{"id":1716,"date":"2020-09-18T16:39:33","date_gmt":"2020-09-18T16:39:33","guid":{"rendered":"https:\/\/opentextbc.ca\/introtourism2e\/chapter\/risk-management-process\/"},"modified":"2023-11-20T16:35:43","modified_gmt":"2023-11-20T16:35:43","slug":"risk-management-process","status":"publish","type":"chapter","link":"https:\/\/opentextbc.ca\/introtourism2e\/chapter\/risk-management-process\/","title":{"raw":"11.2 Risk Management Process","rendered":"11.2 Risk Management Process"},"content":{"raw":"There are a variety of risk management models that have been utilized and promoted. Each is generally a variation on the same theme, with each having a slightly different approach to the analysis. You'll find that large operations, government agencies, military, search and rescue all have their own proprietorial processes. Outlined below is the model from Destination Canada for small and medium enterprises. It\u00a0has four stages: risk identification, risk analysis, risk control, and risk treatment (DC, 2003a).\r\n<h1>Risk Identification<\/h1>\r\nThe initial stage of the risk management process is systematically identifying risks facing the organization. This\u00a0step is often referred to as risk assessment.\u00a0An organization can identify risks in the following ways (CTC, 2003a, p. 6):\r\n<ul>\r\n \t<li>On-site inspections and discussions with management and staff<\/li>\r\n \t<li>Review of products, services, processes, and contracts<\/li>\r\n \t<li>Review of historical activities and losses<\/li>\r\n \t<li>Identification of possible risk scenarios<\/li>\r\n<\/ul>\r\nOnce an exhaustive list of the risks is compiled, the next step is to ensure a thorough analysis occurs.\r\n<h1>Risk Analysis<\/h1>\r\nA typical risk analysis compares the probability (frequency) of any risks occurring by the consequence (severity) if they do occur. This can be done either in a qualitative or quantitative manner, with either numerical values or descriptors applied. For example, an analysis of the risk of\u00a0the catastrophic failure of a ski lift at a resort resulting in passengers falling to the ground\u00a0would likely indicate that the <em>probability<\/em> of this incident occurring is low due to historical records of use, and required maintenance for safety. However, the <em>consequence<\/em> would likely be high, considering there could be a large number of passengers involved in a significant fall, resulting in multiple casualties.\r\n\r\nOperators need to respond (<em>through risk control, see section below<\/em>) if the analysis determines any of the following: 1) the probability of the risk occurring is unacceptable; 2) the consequence of the risk occurring is unacceptable; or 3) the combined impact of the probability and consequence is deemed unacceptable (Cloutier, 2000).\r\n\r\n[caption id=\"attachment_1715\" align=\"aligncenter\" width=\"300\"]<img class=\"size-full wp-image-1715\" src=\"https:\/\/opentextbc.ca\/introtourism2e\/wp-content\/uploads\/sites\/315\/2020\/09\/Carabiner.jpg\" alt=\"A carabiner with a twist lock.\" width=\"300\" height=\"225\" \/> Figure 11.4 Technical safety equipment needs to be regularly inspected as part of the risk management process.[\/caption]\r\n<h1>Risk Control<\/h1>\r\nOnce the risks are identified and analyzed, the next step is implementing mitigation strategies for any unacceptable risks. This step is called risk control, and it comprises\u00a0two primary concepts: exposure avoidance and loss reduction.\r\n\r\n[pb_glossary id=\"2635\"]Exposure avoidance[\/pb_glossary] involves any mitigation strategies used to avoid the exposure to the risks. Examples are eliminating particularly hazardous activities or services, avoiding certain areas due to environmental threats, or changing a tour destination due to political unrest.\r\n\r\n[pb_glossary id=\"2765\"]Loss reduction[\/pb_glossary]\u00a0is a different approach; it assumes that you have acknowledged the risk of a particular activity or service, and\u00a0choose to\u00a0continue to offer it, but will take steps to mitigate the severity of damage that may occur (CCTT, 2003a). An example is requiring all participants in a ski lesson to wear helmets; the risk of falling still exists, but you have taken action to reduce the severity of any fall.\r\n<h1>Risk Treatment<\/h1>\r\nFailing the ability to control all risks identified, the next step in the process is risk treatment. This includes the concept of risk transfer and risk retention. [pb_glossary id=\"2901\"]Risk transfer[\/pb_glossary] refers to the transfer of responsibility to another party, either contractually or by insurance. Risk can be transferred through contract either by entering into a contract for service, or by requiring participants to sign a waiver. Risk is transferred through insurance by paying premiums to an insurer, wherein they absorb the financial risk of an incident. [pb_glossary id=\"2883\"]Risk retention[\/pb_glossary] refers to the level of risk that is retained by the company through a conscious decision-making process. Examples of this may include the decision to increase the size of insurance deductible to use, the use of self insurance, or consciously not transferring risks due to an inability to do so (CTC, 2003b).\r\n\r\n[h5p id=\"40\"]\r\n<div class=\"textbox shaded\">\r\n\r\n<strong>Take a Closer Look:\u00a0Emergency Response Plans\/Emergency Action Plans<\/strong>\r\n\r\nPart of a robust risk management process is either an Emergency Response Plan (ERP) or Emergency Action Plan (EAP). These documents are plans designed assist staff in responding to emergency situations. You will find an EAP in virtually every public building in BC. Your classroom most likely has one posted by the exit. The idea behind having such a plan prepared in advance is that it will help staff respond in a consistent, effective manner if an emergency occurs. The scope and nature of the activities dictate what type of plan is required. For more information on specific plans check with accrediting or licensing agencies related to the specific activity.\r\n\r\n<\/div>","rendered":"<p>There are a variety of risk management models that have been utilized and promoted. Each is generally a variation on the same theme, with each having a slightly different approach to the analysis. You&#8217;ll find that large operations, government agencies, military, search and rescue all have their own proprietorial processes. Outlined below is the model from Destination Canada for small and medium enterprises. It\u00a0has four stages: risk identification, risk analysis, risk control, and risk treatment (DC, 2003a).<\/p>\n<h1>Risk Identification<\/h1>\n<p>The initial stage of the risk management process is systematically identifying risks facing the organization. This\u00a0step is often referred to as risk assessment.\u00a0An organization can identify risks in the following ways (CTC, 2003a, p. 6):<\/p>\n<ul>\n<li>On-site inspections and discussions with management and staff<\/li>\n<li>Review of products, services, processes, and contracts<\/li>\n<li>Review of historical activities and losses<\/li>\n<li>Identification of possible risk scenarios<\/li>\n<\/ul>\n<p>Once an exhaustive list of the risks is compiled, the next step is to ensure a thorough analysis occurs.<\/p>\n<h1>Risk Analysis<\/h1>\n<p>A typical risk analysis compares the probability (frequency) of any risks occurring by the consequence (severity) if they do occur. This can be done either in a qualitative or quantitative manner, with either numerical values or descriptors applied. For example, an analysis of the risk of\u00a0the catastrophic failure of a ski lift at a resort resulting in passengers falling to the ground\u00a0would likely indicate that the <em>probability<\/em> of this incident occurring is low due to historical records of use, and required maintenance for safety. However, the <em>consequence<\/em> would likely be high, considering there could be a large number of passengers involved in a significant fall, resulting in multiple casualties.<\/p>\n<p>Operators need to respond (<em>through risk control, see section below<\/em>) if the analysis determines any of the following: 1) the probability of the risk occurring is unacceptable; 2) the consequence of the risk occurring is unacceptable; or 3) the combined impact of the probability and consequence is deemed unacceptable (Cloutier, 2000).<\/p>\n<figure id=\"attachment_1715\" aria-describedby=\"caption-attachment-1715\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1715\" src=\"https:\/\/opentextbc.ca\/introtourism2e\/wp-content\/uploads\/sites\/315\/2020\/09\/Carabiner.jpg\" alt=\"A carabiner with a twist lock.\" width=\"300\" height=\"225\" srcset=\"https:\/\/opentextbc.ca\/introtourism2e\/wp-content\/uploads\/sites\/315\/2020\/09\/Carabiner.jpg 300w, https:\/\/opentextbc.ca\/introtourism2e\/wp-content\/uploads\/sites\/315\/2020\/09\/Carabiner-65x49.jpg 65w, https:\/\/opentextbc.ca\/introtourism2e\/wp-content\/uploads\/sites\/315\/2020\/09\/Carabiner-225x169.jpg 225w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><figcaption id=\"caption-attachment-1715\" class=\"wp-caption-text\">Figure 11.4 Technical safety equipment needs to be regularly inspected as part of the risk management process.<\/figcaption><\/figure>\n<h1>Risk Control<\/h1>\n<p>Once the risks are identified and analyzed, the next step is implementing mitigation strategies for any unacceptable risks. This step is called risk control, and it comprises\u00a0two primary concepts: exposure avoidance and loss reduction.<\/p>\n<p><a class=\"glossary-term\" aria-haspopup=\"dialog\" aria-describedby=\"definition\" href=\"#term_1716_2635\">Exposure avoidance<\/a> involves any mitigation strategies used to avoid the exposure to the risks. Examples are eliminating particularly hazardous activities or services, avoiding certain areas due to environmental threats, or changing a tour destination due to political unrest.<\/p>\n<p><a class=\"glossary-term\" aria-haspopup=\"dialog\" aria-describedby=\"definition\" href=\"#term_1716_2765\">Loss reduction<\/a>\u00a0is a different approach; it assumes that you have acknowledged the risk of a particular activity or service, and\u00a0choose to\u00a0continue to offer it, but will take steps to mitigate the severity of damage that may occur (CCTT, 2003a). An example is requiring all participants in a ski lesson to wear helmets; the risk of falling still exists, but you have taken action to reduce the severity of any fall.<\/p>\n<h1>Risk Treatment<\/h1>\n<p>Failing the ability to control all risks identified, the next step in the process is risk treatment. This includes the concept of risk transfer and risk retention. <a class=\"glossary-term\" aria-haspopup=\"dialog\" aria-describedby=\"definition\" href=\"#term_1716_2901\">Risk transfer<\/a> refers to the transfer of responsibility to another party, either contractually or by insurance. Risk can be transferred through contract either by entering into a contract for service, or by requiring participants to sign a waiver. Risk is transferred through insurance by paying premiums to an insurer, wherein they absorb the financial risk of an incident. <a class=\"glossary-term\" aria-haspopup=\"dialog\" aria-describedby=\"definition\" href=\"#term_1716_2883\">Risk retention<\/a> refers to the level of risk that is retained by the company through a conscious decision-making process. Examples of this may include the decision to increase the size of insurance deductible to use, the use of self insurance, or consciously not transferring risks due to an inability to do so (CTC, 2003b).<\/p>\n<div id=\"h5p-40\">\n<div class=\"h5p-iframe-wrapper\"><iframe id=\"h5p-iframe-40\" class=\"h5p-iframe\" data-content-id=\"40\" style=\"height:1px\" src=\"about:blank\" frameBorder=\"0\" scrolling=\"no\" title=\"Chapter 11: Risk Management Process\"><\/iframe><\/div>\n<\/div>\n<div class=\"textbox shaded\">\n<p><strong>Take a Closer Look:\u00a0Emergency Response Plans\/Emergency Action Plans<\/strong><\/p>\n<p>Part of a robust risk management process is either an Emergency Response Plan (ERP) or Emergency Action Plan (EAP). These documents are plans designed assist staff in responding to emergency situations. You will find an EAP in virtually every public building in BC. Your classroom most likely has one posted by the exit. The idea behind having such a plan prepared in advance is that it will help staff respond in a consistent, effective manner if an emergency occurs. The scope and nature of the activities dictate what type of plan is required. For more information on specific plans check with accrediting or licensing agencies related to the specific activity.<\/p>\n<\/div>\n<div class=\"glossary\"><span class=\"screen-reader-text\" id=\"definition\">definition<\/span><template id=\"term_1716_2635\"><div class=\"glossary__definition\" role=\"dialog\" data-id=\"term_1716_2635\"><div tabindex=\"-1\"><p>A risk control technique that avoids any exposure to that particular risk.<\/p>\n<\/div><button><span aria-hidden=\"true\">&times;<\/span><span class=\"screen-reader-text\">Close definition<\/span><\/button><\/div><\/template><template id=\"term_1716_2765\"><div class=\"glossary__definition\" role=\"dialog\" data-id=\"term_1716_2765\"><div tabindex=\"-1\"><p>A risk control technique that reduces the severity of the impact of the risk should it occur.<\/p>\n<\/div><button><span aria-hidden=\"true\">&times;<\/span><span class=\"screen-reader-text\">Close definition<\/span><\/button><\/div><\/template><template id=\"term_1716_2901\"><div class=\"glossary__definition\" role=\"dialog\" data-id=\"term_1716_2901\"><div tabindex=\"-1\"><p>A risk mitigation strategy where the risk is transferred to a third party through contract or insurance.<\/p>\n<\/div><button><span aria-hidden=\"true\">&times;<\/span><span class=\"screen-reader-text\">Close definition<\/span><\/button><\/div><\/template><template id=\"term_1716_2883\"><div class=\"glossary__definition\" role=\"dialog\" data-id=\"term_1716_2883\"><div tabindex=\"-1\"><p>The level of risk that is retained by the company through a conscious decision-making process.<\/p>\n<\/div><button><span aria-hidden=\"true\">&times;<\/span><span class=\"screen-reader-text\">Close definition<\/span><\/button><\/div><\/template><\/div>","protected":false},"author":90,"menu_order":2,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":"cc-by"},"chapter-type":[],"contributor":[],"license":[52],"class_list":["post-1716","chapter","type-chapter","status-publish","hentry","license-cc-by"],"part":1708,"_links":{"self":[{"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/pressbooks\/v2\/chapters\/1716","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/wp\/v2\/users\/90"}],"version-history":[{"count":4,"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/pressbooks\/v2\/chapters\/1716\/revisions"}],"predecessor-version":[{"id":3158,"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/pressbooks\/v2\/chapters\/1716\/revisions\/3158"}],"part":[{"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/pressbooks\/v2\/parts\/1708"}],"metadata":[{"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/pressbooks\/v2\/chapters\/1716\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/wp\/v2\/media?parent=1716"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/pressbooks\/v2\/chapter-type?post=1716"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/wp\/v2\/contributor?post=1716"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/opentextbc.ca\/introtourism2e\/wp-json\/wp\/v2\/license?post=1716"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}