RISK MANAGEMENT


By understanding the risk exposure,


we can consider how to manage this down to an acceptable level. As we analyse these potential failures, we can consider the most appropriate methods to mitigate the potential impacts. Typically, these falls into four categories (see Table 3). Having understood the theory, it is important to understand the application of this approach. The major critical items can usually be easily identified, but it can be the small items that can be the most critical and are often overlooked. This is where there is high criticality, there should be an exercise to analyse all the assets to ascertain their relative importance and determine appropriate responses, such as independent duplicate system(s), specific spares holdings, or emergency call out contracts for specialist suppliers.


From potential to reality What happens when a critical asset or system fails, and the potential event becomes real? Many organisations have business continuity plans in place. From experience, I know that some are very detailed and well-rehearsed. However, there are some organisations I have worked with that have a document but no real understanding of the processes and procedures, and have never tested them in a real-world practice. It is important for the continuity of


services that the mitigating actions that have been identified are in place, workable, and understood, and implementable. Scenario 1 has one line feeding water


to the hospital facility. Is it reasonable to state that the water line 1 is a critical asset? Should it fail then there will be no water to the hospital. There is a high risk exposure in this scenario. To address this risk exposure, a second


line (see Scenario 2) is installed from the water treatment plan to the hospital, by a


Water treatment supply facility


Table 3. Mitigating action categories. Method


Mitigation Treat


Transfer Tolerate


Terminate


Address the risk e.g. change design, provide backup systems, alternative processes, suppliers


Pass the risk onto to someone else, e.g. insurance


Accept the risk, the cost of mitigation may be more that the risk exposure


Stop doing the activity that is generating the risk


different route, thereby reducing the risk exposure by half.. Let us consider scenario 2. Line 1 is the primary supply to hospital. This is a critical asset as there would be no supply to the hospital should the line fail. Line 2 could also be used to supply additional capacity to the hospital should it be needed. Line 2 is also a critical asset – should that fail, there will be no supply to the hospital. The installation of line 2 reduces the risk exposure of the hospital losing supply by 50 per cent as there are now two lines


that can be used. There are many cases in industry where there may be two or more sets of redundancy built into the systems to mitigate the loss of an asset or facility. This is an example of adding redundancy to the system not just additional capacity. While, in this scenario, one may feel


more comfortable with the arrangement of 2 lines in place, it would be important that the two lines did not follow the same route to the hospital, in order to minimise the chance of both lines being damaged by one incident.


Water treatment supply facility


Line 1 Hospital


Line 1 Hospital


Line 1


Scenario 1. One-line supply. 56


Scenario 2. Two-line supply. IFHE DIGEST 2026


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