7 MANAGING OCCUPATIONAL RISKS

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7 MANAGING OCCUPATIONAL RISKS
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Risk in OSH
Where we are?
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Dealing with risk
Risk management
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Why this talk is necessary?
Covering all types of accidents
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Basic philosophy
Domino approach to risk control
An occurrence of an accident is only a tip of an
iceberg representing a scenario.
Targeting the entire scenario ?? An early
intervention ? Reducing the likelihood or
elimination of accident.
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Simple example 1/4
Four scenarios consequences
According to Kumamoto, H.,  Henley, E. J.
(1996) Probabilistic risk assessment for
engineers and scientists, 2nd ed., IEEE Press,
New York.
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Simple example 2/4
Conditional probabilities of consequences
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Simple example 3/4
Conditional probabilities of consequences
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Simple example 4/4
Severity of consequences
Severity measure degree of unpleasantness (0 to
10 points)
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Formal definition of risk
Pairs of frequencies and severities
Consequence i (Frequency i, Severity i)
Risk ?? (F1, S1), , (Fi, Si) , , (Fn, Sn)
Example with umbrella
Risk ?? (F1, S1), (F2, S2), (F3, S3), (F4,
S4) (2,1 yr1, 5 pts), (1,4
yr1, 3 pts), (0,9
yr1, 10 pts), (0,6 yr1, 0 pts)
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OSH friendly risk definition
Risk at specific occupational position
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OSH friendly risk definition 2/2
Risk profile Risk to personnel
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Risk avoidance
Possible in some cases
A most intuitive way of avoiding a risk is not to
undertake an activity in such a way that involves
that risk

• Using a well-established, albeit not the cheapest
  one contractor for a particular job instead a
  small particular contractor which poses the risk
  of accident or filing bankruptcy.
• Avoiding a high risk of potentially catastrophic
  consequences of using a generally cost efficient
  nuclear power source by turning to other forms of
  fuel.

Avoidance may seem the answer to all risks, but
avoiding risks also means losing out on the
potential gain that accepting the risk may have
allowed. Not entering a business to avoid the
risk of loss also avoids the possibility of
earning profits.
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Risk control
Three Ts of risk control
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Treatment of risk
i.e. reduction or elimination
It is often the most fruitful approach.

• Numerous technical recipes are given in Chapter 3
  Hazard control
• Organizational examples include
• More attractive labour relations policy to
  minimise stoppages (strikes)
• Training of staff to avoid hazards
• Improvement of site security to prevent theft and
  vandalism
• Advanced ordering of key components
• Liaisons with the local community

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Toleration of risk
i.e. retention or acceptance
All risks that are not avoided or transferred are
retained by default.

• A viable strategy for small risks where the cost
  of insuring against the risk would be greater
  over time than the total losses sustained.
• Includes a small chance of a very large loss.
• Includes risks that are so large or catastrophic
  that they either cannot be insured against or the
  premiums would be infeasible (e.g.war).
• Any amounts of potential loss over the amount
  insured is retained risk.

Normally, a sufficient margin in the finances of
a project should be created to cover the risk
event should it occurr.
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Transfer of risk
i.e. insurance etc.
A general principle risks in business ventures
should be borne, wherever possible, by the party
that is best able to manage them.
Transferring risk to an insurance company A
payment (i.e. insurance premium) is linked to the
probability of occurrence and severity associated
with the accident. Insurers are obliged by the
contract to offer compensation by the party
affected by the risk.

• Insurance coverage can include
• Straight insurance for expensive risks with low
  probability such as fire
• Performance bonds which ensure that the project
  will be completed if the contractor defaults
• Sophisticated financial derivatives, such as
  hedge contracts, to avoid such risks as
  unanticipated losses in foreign exchange markets.

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To end of part seven
Examination question

• What are the three main approaches to dealing
  with risks? Explain the elements of the three Ts
  used for risk control.