In other words, risk management involves minimizing potential risks before they occur throughout the life of a project or a product. And it’s not a one-time process, it involves a continuous approach to anticipating and averting an engineering risk so that a project isn’t adversely affected.
The definitions, goals, and methods of risk management vary in the context of security, engineering, project management, Financial portfolios, public health, and safety, or industrial processes.
To make things less complicated, let’s go over exactly how a risk management process works:
Risk Management Process
- Risk identification
- Risk analysis
- Risk mitigation
- Making a plan
- Risk monitoring
The first step in the engineering risk management process is risk identification. The aim of this process is to obviously identify potential and or possible risks to a product or project. This is done by examining the projects, processes as well as requirements to identify and document those risks.
Some Industries end companies established risk checklists based on experience from previous projects. These checklists are very useful to the project team and project manager in determining the risks on the checklist and expanding the team’s thinking. Past experiences can be very valuable resources and identifying possible risks on projects.
Another method in identifying potential risks involves identifying the sources of the risks by category. Some potential risk categories include:
Once the risks have been identified, the next step in the process is engineering risk analysis. This involves systematically evaluating each of the risks that have been identified and approved in order to estimate the chances of occurrence and consequences of the occurrence.
Measuring the risks can either be simple like when it concerns the value of a lost building, or even difficult or impossible like when it comes to the probability of an unlikely event that would occur in the future.
There is no best approach for a certain risk category. Risk analysis approaches are sometimes lumped into quantitative and qualitative methods. There are some risk events that are more likely to occur than others, and the cost of each risk varies greatly.
That’s why it’s important to make the best-educated guess as possible so that proper implementation of the risk management plan can be prioritized.
To learn more about how you can make a proper plan to avoid injuries and other adverse impacts, click here.
Now that the risk has been identified and analyzed, the company constructs a risk mitigation strategy, which falls into four of the following main categories:
This means making another type of strategy with a high chance of success but I don’t much deeper cost. This process usually involves using existing technologies other than new ones, even if the new methods may prove to have better results and lower costs. Avoiding might also me preventing risks, but it also means missing out on possible gains as well, such as more profits and low cost.
This is when organizations partner with others to share the responsibility of any risk that may occur. Most companies that work on International projects, reduce legal, labor, political, and other types of risks by making a joint venture with a company within that nation.
This is when a company invests funds to reduce a project’s risks. A project manager could hire an expert to review a project’s technical plans or cost estimate to boost confidence in the plan as well as reduce the likelihood of the risk occurring.
This means that the risks involved with a project are shifted to another party. One example of a risk-transferring method is by purchasing insurance on particular items.
Making A Plan
Now comes the part where you make a plan and choose the most suitable countermeasures or controls to reduce the severity of each risk. This includes having plans developed for high, medium, and low-level risks. In other words, you and your team need to develop a contingency plan when a potential risk is likely to occur and could very well impede the chances of success for that particular project or goal. For example, the risk of being struck by truck drivers can be averted by taking the train to transport essential equipment for the project.
Lastly, there is risk monitoring which can also be known as engineering risk assessment. This helps us evaluate a risk handling activity’s effectiveness against established metrics and provide us with feedback on other risk management process steps. Monitoring may also provide us with the means to update our risk-mitigating plans, where we can develop additional mitigating strategies and preventive measures.