Inherent and residual risks

Were you aware of how risky it is for you to come to work? Since you woke up this morning, you could have slipped in the shower, in your driveway or off the road. It’s a wonder you got here in one piece!

Inherently, these are all risky events, but thankfully, you have put appropriate controls in place to lessen – or mitigate – these risks.

Although these inherent risks are high, the residual risks of getting to work are low: you have a rubber mat in your bathtub to keep you from slipping; you shovel your driveway in winter to prevent ice from forming; and, you make sure your tire pressure is correct and there is enough tread.

All these little things you do are controls for mitigating inherent risks that make the residual risks acceptable. Although many of us don’t consciously think about risk in these terms, many of the processes we perform in our lives are controls against some inherent risk. However, even with these controls, you can still slip in the shower, the driveway or off the road. There is always some element of residual risk.

Take a moment to think of three processes you perform at your company and imagine what it would be like if no one performed them? Would your company be exposed to more residual risk? Are these your key risks?

Congratulations. You have just identified your inherent risks, controls and residual risks.

Risk management is ongoing: you have to continuously monitor controls using different sorts of measurable indicators:
· Is the rubber mat on the bathtub floor? Yes or no?
· How many centimeters of snow will fall before someone has to shovel the driveway?
· Are tires rotated every 10000 km or is there 2/32” remaining on the tread?

How do you measure your controls and your residual risks at your company? How would you know when your controls are no longer working?

Each of us must anticipate events that have not occurred in addition to simply managing those that have already happened.