System Safety for the 21st Century, 2nd Edition

CHAPTER 12Risk Assessment and Risk Acceptance

RISK MANAGEMENT CONCEPTS

Risk management is the general term given to the process of making management decisions about risks that have been identified and analyzed. The traditional risk management choices have been the four Ts: terminate, treat, transfer, and tolerate.

Risks can be terminated by either engineering the risk out of the system by making major changes in the types of energy and/or materials being used or by terminating the operation or process with which the risk is associated. Because totally eliminating a risk is usually impossible without eliminating the activity, it may not be a viable choice for private industry and frequently is not a choice for government projects.

Risks can be treated by the application of engineering and administrative controls to reduce the level of risk. It is done by application of systematic application of the system safety precedence (design, safety devices, warning devices, procedures, and training; see Chapter 13).

Risks can also be transferred. The most common way for an organization to transfer risks is by buying insurance. Risk management as a discipline largely involves the study and application of insurance administration. The corporate risk manager normally has a finance‐related degree or background and the responsibility for determining the types of insurance, carriers, deductibles, and coverage limits for the organization.

Finally, risks that are acceptable to the organization ...