RISK EVALUATION

REPORTER: ANGELICA LUZ B. SALVEDIA

BSIE-3A
WHAT IS RISK EVALUATION?

Risk Evaluation is defined as ”Determination of Risk

Management priorities through establishment of
qualitative and/or quantitative relationships between
benefits and associated risk”.
BENEFITS OF A RISK EVALUATION

It helps hazard identification and risk assessments.

Recognize and control hazards in your workplace.
Create awareness among your employees-and use it as a training
tool as well.
Set risk management standards, based on acceptable safe
practices and legal requirements.
RISK Is the risk acceptable?
EVALUATION
STEPS
Principles for establishing a tolerable level of risk
A. Policy
B. Zero risk
C. Weight of evidence
D. Precautionary principle
E. ALARA principle
F. ALOP
G. Reasonable relationship
H. Safety and balancing standards

The Decision
 OPPORTUNITIES FOR GAIN

Acceptability
Unacceptable Risk
Risk Taking
Tolerable Risk
 PRINCIPLES FOR ESTABLISHING ACCEPTABLE
AND TOLERABLE LEVELS OF RISK

 Policy

Some decisions have already been made for the

risk manager by persons higher in the decision-
making hierarchy. These may be the owners of a
company, upper management, Congress, the
president, or other elected officials.
Zero Risk
Banning risky activities has been a
popular approach in years gone by.
Making actions that involve any risk
at all taboo and declaring them
forbidden has been tried in the past
when it was once possible to imagine
zero risk.
Weight of Evidence

In a weight of-evidence approach to

evaluating risk, risk managers assess the
credibility of conflicting evidence about
hazards and risks in a systematic and
objective manner. A formal weight-of-
evidence process may rely on a diverse
group of scientists to examine the
evidence to reach consensus views.
 Precautionary Principle

• The precautionary principle is broadly based on the notion that

human and ecological health are irreplaceable human goods.

• The precautionary principle is controversial and heavily

influenced by culture and uncertainty.

• The precautionary principle is generally considered to be most

appropriate in the early stages of an unfolding risk problem,
when the potential for serious or irreversible health
consequences is great, or when the likelihood of occurrence or
magnitude of consequence is highly uncertain.

• The precautionary principle can be invoked for decision making

when uncertainties are large or intractable.
ALARA Principle

ALARA is an acronym for As Low As

Reasonably Achievable. Technology and cost
present two realistic constraints on what it is
possible to achieve in terms of risk
reduction. If a risk is not yet as low as is
reasonably achievable, it is not acceptable
according to this principle. One popular
criterion for establishing a tolerable level of
risk is to get risk as low as we are capable of
making it.

Appropriate Level of Protection
An appropriate level of protection (ALOP) defines or is defined by the risk
society is willing to tolerate.
The significant contribution of this concept is that it flips the focus from
risk to protection, where we might think of protection as akin to different
degrees of safety. The factors used to determine an ALOP typically include:
•Technical feasibility of prevention and control options
•Risks that may arise from risk management interventions • Magnitude of
benefits of a risky activity and the availability of substitute activities
•Cost of prevention and control versus effectiveness of risk reduction
•Public risk reduction preferences, that is, public values
•Distribution of risks and benefits
Reasonable Relationship

This principle suggests that costs of risk management

should bear “a reasonable relationship” to the

corresponding reductions in risks. It is not a benefit-

cost analysis but it is an attempt to balance

nonmonetary benefits (i.e., risk management

outputs and outcomes) and the monetary costs of

achieving them. Cost effectiveness and incremental

cost analysis are often used as the basis for

determining the reasonableness of this relationship.

 Safety and Balancing Standards

Safety maintains deep roots within the risk analysis

paradigm. A great many safety standards have been used to
establish the tolerable level of risk. Safety standards
encompass a bundle of standard-setting methods that rely
ultimately on some degree of subjective judgment.
 THE DECISION
If the assessed risk is judged by any one of these or any other method to
be acceptable, there is little more for the risk manager to do. However, an
unacceptable risk must be managed. The ideal would be to manage it to
an acceptable level, and when that cannot be done it should be managed
to a tolerable level. There are six broad strategies for managing risk.
These are:
1. Risk taking
2. Risk avoidance
3. Reduce the probability of the risk event (prevent) and increase the
probability of a potential gain (enhance)
4. Reduce the consequence of the risk event (mitigate) and increase the
consequence of a potential gain (intensify)
5. Risk pooling and sharing 6. Retain the risk.
Thank you for watching and
Godbless!