Emily, Arron, Stephen and Ben Dealing with Risk Avoid Reduce Transfer Keep http://www.ioshroutefinder.co.uk/PDF/Dealing%20with%20risk.pdf Evaluating Risk Evaluating Risk Avoid the Risk Avoiding Risk Example would be not climbing or working on access network when lightning is in locality Deciding not to travel if weather conditions are too adverse Reduce Reducing is one method of dealing with risks. Risk reduction or "optimisation" involves reducing the severity of the loss or the likelihood of the loss from occurring. Reducing The Risk There are various ways in which risks can be reduced. The best way to minimise risks is to carry out comprehensive research of the subject, for example economic, consumer and product research. Also – Risks can be reduced by careful screening of customers and by providing a proper training and development programme Example of Risk Reduction Outsourcing could be an example of risk reduction if the outsourcer can demonstrate higher capability at managing or reducing risks. Foe example, a company may outsource a large company issue such as its software development needs to another company, while handling the business management itself. This way, the company can concentrate more on business development without having to worry as much about the manufacturing managing the development team. Therefore reducing the risk of mistakes being made. TRANSFER THE RISK Shifting the responsibility or burden for disaster loss to another party through legislation, contract, insurance or other means INSURANCE IS THE MAIN WAY OF TRANSFERING RISK CONTRACTING IS ANOTHER WAY OF TRANSFERRING RISK RISK TRANSFER INSURANCE • Many companies will have different types of insurance to protect from risk • Traditional insurance products covering natural hazards are written on what is often termed an “indemnity” basis, where the policyholder insures a defined property, economic activity or other entity, such as a building or a business, against specific hazards such as earthquake, wind or flood. In the event of the insured item being lost or damaged as a result of a covered hazard, the policyholder is compensated for their financial loss. Therefore, insurers pay claims based on actual losses. RISK TRANSFER INSURANCE Types of Insurance: Vehicle Insurance Property Insurance Health Insurance Life Insurance Public Liability Insurance Crop Insurance • Environmental Insurance • Marine Insurance • Aviation Insurance • Livestock Insurance Keeping Risk The last approach is to accept the risk, which means the company understands the level of risk and the potential cost of damage, and decides to just live with it without implementing any countermeasures. Many companies will accept risk when the cost/benefit ratio indicates that the cost of the countermeasure outweighs the potential loss value. Here we compare the differing approaches of two car manufacturers: “Toyota has announced the recall of vehicles in the US, Europe and China over concerns about accelerator pedals getting stuck on floor mats. The firm has announced plans to recall 1.1 million more cars in the US a day after saying it was suspending sales of eight popular US models.” (BBC news) Peugeot 406 “Using the remote to lock the car does not always lock the boot, leaving items inside vulnerable to theft (per BBC Watchdog 10-9-2002). Speedometer failure of 2.1TD is common” (honestjohn.co.uk) Both companies have looked at the defect, evaluated the risk and weighed up losses due to compensation/legal action VS cost of recall and amendment. Peugeot has decided that accepting the risk allows them to protect their profits.