risk management parichart visuthismajarn, dr. phil., asst.prof. faculty of environmental management...
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RISK MANAGEMENTRISK MANAGEMENT
Parichart Visuthismajarn, Dr. phil., Asst.Prof.Parichart Visuthismajarn, Dr. phil., Asst.Prof.
Faculty of Environmental ManagementFaculty of Environmental Management
Prince of Songkla UniversityPrince of Songkla University
ENVIRONMENTAL RISK ASSESSMENTSession 8
ObjectivesObjectivesRisk management definitionRisk management definition
Approaches to risk managementApproaches to risk management
Aspects of risk managementAspects of risk management
Principles & challenges of risk managementPrinciples & challenges of risk management
Risk TradeoffsRisk Tradeoffs
Impact of perceptionImpact of perception
Urban air pollution Urban air pollution
Remedial action risk management processRemedial action risk management process
Use of risk management in the militaryUse of risk management in the military
Labeling systems for risk management (DOT, NFPA)Labeling systems for risk management (DOT, NFPA)
Management systems – ISO 14001Management systems – ISO 14001
Environmental audit processEnvironmental audit process
Qualitative risk management systems, several examplesQualitative risk management systems, several examples
Risk managementRisk management
Risk Management is reducing risks to an acceptable Risk Management is reducing risks to an acceptable level, which is?level, which is?– Zero risk? – no risk is acceptable – unrealisticZero risk? – no risk is acceptable – unrealistic– Acceptable risk? – who defines what is acceptableAcceptable risk? – who defines what is acceptable– De Minimus and De “Manifestis” RisksDe Minimus and De “Manifestis” Risks
de minimus, that is trivial risksde minimus, that is trivial risks– Often considered less than 1 in 1,000,000 riskOften considered less than 1 in 1,000,000 risk
de “manifestis” that is obnoxious riskde “manifestis” that is obnoxious risk– Controlled without regard to cost; risk greater than 1 in 1000Controlled without regard to cost; risk greater than 1 in 1000
Risk Assessment complicates management by exposingRisk Assessment complicates management by exposing– Uncertainty and variabilityUncertainty and variability– Differences in stakeholder understanding and perceptionsDifferences in stakeholder understanding and perceptions
multiple perspectives make consensus building difficult multiple perspectives make consensus building difficult
source: www.iupac.org/publications/ ci/2001/march/
How Risk Management fits into How Risk Management fits into the processthe process
: www.fao.org/WAICENT/faoinfo/economic/ esn/risk/risktext.htm
Environmental management Environmental management methodsmethods
Economic Economic InstrumentsInstruments
Indirect RegulationIndirect Regulation Direct Direct RegulationRegulation
Emissions tradingEmissions trading
Deposit-refundDeposit-refund
Consumption Consumption feesfees
Performance Performance bondsbonds
Grants, loansGrants, loans
Tax reliefTax relief
Subsidy RemovalSubsidy Removal
Government spendingGovernment spending
InformationInformation
Publicizing behaviorPublicizing behavior
Reporting Reporting performanceperformance
EducationEducation
StandardsStandards
RegulationsRegulations
InspectionsInspections
PenaltiesPenalties
Risk = Hazard x ExposureRisk = Hazard x Exposure
If this is true, then risk management is a If this is true, then risk management is a function of reducing or eliminating:function of reducing or eliminating:– HazardsHazards– ExposureExposure– Consequences (harm) of expsoureConsequences (harm) of expsoure
Risk management must be formulated in Risk management must be formulated in the context of the culturethe context of the culture– Socio-economicSocio-economic– Socio-politicalSocio-political
Risk ManagementRisk Management
Involves decision-making that Involves decision-making that incorporates:incorporates:– Prioritizing risksPrioritizing risks– Determining acceptable level of riskDetermining acceptable level of risk– Determining resources to reduce Determining resources to reduce
risks to an acceptable levelrisks to an acceptable level– Determining the greatest benefit for Determining the greatest benefit for
the resources to be expendedthe resources to be expended– PlanningPlanning– ImplementingImplementing– Monitoring and evaluating Monitoring and evaluating
effectivenesseffectiveness
Risk assessment & Risk assessment & management integrated management integrated
systems frameworksystems framework
Corporate Corporate objectivesobjectives
EHS EHS policiespolicies
Site Site specific specific goalsgoals
Driving Driving forcesforces
Analytical Analytical boundariesboundaries
Worker
Public
Ecological
Consumer
Financial
Likelihood
Magnitude
Eliminate
Reduce
Respond
Communicate
Threshold criteria
Benefit estimation
Cost estimation
Time sensitivity
Benefit to cost ratio
Resource allocation
Schedule milestones
Independent review
Continuous improvement
DefineObjectives
IdentifyResources,Assess Risk
Develop riskReduction &
Avoidance Alt.
PrioritizeOpportunities
Implement &Review Results
Adapted from Autenrieth
Use of Risk Management in the Use of Risk Management in the MilitaryMilitary
The use of risk The use of risk assessment methods assessment methods in the military varies in the military varies – Quantitative Health Quantitative Health
Risk Assessment Risk Assessment follows generally follows generally accepted principlesaccepted principles
– Qualitative methods Qualitative methods are also used for are also used for decision-makingdecision-making
Step 1Step 1– IDENTIFY HAZARDS DURING MISSION ANALYSISIDENTIFY HAZARDS DURING MISSION ANALYSIS
CONDITIONS THAT HAVE THE POTENTIAL OF CONDITIONS THAT HAVE THE POTENTIAL OF POLLUTING THE AIR, SOIL, WATER, OR DEGRADE POLLUTING THE AIR, SOIL, WATER, OR DEGRADE NATURAL CULTURAL RESOURCESNATURAL CULTURAL RESOURCES
Step 2Step 2– ASSESS THE PROBABILITY OF ENVIRONMENTAL DAMAGE ASSESS THE PROBABILITY OF ENVIRONMENTAL DAMAGE
AND VIOLATIONSAND VIOLATIONSENVIRONMENTAL RISK ASSESSMENT MATRICES ENVIRONMENTAL RISK ASSESSMENT MATRICES
Step 3Step 3– MAKE DECISIONS AND DEVELOP MEASURES TO REDUCE MAKE DECISIONS AND DEVELOP MEASURES TO REDUCE
HIGH RISKSHIGH RISKS
Six Steps of Risk Management Six Steps of Risk Management in Militaryin Military
http://155.217.58.58/cgi-bin/atdl.dll/gta/5-8-2/050802_top.htm
Step 4Step 4– BRIEF THE CHAIN OF COMMAND AND APPROPRIATE BRIEF THE CHAIN OF COMMAND AND APPROPRIATE
DECISION MAKERSDECISION MAKERSPROPOSED PLANS AND RESIDUAL RISKSPROPOSED PLANS AND RESIDUAL RISKS
Step 5Step 5– IMPLEMENT ENVIRONMENTAL MEASURESIMPLEMENT ENVIRONMENTAL MEASURES
INTEGRATE THEM INTO PLANS, ORDERS, SOPs, INTEGRATE THEM INTO PLANS, ORDERS, SOPs, TRAINING PERFORMANCE STANDARDS, AND TRAINING PERFORMANCE STANDARDS, AND REHEARSALSREHEARSALS
Step 6Step 6– SUPERVISE AND ENFORCE ENVIRONMENTAL STANDARDSSUPERVISE AND ENFORCE ENVIRONMENTAL STANDARDS
TRAIN TO THESE STANDARDSTRAIN TO THESE STANDARDS
Six Steps of Risk Management Six Steps of Risk Management in Militaryin Military
http://155.217.58.58/cgi-bin/atdl.dll/gta/5-8-2/050802_top.htm
Environmental Management Environmental Management SystemSystem
4.2 Environmental
policy
4.3 Planning
4.4 Implementation and operation
4.6 Management
review
4.5Checking and
corrective action
Management Systems Development
Co
mp
lian
ce S
tatu
sCompliance & Management Systems
(adding context)
Good Performance But Not Sustainable
Ineffective Systems
Sustainable Zone
Weak Systems & Poor Performance
High
Low
Early Mature
Social Risk Management Framework:Social Risk Management Framework:Basic thrusts: Basic thrusts:
The poor are typically most exposed to diverse risksThe poor are typically most exposed to diverse risks– traditional and moderntraditional and modern
The poor least equipped to deal with these risksThe poor least equipped to deal with these risks– The poor are most vulnerable The poor are most vulnerable – High vulnerability makes them risk averse and thus unable or High vulnerability makes them risk averse and thus unable or
unwilling to engage in higher risk/high return activitiesunwilling to engage in higher risk/high return activitiesSRM seeks to account for multiple sources of risk and their SRM seeks to account for multiple sources of risk and their characteristics to address vulnerability characteristics to address vulnerability – Operates with multiple strategies (prevention, mitigation, coping) Operates with multiple strategies (prevention, mitigation, coping)
and arrangements (informal, market-based, public) to deal with and arrangements (informal, market-based, public) to deal with riskrisk
– Attempts to match the multiple suppliers of risk management Attempts to match the multiple suppliers of risk management instruments (such as households, communities, NGOs, and instruments (such as households, communities, NGOs, and governments) with key demand groups (formal, informal-urban governments) with key demand groups (formal, informal-urban and informal-rural workers)and informal-rural workers)
Adapted from Holzmann, 1998
Sources and Forms of Social RiskSources and Forms of Social Risk
MicroMicro MesoMeso MacroMacro(idiosyncratic)(idiosyncratic) (co-variant)(co-variant)
NaturalNatural RainfallRainfall EarthquakeEarthquakeLandslideLandslide FloodsFloodsVolcanic eruptionVolcanic eruption DroughtDrought
Strong windsStrong windsHealthHealth IllnessIllness EpidemicEpidemic
InjuryInjuryDisabilityDisability
Life-cycleLife-cycle BirthBirthOld-ageOld-ageDeathDeath
SocialSocial CrimeCrime TerrorismTerrorism Civil strifeCivil strifeDomestic violenceDomestic violence GangsGangs WarWar
EconomicEconomic UnemploymentUnemployment Resettlement Resettlement Output collapseOutput collapseHarvest failure Harvest failure FinancialFinancialBusiness failureBusiness failure or currency crisisor currency crisis
Technology Technology PoliticalPolitical Ethnic discriminationEthnic discrimination RiotsRiots Default on social prog.Default on social prog.EnvironmentalEnvironmental PollutionPollution
DeforestationDeforestationNuclear disasterNuclear disaster
Adapted from Holzmann, 1998
Risk Management StrategiesRisk Management Strategies
Prevention Strategies - to reduce the Prevention Strategies - to reduce the probability of down-side riskprobability of down-side risk
Mitigation Strategies - to decrease the Mitigation Strategies - to decrease the impact of a future down-side riskimpact of a future down-side risk– Portfolio diversificationPortfolio diversification
– InsuranceInsurance
– Hedging/Risk exchangeHedging/Risk exchange
Coping Strategies - to relieve the impact Coping Strategies - to relieve the impact once the risk (the event) has occurredonce the risk (the event) has occurred
Adapted from Holzmann, 1998
Risk Management ArrangementsRisk Management Arrangements
Informal arrangements, e.g.Informal arrangements, e.g.– marriage, real assets, mutual community supportmarriage, real assets, mutual community support
Market-based arrangements, e.g.Market-based arrangements, e.g.– cash, bank deposits, bonds and shares, cash, bank deposits, bonds and shares,
insurance contractsinsurance contracts
Publicly provided or mandated arrangementsPublicly provided or mandated arrangements– social insurance, transfers in cash and kind, social insurance, transfers in cash and kind,
subsidies and public workssubsidies and public works
Adapted from Holzmann, 1998
Arrangements/ Strategies
Informal/personal Formal/ financial market-based
Formal/publicly-mandated/provided
Risk reduction Less risky production Migration
Labor standards VET Labor market policies Disability policies
Risk mitigation
Portfolio Multiple jobs Investment in human, physical and real assets
Investment in multiple financial assets
Multi-pillar pension systems Social Funds
Insurance Marriage/family Community arrangements Share tenancy Tied labor
Old-age annuities Disability/Accident
Mandated/provided for unemployment, old-age, disability, survivorship, sickness, etc.
Hedging Extended family Some labor contracts
Risk coping Selling of physical and real assets Borrowing from neighbors Intra-community transfers/charity Sending children to work
Selling of financial assets Borrowing from banks
Transfers/Social assistance Subsidies Public works
Matrix of Social Risk Management (examples)
Adapted from Holzmann, 1998
Framework for studying vulnerable populations
Communityresources
PeopleTies betweenpeopleNeighborhoods
Source: Aday (1994)
Community
Individual
VulnerablePopulations
At-risk
Communityhealth Needs
PhysicalPsychologicalSocial
Statistical(aggregate)
lives
Common GoodReciprocityInterdependence
IndividualResources
Social statusSocial capitalhuman capital
VulnerableIndividuals
Susceptible to:harm or neglect
IndividualHealth Needs
PhysicalPsychologicalSocial
Individual(identifiable)
lives
Individual RightsAutonomyIndependence
Community andIndividual Well-
Being
Resourceavailability
(+)
Relativerisk(+)
Healthstatus
(+)
(+)
(-)
(-)(+)
Social and Community-oriented Medical care and Level Ethical normsPerspective economic policy health policy public health policy of analysis and values
Policy
Note: (+) indicates direct relationship (likelihood of outcome increases as predictor increases; (-) indicates inverserelationship (likelihood of outcome decreases as predictor increases)