Managing Strategic Risk and Harm of Formaldehyde - Report Example

Managing strategic risk By student’s name Course code +name Professor’s name University name City, state Managing strategic risk Risk Assessment Risk assessment refers to an examination that is done carefully on work and aspects that can harm people, within the company or the surrounding communities. The aim of conducting a risk management task is to ensure or weigh up and deduce whether the right precautions have been taken to prevent any harm to the people. Workers and the community that surrounds the company hold the right to be protected from harm that might occur as a result of the responsible party failure to take control measures that are reasonable enough (Andersen, & Schroder, 2010). Accidents and ill health are likely to affect the chemical company, ruin lives once the out put is lost, insurance cost hikes or the company has to go to court. The chemical company is required legally to asses the risks contained in the work place and come up with a plan on how to curb or control the risks. The following figure shows how the company activates might be a risk to the environment and the surrounding communities. River Tributary According to the information given there is a tributary of a river that passes through the chemical factory. The river or the source of the tributary is a home or a habitat for salmon and other habitats. This indicates that incase the chemicals of the company and in this case Formaldehyde leaks and spills to the tributary all the living creatures in the river would result into immediate death. The water in the river will be deemed not fit for drinking. This affects the human life of the surrounding communities in all perspectives. The communities depend on the salmon in the life as food .Therefore, the risks that the Ure river faces incase the company activates pollutes that river will affect the entire livelihood of both the surrounding communities and the wildlife living in the river. The following pictures tries to bring out the idea of the tributary to river Ure. The manager of the chemical company has a responsibility of coming up with a clear guideline to be followed by all the stakeholders in controlling the risks that might be caused by the company activates either to the river or the environment with the area of its operation (Andersen, & Schroder, 2010). In order to assess the risks in the company the following five steps can be followed. Step 1: To identify the hazards The process of identifying hazards is not a simple task however it’s a culmination of a number of approaches. The first approach is to walk around in the work place and in the surrounding environment and search reasonable for what could be expected to cause harm. The manager can also enquire from employees and representatives in order to have a rough idea and their opinion on the whole issue (Andersen, & Schroder, 2010). This is because they may have heard or noticed something that is not immediate to the manager. Managers can familiarize themselves with the causes, sources of hazards, and how to control them by visiting relevant educative sites. Manufacturing companies especially for chemicals belongs to certain trade unions. As a result, they are able to get vertex helpful guidance which enables them even look back at certain hazards that might have occurred. All these factors are important and act as a guideline to the manager during the process of risk assessment of a company like the one dealing with chemical products. Step 2; Decide who might be harmed and how Hazards are many and in each of them the manager of this chemical company has to have a clear overview on who is likely to get harmed. This approach will enable him or her to come up with the most appropriate way of managing the risk. This does not necessary mean listing each party involved, but is simply indentifying groups who may be working in the store room or passerby during the transportation process of the chemical. For example, the leakage that had happened to one of the storage tanks affected the community leaving near the factory. After identifying each case the next step is to measure how they can be harmed, that is the kind of injury or health disorder that might occur. People with particular disabilities, and the young children might stand a particular risk. This calls in for an extra thought on what would happen if members of the public could be getting harm from the company activities. Step 3; evaluate the risks and decide on precautions The first two process in the risk assessment involved issues of identifying the hazard. Therefore, once the hazard is indentified the question that rises is on how to handle the situation. At this step a company may be facing a lot of critics and wish for it to relocate to another place or may be in court over charges .According to the legislative aspects the manager of the chemical company is required to do everything to make sure that people are protected from harm. It is important to compare the steps adapted in handling the hazard with those that are deemed as good practice. There are a number of sources that are good practices, but the first step in this case, a manager had to compare the practice that the company had adapted with the controls that are in hand and how the whole process is organized. During the risk control process the following steps are important; adapting to fewer risks, for example the company may opt to shift to production of less hazardous chemicals. The other principle to apply in this case is to prevent entrance to the hazardous areas; this can be done by guarding the areas or cautioning people over the risks contained as shown in the following picture. The company may decide to issue protective measures such as clothing footwear among others and provide welfare facilities to the surrounding community. Some welfare facilities may include washing, and first aid facilities. All this is aimed at ensuring that the health and safety of all stakeholders is improved and does not cost a lot where failure to adapt to these measures may result into more accidents taking place. Step 4; Record your findings and implement them After a clear review of the hazards the next step is to put the results of the assessment together and put them into practice in line with the people in the business. Therefore, once the manager writes down the assessment of risk down and shares them with the subordinates a solution is likely to be found for the hazards indentified. For example, in this case there is a recommendation made to the company relocation due to a leakage that occurred, however, the company finds it hard to relocate due to the fact that its has build a life in its area of operation. Step 5; assessment and update This is the final step in the risk assessment process. In this case all the collected data from the four steps of this process are assessed fully and any relevant information is kept for future reference. Updates for the stored information are necessary to keep it in line with the changing working environment. Risk evaluation This refers to the determination of risk management options through the raise of qualitative, as well as, qualitative relationships that are contained between associated risks and benefits. Risk evaluation can be based on two methods qualitative, objective, and subjective methods. Individuals under the former are able to give out opinions based on riskiness of a certain situation without necessarily referring to the past. The quantitative risk evaluation method relies mostly to past data where it assumes that there is a possibility of it being projected to the future in order to come up with a measurement of the concerned risk. The risk behind this method is on the data validity and availability. In most case organizations do not store losses that have occurred while at other times some risks occur in rare cases and it is not possible to measure them.Risk evaluation can be based on a number of areas as follows. Political Risk evaluation under this category is based on the difficulties the manger or the chemical company in this case is likely to face. Risk under this category can be understood and reasoned in a manner that is reasoned with enough investment and foresight. Risk evaluation in this case will try to address complications that the chemical company is likely to face as a result of political decisions. That is the political decision that is likely to affect the value and outcome of a certain economic action by altering the company profitability of attaining the set objectives. The risk that the company is to face in this case can be referred to as strategic, financial, and personal loss risk. The reason behind such risk is that these non market factors are related to non macroeconomic factors. Therefore, once the manager of the company is able to understand the risk partly as a profitable and as an effect that gives in an insight into political risk this area of risk evaluation will be dealt with appropriately. Economic Risk evaluation under this category is mostly based on the economic factors that are in favor of its growth or deterioration. Whenever the economy of a country is not stable any risk that affects a company might result into full downfall (Bracken, Bremmer, & Gordon, 2008). A company is likely to face charges in court over risk factors where it is forced to cater or compensate the affected parties and due to economic factors the process might affect the operations of the company a lot. Social Social risk evaluation is mostly focused on social protection aspects in the labor sector. The aim of this form of risk evaluation is to have an extension on the traditional framework for social or community protection. This kind of protection includes; mitigation and prevention aimed at protecting basic live hoods as well as promoting the risk taking (D Bracken, 2008). This kind of risk evaluation should focus on the poor in the chemical company surrounding communities because they are the most vulnerable to risks and have a likelihood of suffering and facing economic shocks. The focus here should be on how to reduce the poor vulnerability and give encouragement to them to take part in riskier, but return activates from the company that can of great transition out of chronic poverty. Technological In this category the risk evaluation process involves application of information technology in managing risks found in the assessment process. A continued maintenance, and establishment of technological approaches aimed at providing an indication that is strong on the facts that the company is applying relevant approach for the assessment, identification, and management of all security risks during the transportation of formaldehyde. Risk evaluation under this category will try to indentify where there available technology has the ability to contain and reduces chances of a risk to occur. It will also try to give option ad technological gaps that once catered for the transportation of formaldehyde will not continue to be a threat to the surrounding community. Legislative This risk assessment category is all about the legal issues directed to the process of risk management. The company once it fails to abide to the set legal aspects there is likely hood of being sued where it can even be forced to terminate its activates or pay a fine. Environmental This category of risk assessment handles the risk to all ecosystems, which includes individuals and the general public from chemical company’s products and the application of other legislations where applicable. Before undertaking an environmental risk assessment the most important approach to be able to set the problem addressed out clearly there has to be strong decisions made based on specific boundaries. In most cases risk assessment under environmental category favours the environment more. For example the company in discussion is located close to a tributary which in the end serves as a source of water to the surrounding communities. Therefore, any toxic material thrown to the tributary will harm the people ( Sinclair-Desgagné, 2004). This calls for strong decisions aimed at ensuring that all the waste products from the company are risk free and can not cause any harm to the surrounding community. The following photos try to explain the environmental risk assessment criteria. Competitive Risk evolution under this category focuses more on the risk that is likely to face the chemical company once it losses its competitive strategies. The company will be able to addresses the risks under this category once it stands a chance to tackle the resulting situations. The manager of the company can follow the following simple steps to be able to by pass this risk assessment category. Some of these steps includes; selecting a team to undertake the process, identify active competitors, develop new technology, put more focus on customers, and scrutinize market changes under this market line Customer/Public/Stakeholder This group of people are a crucial part of the company and have a very strong impact to the company activates and survival. The stakeholder has a direct impact while the impact resulting from the public and customers is a second hand. In the case of customers the assessment will be based on the fact that the chemicals are well handled and clear guidelines are given on how to use the chemical and it does not harm them. Some guidelines may involve wearing of protective clothes and the amount of chemical to apply. The public especially the surrounding community risk assessment should touch mostly on the waste products toxic leaks, and other forms of environment pollution. The general risk assessment steps should be followed in each case to ensure that no one gets harmed from the company activates (Davies, 2001). The decisions made by the stakeholders should be assessed carefully to make sure that they have no impact or have no likelihood of causing any harm to the other parties directly or indirectly connected to the activates of the company. Risk assessment and conclusions It is clear that formaldehyde is an ordinary chemical containing a strong pickle-like odor. It is applied in many products as a boding agent, as well as, a solvent. Therefore, those products made through formaldehyde usually release a gas to the air. The harm or the hazard in this case is that incase formaldehyde concentrations are very high and the off-gassed is breathed in, it could cause health problems. The health risks linked with formaldehyde exposure depends from one person to another. Some of its effects include throat irritation headache, dizziness and nausea. The long-term exposure to high levels of formaldehyde has been linked to cancer. These can be shown in the following pictures. Therefore, the company can not be able to relocate, however, through risk evaluation it can be able to come up with measures that will help in the reduction of harm that formaldehyde can cause to linked parties (Sinclair-Desgagné, 2004). The above pictures are a clear indication of same measures that can help in hazard reduction. The company can use modern technology in the transportation of formaldehyde, this will ensure that there are no leakages to the environment and the health hazards will go down as well. Principles of Integrated Risk Management Companies that apply risk management in an integrated manner are able to generate better information for making up their decisions. This enables them to improve on their set objectives. Therefore, risk management can be linked direct the objective achievements of the company. That means the risk management principles integrated in the company must be of help to the decision making process (Neef, 2003). The following principles are crucial to the company when it comes to risk assessment and management decision making. That once integrated in the company they will aid in achieving the set company objectives. Anticipate In this case the company will apply this principle where it has set objectives that it aims to achieve at a certain period. As it anticipates for that time all the decisions made would be risk free to ensure that there no barriers within the journey. For example, transportation of formaldehyde is risky and can cause harm to the surrounding communities. Therefore, anticipation Assess Once the risks are assessed it important to countercheck on the decision agreed on to make sure that all the expected and important risk aspects have been included. Transportation of this chemical is the direct link to harm that can be incurred by people. Therefore, once it is clearly assessed all the necessary decisions made will help in achieving the set objectives of the company. Prevent This sin a very important risk management principles that a company can integrate. Preventing calls for ensuring that the risks and hazards identified will not cause harm in the future. In order to achieve this company may get involved in community welfare activates that can educate the people on how to prevent themselves from the factory emissions in case a leakage occurs again. Prepare In this case the company is prepared to handle any risk that might occur. This principle aims at ensuring that all the safety measures and equipments to handle risk issues are set always to cater for such hazardous situations. In general, the principle is all about being prepared to tackle reported cases of risks and hazards. Respond Once the company is set and ready to react fast enough to reported or on harms identified it is therefore in a good position to respond to these aspects accurately. The response principle can be integrated in the company to help it handle the indentified hazards appropriately. Recover This phase is adapted to once all the threats from the chemical company activate has subsidised. The immediate objective of this phase is to bring back the areas affected back to normalancy. Planners come up with appropriate preparation equipments as an indication of a normal life. The principle aim of this phase is to bring back things to normal situation. Reference List Andersen, T. J., & Schrøder, P. W. 2010. Strategic risk management practice: how to deal effectively with major corporate exposures. Cambridge, UK, Cambridge University Press.Sinclair Bracken, P. J., Bremmer, I., & Gordon, D. 2008. Managing strategic surprise: lessons from risk management and risk assessment. Cambridge, UK, Cambridge University PressDavies, Davies, W. 2001. Partner risk: managing the downside of strategic alliances. West Lafayette, Ind, Purdue University Press. Neef, D. 2003. Managing corporate reputation and risk: developing a strategic approach to corporate integrity using knowledge management. Amsterdam, Elsevier/Butterworth-Heinemann. Sinclair-Desgagné, B. 2004. Corporate strategies for managing environmental risk. Aldershot, Hants, England, Ashgate. Read More