Risk Assessment, 2nd Edition

5 Fundamental Techniques

Bruce Lyon¹ and Georgi Popov²

¹ Brown & Brown

² University of Central Missouri

OBJECTIVES

• Introduce Fundamental Hazahrd Analysis and Risk Assessment
• Review Hazard Analysis and Risk Assessment Process
• Review Informal Techniques
• Review Formal Tchniques
• Examine the Use of Techniques, their Strengthens, and Limitations
• Provide Guidance on the Use of Fundamental Risk Assessment Techniques

5.1 Introduction to Fundamental Hazard Analysis and Risk Assessment

The act of identifying operational hazards, assessing their risk exposures, and applying appropriate control measures is the key to risk management, and one of the most important functions performed within an operational risk management system (ORMS). ANSI/ASSP/ISO 31010‐2019 Risk management – Risk assessment (ISO 31010) is a consensus standard for current good practices in the selection and use of risk assessment techniques. The standard states that the risk assessment process provides decision makers and stakeholders a better understanding of risks that could impact an organization’s business objective, and the efficacy of controls in place, so that the organization can better manage its operational risks. In essence, the risk assessment process provides a basis for decisions regarding the most appropriate risk‐control measures to take to achieve an “acceptable” level of risk (ALOR) in an organization. Without proper risk assessment, risks cannot be adequately managed.

Within the risk management ...