Types Of Risks And Their Impact

Environmental Risk

Question:

Discuss about the International Standard on Risk Management.

It is an environmental risk as the hazardous chemical can harm people, property and the environment and domestic chemicals. The mining process could have penetrated into the pockets of hydrocarbon gas in the air hence causing an explosion (McIvor and Johnston 2016). Hydrocarbon as a ” hazardous chemical” ought to be placed in caution as it’s a risk factor at workplaces. According to Singh, Nair, Kamal, Bihari, Gupta, Mudiam, Satyanarayana, Raj, Haq, Shukla and Khan (2017) the precautionary activities include proper storage, guidelines on handling and management in preventing workers and environment from suffering the setbacks of an incidence.

The event presents a global risk. Pandemics and interruptions bring hazards to air traffic and road traffic. In this case, the power line interrupted the movement of the aeroplane across to the airfield. Power lines that were lying on the road, consequently, closed the way for some time pending clearance. The burning wreckage of the plane blocked the carriageway hence being a global risk.

The event also presents a utility risk that is caused by failures or interruptions to the delivery of the sick woman who was being transferred from a cruise ship to another vessel for emergency medical treatment just before she fell into the sea (Li 2014).

This is a property and equipment risk whereby, a bridge has collapsed due to the cable breakdown that got suspended. Such damage from natural disaster and vandalism, proprietors will be covered from the risk of property and equipment (Kerner and Lawrence 2014).

The case is not different from the one in (4) above as the collapse of the cliff is a form of natural disaster hence referred to as a property risk.

Also, a property risk would be used in the incident occurred for the collapse of the Rana Plaza, in Bangladesh. The factory will have to cover itself against the property or equipment risk for the loss that occurs.

This is a pandemic risk. It has involved an employee who has carelessly poisoned “food” that would be consumed by customers (Fan, Jamison and Summers 2016). The poisoned fish were to be eaten by the factory’s customers. This means that were it for the factory to ensure itself; it would have taken a cover for pandemic risk.

This case would be looked upon as work health safety risks for the owners of the old mine. In my point of view, I feel that the miners should have sought a cover for property, equipment risk and also work health safety risk (Waters and Dick, 2015). In one hand, the fire is ignited by a nearby grass and forest fire lit by arsonists. The work health safety risk should cover any uncertainty caused at the place of work or the working environment (Andreassi, Piccaluga, Guagliumi, Del Greco, Gaita, and Picano 2016). However, on the other hand, a loss has occurred in that their property has been destroyed. Had the workers insured their farms and equipment from property and equipment risk, the insurance company would have covered the loss or destruction of their water pipes.

Evidently, this is a technological risk. Any loss caused by computer network failures and problems associated with using outdated equipment in a location, the company should seek cover for the technical risk (Haimes 2015). In this case, BHP Billiton and Viale company should cover for the loss of the lives in that surrounding environment.

Global Risk

The captain of the vessel ought to be charged alongside the other steering members for the havoc caused at the marine park. The first mate and the second will be held responsible as the lack of placing coordinates was caused by either their incomplete coding or forgetting to follow instructions placed prior to the occurrence (Devalkar, Anupindi and Sinha 2017). Both the captain, the second and first mate will follow one investigation conducted by the marine officials.

Having charged the captain together with his first mate, their licenses to operate may be taken from them. As a result, they would have paid a massive amount of cash for the offence hence experiencing a loss. However, if both the captain and the first mate had taken a risk cover of staffing, the insurance company would have incurred the loss and their fines for their sake (Cameron, L. and Shah, M., 2015).

In the case, the persons responsible for the grounding remain the first mate, the second mate and the captain in charge of the ship who through their lack of communication and implementation of recommendations led to the havoc caused at the reef thus spilling tons of oil into the ocean destroying marine natural habitat. Anybody will agree to Derek Viner’s beliefs about human beings not being talented in designing to prevent things going wrong and planning to limit the damage when things do go wrong (Gutteling 2015).

Therefore the captain with his mates was not able to stop the destruction or limit the damage itself since it was a form of “accident”. However, some human mistakes could be avoided by being attentive to what is in hand. Laxities and ignorance would lead to severe and dangerous risks like this being discussed. According to the pre-luminary investigations, the ship failed to turn at the waypoint in joining the route to the deep sea thus failing to alter the course of the journey and landing on the reef where the vessel was grounded.

A possible mechanism is the risk management of the danger that had occurred in the incident. It would involve conducting clean up on the Great Barrier Reef. Oil spreads fast and can cause a substantial damage to the marine life. As such, the matter has to be treated with utmost emergency and care to reduce the level of damage to the habitat. The cleanup exercise can be performed by the marine rescue team as they await compensation in a bid to save the aquatic life that may be at risk.

Future prevention of similar occurrence can be pinned to the use of intelligent control systems which utilize communication technologies that are real-time in nature essential in automatic management and monitoring of vessels and other foreign bodies.

Furthermore, the option of geo-fencing can be explored as it deals with the automatic detection of the entrance of individuals into dangerous preset forbidden zones is the primary safety management model revealed in the literature. But the simple trigger logic of the geo-fencing can only offer managers poor binary information concerning on-site workers’ behavior and may lead to frequent false positives.

Utility Risk

As a consequence, the development of an integrated method to perform real-time safety risk assessment of on-site workers based on probability concepts is necessary. According to Moloi (2016), real-time location technologies should provide the workers’ real-time location data. Real-time safety risk assessment is essential as a safety procedure as the use of automatic monitoring technology provides assistance to the risk aversion as well as reduces costs incurred in saving the marine life (Hopkin 2017). Besides, the real-time location system for personnel and the monitoring system for structure constitute a complete solution for health and safety management in the marines.

The Shen Neng 1 should adopt a policy that can be divided into the two groups of on-site users and off-site users. They users can access different software as their needs are different. On-site users include workers, site supervisors, and machinery. The software is an Android App which would control the GPS module and Wi-Fi module of the smartphones. GPS will be used when users are outdoors and Wi-Fi when users are in indoor places such as tunnels. The primary application for off-site users is a web-based software system allowing access to any authenticated user with internet access, no matter where they are (Reason 2016). The web page will provide users with a response on the real-time locations of the ship. The historical trajectories remain available for ad hoc queries.

These functions assist the captain and his mates to be aware of the situation on the ship very conveniently. Moreover, on top of the system, for safety management purposes, the identification and classification of hazards and real-time worker risk assessments are implemented (Reason 2000). Thus, a knowledge-based system is created in which system parameters, threshold values, and rules are stored and organized.

The event is undoubtedly dangerous to both human beings and the environment of residence. Therefore, several outcomes would emanate from the case as the reef was damaged with the oil spillage which threatens the marine life. As a result, the persons in charge would cater for the clean-up exercise to be conducted speedy to avert more damage to the aquatic life.

When combined with the real-time location system, the RTSRA will build a logical relationship between safety risk and the locations of on-site assets. The proposed method will leverage the massive data produced by the RTLS to provide sufficient site information (Kostopoulos, 2016). That information will enable the captain together with his mates to anticipate the locality and potential occurrence of safety risk, and it will contribute to more effective computerized decision processes.

The on-site application will show that the proposed method is reliable and effective for real-time safety risk assessment. The logic and the function of the proposed novel method fulfill

The model in use for the case is referred to as the simple linear model which works on the assumption that accidents remain as a culmination of a set of events which together interact sequentially, thus justifying the fact that accidents are preventable through elimination of one of the causes in a linear sequence.

Property and Equipment Risk

As observed in the case, all the factors have a relation and the causative agents acted one after another where an omission of one would lead to the prevention of the accident. In this case, the act of forgetting to place the coordinates despite having the information led to the accident. The act was followed by the act of the first mate entering coordinates and leaving the last one to the next occupant thus leading to the accident. On the side of the reef owners, placement of proper barricades and monitoring tools would assist in preventing the accident from occurring as the captain would note it or the official have a red flag raised on the activity of the ship and earlier communication done to avoid the mishap.  

The applicability of the linear model can work in determining prevention measures in reducing the possibility of risk occurrence. The theory remains practical in understanding the cause of the accident as all factors point to the lack of memory on inserting the last coordinate which led to the incident. The several factors involved could be avoided had the marine park officials place a barrier or monitoring tools to warn the ship crew of an impending danger. The absence of the same and lack of action led to the case. At the same time, the lack of proper communication and confirmation of reports once handed over by a retiring mate led to the situation (Haimes 2015). Had the first mate considered the impacts of the omission or act of forgetting, the chances of the case occurring would remain minimal as the right course of way would be followed to the main sea.

Simple sequential accident models refer to the school of thought where accidents are perceived to occur as a result of a series of events occurring in a specific order that can be recognized. The series of events in this case occur in a given order such that if one factor is removed from a case, little or no chances of an accident remain viable (Herrera and Woltjer 2010). 

On the other hand, it is based on the assumption that the occurrence of an accident can be prevented by either dislodging one of the risk factors which leads to the eventual disturbance of the rest of the possible occurrences that would lead to an incident.

The case is true for the case study of the ship grounding as any operation by the second mate towards completing the coordinate points would lead to a successful aversion of the grounding. In this respect, it is important to define the beginning to the end of an accident in finding the sequence of events thus assists in averting the same in the future. All the circumstances leading to the event have to be reported to assist in future preventive activities.

The opportunity of preventing an accident from occurring remains open at the time zone 1. The situation is so because there is sufficient time between the time zone and that of the occurrence where precautionary measures would lead to a possible aversion of the case. A preventive mechanism ought to have been developed where for instance both of the mates would sit down and chat the coordinates together and complete them before going to take rest (Bolton, Chen and Wang 2013). In organizations, accidents occur due to the failure to look into the hazards that might lead to future complications. In this case, the second mate failed to look into the hazardous occurrence that might be caused should the information passed onto the first mate fail to be executed. While noting down the coordinates, he acknowledged its importance and carried out the task diligently only to leave the last part that was equally crucial to the journey. The case of human error arises in the situation as the failure to recall the instruction given led to the accident. Establishing hazard prevention measures at time zone 1 remains essential towards prevention of such incidences.   

Pandemic Risk

According to PMBOK standard, risk quantification is a process involving the identification of risks followed by data analysis and relevant correspondence on the threat factor. The step is crucial as it follows the risk identification stage prior to development of preventive measures.

The objective of project risk quantification is to prepare contingencies in t costs, time, or human resources and prioritize them. PMBOK, ISO 31000, and PRINCE2 provide principles and processes for effective risk management. Risks remain quantified by using either expert intuitions or statistical tools. These tools offer various advantages to risk quantification despite having their limitations. The limitations as well as the challenges of the risk quantification process, are essential to consider to ensure effective risk management. The method of risk quantification is a necessary step of the risk management process and therefore, essential to ensure the success of a project.

Therefore, it can be seen that there is a small difference between means of these standards, but when the definition of each step remains under critical analysis, it can be realized that the basic concept surrounding the standards is not different. This implies that different rules divide the risk management process into various steps, but the core concepts remain the same. For example, PMBOK defines the third step as risk response development which means categorizing of assessed risks into acceptable or unacceptable risks and developing of responses accordingly (Ellingwood and Kinali 2009).

Expected monetary value is one of the best ways to quantify risk. According to PMBOK, an expected monetary value remains a product of two numbers. As a result, the benefit of probability risk and that of an event stay an estimate of the gain or loss that can be incurred in the case of a risk occurrence. Specific equipment will fail during a project that will produce in USD10,000, then EMV will be USD -6,000. The table above shows an example of EVM analysis. It can be perceived that a total of USD4,500 is required as a contingency, but in actual only USD1,100 are necessary as subsequent events may fail to occur. Thus it means that the risks which are to occur or fail to happen will add their value to EMV pool, where probabilities that are going to happen will utilize value from this pool (Ellingwood and Kinali 2009). Hence, for this example, a project manager can add extra USD1, 100 to project budget as a contingency. EMV helps project managers in two ways.

First, it helps to manage to estimate the amount required to operate all identified risks. Secondly, it assists in selecting the choice to lead the chance by choosing the option with the minimum value. The EMV is that it provides help in calculating contingency reserves, in procurement planning decision-making, in spreading the impact of a large number of risks, and in decision tree analysis. Whereas drawbacks of using this technique are that this technique not used in small and small-medium sized projects, use of expert opinion may result in personal bias/ and the chance of forgetting of inclusion of definite risks.

Work Health Safety Risk

The current section illustrates quantified estimation of consequences of risk of accident of container ship that is shipwreck. Different consequences of wreckage of ship include acquirement of loss otherwise damage caused to entire container ship, affected terminals of the container ship, damage to the properties exposed in both onshore as well as offshore. Essentially, the risk recognized direct the way towards subsequent losses and in this specific case losses can be classified in terms of cost. Particularly, damage caused to the chief engine incurs the maximum cost; however, this is necessarily followed by auxiliary engines and after that charges for turbo. Nevertheless, damage caused to the entire container ship can direct the way towards huge amount of losses in which costs of container ship together with damage to diverse parts can be taken into account. Furthermore, ship wreckage also shows the ways to abysmal loss to marine life that is again cause of unparalleled loss to the entire ecosystem.

The ISO guidelines provide a proper path towards development and realization of aspects in risk management. Right from the planning moment, the specifications go through the training process essential in equipping the persons involved with the knowledge regarding various operations. Further, it entails the risk assessment tools and preparedness measures to be explored thus preparing one adequately. In later stages, it talks of the monitoring aspects where persons in charge observe the process and evaluate issues of concern while trying to minimize the possibility of causing a havoc. According to Leitch (2010), evaluation remains key in learning from mistakes and placing more concern towards insurance cover in risk aversion of avoiding the payment of heavier fines in cases of calamities.

Risk management is an important and crucial aspect in any business. For posterity purposes, it is proper for precautionary measures to be considered in making sure occurrences that can be prevented remain minimal. As such, it is essential to follow-up on the guidelines provided towards workplace safety and risk management training in developing a wholesome generation (Purdy, G., 2010).

Moreover, it stipulates the importance of communication and training in averting the risk of exposure and persons involved in any occurrence.  In re-assuring safety, the guideline expounds on monitoring and evaluation where several aspects of risk are examined and a probable solution given for further improvement (Brenner 2007). All these aspects are entailed in the guideline in line with controlling, managing, and monitoring risks towards safety concerns around the globe.

References

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Bolton, P., Chen, H. and Wang, N., 2013. Market timing, investment, and risk management. Journal of Financial Economics, 109(1), pp.40-62.

Brenner, J., 2007. ISO 27001: Risk management and compliance. Risk management, 54(1), p.24.

Cameron, L. and Shah, M., 2015. Risk-taking behavior in the wake of natural disasters. Journal of Human Resources, 50(2), pp.484-515.

Devalkar, S.K., Anupindi, R. and Sinha, A., 2017. Dynamic risk management of commodity operations: Model and analysis.

Ellingwood, B.R. and Kinali, K., 2009. Quantifying and communicating uncertainty in seismic risk assessment. Structural Safety, 31(2), pp.179-187.

Fan, V.Y., Jamison, D.T. and Summers, L.H., 2016. The inclusive cost of pandemic influenza risk (No. w22137). National Bureau of Economic Research.

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Hopkin, P., 2017. Fundamentals of risk management: understanding, evaluating and implementing effective risk management. Kogan Page Publishers.

Kerner, A. and Lawrence, J., 2014. What’s the risk? Bilateral investment treaties, political risk and fixed capital accumulation. British Journal of Political Science, 44(1), pp.107-121.

Leitch, M., 2010. ISO 31000: 2009—The new international standard on risk management. Risk analysis, 30(6), pp.887-892.

Li, W., 2014. Risk assessment of power systems: models, methods, and applications. John Wiley & Sons.

McIvor, A. and Johnston, R., 2016. Miners’ lung: a history of dust disease in British coal mining. Routledge.

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