The Concepts of Risk, Incidents, and Accidents

Probability and frequency of loss events are only half of the risk picture. The severity of the loss event must also be considered. Severity refers to the magnitude of the loss in a given period of time. When used as part of the risk assessment tool in system safety. 

All companies face risk and the resultant potential losses on a dally basis. They willingly accept risk—even welcome it— with the hopes of gaining financial return. All new marketing and business ventures are examples of businesses taking risks. These are considered speculative loss exposures because they offer the opportunities for gain and loss. Exposures offering potential for loss with no opportunity for gain are referred to as pure loss exposures. Examples of pure loss exposures include those to theft, fire, or accident. 

Determining exposures a company faces is a formidable task, but it must be undertaken. Companies may choose to bring in an outside consultant or depend on the advice of a representative such as a loss control expert from their insurance company. This person will review activities, procedures, and processes to determine where exposures occur. Once exposures are identified, the company selects the critical exposures and prioritizes them in order of importance. Even large corporations have limited resources and must make decisions as to where to commit their resources. While controlling losses may seem to the safety manager like the most important way to utilize resources, the marketing director may feel that a new product introduction should take precedence. The safety function competes with 

By considering both probability and severity, the risk assessment provides the safety practitioner with a much sounder perspective for judging the significance of hazards. Once the risk assessment is performed, it is possible to determine the types of controls that most effectively eliminate the hazards (see figure 5-1). 

A company might try to avoid the loss altogether. If a company is in the business of producing football helmets, it may choose not to market the product due to the potential liability it would face if a wearer of one of its helmets was injured. Instead, it may choose to produce novelty lamps that look like football helmets to limit its liability exposure. 

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