ARM 55 Segment A Assignment 1

Change Analysis

It asks a series of "what if" questions and projects the consequences for each of the changes and for all feasible combinations of change.

One step in the enterprise-wide risk management process entails investigating risks to make decisions regarding whether risk treatment is needed and which techniques should be used. This step is

Risk Analysis

Strategy Analysis

Risk assessment can also be conducted as part of an organization's strategic planning process, which sets the organization's overall vision, mission, and goals. At the corporate level, this planning is long range and spans a three- to five-year period. It is important to identify, analyze, and evaluate the potential risks related to the organization's strategy. Example is SWOT Analysis.

5 Whys

the problem is stated first, and then the root cause is identified by continuing to ask why (often five times, although it may be less or more than five). The 5 Whys approach is often used in conjunction with a fishbone diagram to generate causes that contribute to the problem being considered.

Questionnaires and Checklists

they do not provide quantitative results and they may not identify all risks. This technique is used as a starting point because its not complex.

System Safety Features

Components, purpose, environment, life cycle.

Risk Management Life Cycle

Conceptual, Engineering, production, operational, disposal.

Maxwell Company has just invested a large sum in new, highly-sophisticated computer equipment and building renovations. Maxwell arranged to lease identical equipment at another location so that it could use the equipment in the event of a disaster at its location. Maxwell's lease of identical equipment at another location is an example of

Duplication

FMEA

Failure Mode and Effects Analysis. Is a team approach that examines the components within a system or process to identify possible modes of failure and how each affects the system or processes. This technique can also analyze the probability and potential severity of failures. FMEA can be used to improve processes at the design stage and to identify the effect of human error within the system.

FTA

Fault Tree Analysis. identifies a specific event, referred to as the top event, and then analyzes factors that contribute to it. The construction of the fault tree includes symbols that graphically represent the logical progression of causal factors from the top event. FTA provides a means to systematically examine problems.

HAZOP

Hazard and Operability Study. Time consuming process for complex problems. It uses a team of specialists from different operational areas to study a process or procedure and examine how failures may result in a hazard. An important feature is the use of guide words that are appropriate for the process under consideration. HAZOP is often used in manufacturing and processing operations to examine the process and identify potential hazards that could result in direct physical damage, injury to employees, or other failures.

JSA

Job Safety Analysis. Each job (activity or operation) is broken down into individual sequential steps. Hazards associated with each step are identified, controls are defined, and responsibility for implementing each is assigned (provided that the added benefit of the safety procedure outweighs its costs). JSA applies best to repetitive human tasks performed in an environment sufficiently stable to allow most hazards to be foreseen.

A risk control technique that reduces the frequency of a particular loss is

Loss prevention

Elliott Industries has just invested a large sum in new, highly-sophisticated computer equipment and building renovations. The building renovations created an airtight, oxygen-free, vacuum-sealed room to house the expensive equipment. For fire losses initiating in that room, the airtight, oxygen-free, vacuum-sealed room is an example of

Loss prevention

One risk analysis approach compares the current state to some future desired state. A technique is commonly used to examine how the current environment may be influenced by emerging developments. With this approach, a team considers changes or trends, and develops various outcomes based upon the changes or trends. Based on the projected outcomes, risks can be identified, analyzed, and evaluated. This technique is called

Scenario Analysis

TOR Approach

Technique of Operations Review Approach. which focuses on ineffective management.

Fishbone diagram

With a fishbone diagram, the effect or problem being analyzed, such as an increase in a particular type of loss, is the starting point for analysis. From there, various causes are identified on the diagram, which resembles a fish skeleton, and further examined to isolate a root cause.

The Delphi technique

brainstorming that relies on a panel of experts who receive questionnaires. Disadvantage is it is time consuming, but it address issues of moderate complexity and produces qualitative data.

Diversification closely resembles separation but is more commonly applied to

business risk than risks resulting in accidental losses.

Separation and duplication risk control techniques both

increase the frequency of losses

Monte Carlo Simulation

is a future states analysis that uses random variables, such as gross domestic product and competitor price levels, to simulate a range of outcomes—for example, levels of product demand. It is based on a random sampling of the variables. This technique is used to evaluate risks arising from a broad scope of situations. The computer model samples the random variables hundreds or thousands of times to produce a distribution of various outcomes. Based on several risk assessment decisions, the Monte Carlo technique uses statistical analysis to calculate possible outcomes and the probability of each.

Scenario Analysis

is a future states analysis used to examine how the current environment may be influenced by emerging developments, such as new technology or new competitors in the market. Using this approach, a team forms and considers changes or major trends; then it develops various scenarios and possible outcomes related to these changes. Based on these outcomes, the team can identify, analyze, and evaluate risks

Components of System Safety

physical elements & energy sources

Hazard Risk

risk that arises from property, liability, or personnel-related loss exposures