minimise locations of the risk

 An organisation may attempt to spread and minimise locations of the risk, e.g. a company may spread its outlets and workforce to a number of areas in order to spread or reduce the risk of an incorrect decision in relation to geographic marketing. For example, a retailer may have outlets in a number of locations in a town to

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ensure the product is available to as many potential customers as possible

Regardless of the final decision ensure that all relevant parties have signed off on it. Although you may be in charge of developing the risk management plan, this is a group project, with group decisions.

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DEVELOP AN ACTION P L AN FOR IMPLEMENTING RISK

TREATMENT

The action plan formalises the risk management process. The specific format of the risk

management action plan will vary from one organisation to another, but the following is an

example of a relatively straightforward methodology.

 Risk

 Date identified

 Level of risk

 Reason for risk rating

 Risk priority /risk ranking

 Action (what is to be done)

 What resources are required

 Who is responsible for the action

 Timeline-when should the action be completed

 Strategy for informing relevant stakeholders- i.e. staff volunteers, board, corporate

sponsors, etc.

 Review date

A risk control action plan is essential for the effective and systematic introduction of risk control

actions. Remember to compare the levels of the risk control hierarchy with the time frame when

determining target dates.

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SAMPLE RISK TREATMEN T ACTION PLAN

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COMMUNICATE RISK MAN AGEM ENT PROCESSES TO

RELEVANT PARTIES

Earlier we discussed the importance of good communication with stakeholders. You should

revisit that section now to refresh you knowledge.

Risk management communication is the sharing of information about risk and risk management

between the decision makers and others.

COMMUNICATION FACTOR S SUCH AS LANGUAGE A ND LITERACY

Effective communication is obviously critical to genuine participation. The specific needs of

individuals in the workplace need to be taken into account. Individuals will have different levels

of literacy, and either may not speak much English or may not have English as their first

language. For example, induction and instruction in policies and procedures need to reflect the

language and literacy levels of each person, and things like safety and emergency warning signs,

which are for the whole workplace, need to be based on easily understandable pictures, rather

than complex language.

Communication must be a two-way street. If individuals are to be able to participate in

WHS/OHS activity in a meaningful way they need access to information in a format they can

understand, and they need to be able to communicate back to WHS/OHS representatives,

supervisors, WHS/OHS advisers and others easily. 12

DIVERSITY OF WORKERS

Employees may come from different cultural, age and educational backgrounds with different

views about personal responsibility and authority; they will have different previous experiences,

knowledge and skills and may have different learning styles. They may have external pressures

and stresses in their lives or pre-existing physical injuries. All these factors need to be taken into

consideration in designing and developing participative arrangements.

Your risk management plan must be distributed to all appropriate personnel; especially those

who have a part in implementing the plan.

12 http://institute.safetyline.wa.gov.au/pluginfile.php/1642/mod_label/intro/BSBOHS503B.pdf

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In order to diseminate information to key personnel you should be face-to-face with them. In

this way you can provide them with a brief outline of the plan containing the key information.

Any details con be provided in written form.

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ENSURE ALL DOCUMENTA TION IS IN ORDER AND

APPROPRIATEL Y STORE D

Not only do you need to distribute the risk management plan to relevant parties, you’ll need to

ensure that copies are created and stored in your company’s information management system. In

many companies, this is a computerised system for the storage of all important information.

Since part of your risk factors include the possibility of something happening to the company’s

computer systems, you should also ensure that hard copies are created and stored in the

appropriate place.

STORAGE OF WHS/OHS INFORMATION

In storing information, it is important to remember that information is being stored so that it can

be used. It is important not to create ‘data cemeteries’. So when deciding how to store

information keep in mind:

 Why is the information being stored?

 Who will want to use it?

 When and how often will they want to access the information?

 What protections (privacy, confidentiality) are required for the information?

 What ‘links‘, or other factors, need to be considered for the data to be meaningful?

 What technology is available?

 What are the skills of the people in using the technology?

 This will then lead to the following questions:

 What is the best medium (electronic; hard copy) for storage?

 What is the best format for organising the information?

 What skills and technology will be required to access the information?

Most organisations will have some records, such as incident and injury reports, workplace

inspections and/or newsletters, in hard copy.

 Hard copy formats tend to be used where:

 The original record is in handwriting

 The original requires a signature; and

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 The material is ‘for information’ and is usually circulated or left in an open location

for people to read (i.e. newsletter)

Even in the smallest community services organisation is likely to have electronic storage for any

information or records that meet one or more of the following criteria.

The record or document has to be:

 Communicated to somebody else

 Retained for legal reasons

 Collated to identify a trend; and

 Used for planning

There are many software options for storing electronic WHS/OHS information. These options

may range from simple spreadsheets to highly interactive purpose-designed software packages

that may incorporate functions such as incident reporting, injury management, chemical and risk

registers, asset and maintenance registers and training records.

Having determined the format for storing WHS/OHS information (i.e. the nature of the

software) the next question is whether it should be on a single computer or networked hardware

for an intranet type system.

It is beyond the scope of this unit to compare the relative features of the various systems, but

some factors to consider are:

 Who needs to access the information?

 Do they have access to the hardware?

 Do they have the skills to access the system?

 What level of technological support is required/available?

IMPLEMENT AND MONITO R ACTION PLAN

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Once risks have been identified and given a reading that indicates that risk’s potential to be

problematic and has been documented for recording and reporting (and audit) purposes, a

treatment plan should be developed. A treatment plan would include rectification elements.

Having done all the work outlined above (and kept any relevant/necessary stakeholders,

management, committees informed during the process), it's now time for those nominated to do

so, to present the risk management plan to whomever has the delegation to authorise its

implementation. This may be a supervisor, a manager or a complains or risk manager. They will

then consider the plan, clarify any questions it has, and after making any necessary adjustments,

endorse the plan.

Once endorsed, the next step is to implement the plan. This will involve:

 Issuing a risk management statement - A good starting point is to let everyone in the

organisation know that your organisation is serious about risk management and to

outline the key risk management strategies. The risk management statement should

also outline the proposed timetable and key contact people, and procedures for

contributing to the risk management process.

 Training - It is likely that training was identified as a key risk management strategy in

addition to the introduction of new practices will often require training. Training for

risk management needs to be carried out in the context of your organisation's overall

training activities.

 Establishing and documenting procedures - Your risk management plan will have

identified areas where written procedures need to be developed and/or documented.

To implement the plan, it will be necessary for staff, volunteers and management

committee members to work together to develop these procedures. Existing

procedures should be reviewed to ensure that they are consistent with new

procedures.

 Allocating specific responsibilities - A risk management plan requires specific

allocation of tasks to ensure no gaps in the process leave room for further risk -

different people within your organisation should be given responsibility to implement

different parts of the plan. It should be clear to all those involved in the process,

who is responsible for each aspect of implementation for the risk management plan.

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Hopefully, there will be some overlap in different action items, where the same action item may

deal with several different risks.

While there are parts of the risk management plan which require your direct involvement to

implement, there are other parts which will be implemented by others. You will still want to track

these areas, to ensure that they are actually completed and not derailed mid-stream.

Once the action items have been implemented, you also need to check and monitor, to ensure

that they will function as expected. There are always a certain number of plans that don’t work

out the way we expect. Should that happen, be willing to admit your fault and try something else.

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EVALUATE RISK MANAGE MENT PROCES S

Risk management is a continual process. Reaching a point of completion in a risk management

project, only means that it’s time to go back and review everything over again.

It is critical to constantly monitor and review the processes and outcomes. Monitoring and

reviewing risk management processes helps to include risk management as a valuable part of the

company. The risk management process in not static but is taken in the context of the internal

and external environments. As these environments change, the variables affecting risk also

change.

Evaluating the process of risk management can be assigned to individuals within departments or

to dedicated staff depending upon the nature of the organisation and the resources available.

Consultants may be brought in at critical times to evaluate processes and institute changes based

on risk contexts or environmental, social and political changes.

In addition to planned and scheduled monitoring and review sessions to examine new risk,

review of the management plan must be ongoing in order to stay relevant. As policies,

procedures, and visions of a corporation change, risk changes. As external contexts change, risks

change. Suitability and cost factors for treatment options change. Treatment options or

contingency plans may lose relevancy throughout the process. External variables such as

legislative actions may develop which creates a different context under which to analyse and

evaluate risk.

Examination of successes and failures in relation to anticipated outcomes is a necessary

component of the risk management process. It increases the probability that future risks can be

evaluated with higher levels of accuracy and greater success. An inability to achieve outcomes

does not indicate failure but provides an opportunity to gain valuable knowledge regarding

process change. Duplication of ineffective processes leading to a repetition of unachieved

outcomes indicates a failure to learn. That can be tragic when corporations, and the people that

depend on them, are at risk.

One of the key components of the risk management process is keeping an accurate record of

documentation relating to the communications, justifications, analyses and relevant information

pertaining to risk. Remember how we began the risk assessment process? With research relating

to:

 Data or statistical information

 Information from other business areas

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 Lessons learned from other projects or activities

 Market research

 Previous experience

 Public consultation

 Review of literature and other information sources

Monitoring is not only a practical requirement but a legal obligation, as the common law duty of

care and WHS legislation requires that the employer “provide and maintain a working

environment that is safe”.

All organisations should ensure that risk identification, assessment analysis, evaluation techniques

and the change arising from these processes fall within the culture of the organisation. This

requires commitment from the most senior levels of management in the organisation, and it

requires communication throughout all ranks of the organisation.

Leadership and coaching are two of the most commonly used processes to engage an

organisation in a cultural change to embrace the issues of risk identification and management and

the issues arising from the change that flows from these procedures.

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S U M M A R Y

Life is full of risks. Everything we do, from buying a car, to crossing the street carries some

degree of risk. Therefore, it shouldn’t surprise us that our business activities have risk associated

with them as well. While some of those business activities carry very little risk, others come

loaded with risk at every turn. Some risks have a great potential for impact while the impact of

others can hardly be seen.

While the risks in our personal life can cause problems for us and our families, even the smallest

business risks carry a much broader potential for causing damage. Employees, customers and

even people who seem unrelated to our business can end up being hurt by the risks associated

with the business.

We had a perfect example of this with the earthquake and tsunami that hit Japan in March of

2011. Millions of lives were affected by what happened; first by the earthquake, then the tsunami,

and then by the damage to the nuclear power plant. Not only workers in the plant were affected,

but millions of customers, everyone who lived within 20 miles of that nuclear plant, even people

as far away as the western part of the United States were affected by what happened in that

event.

Even without the destruction and eventual meltdown of the nuclear power plant, the tsunami

itself wreaked havoc on the north eastern part of the Japanese home island of Honshu. Over five

million families lost their homes, with over 15,000 lives lost.

"In many cases, there is nothing we can do to stop these disasters from happening. Risk

management isn’t about that; it’s about understanding the potential risks and managing

how a company deals with that risk."

If you have any questions about this resource, please ask your trainer. They will be only too

happy to assist you when required.

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R E F E R E N C E S

10 Foundations for Risk Management (N.D.) Retrieved on 12th January 2016 from:

http://civilengineerblog.com/foundation-risk-management/

ASSIST IN THE DESIGN AND DEVELOPMENT OF OHS PARTICIPATIVE

ARRANGEMENTS (N.D.) Retrieved on 12th January 2016 from:

http://institute.safetyline.wa.gov.au/pluginfile.php/1642/mod_label/intro/BSBOHS503B.pdf

Managing Risk (N.D.) Retrieved on 12th January 2016 from:

http://portals.wi.wur.nl/files/docs/ppme/ausguidelines-risk_management.pdf

Establish Risk Context (N.D.) Retrieved on 12th January 2016 from:

http://students.fortresslearning.com.au/bsbrsk501a-manage-risk/section-1-establi...

(N.D.) Retrieved on 12th January 2016 from:

http://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CC0QFjA

C&url=http%

(N.D.) Retrieved on 12th January 2016 from:

http://www.gru.edu/ie/epmo/documents/steptwoplanprojectpdf.pdf