A risk management plan is quite a detailed document prepared by a project manager and aims to foresee potential risks, its impacts and outline adequate response strategies. A good plan will also contain a risk assessment matrix. Risk is defined as being a condition or event which can either have negative or positive repercussions on a business (from a disaster stand point). However, with disasters like floods, fires and power outages the impact is almost always negative. Regardless, the plan needs to have a list of all the likely risks as well as a rating that rates them on a scale from high to low in likelihood. In addition mitigation strategies to help people, salvage sensitive data and equipment needs to be spelt out too. These plans needs to be revised periodically by a team involved in the business’s safety in order to avoid it from becoming stale.
Step no. 1: Putting a team together
Before a risk management program can be put in place a competent team of individuals needs to be assembled. In a business setting this will include people responsible for security, the fire warden, the first aid expert, the plant manager and company’s administrator. Each person will be responsible for working on a certain aspect of the report. For instance, the plant manager will list risks associated with machine malfunction, generator issues, electrical outages etc.
Step no. 2: Estimating the risk rating
Each risk on the list created by all the people part of the team will need to be rated. These risks will be rated based on the damage it can have on the business and its employees. For instance, in the manufacturing industry a fire will not only harm employees and damage equipment but also damage the items being manufactured hence delivering a double financial blow to the company setting back their orders.
Step no. 3: Putting contingencies in place
In order to put contingencies in place you first need to plan the worst case scenario in each case. Then you need to find ways to mitigate the situation to the best of your ability. There are a couple of questions you need to start by asking for every possible emergency scenario:
- Which areas will be the most problematic?
- What tools can be used to deal with the situation?
- How much staff training will be needed?
- What will it cost to reduce the probability of a worst case scenario?
Apply the formula R = M x C (R stands for reduction, M for mitigation and C for contingency) and Exposure = R-R (R for risk). The amount of exposure is what you’ll want to avoid as much as possible. Exposure is also often referred to as a threat or severity. This should also dictate if an activity that is being planned should take place.
This very same formula can be used to work out the costs associated with balancing the risk with exposure. For instance, adding fire extinguishers to your facility and keeping them maintained may cost you $1500 a year which is far cheaper than replacing equipment. But some cheap equipment that costs less than $100 or $200 may not justify the implementation of firefighting equipment.
Step no. 4: Monitoring risks
Once you are sure about what all the risks are, how to mitigate them and done the required math as stated above you need to determine exactly how they may materialize so that you or people who are trained can look out for them. This can easily be done by listing cues for each type of risk. You will need to do this for both high and medium risks. Your employees will also need to be trained to recognize these cues. Because not knowing these cues can just as easily mean that the risk will materialize silently and affect your business despite the fact that you may have very good contingencies in place.
Formulating emergency risk management program takes time and will require a bit of effort on everyone’s part. But at the end of the day it will save lives and your business potentially thousands of dollars in damages and loss business. The important thing is to work through the program making sure that every step is properly considered.