The purpose of Operational Risk Management (ORM) 

The purpose of Operational Risk Management (ORM) is use the powerful tools that can positively impact our operation if implemented correctly and flexible enough to be used by virtually anyone. Risk management cuts across all functional areas and requires a coordinated effort to fully imbed it throughout the work. We must exploit every opportunity to apply ORM so that we take the risks that are necessary and identify those risks that are not.

The advantages are obvious: training in the proper assessment of risk is one that will optimize its opportunities for success with minimal loss. What makes ORM such an invaluable decision-making tool is that it enhances the operation at all levels while minimizing risks – – all dimensions of risk. ORM adds “rigor” to the traditional way we have done business. Properly applied, ORM directly contributes to preserving capability by reducing risks consistent with other cost, schedule, and operation requirements.

Once ORM becomes an integral part of our day-to-day business, the investment will more than pay for itself. As you assess your integration and sustainment strategy for ORM, one of the key concepts to keep in mind is that it should not become an administrative burden. To be fully effective, ORM must have your unqualified support and be totally integrated into operations and planning at all levels.

ORM is about smart operation accomplishment by proactively managing the risks. I expect commanders and functional program managers to make the integration of ORM into a day-to-day operation priority. The goal is to make risk management a seamless part of the way we make decisions and approach any activity–on or off duty.

ORM CONCEPT:

  1. All are responsible for using ORM.
  2. Risk is inherent in all operations.
  3. Risk can be controlled.

ORM WILL:

  1. Systematically maximize training realism by reducing unnecessary restrictions and limitations.
  2. Expand operational capabilities in virtually all areas.
  3. Significantly enhance overall decision making skills.
  4. Power-down decision making.
  5. Make ORM the leading edge of improved employee-management relations.
  6. Cut losses significantly.

KEY ORM PRINCIPLES:

  1. Accept no unnecessary risks.
  2. Make risk decisions at the appropriate level.
  3. Accept risks when benefits outweigh costs.
  4. Integrate ORM into operations and planning at all levels.
Step 1 – Identify the Hazards
Process:Emphasize hazard ID tools. Adds rigor and early detection.
Output:Significant improvement in the detection of hazards (50%+).
  
  
Step 2 – Assess the Risks
Process:All hazards evaluated for mission or activity impact. Root causes determined and risk levels assigned.
Output:Personnel know the priority risk issues of the organization and of their function.
  
  
Step 3 – Analyze Risk Control Measures
Process:Comprehensive risk control options developed on a worst-first basis.
Output:A full range of cost effective, mission supportive, risk controls for the decision-maker.
  
  
Step 4 – Make Control Decisions
Process:Gets risk decisions to the right person, at the right time, with the right support.
Output:Personnel know their decision-making authority and limitations.
  
  
Step 5 – Implement Risk Controls
Process:Leaders lead, operators involved, accountability known.
Output:Controls approved by decision-maker are implemented.
  
  
Step 6 – Supervise and Review
Process:Measures mission effectiveness and direct indicators of risk.
Output:Real time status. Proactive, not reactive.
Tools:The Operations Analysis The Preliminary Hazard Analysis The“What If”Tool） The Scenario Process Tool The Logic Diagram The Change Analysis The Cause and Effect Tool The Hazard and Operability Tool The Mapping Tool THE Interface Analysis The Mission Protection Tool The Safety Quiz The Next Mishap Assessment THE Mission Mishap Analysis The Interview Tool The Inspection Tool The mishap/incident investigation The job safety analysis The Behavior Observation Tool The Training Realism Assessment, TRA The Opportunity Assessment The Energy Trace and Barrier Analysis, ETBA The Fault Tree Analysis, FTA The Failure Mode and Effect Analysis, FMEA The Multilinear Events Sequencing Tool, MES The Management Oversight And Risk Tree, MORT The Risk Assessment Matrix The “Enhanced” Risk Assessment Matrix MOL COM

ELEMENTS OF THE 5M MODEL:

  1. Man – Selection, Performance, Personal Factors
  2. Media – Climate, Operational, Hygiene
  3. Machine – Design, Maintenance, Logistics, Tech Data
  4. Management – Standards, Procedures, Controls
  5. Mission – The desired output of the system

On duty or off-duty everything we do has some degree of risk which, if not properly managed, may result in injury or fatality. The philosophy of operational risk management (ORM) and applying its management tools throughout the chain of command system have demonstrated successful reduction of mishaps and injuries.

Source: ICMA

Image: Freepik

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