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of injury and loss, we ultimately reduce costs and stay on schedule. Thus, the fundamental goal of
risk management is to enhance the effectiveness of people and equipment by determining how
they are most efficiently to be used.
Figure 15-1: Risk management Goal
15.2 ORM Principles
Four principles govern all actions associated with operational risk management. These
continuously employed principles are applicable before, during and after all tasks and operations,
by individuals at all levels of responsibility.
Maximize
Operational
Capability
Conserve Personnel & Resources
Prevent or Mitigate
Losses
Advance or Optimize
Gain
Evaluate And Minimize
Risks
Evaluate And Maximize
Gain
Identify, Control, & Document
Hazards
Identify, Control, & Document
Opportunities
FAA System Safety Handbook, Chapter 15: Operational Risk Management
December 30, 2000
15 -
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Accept No Unnecessary Risk:
Unnecessary risk is that which carries no commensurate return in terms of benefits or
opportunities. Everything involves risk. The most logical choices for accomplishing an
operation are those that meet all requirements with the minimum acceptable risk. The corollary
to this axiom is “accept necessary risk,” required to successfully complete the operation or task.
Make Risk Decisions at the Appropriate Level:
Anyone can make a risk decision. However, the appropriate decision-maker is the person who can
allocate the resources to reduce or eliminate the risk and implement controls. The decision-maker
must be authorized to accept levels of risk typical of the planned operation (i.e., loss of
operational effectiveness, normal wear and tear on materiel). He should elevate decisions to the
next level in the chain of management upon determining that those controls available to him will
not reduce residual risk to an acceptable level.
Accept Risk When Benefits Outweigh the Costs:
All identified benefits should be compared against all identified costs. Even high-risk endeavors
may be undertaken when there is clear knowledge that the sum of the benefits exceeds the sum of
the costs. Balancing costs and benefits is a subjective process, and ultimately the balance may
have to be arbitrarily determined by the appropriate decision-maker.
Integrate ORM into Planning at all Levels:
Risks are more easily assessed and managed in the planning stages of an operation. The later
changes are made in the process of planning and executing an operation, the more expensive and
time-consuming they will become.
15.3 The ORM Process Summary
The ORM process comprises six steps, each of which is equally important. Figure 15-2 illustrates
the process.
FAA System Safety Handbook, Chapter 15: Operational Risk Management
December 30, 2000
15 -
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1. Identify
the Hazards
2. Assess
the Risks
3. Analyze
Risk Control
Measures
4. Make
Control
Decisions
5. Implement Risk
Controls
6. Supervise
and Review
Figure 15-2: ORM's 6 Process Steps
Step 1: Identify the Hazard
A hazard is defined as any real or potential condition that can cause degradation, injury, illness,
death or damage to or loss of equipment or property. Experience, common sense, and specific
analytical tools help identify risks.
Step 2: Assess the Risk
The assessment step is the application of quantitative and qualitative measures to determine the
level of risk associated with specific hazards. This process defines the probability and severity of
an accident that could result from the hazards based upon the exposure of humans or assets to the
hazards.
Step 3: Analyze Risk Control Measures
Investigate specific strategies and tools that reduce, mitigate, or eliminate the risk. All risks have
three components: probability of occurrence, severity of the hazard, and the exposure of people
and equipment to the risk. Effective control measures reduce or eliminate at least one of these.
The analysis must take into account the overall costs and benefits of remedial actions, providing
alternative choices if possible.
FAA System Safety Handbook, Chapter 15: Operational Risk Management
December 30, 2000
15 -
6
Step 4: Make Control Decisions
Identify the appropriate decision-maker. That decision-maker must choose the best control or
combination of controls, based on the analysis of step 3.
Step 5: Implement Risk Controls
Management must formulate a plan for applying the controls that have been selected, then
provide the time, materials and personnel needed to put these measures in place.
　
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