A risk assessment is a methodical procedure carried out by a qualified individual that entails locating, evaluating, and managing risks and hazards that are present in a scenario or location. With the use of this decision-making tool, you may decide which risks should be prioritized based on their likelihood and potential impact on the company, as well as which controls should be implemented to remove or reduce those risks.
There are several methods used to carry out risk assessment, these methods are what we will be considering in this article.
Methods of Risk Assessment
Methods of risk assessment differs in different sectors and oragnisations, but a method adopted should best suit the organization process.
Before we get into the subject of the article, let use refresh our minds on what risk assessment entails.
Risk assessment is the determination of quantitative or qualitative estimate of risk related to a well-defined situation and a recognized threat (also called hazard).
Quantitative risk assessment requires calculations of two components of risk (R)
The magnitude of the potential loss (L), and
The probability (p) that the loss will occur.
In summary, to conduct risk assessment, 5 main steps are always adopted.
- Identify the hazard: Be it physical, mental, chemical or biological.
- Decide who could be harm
- Assess the risk
- Make record of findings
In the engineering of complex systems, sophisticated risk assessments are often made within safety engineering and reliability engineering when it concerns threats to life, environment or machine functioning.
Methods for risk assessment may differ between industries and whether it pertains to general financial decisions or environmental, ecological, or public health risk assessment.
There are several methods of risk assessment which can help identify risk, assess the risk appropriately and help in the risk management.
Some of these most used methods of risk assessment include:
- What-if analysis
- Fault tree analysis (FTA)
- Failure mode event analysis (FMEA)
- Hazard operability analysis (HAZOP)
- Incident BowTie
- Event Tree
What-If Analysis is to identify hazards, hazardous situations, or specific event sequences that could produce undesirable consequences. The method can involve examination of possible deviations from the design, construction, modification, or operating intent. It requires a basic understanding of the process intention, along with the ability to mentally combine possible deviations from the design intent that could result in an incident. This technique is really successful when the members of the team involved in the analysis are well experienced.
Fault tree analysis (FTA)
It is a deductive procedure used to determine the various combinations of hardware and software failures and human errors that could cause undesired events (referred to as top events) at the system level.
A Fault Tree is a vertical graphic model that displays the various combinations of unwanted events that can result in an incident. The diagram represents the interaction of these failures and events within a system. Fault Tree diagrams are logic block diagrams that display the state of a system (TopEvent) in terms of the states of its components (basic events).
A Fault Tree diagram is built top-down starting with the TopEvent (the overall system) and going backwards in time from there. It shows the pathways from this TopEvent that can lead to other foreseeable, undesirable basic events. Each event is analyzed by asking, “How could this happen?” The pathways interconnect contributory events and conditions, using gate symbols (AND, OR). AND gates represent a condition in which all the events shown below the gate must be present for the event shown above the gate to occur. An OR gate represents a situation in which any of the events shown below the gate can lead to the event shown above the gate.
Failure mode event analysis (FMEA)
Failure mode event analysis (FMEA) can also be known as potential failure modes and effects analysis; failure modes, effects and criticality analysis (FMECA).
Failure modes and effects analysis (FMEA) is a step-by-step approach for identifying all possible failures in a design, a manufacturing or assembly process, or a product or service.
Failure modes mean the ways, or modes, in which something might fail. Failures are any errors or defects, especially ones that affect the customer, and can be potential or actual.
Effects analysis refers to studying the consequences of those failures.
Failures are prioritized according to how serious their consequences are, how frequently they occur and how easily they can be detected. The purpose of the FMEA is to take actions to eliminate or reduce failures, starting with the highest-priority ones.
Failure modes and effects analysis also documents current knowledge and actions about the risks of failures, for use in continuous improvement. FMEA is used during design to prevent failures. Later it’s used for control, before and during ongoing operation of the process. Ideally, FMEA begins during the earliest conceptual stages of design and continues throughout the life of the product or service.
Hazard operability Analysis (HAZOP)
Hazard and Operability Analysis (HAZOP) is a structured and systematic technique for system examination and risk management. In particular, HAZOP is often used as a technique for identifying potential hazards in a system and identifying operability problems likely to lead to nonconforming products.
HAZOP is based on a theory that assumes risk events are caused by deviations from design or operating intentions. Identification of such deviations is facilitated by using sets of “guide words” as a systematic list of deviation perspectives. This approach is a unique feature of the HAZOP methodology that helps stimulate the imagination of team members when exploring potential deviations.
The ‘Incident BowTie’ analysis method combines two analysis methods; BowTie risk analysis and Tripod incident analysis. The method brings the advantages of both worlds together. The information from the BowTie analysis can be used as input for the incident analysis, viewing it from a broader perspective and making sure all the possible scenarios are taken into account. The input from the Tripod incident analysis can be used to make the BowTie analysis more realistic and up to date, using real-life data.
It creates an extra layer in the BowTie diagram, making it possible to add more specific information to the risk analysis. The two methods have an important similarity in the analysis technique; the barriers. For both methods barriers are used to show what is done to prevent incidents or events (BowTie) or to show where the failures lie (Tripod). To build an ‘Incident BowTie’ diagram the items from both methods are connected on the level of the barriers, making it possible to collect information about those barriers from two viewpoints.
Event Tree analysis
The Event Tree analysis method is a bottom-up inductive method. It makes use of general information to analyze specific information. The diagram that is built gives a horizontal graphical representation of the logic model that identifies the possible outcomes following an initiating event. The event sequence is influenced by either success or failure of the applicable barriers or safety functions/systems.
The event sequence leads to a set of possible consequences. Each combination of successes or failures of barriers leads to a specific consequence or event. The method can also be used quantitatively to calculate the probability of each outcome or consequence giving the failure probability of each barrier.
In summary, the variety of risk assessment techniques highlights how dynamic the issues facing today’s businesses are. The techniques used, which range from sophisticated quantitative models to conventional qualitative approaches, show a constant evolution in response to the complexity of modern hazards. The total effectiveness of risk assessment can be improved by combining different techniques, each of which has advantages and disadvantages.