Which is most commonly used risk assessment tool?

In work and in life, success is often the result of hard work and persistence rather than genius or inborn talent. And while some people are naturals when it comes to crunching numbers, others know you don’t have to have all the answers—you just have to know where to find them.

In quality management, making the right choice comes down to having the right tools at hand. In this post, we’ll look at 4 critical risk assessment tools all quality professionals should have in their toolbox.

1. Risk Matrix

The risk matrix is like your hammer or your screwdriver—it’s the tool you’ll come back to again and again in a variety of circumstances. One of the biggest benefits of using a risk matrix is that it lets you put a quantitative risk value on a hazard, which can then be filtered through company policy on how different levels of risk should be handled.

How a Risk Matrix Works: Risk is defined as probability multiplied by potential impact. A risk matrix breaks these out into separate scales and assigns numeric values to each level of probability and impact. This allows you to chart the values on a matrix and calculate the risk for each combination of values.

On a color-coded risk matrix, the hazard will fall into one of three categories: low (acceptable) risk, high (unacceptable) risk and moderate risk. This lets you see where additional controls are required to reduce risk to acceptable levels, although it requires management to determine ahead of time what precise level of risk in the moderate region is unacceptable.

2. Decision Tree

A decision tree is a less frequently used risk assessment tool, but it can still come in handy. It’s particularly useful for understanding how to apply policies or choosing between different modes of action.

How a Decision Tree Works: A decision tree presents a series of questions or choices that branch out into a variety of outcomes. For example, quality professionals in the food industry might use a decision tree to determine when a hazard requires a Critical Control Point (CCP). You can also use statistics to inform a decision tree to figure out, for example, when it’s safe to release a new product.

3. Failure Modes and Effects Analysis (FMEA)

Failure Modes and Effects Analysis (FMEA) outlines all the ways a design, process or product can fail.

How FMEA Works: an FMEA chart places the process step or design in question on individual rows, with vertical columns allowing you to map out:

• Each potential failure and its cause
• The effect on higher levels in the process, assembly or system
• Existing controls and detection methods
• Any required actions and associated details

4. Bowtie Model

The bowtie model is used to mitigate the risk associated with rare, high-impact events. It was originally used by high-risk industries like chemicals and oil and gas, but today the bowtie model is spreading to other industries because companies see how helpful it is for visualizing a complex risk environment.

How Bowtie Risk Assessment Works: The center of the bowtie diagram is the hazard or loss of control event under evaluation. On the left side are preventive controls, and on the right side are recovery controls that would mitigate the impact if it did happen.

One final note—while risk assessment is a critical first step in reducing risk, the truth is it does not equal risk management. Many companies mistakenly think they are one and the same, but in reality risk assessment is just one part of a continuous closed-loop process based on hazard identification, risk assessment, control implementation and continuous monitoring.

What are Risk Assessment Tools?

Risk assessment tools, sometimes called “risk assessment techniques,” are procedures or frameworks that can be used in the process of assessing and managing risks. There are many ways to assess risk, making risk assessment tools flexible and easy to use for a variety of jobs, industries, and needs.

There are four commonly used risk assessment tools in different businesses. All of them are used often and are easily applicable to different situations. These tools are:

1. Risk matrix
2. Failure Mode and Effects Analysis (FMEA)
3. Decision Tree
4. Bowtie Model

Risk Matrix

A risk matrix is a visual representation of risks laid out in a diagram or a table, hence its alternate name as a risk diagram. Here, risks are divided and sorted based on their probability of happening and their effects or impact. A risk matrix is often used to help prioritize which risk to address first, what safety measures and risk mitigation plans to take, and how a certain task should be done. Risk matrices can come in any size and number of columns and rows, depending on the project and risks being discussed. 

FMEA

The Failure Mode and Effects Analysis (FMEA) risk assessment tool was first discovered in the 1940s by the US military to identify all possible issues or failures in a design, process, product, and service. This tool is often used during a product or service’s design or proposal stage to actively study possible risks and discover their effects. FMEA has two parts to it: 

• Failure Modes: the failures, problems, and issues that occur
• Effects Analysis: the analysis of the failures’ effects 

Decision Tree

Risk Assessment Tool: Decision Tree

The decision tree risk assessment tool works by providing project managers a template to calculate and visualize the values of different results and the likelihood of achieving them. In some cases, a decision tree is also often used to help calculate the value of a project, product, or service. 

To use this tool, one starts with one element, product, or service they want to evaluate, and then creates different branches from it with different goals. When carried out, the final product looks like a flowchart similar to a tree with different branches, hence the name. 

Bowtie Model

Risk Assessment Tool: Bowtie Model

The Bowtie Model risk assessment tool aims to show the causal links between different sources of risks and their consequences. The left side of the diagram shows what causes the risk, the right shows their potential outcomes, and then both sides meet in the middle with a single risk called “Event.” The left and right sides of the Event are larger and wider as many sources may lead to different consequences, but still be centered around one risk. When drawn out, the model starts to look like a bowtie. 

Uses

Risk assessment tools are an essential part of performing risk assessments and risk management tasks. Not only do they make risk assessments easier, but they also help put different risks into perspective and help create contingency plans better. 

Some things risk assessments tools can help with are:

• Creating and spreading awareness on different hazards and risks
• Identifying who are most at risk of encountering or suffering from certain risks
• Determining what control measures and programs are required for which risks and what need to changed in existing rules
• Preventing and mitigating injuries, fatalities, and illnesses 
• Meeting legal requirements on certain industry-specific tasks where applicable

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