Risk Assessment in Relation to Environmental Management - Essay Example

Running Head: Risk Assessment in relation to environmental management Risk Assessment in Relation to Environmental Management Institution’s Name Critically assess the (tool) Risk Assessment in relation to environmental management Environmental management systems have a great in the functioning оf organizations. In about last 15 to 20 years, a completely different approach to dealing with environmental conditions has been evolving, namely the development оf environmental management systems. (Sheldon 2002) Under this new approach, environmental management is seen as an essential part оf overall business and strategic management. Sustainable development and environmentally friendly systems and products are emphasized. It is proactive rather than reactive. The orientation is positive rather than negative. Environmental management systems are seen as adding value to products and services, creating a competitive advantage, improving community image, reducing costs, and increasing the bottom line. A risk management approach, with heavy emphasis placed on prevention, control, and technical systems, can make a positive and effective contribution to environmental management systems. Risk managers can and should be a part оf developing and operating environmental management systems. While risk managers are currently involved in environmental issues, they could be much bigger contributors. Individuals or groups with undisciplined approaches to problem solving typically derive solutions with no real understanding оf the problem. This typically results in solutions that are temporary in nature and end up being costly to the organization. According to Sheldon and Yoxon (2002) an organization cannot manage what it does not measure. Effective employees, managers and leadership in an organization are those who follow logical, systematic approaches in their quest to solve problems and make decisions in the problem solving process. There are numerous tools that are used in the decision-making process, such as brainstorming, backwards planning, incubation, and risk analysis. This paper will focus on providing an analysis оf the decision-making tool called risk analysis and apply it to the world оf mobile computer manufacturers. In order to understand the risk analysis technique, we must define the concept оf risk. We must also clarify the distinction between the concepts оf problem solving and decision-making, two concepts that are frequently confused with one another. Problem solving can be defined as the process оf identifying and correcting a problem. A problem can be defined as the gap between "what is" and "what should be". According to Kiesow (2002), it is in this stage that we define and identify potential solutions for problems. Decision-making is the process оf selecting one solution from alternative solutions that will solve a problem. Thus, decision-making is actually a part оf the problem solving process. Risk analysis is a popular decision making tool used in a multitude оf diverse activities such as insurance underwriting, investment planning, banking, commodities trading, military strategic planning, engineering, environmental studies, and scientific inquiries. It is a technique used to identify possible risks, assess their likelihood and impact, and facilitates the creation оf methods to avoid or reduce these risks. The technique employs risk assessment, risk management, and risk communication into its process. According to Wharton (1992), risk assessment is the articulation оf risk in terms оf their likelihood and seriousness. Risk assessment involves three fundamental processes. The first is the identification оf risks. This produces a list оf risk items that can be evaluated. The second is the analysis оf the risk or risks. This process assesses the probability оf loss and magnitude оf each listed risk. (Welford 1997) The third involves prioritizing the risks in a ranked order. Once the risks have been identified and assessed, risk management techniques and methodologies can be applied to combat the risks identified in the risk assessment. For mobile computer manufacturers, example risks can include, product viability in the marketplace; competition pricing versus the pricing required for the product to be profitable; viability оf the technology used in the product for the duration оf the products lifecycle; and changes in the marketplace. (ORiordan 1999) Risk management, in the opinion оf Wharton (1992), is the course оf dealing with the identified and assessed risks. It is typically implemented in the early stages оf the product lifecycle to combat the risks identified in the risk assessment stage. Computer manufacturers employ risk management techniques in the lifecycle оf a product to deal with the risks identified and evaluated in the risk assessment phase. It is also important to recognize that there are a number оf distinct approaches to risk analysis. However, they are typically categorized into two types, quantitative and qualitative. Quantitative risk analysis is an approach that uses two basic elements – the possibility оf an event and the loss that might happen should it occur. The success оf this approach depends heavily on the reliability and strength оf the probability data. The strength оf this approach is also its weakness. The decisions made with this approach are based on an exhaustive collection оf data. This requires a large amount оf time, money and resources. The data can also become redundant and inaccurate due to such things as the sample size and the time required collecting the data. This approach is rarely used by mobile computing manufacturers due to the costs and time associated with it. Qualitative risk analysis is the more widely used approach. The primary reason for its popularity is that it does not require the collection оf probability data. This approach scientifically examines assets, threats, and vulnerabilities that establish the possibilities оf threats occurring. The approach attempts only to prioritize the various risk elements in subjective terms. This is the approach used by mobile computer manufacturers in the risk analysis оf a product during its lifecycle. In conclusion, risk analysis is an influential decision making tool that is used in a variety оf disciplines. It is a tool used by mobile computer manufacturers to assist them in determining whether or not a product comes to market or when it will be removed from the marketplace. The assessment and management оf risks are evaluated throughout the product lifecycle. A product released or allowed to remain in the marketplace whose risks are not adequately assessed and managed run the risk оf failing in the market place. References Carlow Peter, ed (1998). Handbook оf environmental risk assessment and management. Oxford: Blackwell Science Kiesow, Paul, (2002) “PDCA Cycle: An Approach to Problem Solving" Ceramic Industry (1994): 20. Rpt. in Interpersonal Skills in Organizations. Suzanne de Janasz, Karen O. Dowd and Beth Schneider: New York, NY, McGraw-Hill, p. 396. ORiordan, T (1999) Environmental science for environmental management. (second edition) Harlow: Longman. Sheldon, C. & M. Yoxon. (2002) Installing Environmental Management Systems: A Step by Step Guide, Earthscan Pubns Ltd Welford, R & Gouldson, A (1993) Environmental Management and Business Strategy. Pitman Publishing. 333.70681. Welford, R (1997) Corporate Environmental Management 2: Culture and Organisations Earthscan, London. Wharton F., (1992) "Risk management: basic concepts and general principles," in Risk: Analysis, Assessment and Management. John Wiley & Sons, 1-13 Woolston, H (1993) Environmental Auditing: An Introduction and Practical Guide. British Library. 333.717 ENV (A useful introduction to environmental auditing.) Read More