In developing a risk management process some of the the useful tools include:
One key task in analysing risks is to estimate the likelihood of an event. To do this you will need a likelihood scale. Likelihood scales will need to be tailored to the risk management process.
An example of a likelihood scale is:
You will need to describe the likelihood in terms of a rate, for example, 'almost certain' could mean 'will occur at least once a year or more often' and 'almost incredible' could mean 'once in 100,000 years.
The likelihood scale and the way it is described may vary with the type of risk.
Is is useful to have a consequences scale for a given category or risk. An example of a consequences scale for health and safety is:
The consequence scale will vary with each type of risk.
Level of risk scale
A scale for the level of risk is very useful for prioritising risks. For example.
Level of risk matrix
The level of risk is the combination of the consequences and the likelihood for a specific risk.
Examples of low risks include:
Examples of high risks include:
The following table is a risk matrix and shows the relationship between Likelihood, Consequence and Level of risk.
In the table:
Specific risks can be located on the matrix. Risks can be compared with each other so they can be prioritised for treatment.
Scale for evaluating risk
When evaluating the level of risk, ie deciding whether it is an acceptable risk or not it is useful to have a scale on which to base judgments, for example:
For a given risk one will need to make a judgment of where the cut off points are for levels i) to iv) in the table. When is an occupational health and safety risk broadly acceptable? When is it intolerable? What is the level or risk the organisation wants to achieve? As low as reasonably practicable? Best achievable?