Risk assessments are important as they are used to strategize about approaches to risk, leading to all sorts of important decisions.
For example, when a government publicizes a competent risk assessment, it will help explain a lot about the decisions it is making.
Even in cases where a government does something which is politically unpopular, but consistent with the findings of a well-done risk assessment, it will help explain why what the government is doing makes sense.
By contrast, if a government does something which contradicts a competent risk assessment, there will usually be direct evidence that it is acting against the public interest.
But it isn’t just governments that can use risk assessments, everyone can.
Here is a short guide on how to do a professional risk assessment aimed at reducing risk in a disaster, useful both if one is doing the assessment or determining whether someone else’s risk assessment is accurate or flawed.
In the case of government, flawed risk assessments will usually result in a waste of taxpayer dollars.
Virtually all competent risk assessments of this type include a “risk matrix” which is the main deliverable contained in such a document.
This risk matrix is a graph with two sets of rows and columns.
Typically, one side represents the “likelihood” of something bad occurring, the other the effects of that thing occurring, referred to as the “consequence.”
If likelihood is measured on a scale of 1 to 5 then each number needs to be defined.
Simply using terms such as “very low,” “low,” “medium,” “high” and “very high” is not sufficient and is the most common mistake with doing risk assessments.
The problem in the definitions cited above is that they are subjective and imprecise.
The data input using such vague definitions will inevitably be misleading, resulting in bad decision-making, with the result that bad things will happen.
A common and more accurate way of defining likelihood is to use numbers, which define breakpoints.
For example, a “5” could be something that typically happens once a week; “4”once a month; “3”, once a year; “2” once a decade and “1” once a century.
Normally the breakpoints are even more precise than in this quick example.
The same thing is true for consequences. If the scale is 1 to 5, then what does each number mean?
For example, are the consequences injuries and/or lives lost, or alternatively, financial impact or reputational risk?
For a family doing a risk assessment focusing on injuries and safety in the home, a “1” could be anything that doesn’t require medical attention.
By contrast a “5” could be something that kills all or almost all members of the family.
In this context, think about something bad that could happen — a fire, flood, terrorist attack, explosion, etc.
Now consider how often that thing is likely to occur and attach it to a particular number.
Then consider how severe the impact of that thing happening will be and assign it to the appropriate number on the scale.
Such risks can now be plotted on a chart for a wide variety of possible occurrences, leading to a completed risk matrix.
This provides a visual representation of how a person, family or organization views different risks and helps put them into context.
Doing this basic exercise even once will help an individual, family or business be significantly more prepared to assess and deal with risk, and will often put them ahead of even some emergency preparedness departments.
— Alex Vezina is the CEO of Prepared Canada Corp, teaches Disaster and Emergency Management at York University and is the author of Continuity 101. He can be reached at [email protected].