The Ultimate Risk Management Guide (2021)

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20th May 2021

Anyone who has a job is at risk of workplace health and safety incidents. Employers have a responsibility to manage this risk, and to ensure that all employees can work in a safe and healthy environment. This guide will help you to understand the risks, what you can do to manage them, and how to report them if required

The Ultimate Risk Management Guide - Kendra Align

Introduction to workplace health and safety risk management

The workplace health and safety risk management is an important part of any business. An organisation cannot afford to not manage the risk of harm to it’s employees. The Workplace Health and Safety Act (WHS Act) requires that an organisation has a WHS Management System in place, in addition to other requirements.

At its core, workplace health and safety is all about keeping employees safe. Because without their safety, a business may not be able to thrive in the long term. Moreover when employees are not safe at work, they're more likely to file a compensation claim to cover their medical expenses, time off work, and other losses. To avoid these claims, organisations need to consider investing in risk management.
This risk management guide is a resource for employers, employees, contractors, volunteers and other individuals and organisations who have a role in managing workplace health and safety risks. It helps you understand how to manage risks to health and safety, and provides information on how to manage risks and manage incidents. In this post, we will look at what risk management is, how it relates to WHS, and what you need to know about managing risk in your workplace.

What is risk management?

Risk management is the process of identifying hazards, estimating the probability of an unwanted event occurring, and determining the appropriate actions to take if it does. It is a continuous cycle of risk identification, risk assessment, risk treatment and risk monitoring. It is the process of managing and preventing risk in all its forms. The goal of risk management is to ensure that the business is not exposed to risk above a predetermined threshold, and the residual risk is within the risk appetite of the organization.

Risk management is vital to ensuring the success of any business, and it is a crucial part of WHS. It is one of the most important aspects of business operations. A company's reputation, finances, and even the physical assets are at stake. Risk management in WHS helps an organisation to identify risks and prevent them from causing damage to their business.

Why is Risk Management important?

As a business owner, you have a duty of care to protect employees and customers from risks. If you fail to do so, you could be prosecuted under health and safety laws. Risk management is an important process for protecting people, property, and the environment from potential workplace hazards. It's also a preventative measure that makes it more likely that you'll avoid claims or fines from your customers. Risk management is a process that involves identifying possible threats, evaluating the level of risk, and taking preventive measures.

Understanding health and safety risk

Risk is any uncertain event or condition that, if it occurs, has the potential to adversely affect a company's assets and/or capital, or  the personal well-being of the organisation's employees. When you're running a business, there are different risks that you need to take into account. The first of these is, the health and safety risk. This is considered to be an on-going risk, as it can happen at any time. If it's not managed properly, it can lead to serious issues. 

A health and safety risk is a hazard that could lead to an injury or illness for your employees, your customers, or even anyone else who interacts with your business. It could be an imminent hazard like a gas leak that needs to be addressed immediately or a long-term hazard that's been present in your business for some time like mold buildup. The main objective of management is to eliminate all these risks from workplaces so that workers can work in a safe environment.

The Risk Management Process

The risk management process is a four-step process that involves identifying the risks, assessing the risks, developing a risk response strategy, and implementing the risk response strategy.

The following sections explain these four steps in greater detail.

Identifying risks

If you have already started your company and don't have a solid risk management strategy in place, there is no need to panic. Any company can have a solid risk management strategy- even as a startup, with just some planning and commitment. The first step of creating a risk management strategy is to identify the risks that your business faces.

You cannot ignore the fact that there are a number of health and safety hazards in the workplace. If you don't do your job properly, you or your co-workers could get seriously injured. It's something that you need to be aware of, and you need to take the right steps to address this issue.

A hazard is any situation or substance that could harm a person. Hazards can be physical, chemical, biological or psychosocial. Physical hazards include those that involve moving machinery, fumes, heat, cold, radiation and electric shock. Chemical hazards include those caused by inhaling, ingesting or coming into contact with potentially harmful substances.

Methods for risk identification:

Only those who know the possible dangers, threats and risks for the company can prepare for it. Here is a selection of methods for risk management and the associated risk identification phase:

• Observe the work environment 

• Work with the employee or the employee's representative 

• Review the employee's medical history 

• Observe the employee during the work tasks 

• Obtain information from the employee 

• Use a checklist

• Expert surveys

• Risk workshops

• Process analysis

Risk Assessment 

Risk assessment is to assess the risks that have been identified to assess whether the risks are serious or not. When assessing risks, it is good practice to reference your past historical data on ill health, accidents and incidents in the workplace. Research in this area and information from general statistics, for example on occupational injuries, can also help you obtain a good basis as well.

How to conduct risk assessment in a workplace?

The employer is responsible for regularly examining the workplace and assessing the risks. The risk assessment must always be in writing. It should lead to proposals for measures to eliminate or reduce the risks. If they cannot be remedied at once, it must be written down in an action plan. The measures that have been implemented must be checked so that they turn out well.

The risk assessment workflow can be divided into five steps:

Risk assessment seeks to provide answers to two questions: 1) what is the extent of possible damage and 2) what is the likelihood of harm occurring?  These two factors are then plotted against each other using a risk matrix to score and prioritize the risks for future action.

Risk response strategy 

Once you have defined your business risk and threats, you need to develop a risk response strategy. When you’re thinking about your risk response strategy, you want to think about what you’re going to do in case something happens and what you’re going to do to reduce the likelihood of that happening in the first place.

One of the most important things to keep in mind is that you can't eliminate all business risks. So the goal of the risk management processes is to minimise the impact of a business disruption. The employer must take control of the risks, ie. reduce these to at least a level where the minimum requirements in laws and regulations are met and the employer is exposed to as little danger as possible.

In the case of a low, insignificant risk, it is considered that no attempt is made to achieve a significant increase in the level of safety by reducing the risk. When it comes to a slightly increased risk, you can talk about a tolerable risk. In this case, hazards that give rise to risks must be taken under special scrutiny, and, if necessary, measures must be taken to reduce the risk. However, it always pays to reduce the risks, if it contributes to smoother work.

The more significant a risk has been judged to be, the faster measures must be taken to prevent these. A risk can also be so great, ie. unbearable, that a work may not be started or continued before the risk has been reduced.

Two common risk response strategies:

Avoid Risks

This strategy advocates for the halting or not starting any process or action that could result in health and safety risk in the workplace. This is an option of choice when risk is likely to result in fatal accident or illness, if it breaks the law or puts the existence of the organization in grave danger.

Examples of risk avoidance can include shutting down a site, or abandoning a production process.

Risk Reduction

This is also known as risk mitigation. In this case, actions are deployed to reduce the likelihood or severity of a hazard risk. Examples include the use of PPE, reducing access to a high-risk workplace.

Avoiding the common pitfalls of Risk Management

Risk management has become an integral part of business planning, but it can be difficult to implement successfully. When done well, risk management provides the insights you need to make informed decisions and maintain a competitive edge. 

However, there are some common pitfalls that are common to risk management. 

Being reactive and not proactive

One of the pitfalls many businesses make is that of waiting for incidents to happen they kick into action. Simply, they do not get ahead of the risks. When you’re growing a business, it can be easy to get so preoccupied with the day-to-day tasks that you don’t have time to think about risks that could be significant.

Poor data collection, quality, or management

There are a few things that can derail even the best risk management efforts. One of these is to not give enough attention to your data and your tools. If you don’t have data or you don’t have access to the right data, it will be really hard for you to make good decisions.

Lack of routine risk identification process

It’s important to look at your risks on a regular basis because things are always changing.

Inadequate risk assessment

There’s a tendency to focus on the risks themselves, rather than on the likelihood of them occurring. As a result, people often try to mitigate the risk. For example, they’ll change the way they do something with the aim of reducing the risk of something going wrong.

Cutting corners

Most small businesses are not risk averse and will actively pursue opportunities that could be beneficial to their business. However, it’s important to maintain a healthy balance between risk and reward when making decisions.

Others include:

How to ensure quality and effective risk management in your workplace?

When it comes to risk management and to workplace health and safety in general, you can’t afford to be complacent. An intuitive and affordable WHS management system would save you a ton of hassle and money.

A Workplace Health and Safety (WHS) management system is a systematic approach to managing workplace health and safety. It involves identifying hazards and risks, assessing and controlling them, and monitoring and reviewing the process. 

Final Thoughts - Risk Management

Risk management is a vital part of any business. It is also a process that should be continually improved and adjusted as the business environment changes. Whether you're just starting out or have been in business for years, a WHS management system that works for your company can help you manage risk effectively and make sure your workplace is safe for your employees while also helping meet relevant regulatory compliance.

Published by: Kiri Align