A company’s ability to manage risk with an effective method or collection of control measures will reduce exposure to potential threats that may derail an organization’s operations, supply chain, or the well-being of employees. Why are risk controls important, and which methods work the best?
Risk management statistics show that 41% of organizations experienced three or more critical risk events in the last 12 months while only 8% of organizations conduct monthly cyber risk assessments with 71% of companies saying sensitive data breaches are the biggest concern.
Discover the most effective method or combination of tools used to reduce risks with risk controls designed for loss prevention and the reduction of likelihood and impact severity.
What Are Risk Control Measures?
Risk control measures are techniques implemented to manage or mitigate potential hazards and risks that could arise in various processes, operations, activities, tasks, and environments. Risk control strategies aim to reduce vulnerability to potential risks and ensure workplace safety.
First, the risk officer will identify potential risk factors related to hazards in an environment or process using risk assessments. Then, they will use a risk management program to manage risks. An efficient risk management plan has various control measures to protect employees, employers, and the public.
Risk Control Examples
An example of risks in the financial industry includes fraudulent transactions or security data breaches, which would require the swift implementation of engineering controls that reinforce access controls and the encryption of data to manage, mitigate, and minimize risks.
A banking company could implement multi-factor authentication to improve risk controls using the administrative controls category. Some examples of efficient risk control measures help to identify potential threats your organization faces with the possible controls you could implement.
Example 1: Starbuck’s Supply Chain
One example is Starbucks, a world-leading coffee supplier. SFK Corp analyzed multiple methods and controls used by Starbucks to reduce subjection to risks and vulnerabilities associated with bad weather, political instability, and unforeseen events because the coffee giant sources beans worldwide.
Part of the Starbucks risk management program and controls include investing in sustainable farming and quality tracking, which fall under the umbrella of administrative controls. Starbucks reduces the potential harm of risk exposure by implementing administrative controls over the supply chain.
Example 2: British Petroleum
Who can forget example two: the British Petroleum (BP) Deepwater Horizon Oil Spill in 2010 that cost the company over $20 billion? BP certainly had its hands full trying to establish a more efficient risk management process with controls that wouldn’t nearly bankrupt the petroleum giant.
Reuters suggests that the best way BP could improve its risk management program was to implement custom risk control measures. BP started conducting more frequent risk assessment processes to identify new controls using a combination of engineering controls, PPE, and elimination measures.
Specific Control Techniques in a Risk Management Process
A risk control measure can differ from a risk control or mitigation strategy. Also, some industries use specific risk control measures based on certain risk factors other industries don’t share. Different controls typically encourage the following risk mitigation techniques:
- Avoidance: Avoid the hazard by substituting a harmful chemical with an alternative in operations.
- Diversification: Diversify the portfolio of products or services to reduce revenue losses.
- Duplication: The creation of a contingency plan often using technology like a backup system.
- Loss Prevention: Accept the risk, and attempt to reduce the consequences as much as possible.
- Loss Reduction: Accept a risk but aim to minimize the cost of losses when threats occur.
- Separation: Disperse resources/hazards to ensure a critical event at one location remains there.
These are some risk control techniques certain industries use after a risk assessment. The controls implemented depend on the likelihood and potential severity of the consequences. One party provides a safer alternative while another reduces the likelihood of revenue loss by diversifying a portfolio.
How to Use the 5 Risk Control Levels in a Risk Management Process
The National Institute of Occupational Safety and Health (NIOSH) and the Occupational Safety and Health Administration (OSHA) suggest a hierarchy of controls to reduce vulnerability to identified risks or the consequences of critical risk events occurring. Use the five levels to improve risk control efforts.
Level 1: Eliminate Hazards
The most effective method of control measures is to eliminate the hazards identified in a risk assessment. Eliminate the hazard for long-term success because you’ll best mitigate risks and the potential impact of consequences by removing what may harm processes, operations, or personnel.
The control measures effectiveness follows a structured approach, recommending controls from most to least effective. Still, you can’t always eliminate hazards. For example, you can’t eliminate all of the safety hazards or the potential severity of hazardous chemicals in a chemical engineering plant.
Level 2: Replace Hazards
The second control measure with the highest effectiveness is to replace or substitute a hazard with another item to minimize or manage risks in a process, operation, or environment. For example, assess whether you have hazardous chemicals increasing employees’ exposure.
Reduce potential losses or exposure to safety hazards by replacing a chemical with a safer alternative. Identify any hazard in which this control method would work for more efficient risk management. Also, follow the NIOSH prevention through design control recommendations for machinery and equipment.
Level 3: Implement Engineering Controls
The third line of defense is to implement engineering control measures after you assess whether equipment modifications can make an environment safer. Engineering controls include changing a specific part of equipment that may harm personnel or adding guards around machinery.
NIOSH has an entire database of engineering controls to help you assess and reduce risks from a machinery part that poses a hazard to staff. An organization can also implement specific engineering controls from the database once identifying hazards related to asphalt, dust, or paint.
Level 4: Use Administrative Controls
The fourth level of control measures are called administrative controls, which have some effectiveness but aren’t the desired measures. Administrative controls establish action plans and work practices that reduce the duration and frequency of exposure to a specific hazard within an organization.
For instance, a manufacturing organization may limit access to hazardous areas that contain chemicals that could harm personnel. Another example is when an organization institutes rotating tasks or job rotation to limit each person’s exposed times as much as possible.
Level 5: Supply Personal Protective Equipment (PPE)
The last line of defense in the hierarchy of control measures is to supply personnel with personal protective equipment (PPE) to limit the potential impact associated with hazards and risks you can’t eliminate or where other controls aren’t possible in the organization or industry.
OSHA says that PPE is essential for workers in environments in which an organization can’t use other controls. For instance, an organization building commercial generators must supply the personnel with personal protective equipment that is flame and acid retardant as they’re exposed to these hazards.
How to Use a Risk and Control Matrix (RACM)
A risk and control matrix helps an organization manage risk and implement better controls based on risk profiles with each hazard having a risk rating to define which control measure is necessary. The RACM matrix helps companies assess the relationship between potential risks and impacts.
Here is a step-by-step process to use the RACM with a risk assessment:
- Identifying risks with health and safety inspection software is the first step to using a RACM, which must include risks associated with business processes, activities, tasks, operations, movable machinery, stagnant equipment, environments, production lines, and staff.
- Assessing vulnerabilities with a mobile risk assessment app will help businesses identify the likelihood and potential impacts of each risk based on identified hazards in step one. Use a risk assessment matrix to determine the likelihood and potential impacts of risk events.
- Conduct a risk analysis to assign a risk rating to each risk should the event occur. A risk with a high likelihood of occurrence and the potential for serious impact on revenue or employee well-being would have a higher risk rating and require a more efficient control measure.
- Implementing risk control measures based on the ratings assigned in a risk matrix ensures the risk management strategy runs smoothly. For example, use the elimination risk control to reduce risks your staff can easily avoid altogether.
- Analyzing control effectiveness is integral to continuous risk management. Risk monitoring plays a crucial role in identifying emerging risks in a new environment, when the industry has regulatory compliance changes, or when new equipment is introduced into a business.
- Initiate action plans as soon as each risk is assigned a control measure. Eliminate the identified hazards where elimination is possible, implement substitution where products can change, or provide your personnel with PPE to ensure workplace safety at all times.
Implement Effective Risk Control Measures With Velappity
Risks can strike any industry or business if risk assessment isn’t part of the processes. Risk management can reduce the likelihood of risks occurring and protect everyone and every asset in an environment while meeting regulatory compliance standards for any industry.
Risk control starts with software that transforms how you assess, mitigate, minimize, and manage risks in your workplace environment and operations. Velappity is an effective risk management tool for conducting risk assessments, controlling risk, and managing potential risks in the future.
Reduce risk by assigning a control based on risk categories, which is an essential component of carrying out frequent and legally required risk assessments. The Velappity pricing options welcome all organizations to conduct thorough risk assessments to assign the best controls.
Understand why you need a mobile risk assessment app, including the top benefits of custom form design that ensures your risk assessments and controls have the highest effectiveness. Start a free trial today, or contact us to discover how it encourages loss prevention from risks and long-term success.
Risk Control Measures Conclusion
An organization’s operations, staff, and environment always have risks, including cybersecurity threats and ever-evolving or emerging risks related to the market, industry, or sensitive data. Workplace safety is about creating a safer space or process for each person who enters the property.
Emerging risks can also include new equipment or chemical products. Remember to assign a control with the highest effectiveness or use engineering or administrative controls where possible to prevent potential harm and encourage loss prevention. Contact us today to streamline risk control.
Risk Control in Risk Management FAQs
How does risk control differ from risk management?
Risk management describes the entire process of how a company will assess, evaluate, analyze, manage, mitigate, or control risks. However, risk control, an essential component of risk management, refers to the strategies implemented to reduce risk based on a specific risk assessment at the time.
Can companies eliminate all risks with specific risk control techniques?
No, companies can’t eliminate all risks. Instead, manage risk with an effective method of control if the hazard can’t be removed from the workplace environment. Assessing vulnerabilities and assigning a risk rating will help determine whether a company requires substitution, administrative controls, or PPE.
What are effective risk control measures for cybersecurity threats?
The cybersecurity industry has many constantly emerging risks that require the best solutions for controlling risk. Administrative and engineering control measures have the greatest effectiveness in cybersecurity because developers can reinforce data security based on frequent risk assessments.
