Page 49 - KFTL Report

KFTL DUE DILIGENCE – Kingston, Jamaica
13 Risk Management & Profiling
13.1 Risk Matrix
13.1.1 General Introduction:
Apart from safety, functional department, process and systems related risks as reported above, as Trent we believe a key risk in itself, is the quantum of money, time and effort required to implement measures that control, diminish and/or eliminate the various risks and activities.
It is possible that not all projects/ programs can be carried out at the same time, and/ or that all monies will be available to fund these projects. Therefore, understanding risk and being able to prioritise appropriately, will help ensure the right activities get funded in the appropriate order, in order to effectively address both risks and business goals.
13.1.2 Risk Approach:
A risk-based strategy can be used to qualitatively assess assets and prioritise activities, small/ large projects and maintenance and repair work.
Risk level is estimated based on a probability of failure X consequence of failure. A redundancy factor can also be included if appropriate.
A typical 5X5 risk matrix is used to for likelihood of failure with 1 for rarely and 5 for almost certain, and consequence of failure with 1 for minimal and 5 for critical. Qualitatively, risk levels are determined as: very low, low, medium, high, very high or extreme.
The table below a risk matrix qualitatively categorizing risk level in terms of failure chance (likelihood) and impact of failure to the business in terms of injury, fatality, financial, reputation etc.
When mapping the risk item, it is the consequence with most severe rating that determines where the risk item sits on the risk matrix i.e.: if the risk has a low financial consequence, but presents a potential fatality if it fails, then the fatality determines the consequence criticality.
Below is an example of some risks in a 5X5 matrix that have been quantified as objectively as possible, given the information available at the time.
A tabulated format is also shown with same information for reference and comparison to the 5X5.
Once the limits (i.e.: financial consequences etc.) have been accurately determined, such an approach could help KFTL in prioritising spend, that will ensure money, time and efforts goes to the most appropriate activities, with clear line of sight regarding the risks and impact each activity are designed to address.
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