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The Risky Business Of Risk Assessment

By Amy Radishofski, Features Editor, Manufacturing.netThe government requires that companies provide a safe environment for their employees. But how do you know what hazards your workers may face and how to find the best risk assessor?

Everything in life involves risk. When you’re a kid, your parents do the best they can to protect you. When you grow up, it’s your employer’s turn. Obviously, if you stick a fork in the toaster in the employee kitchen, then that’s your own fault. But should you get pinned under a piece of machinery, that’s another story.

Employers are required to do the best they can to ensure you have the safest environment possible at work. Although it may be nearly impossible to predict every possible accident that could occur, there are some things that employers can do to make the workplace safer.

According to Mat Allen at Marsh Risk Consulting, employers have certain discretionary and non-discretionary reasons for doing a risk assessment.

“The non-discretionary reasons behind risk assessment include federal government or internal governance requirements. In those instances, the assessment is required,” Allen said. “Discretionary reasons include supply chain risk management, or at the request of senior management. A risk assessment is voluntary in those cases.”

“Companies need to be informed on all the main issues regarding risk assessment -- the key one being the fact that it is obligatory to comply with health and safety regulations and to eliminate any hazards likely to adversely affect your employees’ health and safety,” noted Geoff Hooke, Secretary General of the British Safety Industry Federation (BSIF).

Allen also suggests that companies with multiple requirements, such as those in various global locations, for example, focus on the end-product, or what the governments require.

“The end-product defines the process,” Allen said. “Take a look at what you need, then you can go back and figure out what data and steps are required to get you to that point.”

Allen outlines four steps for a risk assessment:
1- Collect data via interviews, surveys, etc.
2- Have a platform for assessment -- filter the data for all levels of management
3- Perform the assessment and determine the dollar impact and the probability of a problem
4- Check to be sure you have adequate controls in place to deal with the potential problem

“The costs will vary according to the nature of the hazards present and the level of the people involved,” Hooke said. “The cost should not be onerous and should be perceived as ‘good value,’ as it should eliminate the disruption of staff being absent -- through sickness, compensation claims, increased insurance premiums -- and contribute to a ‘happy’ workplace culture.”

“When it comes to risk assessment, there is no ‘best practice,’” Allen added. “You can’t control everything, but you can control the amount of money you spend, which determines how thorough an assessment you can do.”

“The controls you have in place are an important factor,” said Blain Heckman with Kaufman, Rossin & Co. “The better your controls, the less work an auditor has to do, and vice versa.”

To get the risk assessment ball rolling, companies can turn to the internet, as it can provide regulatory information and different processes for risk assessment, but Allen cautions companies against implementing any online solutions themselves.

“Companies need people who know the terminology and have experience in the process,” he said. “I’ve seen many companies get it wrong on their first try. Prioritization of risks seems easy, but it can actually be very complicated.”

Once a company gathers some background information, it should hire a risk assessor. Risk assessors have experience in spotting problems before they occur and could make recommendations to improve safety.

“During a risk assessment, an auditor can find material weaknesses or design problems. They would then issue a letter on those problems that would go back to a company’s board of directors, or lenders at a bank,” Heckman said. “That’s a big negative, but fixing the problem is a big positive.”

But what should you look for when you’re picking a risk assessor? Surely, each option has pros and cons.

“This can be difficult. The employer is legally obliged to ensure that ‘competent’ people are engaged in health and safety areas,” Hooke said. “As far as the BSIF is aware, there is no definition of this type of competence and the employer will need to use his judgment and check references.”

When looking for an auditor or risk assessor, companies should look for someone with the necessary industry and technical experience, advises Heckman. He also suggests that companies look at the fees to see if they are appropriate for the size of the job.

“There is some oversight over the auditors,” added Heckman. “Every three years, the auditors are reviewed via a peer review process.”

Although the options and the potential safety issues can be daunting, employers must take any and all necessary steps to ensure workplace safety. If they do not, they face some stiff penalties.

“If you don’t make risk assessment a priority you are breaching the criminal laws,” Hooke said. “Penalties can be anything from improvements notices (i.e., where the problem needs to be corrected by a certain date), to prohibition notices (a specific area to be closed until the problem is corrected) to large fines and/or imprisonment.”

“Risk assessments are continual, fluid, and flexible,” Allen added. “The economy is bad and companies should be doing anything they can to control balance sheet volatility. Anything that interrupts cash flow is a big problem right now for manufacturing companies.”

If you’re feeling overwhelmed or just unsure where to start, help is out there.

Companies can get information by contacting “one of their industry’s key professional institutions, their trade body or employ the services of a safety consultant,” added Hooke.