risk management study guide

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STUDY GUIDE SMRK5103 Risk Management

1

CENTRE FOR GRADUATE STUDIES

STUDY GUIDE

SMRK5103Risk Management

Writer: Dr Mohd Rafee Baharudin Open University Malaysia

Developed by: Centre for Instructional Design and TechnologyOpen University Malaysia

First Edition, August 2012

Copyright Open University Malaysia (OUM), August 2012, SMRK5103All rights reserved. No part of this work may be reproduced in any form or by any meanswithout the written permission of the President, Open University Malaysia.


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Contents

Course Introduction .......................................................................................5 Course Synopsis ..................................................................................5 Course Aims .........................................................................................5 Course Outcomes ................................................................................6 Course Load .........................................................................................6

Course Resources and Requirements .........................................................8 Set Textbook(s) ....................................................................................8 Essential References ...........................................................................8 Additional Recommended Readings ....................................................9 My Virtual Learning Environment (myVLE) ..........................................9 OUM Digital Library Resources ............................................................ 9

Assessment ..................................................................................................10 Assessment Format ...........................................................................10 Late Submission of Assignment(s) .....................................................10

Topics ...........................................................................................................11 Topic 1 Introduction to Risk Management .......................................11 Topic 2 Risk Strategy ......................................................................14 Topic 3 Risk Assessment ................................................................17 Topic 4 Risk and Organisations ......................................................20 Topic 5 Risk Response ...................................................................23

Topic 6 Risk Assurance and Reporting ...........................................26 Topic 7 The Cost of Human Error ...................................................29

Assessment Guide .......................................................................................31 Assignment ..............................................................................................31 Do Not Plagiarise .....................................................................................32 Avoid Plagiarism ......................................................................................32 Documenting Sources ..............................................................................33 Referencing ..............................................................................................33

Appendix A ...................................................................................................35

Sample Assignment ................................................................................35

Appendix B ...................................................................................................36 Learning Support .....................................................................................36

Appendix C ...................................................................................................37 Study Paths for Success in the Course ...............................................37


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COURSE INTRODUCTION

Study Guide

The course SMRK5103 Risk Management is one of the required courses for

the OUM Master of OSH Risk Management (MOSHRM) programme. The

course assumes some prior knowledge and experience of face-to-face

teaching in a classroom and of curricular aspects of courses you have

taught. For this reason, you are encouraged to read widely and to tap into

your work experience to get the most out of the course.

Course Synopsis

The course introduces the subject of risk assessment and control with acomprehensive perspective on risk concepts, tools and techniques. Itdemonstrates critical understanding of the principles and practices of riskassessment and control.

Course Aims

The course aims to equip students with advanced knowledge and skills in

assessing and managing the risks involved in an industry towards creating a

specialised workforce.

Course Outcomes

By the end of this course, you should be able to:

1. Describe the concept of risk management;

2. Discuss the steps involved in conducting risk assessment;

3. Critically assess risk using different types of tools in evaluating risks;and

4. Conduct risk assessment and control in various industries.


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Course Load

It is a standard OUM practice that learners accumulate 40 study hours forevery credit hour. As such, for a three-credit hour course, you are expected

to spend at least 120 hours of learning. Table 1 gives an estimation of howthe 120 hours can be accumulated.

Table 1:Allocation of Study Hours

Activities No of Hours

Reading the course guide and completing the exercises 60

Attending 5 seminar sessions (3 hours for each session) 15

Engage in online discussion 10

Completing assignment 20Revision 15

Total 120

It is important to know that this STUDY GUIDE is organised around anumber of TOPICS, LEARNING OUTCOMES, FOCUS AREAS and

ASSIGNED READINGS. This is illustrated in the figure below.

TOPICS

LEARNING

OUTCOMES

FOCUS

AREAS

ASSIGNED

READINGS

STUDY GUIDE

Figure 1:Organisation of the Study Guide

To achieve the learning outcomes for the course, five TOPICS are includedin the Study Guide. Each of these topics is to be covered in depth, based onreadings from the assigned textbook and supplementary materials for thecourse. You are expected to spend about 12 hours of learning time on eachtopic. Ideally, a topic should be covered during each seminar.


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Secondly, each topic comprises a number of LEARNING OUTCOMES,FOCUS AREAS and ASSIGNED READINGS. Each topic is guided by topic-related learning outcomes which essentially tell you what ought to be

achieved at the end of a topic. The focus areas demonstrate sub-topics thatare to be learnt, understood, applied and evaluated through deliberation. Inaddition, these focus areas will be covered in the assignment and theexamination for the course.

Finally, assigned readings cover the core content for each topic. You willhave to read allof what is assigned.

An important point to be raised here is that while the selected topics for thecourse SMRK5103 cover a substantial amount of information, your readingsand deliberations should not be limited to these topics or to the assigned

readings. The assigned readings and the focus areas merely tell you aboutcore content, representing the minimumamount of information to cover. Asin all graduate courses, a wide selection of readings is recommended for fullunderstanding of the area, which in this case, includes models and strategiesof instruction used by teachers all over the world. It would be worth yourwhile to read the recommended texts and to search OUMs digital library forother books and articles related to the course.

The pages that follow outline a list of topics and related learning outcomes,focus areas as well as assigned readings for the course. Throughout theduration of the course, your course facilitator will use these topics as a guide

for all face-to-face interaction, class participation and group or onlinediscussion. At the end of the course, your knowledge and comprehension ofthe areas under these topics will be assessed.


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COURSE RESOURCES AND REQUIREMENTS

Set Textbook(s)

Hopkin, P. (2010). Fundamentals of risk management: Understanding,evaluating and implementing effective risk management. United States:Kogan Page Limited.

Essential References

Bartlett, J. (2004). Project risk analysis and management guide. UnitedKingdom: APM Publishing.

British Standard Institute. (2008). BS31100:2008, Principle of risk

management. United Kingdom: British Standard Institute (BSI).

DOSH. (2008). Guidelines for hazard identification, risk assessment and riskcontrol (HIRARC). Retrieved from http://www.dosh.gov.my/doshv2/phocadownload/guidelines/ve_gl_hirarc.pdf

Goetsch. (2011). Occupational Safety and Health for Technologies,Engineers and Managers(7th ed.). Pearson. Pg. 3 9.

HM Treasury. (2004). Theorange book: Management of risk principles andconcepts. Retrieved from http://www.hmtreasury.gov.uk/d/orange_

book.pdf

International Standard IES/FDIS 21010. (2009). Risk management Riskassessment techniques. Retrieved from www.iso.org

IRM. (2002).A risk management standard. Retrieved from http://www.theirm.org/publications/documents/Risk_Management_Standard_030820.pdf

ISO. (2009). ISO 31000: 2009 Risk management principles and guidelines.Retrieved from http://www.iso.org/iso/catalogue_detail?csnumber=43170

The Institute of Internal Auditors. (2004). The role of internal auditing inenterprise wide risk management. Retrieved from www.theiia.org.

Vance, B., & Makomaski, J. (2007). Enterprise risk management fordummies. New Jersey: Wiley Publishing.


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Additional Recommended Readings

Association of Insurance and Risk Managers. (2006). Insurance buyersguide. Retrieved from www.airmic.com

COSO. (2004). Enterprise risk management integrated framework:Executive summary. Retrieved from www.coso.org

Ericson, C. A. (2005). Hazard analysis techniques for system safety (2nded.). Wiley-Interscience.

Health and Safety Executive. (2005). A review of safety culture and safetyclimate literature for the development of the safety culture: Inspectiontoolkit research report 367. Retrieved from http://www.hse.gov.uk/research/rrpdf/rr367.pdf

Occupational Safety and Health Master Plan for Malaysia 2015 by Ministry ofHuman Resources Malaysia.

United States Government. (2004). Every business should have a plan.Retrieved from www.ready.gov

My Virtual Learning Environment (myVLE)

Online Discussion

Learners are required to participate in online discussions.

Assignment

Learners are required to surf the Internet, visit OUM digital library resources,and read the recommended textbooks and journals to complete theassignments.

OUM Digital Library Resources

For the purpose of referencing materials and doing library-based research,OUM has a comprehensive digital library. For this course, you may use thefollowing databases: ProQuest, CINAHL Plus, Springer Link and InfoSciBooks. From time to time, materials from these databases will be assignedfor additional reading and activities.


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ASSESSMENT

Assessment Format

Refer to myVLE.

Late Submission of Assignment(s)

Failure to submit an assignment by the due date without the granting of anofficial extension of time by your course tutor will incur a penalty.


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Topics

Topic 1: Introduction to Risk ManagementLearning Outcomes

By the end of this topic, you should be able to:

1. Describe a range of definitions of risk and risk management, and theusefulness of the various definitions;

2. List the characteristics of a risk that need to be identified in order to

provide a full risk description;3. Describe options for classifying risks according to the nature, source

and timescale impact;

4. Outline the options for the attachment of risks to various attributes ofan organisation and the advantages of each approach;

5. Use a risk matrix to represent the likely impact of risk materialising interms of likelihood and magnitude;

6. Outline the principles (PACED) and aims of risk management and itsimportance to operations, projects and strategy;

7. Describe the nature of hazard, control and opportunity risks and howorganisations should respond to each type;

8. Outline the development of the discipline of risk management, includingthe various specialist areas and approaches;

9. Describe the key benefits of risk management in terms of compliance,assurance, decisions and efficiency/efficacy (CADE3);

10. Describe the key stages in the risk management process and the maincomponents of a risk management framework; and

11. Describe the key features of the best-established risk management

standards and frameworks.


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Focus Areas Assigned Readings

1.1 Approaches to Defining

Risk

1.2 Impact of Risk

Organisations

1.3 Types of Risks

1.4 Development of Risk

Management

Hopkin, P. (2010). Fundamentals of risk

management: Understanding, evaluating and

implementing effective risk management. United

States: Kogan Page Limited.

Chapter 1 Approaches to Defining Risk

Definitions of risk.

Types of risks.

Risk description.

Inherent level of risk.

Risk classification systems.

Risk likelihood and magnitude.

Chapter 2 Impact of Risk on Organisations

Risk importance.

Impact of hazard risks.

Attachment of risks.

Risk and reward.

Risk and uncertainty.

Attitude to risk.

Chapter 3 Types of Risks

Timescale of risk impact. Hazard, control and opportunity risks.

Hazard tolerance.

Management of hazard risks.

Uncertainty acceptance.

Opportunity investment.

Chapter 4 Development of Risk Management

Origins of risk management.

Insurance origins of risk management.

Specialist areas of risk management.

Enterprise risk management.

Levels of risk management

sophistication.

Risk maturity models.


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1.5 Principles and Aims of

Risk Management

1.6 Risk Management

Standards

Chapter 5 Principles and Aims of Risk

Management

Principles of risk management.

Importance of risk management.

Risk management activities.

Efficient, effective and efficacious.

Perspective of risk management.

Implementing risk management.

Chapter 6 Risk Management Standards

Scopes of risk management standards.

Risk management process.

Risk management framework.

COSO ERM cube.

Features of risk management standards.

Control environment approach.

Guidelines for Hazard Identification, Risk

Assessment and Risk Control (HIRARC) by

DOSH Malaysia, Ministry of Human Resources

Malaysia 2008.

Pg. 5 16.

Risk Management Concept in Malaysia

Basic Concepts

Planning and Conducting of HIRARC

Control

Study Questions

1. Discuss the PACED concept.

2. Discuss the options of classifying risks according to the nature, source

and timescale impact.

3. Discuss the nature of hazard, control and opportunity risks and how

organisations should respond to each type.


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Topic 2: Risk Strategy

Learning Outcomes


1. Describe the main parts of risk management policy and the importanceof each part;

2. Explain the key components of the risk architecture, strategy andprotocols (RASP) for an organisation and how these fit together;

3. Describe the range of risk documentation and records that could berequired and the function of each different type;

4. Describe the nature, content and use of a risk register, citing examples;

5. Outline the key roles and responsibilities of risk management in relationto job roles and key departments, including the role of CRO;

6. Describe suitable risk architecture for a range of organisations,including the importance of risk committees and risk communication;

7. Describe the key features of a risk-aware culture (LILAC) and how thekey components can be measured;

8. Describe the components of evaluating risk maturity of an organisation(4Ns) and the benefits associated with greater risk maturity; and

9. Outline the importance of risk training and risk communication,

including the use of a risk management information system (RMIS).


2.1 Risk Management Policy



implementing effective risk management.

United States: Kogan Page Limited.

Chapter 7 Risk Management Policy

Risk architecture, strategy

and protocols.

Risk management policy.

Risk management

architecture.

Risk management strategy.


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2.2 Risk Management

Documentation

2.3 Risk Management

Responsibilities

2.4 Risk Architecture and

Structure

Risk management protocols.

Risk management

guidelines.

Chapter 8 Risk Management Documentation

Record of risk management

activities.

Risk response and

improvement plans.

Event reports and

recommendations.

Risk performance and

certification reports.

Designing a risk register. Using a risk register.

Documenting HIRARC

Responsibility and Accountability

Documenting Process

Guidelines for Hazard Identification, Risk

Assessment and Risk Control (HIRARC) by

DOSH Malaysia, Ministry of Human Resources

Malaysia 2008.Pg. 16 17.

Chapter 9 Risk Management Responsibilities

Allocation of responsibilities.

Risk management and

internal audit.

Range of responsibilities.

Statutory responsibilities of

management.

Role of risk manager.

Chief Risk Officer (CRO).

Chapter 10 Risk Architecture and Structure

Risk architecture.

Corporate structure.

Risk committees.


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2.5 Risk-Aware Culture

2.6 Risk Training and

Communication

Risk communications.

Risk maturity.

Alignment of activities.

Chapter 11 Risk Aware Culture

Styles of risk management.

Defining risk culture.

Components of a risk-aware

culture.

Measuring risk culture.

Risk culture and risk

steategy.

Establishing the context.

Chapter 12 Risk Training and

Communication

Risk training and risk culture.

Risk information and

communication.

Shared risk vocabulary.

Risk information on an

intranet.

Risk Management

Information System (RMIS).

Consistent response to risk.

Study Questions

1. Discuss the key features of a risk-aware culture (LILAC) and how thekey components can be measured.

2. Discuss the main parts of a risk management policy and theimportance of each part.


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Topic 3: Risk Assessment

Learning Outcomes


1. Describe the importance of risk assessment as a critically importantstage in the risk management process;

2. Outline the range of risk assessment techniques that are available andthe advantages/disadvantages of each technique;

3. Describe the importance of risk classification systems and the keyfeatures of the best-established systems;

4. Provide examples of the use of a risk matrix, including using it toindicate the dominant risk response in each quadrant;

5. Use a risk matrix to indicate the risk appetite of an organisation andwhether the organisation is risk averse or risk aggressive;

6. Describe the main components of loss control as loss prevention,damage limitation and cost containment and provide practicalexamples;

7. Demonstrate the use of loss-control actions to reduce the impact of anevent that has a large magnitude before mitigation;

8. Outline the alternative approaches to define the upside of risk and thepractical application of these approaches for strategy, projects and

operations;

9. Outline the importance of business continuity planning and disasterrecovery planning and provide practical examples;

10. Describe the approach taken during a business impact analysis andhow the analysis supports business continuity planning; and

11. Describe the key features of a business continuity plan, as set out inestablished business continuity standards, such as BS 25999.


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3.1 Risk AssessmentConsiderations

3.2 Risk Classification Systems

3.3 Risk Likelihood and Impact





Chapter 13 Risk Assessment Considerations

Importance of risk

assessment.

Approaches to risk

assessment.

Risk assessment

techniques.

Risk matrix. Risk perception.

Risk appetite.

Chapter 14 Risk Classification Systems

Short, medium and long-

term risks.

Purpose of risk classification

systems.

Examples of risk

classification systems.

FIRM risk scorecard.

PESTLE risk classification

system.

Hazard, control and

opportunity risks.

Chapter 15 Risk Likelihood and Impact

Application of a risk matrix.

Inherent and current level of

risk.

Control confidence.

4Ts of risk response.

Risk significance.

Risk capacity.


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3.4 Loss Control

3.5 Defining the Upside Of Risk

3.6 Business Continuity Planning

Chapter 16 Loss Control

Risk likelihood.

Risk magnitude.

Hazard risks. Loss prevention.

Damage limitation.

Cost containment.

Chapter 17 Defining the Upside of Risk

Upside of risk.

Opportunity assessment.

Riskiness index.

Upside in strategy. Upside in projects.

Upside in operations.

Chapter 18 Business Continuity Planning

Importance of BCP and

DRP.

Business continuity

standards.

Successful BCP and DRP.

Business impact analysis

(BIA).

BCP and ERM.

Civil emergencies.

Study Questions

1. Discuss the range of risk assessment techniques that are available aswell as the advantages and disadvantages of each technique.

2. Discuss the key features of a business continuity plan.


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Topic 4: Risk and Organisations

Learning Outcomes


1. Describe the key features of a corporate governance model and thelinks to risk management in different types of organisations;

2. Describe the different types of stakeholders of a typical organisationand the influence of these stakeholders on risk management;

3. Describe a simplified business model and the different types of coreprocesses that need to take place in an organisation;

4. Provide a brief description of the project life cycle and the importanceof risk management at each stage, using the 4As approach;

5. Describe the key features of a project risk management system, suchas the Project Risk Analysis and Management (PRAM) approach;

6. Outline the key features of operational risk as practised in financialinstitutions, such as banks and insurance companies;

7. Describe the key sources of operational risk in financial institutions andprovide examples of how these risks are managed;

8. Describe the importance of the supply chain and the contribution ofsupply chain risk management to the success of the organisation; and

9. Give examples of the risks associated with outsourcing and how theserisks can be successfully managed.


4.1 Corporate GovernanceModel





Chapter 19 Corporate Governance Model

Corporate governance.

OECD principles of

corporate governance.

LSE corporate governance

framework.


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4.2 Stakeholder Expectations

4.3 Analysis of the BusinessModel

4.4 Project Risk Management

4.5 Operational Risk Management

Corporate governance for a

bank.

Corporate governance for a

government agency. Evaluation of board

performance.

Chapter 20 Stakeholder Expectations

Range of stakeholders.

Stakeholder dialogue.

Stakeholders and core

processes.

Stakeholders and strategy.

Stakeholders and tactics. Stakeholders and

operations.

Chapter 21 Analysis of the Business

Model

Simplified business model.

Core business processes.

Efficacious strategy.

Effective processes.

Efficient operations.

Reporting performance.

Chapter 22 Project Risk Management

Introduction to project risk

management.

Development of project risk

management.

Uncertainty in projects.

Project life cycle.

Opportunity in projects.

Project risk analysis and

management.

Chapter 23 Operational Risk Management

Operational risk.

Definition of operational

risk.


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4.6 Supply Chain Management

Basel II.

Measurement of operational

risk.

Difficulties of measurement. Development in operational

risk.

Chapter 24 Supply Chain Management

Importance of the supply

chain.

Scope of the supply chain.

Strategic partnerships.

Joint ventures.

Outsourcing of operations. Risk and contracts.

Study Questions

1. Discuss the project life cycle and the importance of risk management ateach stage, using the 4As approach.

2. Discuss the key features of a project risk management system, such asthe PRAM approach.


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Topic 5: Risk Response

Learning Outcomes


1. Provide alternative definitions of Enterprise Risk Management (ERM);

2. Identify the key features of an enterprise-wise approach;

3. Describe the ten steps in the implementation of a successful ERMinitiative;

4. Outline the importance of risk appetite as a planning tool in theimplementation of a risk management initiative;

5. Describe the relationship between risk appetite, risk exposure and risk

capacity and the interface with operations, projects and strategy;6. Describe risk response options in terms of tolerate, treat, transfer and

terminate, and how these can be shown on a risk matrix;

7. Describe the types of controls that are available, in terms of Preventive,Corrective, Directive and Detective (PCDD) controls;

8. Explain how to determine whether controls are cost effective, howcontrols change loss expectancy and how to learn from controls;

9. Provide practical examples of the control of selected hazard risks,including risks to finances, infrastructure, reputation and marketplace;

10. Describe the importance of insurance and the circumstances in whichinsurance is purchased, including the involvement of a captiveinsurance company; and

11. Explain the importance of the insurance purchasing process of cost,coverage, capacity, capabilities, claims and compliance.


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5.1 Enterprise Risk Management

5.2 Importance of Risk Appetite

5.3 Tolerate, Treat, Transfer andTerminate

5.4 Risk Control Techniques



implementing effective risk management.United States: Kogan Page Limited.

Chapter 25 Enterprise Risk Management

Enterprise-wide approach.

Definitions of ERM.

ERM in practice.

ERM and business

continuity.

ERM in energy and finance.

Future development ofERM.

Chapter 26 Importance of Risk Appetite

Risk capacity.

Risk exposure.

Nature of risk appetite.

Cost of risk controls.

Risk management and

uncertainty.

Risk appetite and lifestyle

decisions.

Chapter 27 Tolerate, Treat, Transfer and

Terminate

The 4Ts of hazard

response.

Risk tolerance.

Risk treatment.

Risk transfer.

Risk termination.

Project and strategic

response.

Chapter 28 Risk Control Techniques

Hazard risk zones.

Types of controls.


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5.5 Control of Selected HazardRisks

5.6 Insurance and Risk Transfer

Preventive controls.

Corrective controls.

Directive controls.

Detective controls.

Chapter 29 Control of Selected Hazard

Risks

Risk control.

Control of financial risks.

Control of infrastructure

risks.

Control of reputational

risks.

Control of marketplacerisks.

Learning from controls.

Chapter 30 Insurance and Risk Transfer

Importance of risk transfer.

History of insurance.

Type of insurance cover.

Evaluation of insurance

needs.

Purchase of insurance.

Captive insurance

companies.

Study Questions

1. Discuss the importance of risk appetite in an organisation.

2. Discuss the applications of PCDD control measures in managing risks.


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Topic 6: Risk Assurance and Reporting

Learning Outcomes


1. Describe the purpose and nature of internal control and the contributionthat internal control makes to risk management;

2. Outline the importance of the control environment in an organisationand provide a structure of evaluating the control environment (CoCo);

3. Describe the activities of a typical internal audit function and therelationship between internal audit and risk management;

4. Describe the activities involved in the ERM initiative and how these canbe allocated to internal audit, risk management and line management;

5. Outline the importance of risk assurance and identify the sources ofrisk assurance that are available to the board/audit committee;

6. Discuss the importance of risk reporting and the range of risk reportingobligations placed on companies, including Sarbanes-Oxley;

7. Provide examples of risk reporting approaches adopted by differenttypes of organisations, including companies, charities and governmentagencies;

8. Describe the importance of corporate social responsibility as acomponent of corporate governance and outline the range of topics

covered; and

9. Describe the steps involved in the successful implementation of a riskmanagement initiative, together with the barriers and actions.


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6.1 Evaluation of the ControlEnvironment

6.2 Activities of the Internal AuditFunction

6.3 Risk Assurance Techniques

6.4 Reporting on RiskManagement



implementing effective risk management.United States: Kogan Page Limited.

Chapter 31 Evaluation of the Control

Environment

Nature of internal control.

Purpose of internal control.

Control environment.

Features olf the control

environment.

CoCo framework of internal

control.

Risk aware culture.

Chapter 32 Activities of the Internal Audit

Function

Scope of internal audit.

Financial assertions.

Risk management and

internal audit.

Risk management outputs.

Role of internal audit.

Management

responsibilities.

Chapter 33 Risk Assurance Techniques

Audit committees.

Role of risk management.

Risk assurance.

Hazard, control and

opportunity risks.

Control of risk self-assessment.

Benefits of risk assurance.

Chapter 34 Reporting on Risk Management

Risk documentation.


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6.5 Corporate SocialResponsibilities

6.6 Future of Risk Management

Sarbanes-Oxley Act of

2002.

Risks reported by US

companies. Charities risk reporting.

Public sector risk reporting.

Government report on

National Security.

Chapter 35 Corporate Social

Responsibilities

CSR and corporate

governance.

CSR and risk management. CSR and reputational risk.

CSR and stakeholder

expectations.

Supply chain and ethical

trading.

CSR reporting.

Chapter 36 Future of Risk Management

Review of benefits of risk

management.

Steps to successful risk

management.

Changing fact of risk

management.

Concept of risk appetite.

Concept of upside of risk.

Future developments.

Study Questions

1. Discuss the activities of a typical internal audit function and therelationship between internal audit and risk management.

2. Discuss the steps involved in the successful implementation of a riskmanagement initiative, together with the barriers and actions.


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Topic 7: The Cost of Human ErrorLearning outcomes


1. Describe the key features of a risk-aware culture (LILAC); and

2. Explain how the key components can be measured.

Focus Area Assigned Readings

7.1 Learning from the Past

7.2 The Need for Safety

7.3 Safety Culture

Goetsch. (2011). Occupational Safety and

Health for Technologists, Engineers andManagers(7th ed.). Pearson. Pg. 3 9.

Safety and Health Movement, Then and Now

Developments Before the Industrial

Revolution

Milestones in the Safety Movement

Tragedies that have Changed the Safety

Movement

OSH Current Situation

Rates of Occurrence of Occupational

Accidents and Fatalities

Comparison of OSH Performance Profilesbetween Malaysia and Other Countries in

East Asia

National Competitiveness Index Versus

National Occupational Fatality Occurrence

Rate

OSH Contribution to the Malaysian Quality

of Life

OSH Culture Establishment

Long Term Vision for OSH in Malaysia

Safety Culture A Tool in Sustaining

Productive Human Capital

Occupational Safety and Health Master Plan for

Malaysia 2015 by Ministry of Human Resources

Malaysia.


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7.4 Understanding Human

Error

Goetsch. (2007). Occupational safety and

health for technologists, engineers and

managers(7th ed.). Pearson. Pg. 34 36.

Human Factors Theory of Accident Causation

Overload

Inappropriate Response and Incompatibility

Inappropriate Activities

Huma Factors Theory in Practice

Study Questions

1. Explain how workplace tragedies have affected the safety movement.

Give examples.

2. Discuss the importance for organisations to establish safety culture.

3. Using your organisation as an example, explain how it is able to realise

OSH-MP15.


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Assessment Guide

Refer to myVLE.

Assignments

There is one assignment in this course. Commonly, the assignment will befocusing on the application of OSH legal requirements for the purpose of anorganisations relevant legal compliance. The assignment questions will beassessed from OUM`s Virtual Learning Environment (myVLE). It is yourresponsibility to make sure that your assignment reaches the coursecoordinator within the time frame.

The objective of the assignment is mainly to give you an opportunity toexplore and analyse OSH legal requirements in depth. You are encouragedto use critical thinking in your assignment especially for the application oftheories into practice. The assignment is guided by the contents of therecommended textbook and recent journals.

As mentioned earlier, graduate students must demonstrate that they haveread widely and researched their topic well. It is NOT sufficient to rely oninformation in the assigned textbook or in the Course Guide to complete yourassignment. Using a variety of references will give you a broader perspectiveon the various topics and will provide a deeper understanding of the subject.

The criteria for the assessment of this assignment cover content, structureand thinking skills. In general, you are required to write clearly, using correctspelling and grammar. You also have to submit a paper that shows evidenceof the following:

(a) Reflection: Reflect critically on issues raised in the course.

(b) Deliberation: Consider and appreciate a range of points of view,including those included in the course material.

(c) Application: Develop your own view with regard to application of theconcepts and focus areas covered in the course.

(d) Argument: State your argument clearly with supporting evidence fromrelated research and demonstrate appropriate referencing of sources.


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(e) Integration: Draw on your own experiences and integrate theinformation in the course assignment.

Do Not Plagiarise

As a graduate student, remember that your own thinking and the knowledgeyou construct as a participant in a course are integral to learning. Tosucceed in the course, you should never resort to plagiarism or copying atany level whatsoever. Plagiarism refers to any form of deception in awritten paper(such as assignments or essays) by a student. It is intendedto deceive the instructor about the students abilities or knowledge or theamount of work that is actually contributed by the student. Here are some

examples sourced from a local site (www.ppl.upm.edu.my).

1. Copying large sections of a paper from the Internet or print sources and

not acknowledging these sections as quotations.2. Paraphrasing or restating someones argument without acknowledging

the author. Remember that detailed arguments from clearly identifiablesources must always be acknowledged.

3. Purchasing or buying essays or papers written by other students.

4. Taking credit for work produced by someone else. This includesphotographs, charts, graphs, drawings, statistics, video clips, audioclips, verbal exchanges such as interviews or lectures, performanceson television and texts printed on the web.

5. Taking double credit by submitting the same essay for two or morecourses.

Avoiding Plagiarism

Here are some ideas from www.ppl.upm.edu.myfor avoiding plagiarism inyour assignments and essays.

1. Insert quotation marks around "copy and paste" clauses, phrases,sentences or paragraphsandcite the original source.

2. Paraphrase clauses, phrases, sentences or paragraphs in your own

wordsandcite your source.3. Adhere to the American Psychological Association (APA) stylistic

format, when citing a source and when writing out the bibliography orreference page.

4. Write independently without being overly dependent on informationfrom others.


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33

5. Original work. Read a text, put it away and then write about what yourhave read in your own words.

6. Educate yourself on what may be considered common knowledge (nocopyright necessary), public domain (copyright has expired or not

protected under copyright law), or copyright (legally protected).

Documenting Sources

Remember that when you quote, paraphrase, summarise or refer tosomeones work you are required to cite the source. Here are some of themost commonly cited forms of material (See www.jfklibrary.org,

library.duke.edu/research/citing andwww.ppl.upm.edu.my).

Direct citationusing quotationmarks

Simply having a list of thinking skills is no assurance thatchildren will use it. In order for such skills to become partof day-to-day behaviour, they must be cultivated in anenvironment that values and sustains them. Just aschildrens musical skills will likely lay fallow in anenvironment that doesnt encourage music, learnersthinking skills tend to languish in a culture that doesntencourage thinking (Tishman, Perkins and Jay, 1995,p.5).

Indirect Citation

using referential

According to Wurman (1988), the new disease of the

21

st

century will be information anxiety, which has beendefined as the ever-widening gap between what oneunderstands and what one thinks one shouldunderstand.

Referencing

All sources that you cite in your paper should be listed in the REFERENCEsection at the end of your paper. Below are some suggestions, as listed in

library.fayschool.org/ Pages/Citation_Guide.htm

From a Journal Brown, E. (1996). The lake of seduction: Silence,hysteria, and the space of feminist theatre. JTD:Journal of Theatre and Drama, 2, 175-200.

From an OnlineJournal

Evnine, S. J. (2001). The universality of logic: On theconnection between rationality and logical ability[Electronic version]. Mind, 110, 335-367.


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34

Retrieved January 12, 2008, from PsyCARTICLESdatabase.

From aWebpage

National Park Service. (2003, February 11). AbrahamLincoln Birthplace National Historic Site. RetrievedFebruary 13, 2003, from http://www.nps.gov/abli/

From a Book Fleming, T. (1997). Liberty! The American Revolution.New York: Viking.

From an Articlein a Book

Cassel, J., & Zambella, B. (1996). Without a net:Supporting ourselves in a tremulous atmosphere.In T. W. Leonhardt (Ed.), "LOEX" ofthe West: Teaching and learning in a climate ofconstant change (pp. 75-92). Greenwich, CT: JAIPress Inc.

From a PrintedNewspaper

Holden, S. (1998, May 16). Frank Sinatra dies at 82:Matchless stylist of pop. The New York Times, pp.

A1, A22-A23.


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35

Appendix A

Assignment

SMRK5103 RISK MANAGEMENT

Objective:

The purpose of this assignment is to analyse organisational risks based ondifferent RAM.

The task

You are given TWOarticles entitled:

1. A semi-quantitative assessment of occupational risks using bow-tierepresentation.

2. Appraisal of a new assessment model for SME.

Read the articles given and answer the following questions.

For each article, DISCUSSthe methodology used in assessing risks. Yourdiscussion should include but is not limited to:

(i) The suitability of the method in assessing risks;

(ii) Coverage or scope of risks;

(iii) The advantage of the Risk Assessment Matrix (RAM) used;

(iv) The limitation of the RAM used; and

(v) Suggestions to further improve the risks assessment methodology.

(60 marks)


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36

Appendix BLearning Support

SMRK5103 RISK MANAGEMENT

Seminars

There are 15 hours of face-to-face facilitation provided for the course. Therewill be FIVE seminars of three hours each. You will be notified of the dates,times and location of these seminars, together with the name and e-mailaddress of your facilitator, as soon as you are allocated a group.

Discussion and Participation

Besides the face-to-face seminars, you have the support of onlinediscussions in myVLE with your facilitator and your coursemates. Yourcontributions to the online discussion will greatly enhance yourunderstanding of course content, and help you do the assignment andprepare for the examination.

Feedback and Input from Facilitator

As you work on the activities and the assigned text, your course facilitatorwill provide assistance to you throughout the duration of the course. Thefacilitator will also mark your assignment and give you feedback on yourperformance. At any time that you need assistance, do not hesitate todiscuss your problems with your facilitator. The seminars and the onlineforum can also be used for any of the following situations:

When you have difficulty with the contents of the textbook or if you do notunderstand the assigned readings.

When you have a question or problem with the assignment.

Bear in mind that communication is important for you to be able to get themost out of this course. Therefore you should, at all times, be in touch withyour facilitator and coursemates, and be aware of all the requirements forsuccessful completion of a course.


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Appendix C

Study Paths for Success

Time Commitments for Study

You should plan to spend about six hours of study time on each topic, whichincludes the time spent doing all assigned readings and activities. You mustschedule your time to discuss the work online and spend enough time oneach topic for this course. It is often more effective to distribute the studyhours over a number of days rather than spending the whole day studyingone topic. You have some flexibility as there are 10 topics spread over aperiod of 15 weeks.

Study Strategy

The following is a proposed strategy for working through the course. If youhave difficulty following the strategy, discuss your problems with yourfacilitator either through the online forum or during the seminars.

(i) The most important step is to read the contents of this Course Guidethoroughly.

(ii) Organise a study schedule. Take note of the amount of time you spendon each topic, as well as the dates for submission of the assignmentsand seminars.

(iii) Once you have created a study schedule, make every effort to stick toit. One reason students are unable to cope with postgraduate coursesis that they delay their course work.

(iv) To understand the various dimensions of the course, do the following:

Study the Course Overview and the entire list of topics. Thenexamine the relationship of a topic to other topics.

Complete all assigned readings and go through the supplementarytexts to get a broad understanding of course content.

Do all activities and read the Scenarios in the assigned textbook tounderstand the various concepts and facts presented in a topic.


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38

Draw ideas from a large number of readings as you prepare for theassignment. Work on the assignment as the semester progressesso that you are able to systematically produce a commendableportfolio or paper.

(v) When you have completed a topic, review the Learning Outcomes forthe topic to confirm that you have achieved them and are able to dowhat is required.

(vi) After completing all topics, review the course content to prepare for thefinal examination. Review the Learning Outcomes of the course to seeif you have covered all the relevant parts of the course.


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Appraisal of a new risk assessment model for SME

M. Fera, R. Macchiaroli *

Dipartimento di Ingegneria Aerospaziale e Meccanica, Seconda Universit di Napoli, Real Casa dellAnnunziata, Via Roma, 29, 81041 Aversa (CE), Italy

a r t i c l e i n f o

Article history:

Received 9 November 2009

Received in revised form 21 April 2010

Accepted 14 May 2010

Keywords:

Risk assessment

Safety at work

FMECA

SCEBRA

AHP

a b s t r a c t

The identification, assessment and reduction of the risks is among of the most important issues of t

safety at work. This papers goal is to demonstrate the effectiveness of a new risk assessment method p

posed by the authors and presented in the past (Fera and Macchiaroli, 2009). In general, one can deal w

risk assessment using different methods: quantitative, qualitative or a mix; however, the typical modproposed in the literature are difficult to implement in SMEs. The method proposed in this paper i

mixed one whose effectiveness is demonstrated through an application study carried out in differe

industrial systems, like a steel industry or a logistic services provider.

2010 Elsevier Ltd. All rights reserv

1. Introduction

The injuries statistics (Table 1) released by the International

Labour Organization (ILO) for 2007 are very significant.

They show how health and safety problems are very far frombeing solved. It is well known that an effective approach to healthand safety at work needs a suitable risk assessment phase, the

adoption of prevention and protection actions and the implemen-tation of a severe safety audit phase. However, less attention has

been paid to these phases in the practice, using non-appropriate

tools and methodologies which are either too complex to manage

or too simple and subjective, thus not suitable to recognize hazards

and reduce the corresponding risks.

The aim of this paper is to assess the effectiveness of a new and

reliable assessment model presented in Fera and Macchiaroli

(2009), able to face the aforesaid applicability difficulties of the

models developed so far and to show, through its application to

several industrial plants, how an improvement in safety condition

can actually be achieved. The proposed model is based on knowntechniques, such as Failure Modes and Effects Criticality Analysis(FMECA), Scenario Based Risk Assessment (SceBRA) and Italian

standard UNI 7249:2007. These techniques are integrated within

a procedure composed by seven steps, some quantitative and some

qualitative. This model also includes the Analytic Hierarchy Pro-

cess (AHP) decision making technique, which as well known

is useful to minimize inconsistencies in experts judgments, within

the subjective phases of risk assessment.

The paper is organized as follows. After discussing the main fe

tures of relevantmodels presentedin theliteratureand theopen

sues in risk assessment, Section3contains a brief overview of t

AHP technique in order to underline its importance in the propos

model. Afterwards, the proposed model is described in detincluding a discussion about its main features and advantages. Bfore concluding, we also report the results from an experimen

campaign carried in three manufacturing and services firms.

2. Literature review and open issues

The identification and choice of a suitable risk assessment mo

el has been felt as a crucial issue for decades. So far, models usedthe practice were developed for different applications and adapt

for health and safety at work. A possible classification is presentinTable 2.

Please note that qualifying methods as quantitative or qu

itative does not mean they are objective or subjective. So, in t

paper we refer to quantitative or qualitative to indicate whetha method makes use of numerical data or not, while we refer

a subjective method when it mainly relies on experts judgme

Since the judgment, in turn, can be qualitative or quantitative,

the last case we also refer to the corresponding method as qua

quantitative.

Thus, subjective methods are focused on the experts contribtion. Experts are responsible to predict the possible interactio

between workers, machines and work environment. Subjectmodels cannot be implemented in all kind of firms, because of th

intrinsic uncertainty which makes them not suitable for seve

applications; think, in example, to risk assessment in the chemi

0925-7535/$ - see front matter 2010 Elsevier Ltd. All rights reserved.

doi:10.1016/j.ssci.2010.05.009

* Corresponding author. Tel.: +39 0815010339; fax: +39 0815010204.

E-mail address:[email protected](R. Macchiaroli).

Safety Science 48 (2010) 13611368

Contents lists available at ScienceDirect

Safety Science

j o u r n a l h o m e p a g e : w w w . e l s e v i e r . c o m / l o c a t e / s s c i


40/53

or oil & gas industry, where generally sophisticated reliabilitymodels can and must be applied, and normally lead to a wide ex-

tent of success. Instead, subjective models can be used with good

results in the non industrial environments. In the international lit-

erature there are some contributions about risk assessment for

fishing vessels (Piniella et al., 2009), using a check-lists method,

or for large transport networks and urban systems (Chen et al.,

2009). Other authors (Van Duijne et al., 2008) developed a subjec-

tive assessment model based on the European guidelines RAPEX,

used for food quality and safety assurance. Another subjective

method example is the DELPHI analysis, which is a structuredmethod that gives a hierarchy of the decisions to be evaluated

and achieves a final decision through verbal experts judgements.These models are often used in SMEs due to their simplicity,

although in some cases their application can be misleading, as

underlined by many authors (Hetherington et al., 2006; Wirth

et al., 2008; Lingard et al., 1997).

Quantitative models, both objective and subjective, are widely

used in many fields, like in large industrial firms or in the oil and

gas industries. These models make an extensive use of reliability

analysis and, thus, are based on process decomposition techniques

and failures likelihoods knowledge. Indeed, several works are

based on the Bayesian approach for fault tree analysis or for event

trees analysis (Martn et al., 2009; Doytchev et al., 2008). The sta-

tistical approach is also used for other types of risk assessment

models, as for the Bow-Tie ones (Ale et al., 2008). The Bow-Tiemodels are based on the identification of a link between causes

and effects of events, and identify a direct quantitative relation be-tween risk sources and risk consequences. A likelihood is associ-

ated to all possible paths from a cause to an effect, that is, an

expression of the relative importance of a specific risk as connected

to a risk source. Objective methods are used to assess risks in the

chemical industry (Glickman et al., 2007; Brito et al., 2009) or in

the coal mines (Sari et al., 2009); in these sectors safety is often re-

lated to specific possible accidents, whose severity justifies the

adoption of quantitative evaluation techniques.

Existing literature reports some works using mixed quali-quan-

titative methods. Some authors apply typical techniques of knowl-edge analysis, as fuzzy theory (Grassi et al., 2009), trying to

formalize and quantify subjective aspects, treated as fuzzy vari-

ables. Other contributions on this issue are given by the application

of techniques such as the well known HAZOP method and the FSA,

that was developed and suggested to be applied in the maritime

field by International Maritime Organization (IMO) (IMO, 2002)

The FSA is a structured and systematic approach to assess complex

situations. Examples of its application are reported in the literature

(Hu et al., 2007; Wang, 2002; Ventikos and Psaraftis, 2004). The

FSA method is a structured and costly method, therefore as

underlined by several authors it was mainly used in the maritime

sector, but its application to other, less capital intensive sectors, isnot easily justifiable. Among the works appeared in the literature

it is worth to mention the contribution by Hu et al. on 2007, whopropose an integration between the FSA and fuzzy methods.

Starting from our first need, i.e., to create a model suitable and

effective for SMEs, that goes beyond the objective and quantitative

models complexity and the non-effectiveness of subjective models

we explored the possibility to create a model for this kind of firms

based on an approach which represents a compromise between the

different models. The absence in the existing literature of a such a

model and the need for an improvement in existing safety assess-

ment tools for SMEs, convinced us that there is space for working

on mixed quali-quantitative methods. The lack of such approaches

can be due, in our opinion, to the little attention paid so far to

safety in the small and medium enterprises (SMEs) by researchersand practitioners. This fact, in turn, might be due to the higherinterest paid by them to larger industrial firms, which in a first

analysis could be identified as a major risk source, while all sta-tistics show, instead, that most part of injuries and deaths are more

likely to occur in SMEs. For all the reasons mentioned so far, the

purpose of this work is to propose a mixed risk assessment meth-

od, able to overcome the practical difficulties generally found by

SMEs in the application of objective and quantitative techniques

(also due to the higher skills required to this aim) and to fill the

gap between the results obtained by the application of subjective

approaches, generally employed, and the need for a reliable risk

assessment.

One of the foreseen advantages of the proposed method is that,without using costly objective or mixed methods, it allows to

achieve a good match between the results of the risk assessmentand actual risk relevance. In other words, this means that the pro-

posed method achieves better results using similar resources.

3. The Analytic Hierarchy Process (AHP) framework

The AHP (Saaty, 2000) is a technique used in decision making

Based on the contribution of different experts, it aims at the crea-

tion of a unique priority index for each possible decision, that sum-

marises all experts judgments, minimizing their inconsistency. In

general, the procedure, given an objective and given a set of possi-ble choices and/or decisions to achieve that goal, calls the experts

to express a relative judgment of relevance of each choice, when

compared to all the others.

The main difference between AHP and the DELPHI methodmentioned before, is that the AHP technique is not simply based

on verbal judgements but also makes use of quantitative

evaluations.

So, given a set of possible decisions, D= [D1,D2, . . . ,Dn], the ex-

pert has to indicate a relevance judgment of each decision com-

pared with all the others, examined one by one. Each expert

gives a relevance judgment, that could be named jkil, where k and

i are the counter of all the decisions belonging to the set D and lis the counter of the lth expert. All judgments for each couple of

decisions (Dk,Dj), will be synthesized using a geometrical mean

through(1).

jkiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffijki1jki2 . . .jkin

n

q 1

Table 1

Worldwide 2007 injuries and deaths.

Type of injury Number of injuries

Workplace injury 250.000.000 inj/year

8 inj/s

Children workplace injuries 12.000.000 inj/year

Deaths 1.300.000 death/year

Table 2

Methods for the health and safety risk assessment.

Qualitative

What if? analysis

Safety review

Check lists

Quantitative

Fault tree analysis

Events tree

Bow-Tie model

Quali-Quantitative

Hazards and Operability Study (HAZOP)

Failure Methods and Critical Analysis (FMECA)

Formal Safety Assessment (FSA)

1362 M. Fera, R. Macchiaroli/ Safety Science 48 (2010) 13611368


41/53

The use of the geometrical mean for the collection of different

judgments is fundamental, because it has been demonstrated

(IMO, 2002) that its use minimizes the inconsistency of the com-

parison matrix C(see forward), for the reason that the unanimity

and homogeneity properties are respected. The unanimity prop-

erty states that, when all the experts give the same judgment x,

the resulting overall judgment should bex. The homogeneity prop-

erty states that when individuals give a judgement u times larger

than another, the resulting overall judgment should be utimes lar-ger too. A mathematical formulation of the unanimity and homo-

geneity properties is reported in (2) and (3)

fx;x;. . . ;x x 8x 2 X 2

fux1;ux2;. . . ; uxn ufx1;x2;. . . ;xn 8 x;ux2 X; u2 R 3

Once the resulting overall judgments are computed, through Eq.

(1), they are inserted into a square matrix (nxn), named compari-

son matrix, C.

C D1 D2 . . . . . . DnD1

D2

. . .

. . .

Dn

j11 j12 . . . . . . j1n

j21 j22 . . . . . . j2n

. . . . . . . . . . . . . . .

. . . . . . . . . . . . . . .

jn1 jn2 . . . . . . jnn

0

BBBBBB@

1

CCCCCCAA fundamental condition to be respected for the applicability of

the AHP methodology is that the comparison matrix Cis consis-

tent. We say that a matrix A = (aij) is consistent if the transitivity

and symmetric properties are satisfied, as expressed in (4) and (5).

aijajk aik where i;j; k 1; 2;. . . ; n 4

aijaji 1 wherei;j 1; 2;. . . ; n 5

To maximize the consistency index of matrixC, besides the fact

that elements with k=i always equal 1, the elements with k i

should respect the condition reported in(6).

jik 1

jki6

In real applications, however, it is possible that relation (6)is

not satisfied. This implies that an inconsistency may occur. For

the correct applicability of the AHP methodology, it is important

that the inconsistency of the comparison matrix C is less than

10%, i.e., the number of times in which relations(4)are not verified

has to be less than 10%.

The ranking of the possible decisionsDi, as stemming from the

judgments of experts, can be computed from the entriesj ik of the

comparison matrix C. To each row, corresponding to a decision

Di, is assigned a priority index pi, computed as the ratio between

the sum of the entries of that row (P

kjki) divided by the sum of

all entries inC(P

kP

ijki), as reported in(7).

pi Xk

jki

,Xk

Xi

jki 7

4. The proposed risk assessment model

The proposed model is divided in three phases and each phase

is divided into steps, that involve, alternatively, methods like FME-

CA, SCEBRA, standard UNI 7249:2007 and AHP. In Table 3, we re-

port the methods used for each step.The first aims at the creation of the work team and the classifi-

cation of major risks; this is achieved using the SceBRA and theAHP techniques. In the second phase the risk assessment is focused

on the risk criticality calculation, and this is achieved using t

Italian UNI standard and the FMECA technique. The last pha

deals with the identification and classification of preventive a

protective actions to minimize the risks; this task is achieved usi

again the AHP and some safety economic measurement te

niques. Refer to Fig. 1 for a schematic sketch of the propos

model.

The SceBRA technique is mostly used in the management fie

especially when an analysis of different development scenarios

needed. Just in a few cases SceBRA has been used for the safe

risks analysis. In our model, it is used to overcome the probleof the risks identification.

The literature reports some contributions that use FMECA to

sess safety problems. Indeed, in practice it is quite easy to find

the FMECA modules columns reserved to the maintenance acti

ties safety. In turn, in our model the FMECA is just used as a refe

ence to evaluate the criticality of each risk.

UNI 7249:2007 is an Italian standard that illustrates the calc

lation methods for the frequency and consequence indexes, sta

ing from the injuries data available in each firm.

AHP has been selected to reduce the subjectivity of steps 2 a

6. AHP permits to give relative judgements of relevance among dferent risks, not just using numerical values, but also with ver

statements (indeed, a translation table from verbal statementsnumerical values is also present). Refer to former Section 3 fo

deeper introduction to that technique. It is important to note ththe choice of the AHP, instead of other structured methods such

the DELPHI one, was due to the more reliable analysis of the AH

that is conducted using mathematical tools.

In the following part of the paper we analyse and describe

better detail the seven steps of the model used to perform r

assessment.

4.1. Phase 1 major risk identification

The first step, i.e., team building, is very important, because i

the main element to ensure an adequate reliability of the asse

ment. Team composition could be deduced from the safety fiorganization, that is imposed, largely, by national safety law

Our will is to build a new assessment model, also respectful

safety laws in force. The minimal team composition should b

(i) the safety responsible, (ii) a work medicine expert and (iii

production worker expert.

The second step, i.e., risk identification, is carried out with t

application of the AHP technique. For each couple of risks, expe

will give a judgement of relative importance. Each risk is assess

comparing itself with all the others; in other words, experts m

specify how much the analysed risk is relevant compared with

the others. The relative importance judgement given by experts

each risks couple are collected in a geometrical mean, which bcomes an element of the general comparison matrix, used to qua

tify priorities between all risks. The hierarchy used to determi

priorities between all possible firms risks is reported inFig. 2.

Table 3

Methods used for each step.

Phase Step Description Method

1 1 Team work identification SceBRA

2 Major events identification SceBRAAHP

2 3 Frequencies calculation FMECAUNI 7249

4 Conse quences calculation FMECAUNI7249

5 Criticality calculation FMECA

3 6 Improvement actions priorization AHP

7 Improvement action verifying Mixed technique

M. Fera, R. Macchiaroli/ Safety Science 48 (2010) 13611368 1


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4.2. Phase 2 risk assessment

Once the results of the second step, i.e., the risks priority, are

obtained, it is possible to proceed to the third and fourth steps.Here the model proposes the calculation of the frequency and con-

sequence indexes, which are computed referring to Italian national

standard, UNI 7249:2007 (this standard is available also in English

as Statistics on occupational injuries). The equations used to cal-

culate both of them are reported in(8) and (9).

FIA Im

Eh 10

6 8

CIGT IGP IGM

E 10

3

IGT 7500

Pg

100

7500 m

E 103 9

In(8), IA is the number of injuries causing an inability lasting

more than a day, Imis the number of deaths and Eh is the worked

hours. In(9), IGT, IGP, IGMare respectively the off-work days due to

(i) a temporary injury, (ii) to an injury with permanent conse-quences and (iii) to a death injury, and Eis (iv) the total number

of workers employed in the specific work sector. All these dataare, normally, available in the firms injury registration book.

Please note that in the proposed procedure Fand Care not an

estimate, possibly given by the risk auditor, of, respectively, the

probability of occurrence of the dangerous event and of the impor-

tance of the damage caused, as it usually occurs in typical riskassessment procedures. In the proposed modelFand Care simply

computed using historical data.After this step, the procedure starts to implement the fifth step

i.e., the calculation of the general criticality index that integrates

the results obtained in previous steps. The equation used to calcu-

late the evaluation index is reported in(10).

Ik Fk Ck pk DF C

Fk Ck pk F Cmax F Cmin 10

In(10),FkandCkare, respectively, the frequency and the conse-quence indexes for the kth risk analysed, as computed in steps 3

and 4, andpkis the priority index, as computed in step 2. So, again,Ikaccounts for the importance of thekth risk, as it results from the

firms history. The second term of the sum has been introduced

to assess all risks that do not have a history, i.e., for those risks

for which it is impossible to determine the frequency and the con-

sequence indexes. It is important to notice how the second term

gives a more specific evaluation of the typical risks of a firm; in

fact, thepkindex is calculated comparing each risk with the others

in specific working environment, while the difference D(F C) can

be seen as a reference scale, that gives an idea of the overall risk

level of a firm.

Willing to explain why the method proposes to evaluate the in-

dexIk as in expression(10), we could say that the attempt was to

introduce an evaluation method able to take into account, from onehand, the history of a firm, thus accounting not only for occurred

injuries (through the evaluation ofC) but also for not occurred ones(ifFhas a low value, that could mean also that prevention and pro-

tection measures in place might have been effective, despite of the

possible severity of the damage), from the other hand, the judg-

ments of experts, filtered through a method as AHP, as in tradi-

tional risk assessment schemes. In other words, we recognized

that relying only on experts traditional assessment methods could

lead to relying too much on their experience and not to pay enough

attention to the specific firm point of view, thus leading to empha-

size too much the consequences of an accidents and to underesti-

mate both the probability of occurrence and the prevention andprotection measures already in place.

Let us give an example. In real cases it could happen that a spe-cific hazard has never lead to the occurrence of an accident: think

1)Team work

identification

2) Major events

identification

S

C

EB

R

A

3) Frequencies

calculation

4) Consequences

calculation

5) Criticality

calculation

FM

E

CA

-

U

N

I

F

M

E

CA

SC

EB

R

A

-

AH

P

6) Improvementactions priorization

A

H

P

7) Improvement

action verifying

M

I

X

Phase 1 Phase 3Phase 2

Fig. 1. Assessment model.

Fig. 2. Risks hierarchy.



43/53

in example, to a fire in a paper mill plant. When evaluating the fire

risk using our method, since the product F Cequals 0, it might

happen that the proposed method evaluates it as less relevant

compared to other risks; an expert, instead, could see the fire risk

as the most relevant risk, simply because of the serious conse-

quences of fire accident occurrence. So, which is the right way to

watch to the problem? In our opinion, clearly, the right way to as-

sess the risk is the one proposed here. In fact, the gravity of the fire

risk is accounted for with the second term of Eq. (10), while, if noaccident happened in the history of a firm, this means that the cor-

responding safety level is acceptable and, specifically, the preven-tion actions in place are effective. A conclusion which we might

draw from this example is that, if the prevention and protection

measure in place in a firm produced a history with no accidents,

this has to force the attention of the auditor not only towards risks

with major consequences but also towards other risks, more rele-

vant in that firm and, as retrievable from the firms safety history,

not properly managed in the past.

Another example, quite different, regards a risk that occurred in

one of the test cases presented afterwards in this paper. Let us con-

sider the risk stemming from the exposure to severe indoor climate

conditions in a service company dealing with logistics of flowers. A

traditional approach could lead to underestimate indoor climaterisk when compared with other risk, like in example mechanicalrisk, possibly because of their higher consequences. With our ap-

proach, the importance of the consequences of such risks is takeninto account through the second term of Eq. (5), but meanwhile

the analysis of the firms history leads to a relevant value of factor

Ffor the indoor climate risk (if that risk factor actually caused trou-

bles to employees health) in the first term of the equation, thus

allowing to balance different factors and to assess that risk prop-

erly. In other words, in this case, what the proposed method is able

to stress and take account for is the actual occurrence of a damage

and/or an injury and not only its probability, as estimated by an

expert.

Willing to draw up some conclusions, we might say that theproposed method defines a procedure to reduce the impact of a

wrong risk perception by experts. In particular:

the criticality index for a risk that has never been happened,

is composed by a term that is zero (i.e., the first term in Eq.

(10)) and by a term composed by the relevance judgement

of the experts, derived by the AHP method application

(i.e.,pk) and by an index that is specific to the firm analysed

in the assessment (i.e., D(F C)); the result is a mitigation of

the possible overemphasis resulting from a too high estima-

tion of the risks consequences that also takes into account

prevention and protection measures in place, and

the criticality index for a risk that occurred often is com-

posed by a term that properly takes into account the fre-

quency of occurrence (i.e., factor F in the first term of Eq.(10)) and by a term composed by the relevance judgement

of the experts, as before; the result is a mitigation of thepossible underestimation of the risk, that takes into account

the actual occurrence frequency of the corresponding dam-

ages and/or injuries.

Finally, let us propose a comment on how to apply the method

when the safety auditor is analysing a start-up company; in this

case the first term of Eq. (10)is equal to zero, not because the spe-

cific risk never lead to accidents, but because the firm has not got a

history. This problem could be overcome using external statistics

referred to the specific sector of the start-up firm. For example,in Italy the public work injuries insurance agency (INAIL) produces

the summary of the frequencies and consequence for the differentoperative sectors each year. So, using these statistics, the method

could be used also for the start-up firms. It must be claimed, ho

ever, that the best performance of the proposed method is actua

achieved in firms with a safety history.

4.3. Phase 3 improvement actions

Once a criticality has been defined for all risks, the model pr

ceeds with the sixth step, i.e., the identification of preventive aprotective measures used, respectively, to reduce the frequen

of occurrence and the consequences of the dangerous event. Th

step is implemented through a team meeting, as defined in st

1, and trough a new application of AHP. For each risk, the expe

will define some actions, and afterwards they will express their rative judgements between the proposed actions. The calculati

procedure to obtain the actions priorities is the same of stepThe improving actions hierarchy is shown inFig. 3.

The innovation of the method for the identification of preve

tion and protection actions is centered on the use of AHP, that pe

mits to reduce inconsistencies of the decisions regard

implementation priorities for the different corrective actio

decided for each risks. In other words, when defining priorit

among corrective actions, it may happen that some inconsisten

occurs or, more simply, that their scheduling does not respo

effectively to actual needs. The application of AHP allows to redu

this circumstance, simply because the AHP mathematical approa

is able to minimize inconsistencies among relative priority jud

ments given by experts to corrective actions.

Once prevention and protection actions, as defined in step 6, aimplemented, it is necessary to evaluate their effectiveness. This

the goal of step 7. To this aim we propose the use of an ind

named DOE, which has been created by the US Department Of E

ergy, and whose definition is reported in(11).

DOE10

2 106 D5 10

5 T2103 LWC10

3 WDL4102 WDLR2 10

3 NF

Eh

In(11), D is the number of deaths, Tis the number of injurwith total disability, LWCis the number of accidents with an injuWDLis the number of work absence days, WDLRis the number

days in which a production sector has to work in a limited mo

NFCis the number of near miss and Ehis the number of total wo

ing hours. Using this index over an appropriate time horizon, it

possible to measure the safety system improvement. If the ind

shows an increase from a period to another, i.e., the difference

the values it assumes over two periods is positive or equals ze

Fig. 3. Improving actions hierarchy.

M. Fera, R. Macchiaroli/ Safety Science 48 (2010) 13611368 1


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it means that the assessment and the improvement actions were

not adequate, thus another implementation of the procedure is

required.

Notice how the application of the method finds its natural best

performance when it is applied in a continuous improvement

framework, such as the Deming wheel (Fig. 4), i.e., where there is

a continuous improvement led by the cyclic application of phases:

(i) plan, (ii) do, (iii) check, (iv) act. This is typical of all ManagementSystems that pursue continuous improvement strategies, like

Quality or Safety Management Systems planned as in ISO EN9001:2008 or OSHAS 18000.

5. The experimental campaign

To test the performance of the proposed method and its ability

to easily and properly assess risks and, consequently, to identify

effective prevention and protection measures, an experimentalcampaign was performed in three enterprises classified as SMEs.

The enterprises belong to two different sectors, the steel workindustry and the logistic services; in particular, two belong to the

first sector and one to the other one.

Before describing and commenting the results, let us explain

the method we used to validate the proposed model. The results

of the experiments, as stemming from the application of the pro-

posed method to the three firms, were compared with:

the results of traditional methods used to assess safety at work

in these firms and

the risk classification, as calculated from the injuries statisticsavailable for the industrial sector who they belong to.

The reason for not relying solely on firms available data is that

they could suffer from underreporting (think about missed acci-

dents) and limited exposure (so that real hazards may not have

materialized yet and hence not being represented in the statistics

but may still pose a significant risk). The use aggregated data, spe-

cific of an industrial sector, rather than data for individual firms,can possibly give a better, or at least a wider, picture of the risk

than company-specific data. Still, the use of company-specific data

helps in analysing and underlining special features which might bepresent within particular firms.

The effectiveness of the proposed method was assessed throughan index named reliability index computed as the distance be-

tween the ranking of each risk, available from the injuries registry

and from the national statistics for the sector, and the ranking

resulting from the application of the old and new methods; each

position in the ranking equals one distance unit; so, the best per-

formance is achieved if the distance index equals zero, while the

more the index grows, the more we can say that the proposed

method achieves misleading results compared to the actual risk

classification.

The first experiment was conducted in a steel working factory.It is an assembly line, operating on 3 shifts for 24 h. The working

activities include machines set-up, feeding of material to the ma-

chines and machine control. In the production line workers also

manipulate chemical products, as flammable or noxious

substances.

All the risks were identified and assessed using the new meth-

od. The criticality indexes, for the production line analysed, areshown inTable 4.

Fig. 4. The Deming wheel.

Table 4

Criticality index for the risks in the assembly line analysed.

Risk Criticality indexes

Mechanical 33,64

Knife parts contact 10,14

Material in movement contact 6,69

Electric 6,38

Noise 4,24

Fire 1,32

Vibrations 1,11

Table 5

Old and new assessment model risk prioritization compared with real data for first experiment.

Ne w assessment method Specific firm statistics Industrial sector national statistics Old assessment method

Mechanical Mechanical Material in movement contact Noise

Knife parts contact Knife parts contact Knife parts contact Fire

Material in movement contact Material in movement contact Mechanical Mechanical

Electric Electric Vibrations Electric

Noise Vibrations Noise Vibrations

Fire Fire Fire Material in movement contacts

Vibrations Noise Chemical Knife parts contact

Chemical Chemical Electric Chemical

Table 6

Reliability indexes for the assessment method analysed.

Distances New assessment

method

Old assessment

method

Compared to specific firm

statics

4 21

Compared to national

statistics

12 25

Table 7

Criticality indexes for the second experiment.

Risks Criticality indexes

Mechanical 25.12

Manual handling contact 6.79

Knife contacts 3.90

Noise 2.44

Electrical 1.76

Fire 1.03

Mechanical handling contact 0.74

Vibrations 0.62

Chemical 0.39

Micro-climate 0.31

Explosions 0.27



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Table 5 reports the risk priority ranking for respectively, the

proposed assessment model, the actual data available in the spe-

cific firm, the statistics data from the industrial sector as reported

by the Italian Health and Safety Insurance Institute (INAIL) and the

traditional assessment model used in the firm so far. As shown, the

new model matches actual d

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