Risk Assessment

Risk assessment determines possible mishaps, their likelihood and consequences, and the tolerances for such events.[1] The results of this process may be expressed in a quantitative or qualitative fashion. Risk assessment is an inherent part of a broader risk management strategy to help reduce any potential risk-related consequences.[1][2]

More precisely, risk assessment identifies and analyses potential (future) events that may negatively impact individuals, assets, and/or the environment (i.e. hazard analysis). It also makes judgments "on the tolerability of the risk on the basis of a risk analysis" while considering influencing factors (i.e. risk evaluation).[1][2]

Risk Assessment

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Risk assessments can be done in individual cases, including in patient and physician interactions.[3] In the narrow sense chemical risk assessment is the assessment of a health risk in response to environmental exposures.[4]The ways statistics are expressed and communicated to an individual, both through words and numbers impact his or her interpretation of benefit and harm. For example, a fatality rate may be interpreted as less benign than the corresponding survival rate.[3]A systematic review of patients and doctors from 2017 found that overstatement of benefits and understatement of risks occurred more often than the alternative.[3][5]A 2017 systematic review from the Cochrane collaboration suggested "well-documented decision aids" are helpful in reducing effects of such tendencies or biases.[3][6]An individuals own risk perception may be affected by psychological, ideological, religious or otherwise subjective factors, which impact rationality of the process.[3] Individuals tend to be less rational when risks and exposures concern themselves as opposed to others.[3] There is also a tendency to underestimate risks that are voluntary or where the individual sees themselves as being in control, such as smoking.[3]

Risk assessment can also be made on a much larger systems theory scale, for example assessing the risks of an ecosystem or an interactively complex mechanical, electronic, nuclear, and biological system or a hurricane (a complex meteorological and geographical system). Systems may be defined as linear and nonlinear (or complex), where linear systems are predictable and relatively easy to understand given a change in input, and non-linear systems unpredictable when inputs are changed.[7] As such, risk assessments of non-linear/complex systems tend to be more challenging.

In the engineering of complex systems, sophisticated risk assessments are often made within safety engineering and reliability engineering when it concerns threats to life, natural environment, or machine functioning. The agriculture, nuclear, aerospace, oil, chemical, railroad, and military industries have a long history of dealing with risk assessment.[8] Also, medical, hospital, social service,[9] and food industries control risks and perform risk assessments on a continual basis. Methods for assessment of risk may differ between industries and whether it pertains to general financial decisions or environmental, ecological, or public health risk assessment.[8]

Rapid technological change, increasing scale of industrial complexes, increased system integration, market competition, and other factors have been shown to increase societal risk in the past few decades.[1] As such, risk assessments become increasingly critical in mitigating accidents, improving safety, and improving outcomes. Risk assessment consists of an objective evaluation of risk in which assumptions and uncertainties are clearly considered and presented. This involves identification of risk (what can happen and why), the potential consequences, the probability of occurrence, the tolerability or acceptability of the risk, and ways to mitigate or reduce the probability of the risk.[2] Optimally, it also involves documentation of the risk assessment and its findings, implementation of mitigation methods, and review of the assessment (or risk management plan), coupled with updates when necessary.[1] Sometimes risks can be deemed acceptable, meaning the risk "is understood and tolerated ... usually because the cost or difficulty of implementing an effective countermeasure for the associated vulnerability exceeds the expectation of loss."[10]

Benoit Mandelbrot distinguished between "mild" and "wild" risk and argued that risk assessment and risk management must be fundamentally different for the two types of risk.[11] Mild risk follows normal or near-normal probability distributions, is subject to regression to the mean and the law of large numbers, and is therefore relatively predictable. Wild risk follows fat-tailed distributions, e.g., Pareto or power-law distributions, is subject to regression to the tail (infinite mean or variance, rendering the law of large numbers invalid or ineffective), and is therefore difficult or impossible to predict. A common error in risk assessment and management is to underestimate the wildness of risk, assuming risk to be mild when in fact it is wild, which must be avoided if risk assessment and management are to be valid and reliable, according to Mandelbrot.

Financial decisions, such as insurance, express loss in terms of dollar amounts. When risk assessment is used for public health or environmental decisions, the loss can be quantified in a common metric such as a country's currency or some numerical measure of a location's quality of life. For public health and environmental decisions, the loss is simply a verbal description of the outcome, such as increased cancer incidence or incidence of birth defects. In that case, the "risk" is expressed as

If the risk estimate takes into account information on the number of individuals exposed, it is termed a "population risk" and is in units of expected increased cases per time period. If the risk estimate does not take into account the number of individuals exposed, it is termed an "individual risk" and is in units of incidence rate per time period. Population risks are of more use for cost/benefit analysis; individual risks are of more use for evaluating whether risks to individuals are "acceptable".

In quantitative risk assessment, an annualized loss expectancy (ALE) may be used to justify the cost of implementing countermeasures to protect an asset. This may be calculated by multiplying the single loss expectancy (SLE), which is the loss of value based on a single security incident, with the annualized rate of occurrence (ARO), which is an estimate of how often a threat would be successful in exploiting a vulnerability.

The usefulness of quantitative risk assessment has been questioned, however. Barry Commoner, Brian Wynne and other critics have expressed concerns that risk assessment tends to be overly quantitative and reductive. For example, they argue that risk assessments ignore qualitative differences among risks. Some charge that assessments may drop out important non-quantifiable or inaccessible information, such as variations among the classes of people exposed to hazards, or social amplification.[12] Furthermore, Commoner[13] and O'Brien[14] claim that quantitative approaches divert attention from precautionary or preventative measures.[15] Others, like Nassim Nicholas Taleb consider risk managers little more than "blind users" of statistical tools and methods.[16]

A risk evaluation means that judgements are made on the tolerability of the identified risks, leading to risk acceptance. When risk analysis and risk evaluation are made at the same time, it is called risk assessment.[1]

The process of risk assessment may be somewhat informal at the individual social level, assessing economic and household risks,[17][18] or a sophisticated process at the strategic corporate level. However, in both cases, ability to anticipate future events and create effective strategies for mitigating them when deemed unacceptable is vital.

At the strategic corporate level, management involved with the project produce project level risk assessments with the assistance of the available expertise as part of the planning process and set up systems to ensure that required actions to manage the assessed risk are in place. At the dynamic level, the personnel directly involved may be required to deal with unforeseen problems in real time. The tactical decisions made at this level should be reviewed after the operation to provide feedback on the effectiveness of both the planned procedures and decisions made in response to the contingency.

The results of these steps are combined to produce an estimate of risk. Because of the different susceptibilities and exposures, this risk will vary within a population. An uncertainty analysis is usually included in a health risk assessment.

During an emergency response, the situation and hazards are often inherently less predictable than for planned activities (non-linear). In general, if the situation and hazards are predictable (linear), standard operating procedures should deal with them adequately. In some emergencies, this may also hold true, with the preparation and trained responses being adequate to manage the situation. In these situations, the operator can manage risk without outside assistance, or with the assistance of a backup team who are prepared and available to step in at short notice.

Other emergencies occur where there is no previously planned protocol, or when an outsider group is brought in to handle the situation, and they are not specifically prepared for the scenario that exists but must deal with it without undue delay. Examples include police, fire department, disaster response, and other public service rescue teams. In these cases, ongoing risk assessment by the involved personnel can advise appropriate action to reduce risk.[19] HM Fire Services Inspectorate has defined dynamic risk assessment (DRA) as:

Dynamic risk assessment is the final stage of an integrated safety management system that can provide an appropriate response during changing circumstances. It relies on experience, training and continuing education, including effective debriefing to analyse not only what went wrong, but also what went right, and why, and to share this with other members of the team and the personnel responsible for the planning level risk assessment.[19] e24fc04721