Risk Management
Vocabulary that anchors the domain
- Hazard is a source or situation with potential for harm. Risk is the combination of likelihood of occurrence and severity of consequence. Exposure, not merely the presence of a hazard, drives risk.
- Process (ISO 31000 style): establish context, identify hazards, analyze risk, evaluate against criteria, treat risk, then monitor and review with communication throughout.
- Treatment options: avoid, reduce (mitigate), transfer (insurance, contract), and accept. Avoidance removes exposure but may be commercially or operationally impossible.
- ALARP: reduce risk as low as reasonably practicable, with a cost-benefit justification required for stopping short of further reduction.
- Tools: FMEA (failure modes), HAZOP (process deviations), LOPA (independent protection layers), fault tree (deductive, top-down), event tree (inductive), and bowtie (links prevention to mitigation).
- Initial vs. residual risk: residual is what remains after controls are applied.
Traps. A risk matrix is ordinal, not cardinal - a cell scoring 16 is not "twice" a cell scoring 8, and multiplying likelihood by severity is only defensible on constructed scales. Also, risk assessment is incomplete without risk evaluation against criteria and an explicit decision.
Rule of thumb. Score likelihood and severity on 1–5 scales, and use the highest credible severity rather than an average - a rare but fatal outcome still ranks as severe.
Worked example. A task scores likelihood 3 and severity 4, giving an initial risk of 12. After installing an interlock, likelihood falls to 1, for a residual score of 4. The residual score, not the initial score, is what you compare against the acceptability criterion.