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What is Risk? The purpose of studying
Risk is an unwanted negative consequence of
an event of which the possible undesirable
outcome can be identified, predicted and
quantified.
Uncertainty is an unknown situation, where
its possible outcome cannot be analysed or
predicted. E.g. weather uncertainty.
What can you do about Risk?
Risk lends itself to statistical analysis.
Since it can be statistically analysed, the risks
can be;
- eliminated,
- reduced, or
- transferred to a third party at a cost or
managed for a profit.
What is Risk Management?
Good management practice
Process steps that enable improvement
in decision making
A logical and systematic approach
Identifying opportunities
Avoiding or minimising losses
Source: UNCTAD 2000
RM
To develop the capability to identify, assess,
improve and limit risk in the management and
practice of engineering through the application
of concepts and tools of risk engineering.
On completion, you will be able to identify
hazards in an engineering project and
design an appropriate risk management
strategy.
The Risk Management process:
1. Establish the context
Defining types of risk, for instance,
Strategic risks to the goals and objectives
of the organisation.
Identifying the stakeholders, (i.e.,who is
involved or affected).
Past events, future developments.
Source: UNCTAD 2000
The Risk Management process:
2. Identify the risks
Defining types of risk, for instance,
Strategic risks to the goals and objectives
of the organisation.
Identifying the stakeholders, (i.e.,who is
involved or affected).
Past events, future developments.
Source: UNCTAD 2000
The Risk Management process:
3. Analyse the risks
How likely is the risk event to happen?
(Probability and frequency?)
What would be the impact, cost or
consequences of that event occurring?
(Economic, political, social?)
Source: UNCTAD 2000
The Risk Management process:
4. Evaluate the risks
Rank the risks according to management
priorities, by risk category and rated by
likelihood and possible cost or
consequence.
Determine inherent levels of risk.
Source: UNCTAD 2000
The Risk Management process:
5. Treat the risks
Develop and implement a plan with specific
counter-measures to address the identified
risks.
Consider:
Priorities (Strategic and operational)
Resources (human, financial and technical)
Risk acceptance, (i.e., low risks)
Source: UNCTAD 2000
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The Risk Management process: The Risk Management process:

5. Treat the risks 7. Communicate & consult
Document your risk management plan and Communicate results to the team, and decide
describe the reasons behind selecting the risk whether risk is properly managed or further
and for the treatment chosen. measures are required.
Record allocated responsibilities, monitoring or
evaluation processes, and assumptions on
residual risk.

Source: UNCTAD 2000 Source: UNCTAD 2000

The Risk Management process:

6. Monitor and review

In identifying, prioritising and treating risks,

organisations make assumptions and decisions
based on situations that are subject to change,
(e.g., the business environment, trading
patterns, or government policies).
Risk Management policies and decisions
must be regularly reviewed.

Source: UNCTAD 2000

The Risk Management process:

6. Monitor and review
Risk Managers must monitor activities and
processes to determine the accuracy of
planning assumptions and the effectiveness
of the measures taken to treat the risk.
Methods can include data evaluation, audit,
compliance measurement.

Source: UNCTAD 2000