Techniques for Cost Effective Risk Reduction

Techniques for Cost Effective Risk Reduction
Trammell, S.R, P.E., CSP, CHMM and Davis, B.J., P.E.;

All businesses have many independent, often competing interests, from across the enterprise, clamoring for risk reduction funding. In the environmental, health and safety (EHS) realm, such external entities as fire and building authorities, loss prevention insurers, U.S. Occupational Safety and Health Administration (OSHA) and U.S. Environmental Protection Agency (EPA) and such internal entities as Facilities, Security, Environmental, Health Resources and Safety Departments, routinely provide recommendations or requirements for business interruption, system reliability and quality, environmental protection and personnel safety risk reduction. Rational management of these risks within limited annual budgets requires difficult to quantify value judgments. Obviously, mitigating every risk regardless of cost is both impractical and essentially impossible, since the business will neither have sufficient resources to accurately quantify every credible risk, nor have the needed capital to implement all of the determined corrective actions. This discussion will focus on the issue of competing risks, and provide insight into the “relative risk reduction” identification and prioritization technique that may assist with optimized, continual EHS risk reduction. Although this paper is not intended to be a definitive primer on risk prioritization, the authors are hopeful that it will provide some insight, for risk managers who struggle with resource prioritization, and stimulate debate, on relevant techniques such that methodology improvements can be realized.