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Assessment and Management of Risks

Risk can be defined as the unexpected happening in uncertain events. Risk can also be described as a combination of the likelihood of a hazard occurring and the severity of the hazard. One is never certain that risk is going to happen and so the risk is un-foretold and uncertain. The risk may be financial, physical, or health-related. Risk assessment involves the determination of the quantitative and qualitative value of a risk; quantitative involves the calculation of the magnitude of the potential loss and the probability of the loss to occur. This can be calculated by first calculating the single loss expectancy (SLE) of an asset (loss of value of an asset due to a single incident), then the annualized rate of occurrence (ALO) of the single incident, which is then used to calculate annualized loss expectancy (ALE= SLE*ALO) – which explains how much an organization is likely to lose from an asset due to the single incident (risk) (Lingard H, & Rowlinson, 2005, p. 45). Assessment is a function of three variables which include; Probability of a threat occurring, probability of any victims, and potential impact of the consequences.

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The major objective is to determine the measures to be used to comply with legislation hence reducing the level of work-related injuries and sicknesses. This helps to comply with the Health and Safety at Work Act of 1974. The assessment has to cover all those who may be at risk (Hughes, Phil, and Ferrett, 2006, p. 75). The cover of the risk must include all direct costs (Directly related to the accident) and indirect costs (those not directly related to the risk). General categories of accidents in the construction industry include: – Contact with moving machinery or material being machined, being struck by moving, flying or falling objects, being hit by vehicles, being struck by anything fixed or stationary, injuries during handling, lifting, or carrying accidental slips, tripping and fall on the same level, falling from high heights, trapped by something collapsing, drowning, harmful substances exposure or contact, fires, explosions, electricity accidents, animal injuries and physical assault by a person. Health risks are categorized into four which may be acute or chronic including Chemical, biological, physical, psychological (Hughes et. al, 2006, p. 72).

Risk management is the identification, assessment, and prioritization of the hazard followed by the coordinated and economic use of resources to minimize, monitor, and control the probability and/or impact of the risk. Managing risk as an individual who is to incur the risk is difficult hence the need to transfer the risk to another party, avoiding the risk of accepting the consequences of the risk in totality or partly. There is only one methodology in managing a risk, where the following order is followed: Identifying the risk and planning about the risk; mapping and defining a framework; developing analysis and Monitoring (Trenter, 2001, p.210).

The management process has various principles which include creating value, be integral to the organizational and the decision making process, systematic and structured, based on the best available information, be considerate of human factors, transparent and all-inclusive, dynamic iterative and flexible and be subject to change or continuous improvement and enhancement.

Without a proper management approach to risk, the organization or individual will at all times be left at a loss whenever the risk occurs. The best risk management decision is where one is left in the same position where he/she was before the risk occurred. After the risk has been assessed, the management can make decisions to manage the risk which may involve; avoidance, reduction, transfer, or retention of the risk. All these are at the disposal of the management team (Hughes et. al, 2006, p. 70).

Risk strategy sets out the attitude of the organization towards the risk. It defines the structure of managing and owning the risk, specifying the risk consideration in planning and the operational cost. The strategy must also have structures for monitoring, reviewing, and assurance of risk management.

Every organization has a legal obligation to have a health and safety management plan and system which must consider legislation specific to construction, for example, “Construction (Design and Management) Regulation 1994, Construction (Health and Safety Welfare) Regulations 1996, Construction (Head Protection) Regulations 1989, Confined Spaces Regulations 1997 and Manual Handling Regulations 1992” (Trenter, 2001, p. 211). Based on the nature of sites, other legislations may be applicable. The Health and Safety at Work Act 1974 consist of four main parts and nine associated schedules: “Part 1:- provision relating to health, safety and welfare at work; part 2- Concerns the employment medical Advisory services; part 3- modifies the law relating to building regulations under the public health act 1936; and part 4- miscellaneous and general provision” (Construction Confederation, 2008 p.3). Part one of the Act aims at three objectives which are securing health safety and welfare at the workplace. Protecting other people from risks arising out of work activities and controlling the keeping and use of explosives, highly flammable and dangerous substances through reviewing relevant statutory provisions.

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Part two of this act re-enacted the Employment Medical Advisory Service Act 1972, which gives the secretary of state responsibility for the service. Medical advisors advise the secretary of state on health matters (Construction Confederation, 2008, p. 10). Part four has minor amendments which were in the following enactments – Radiological Protection Act 1970, Fire Precautions Act 1971, and Companies Act 1967 which have given rise to new regulations (Construction Confederation 2008, p. 10).

The act further has nine schedules related to the four parts. The first schedule deals with existing enactments which are relevant to the statutory provisions, schedule two deals with additional provisions which are constitutional, schedule three deals with matters relating to health and safety regulations, schedule five, six, and seven all relate to part three of the act. Schedule eight deals with transitional provisions in accordance to fire certificates under Factories Act 1961 or Offices, Shops & Railway Premises Act 1963. Schedule nine deals with minor and consequential amendments (Construction Confederation, 2008, p. 11). Legislation in general terms, whether for risk management or otherwise, has had adverse effects on the companies in the UK regardless of its specialization. To the construction industry, it has not been spared from the tedious and legal battles to fulfill registration status. To establish a construction company one has to fulfill endless conditions which scare away the investors and jeopardize the countries constructions sector’s advancements. Companies have to pay enormous fees in terms of insurance which only end up being in the pool of risks, thus wasting away profits of the contractors.

Though the welfare of the workers in the sector is addressed, many insurance policies are passing unpaid due to non-occurrence. Today technology is high-tech and hence contractors must not be forced into paying huge sums of money in form of premiums while all they have to do is reduce or retain the risk with other methods. Let me not be mistaken by scrupulous business people who may take the advantage of the offer but this would work if the government identifies genuine contractors.

Statistics of the HSE survey indicated 1.2 million people working during the last year were ill from their workplace and 551 were new reported cases. 180 workers were killed as at 0.6 per 10000 workers. 246000 reportable injuries occurred, to the workers at a rate of 870 per 100000 workers (Health and Safety Statistics, 2009, p. 2), the number of workdays lost was 29.3 million at a rate of 1.24 days per worker; 24.6million due to work-related illnesses and 4.7 due to injuries at the workplace. In total, offenses prosecuted were 1574 which specifically were1245 by the HSE and ORR, while 329 by the local authorities (health and safety statistics, 2009, p. 2). These figures are shocking and generally, the risk at the workplace especially for the construction industry is high and unavoidable. The industry should seek ways to reduce the health risks without hurting the investors and/or the workers. The blame falls on the government for allowing incompetent players in the industry just because they fulfill legislation requirements, a task force should be set to establish the hazards, the persons at risk, evaluate the level of risk, risk controls, and assessment then monitor and review the risks involved.

Reference

Construction Confederation (2008) House builders health & safety manual, N.C., Construction Industry Pubs.(online). Web.

Health and Safety Statistics. Health and Safety Statistics 2008/09. South Wales. A National Statistics Production. (Online). Web.

Hughes, Phil et. al. (2006) Introduction to health and safety in construction. Edition2. Maryland, Elsevier, (online). Web.

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Lingard, Helen & Rowlinson, Stephen M. (2005) Occupational health and safety in construction project management, England, Taylor & Francis. (Online). Web.

Trenter N.A. (2001) Earthworks: a guide. London, Telford Thomas. (online) Web.

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