What Is A Risk Assessment? 5 Steps To Making One Work For Your Needs
No business can avoid risk entirely. Yet, many businesses inadvertently leave themselves exposed to avoidable risks.
One way your business can dodge these avoidable risks is through a risk assessment process.
Not familiar with the process? Keep reading for a quick overview and five steps you can employ in your business.
What Is Risk Assessment?
In basic terms, risk assessment is a process businesses use for pinpointing and mitigating possible risks in the business. These hazards might affect employees, customers, or the business at large depending on the assessment focus.
Businesses can use a variety of risk assessment tools, such as:
- A SWOT analysis
- Historical data analysis
- Risk analysis software packages
Now let’s move on to the general steps involved.
The first step in the risk assessment process is the identification of potential risks. Mind you, this isn’t hazards. Anything can prove a hazard, but a risk refers to the likelihood that hazard will cause harm.
So, you must examine the business for things that are more likely to cause harm.
Next, you must determine who the risk threatens and how the risk might occur. Here is one risk assessment example for this step.
Your company houses toxic material in a storage tank nearing the end of its working life. There is a higher risk of the older tank failing. In this step, you determine the tank might leak and could potentially harm employees and anyone living nearby.
In the evaluation step, you do your best to calculate the likelihood of the risk occurring. So, how likely is the storage tank failure and how soon will it likely fail. From that, you establish a set of precaution steps or control methods.
For example, you might decide that you should hire an expert to examine the tank. When you get the expert’s recommendation, you can make informed decisions.
In the implementation step, you follow through on the precaution or control steps you set out in the evaluation step. In the storage tank example, you would hire the expert and get their recommendations. From there, you might order a new tank immediately or schedule a new tank a year or two down the road.
For a recurring or more nebulous risk, you do periodic reviews of your assessment and precaution or control steps. If necessary, you implement new steps.
Do you prefer keeping safety assessments in-house? You can get employees trained on risk assessment through third-party organizations, such as safetyfocus.assp.org.
Adapt the Steps for Your Business
Every business should tailor its risk assessment to its needs. A chemical company, for example, needs an analysis focused on physical risks to the employees and facilities. A one-woman bakery will need a risk assessment based primarily on customer safety and equipment failure.
If you stay tightly focused on things most likely to go wrong for your business, you avoid wasted time and fruitless concerns.
Looking for more tips and advice for your business? Check out our Finance & Business section on this website.