What is risk management and why is it important? – UK Guide

Posted in Blog on Sep 28, 2022

What is risk management and why is it important? – UK Guide

As an employer, you have a legal duty under the Management of Health and Safety at Work Regulations 1999 to ensure the health and safety of everyone at the workplace from your employees to your visitors. Risk management plays a key role in achieving compliance with the highest workplace health and safety standards, regulations and directives.

The guide below is designed to help you understand the basic risk management principles, procedures and techniques, as well as the benefits of risk management and the use of risk management tools.

What is risk management?

Risk management can be broadly defined as the process of identifying, assessing and controlling risks at the workplace to minimise the possibility of harm. It incorporates risk assessment but goes beyond it by looking at the ways to prevent and manage risks, as well as how to share the risk awareness across the business and how to adapt to new risks.

Risk management can reduce the risk of harm associated with a variety of factors, including:

  • Equipment and how it’s used
  • People who could be at risk and how they could be affected
  • Work practices employed and how safe they are
  • Work environment and potential dangers in it

It’s important to understand that risk management is an on-going activity, which involves constant reassessment and reevaluation of the risk and controls to account for changes in the workplace over time. You should always have a risk management plan in place to reduce significantly the probability of harm.

The importance of risk management

Beyond the physical harm inflicted, an incident at work can have a huge psychological impact on the workers. It could also carry serious reputational and financial repercussions for the business. Implementing a robust risk management plan allows you to pre-empt potential hazards and prevent workplace risks that are under your control.

Effective risk management offers a number of benefits for your organisation including:

  • Providing a safe working environment for everyone
  • Ensuring compliance with industry standards
  • Extending the lifespan of your business assets
  • Increasing employee productivity and engagement
  • Improving your existing processes to ensure safety and efficiency
  • Demonstrating leadership involvement in workforce safety
  • Reducing potential financial losses resulting from accidents

In addition to ensuring legal compliance, when correctly designed and implemented, risk management can help your business improve its efficiency and save you money in the long run.

The risk management process

There are five key steps to any risk management framework: risk identification, risk evaluation, risk control and mitigation, reporting and on-going monitoring. Each of these steps has to be carefully recorded and documented, as you may be required to show proof that adequate measures had been put in place in case of an accident or a claim against your business.

  1. Risk Identification: Identify hazards in the workplace that can potentially lead to harm
  2. Risk Evaluation: Assess the likelihood of harm occurring and the degree of potential harm
  3. Risk Mitigation: Devise, verify and implement control measures to adequately mitigate the risk
  4. Reporting: Document all your findings and keep a record of them for at least 10 years
  5. Monitoring: Monitor all risks and controls and implement any corrective measures when necessary

Implementing digital risk management solutions can increase the efficiency of your entire risk management plan, from the design risk assessment stage to evaluating hazards, verifying controls and storing your documentation for the entire legally required period of 10 years.

Other things to consider

When you design your risk management plan, you should also take into account the circumstances in which the risk management will take place. It is extremely important to identify the roles and responsibilities within the organisation before the risk management process begins to avoid confusion and missed information.

You should also define the risk management tools and techniques and that will be used to better envision how the procedure will be carried out. It also helps you establish if you need external expert help and/or risk management training.

In regards to communications, identifying the key internal and external stakeholders is also something that has to be done at the start of your project. This helps establish good communication and maintain a steady flow of information. Risk awareness can make or break the success of your risk management plan.

Last but not least, have a back-up plan. Nothing is perfect and you can never fully eliminate all risks in the workplace. This is why you should consider what could go wrong, how likely it is to happen, what impact could a sudden incident have on your business and what steps you need to take in case something unexpected happens. Having a response plan in case of an accident and having access to emergency funds are both parts of any good risk management strategy.

Risk management techniques

Once risks have been identified and evaluated, it’s time to explore the different ways to respond to those risks. There are four main risk management techniques:

  • Risk avoidance: If possible, the risk is eliminated by directly removing the cause.
  • Risk reduction: When it’s impossible to eliminate the risk, then steps to control it and reduce the likelihood of it happening should be implemented.
  • Risk retention: Sometimes risks are unavoidable and companies will accept low levels of risk. If that is the case, however, you must also design a plan of response in case the risk leads to an incident at work.
  • Risk transfer: In certain situations, implementing controls for a hazard may transfer the risk to a different person. In this type of situation, you have to establish if the new risk is lesser than the original one and if it’s worth implementing the originally selected control measures.
  • Risk sharing: Risks can be shared with other people within the organisation, as well as external parties to better cope with its potential impact

Whichever risk management technique you use, you should make sure to regularly reevaluate your decision to determine whether the implemented controls still work and whether a better solution is available or not. If improvements can be made, you should be always willing to amend your risk management plan accordingly.

Why use a risk management tool?

Risk management is a complicated process. Luckily, there are risk management software tools that can help you streamline the process and ensure you are ticking all the boxes.

Strategic approach to risk management A good risk management software will be able to give you information about all your assets, risks and the controls in place. This gives you the opportunity to focus your efforts on the areas of your business that need it most and improve the effectiveness of your risk management plan.

Better communication & collaboration Modern risk management tools should be able to provide a digital risk management platform that functions as a shared workspace where everyone in your team collaborates and shares information in real time. This gives you better visibility of everything that’s going on in your business and it allows people across the organisation to contribute.

Record keeping made easy According to the UK industry standards, you are required to keep a record of all risk assessments and all verified and implemented hazard controls for at least 10 years to be able to prove that you have completed your legal responsibility of care for the health and safety of your workers.

Managed Risk by RiskMach is a multi-user digital platform that allows you to do all of the above, plus it gives you all the tools you need to complete the Plan-Do-Check-Act (PDCA) cycle, ensuring compliance with all relevant OH&S legislation, standards and directives, including ISO 45001.

Other risk management questions

After having discussed all major talking points regarding risk management, it’s time to take a look at the other relevant questions you may have.

What is risk management training? Risk management training is designed to introduce team members of all levels of expertise to the concepts and mechanisms of risk management. Ensuring suitable risk management awareness is a crucial step in the path to compliance.

Why is it important to take a balanced approach to risk management? You will need to have a bespoke risk management approach for each specific project to determine the relevant processes, tools and techniques, as well as the roles and responsibilities within the team. Having a balanced risk management approach contributes to the higher efficiency and better quality of the overall risk management procedure.

What is the difference between risk management and risk assessment? Risk assessment is only a part of the risk management process. It looks at the identification and assessment of risk but it’s a one-time activity that should be repeated regularly, whereas risk management is a constant, ongoing process that also includes sharing information, adapting to change and constant improvement of the implemented risk mitigation tactics.

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