OPERATIONAL OPERATIONAL RISK MANAGEMENTRISK MANAGEMENT

Why have ORM for NJROTC?Why have ORM for NJROTC? Summer CampSummer Camp DrillDrill PRTPRT

AMIAMI Sword TeamsSword Teams

NJROTC picnicNJROTC picnic Orientation tripOrientation trip

What we’ll cover today…What we’ll cover today…

* 5-Step ORM Process* 5-Step ORM Process* Causes of Risk* Causes of Risk* 4 ORM Principles* 4 ORM Principles* 3 Levels of ORM* 3 Levels of ORM* Risk Assessment Matrix* Risk Assessment Matrix

Operational Risk ManagementOperational Risk Management

ORM is the process of dealing with risk ORM is the process of dealing with risk associated with NJROTC Unit operations, associated with NJROTC Unit operations,

which includes risk assessment, risk which includes risk assessment, risk decision making, and implementation of decision making, and implementation of

effective risk controls.effective risk controls.

ORM ORM

A Decision Making ToolA Decision Making ToolShould we do this or not?Should we do this or not?

Increases Ability to Make Increases Ability to Make Informed DecisionsInformed Decisions ReducesReduces Risks to Acceptable Risks to Acceptable LevelsLevels

ORM GoalORM Goal

The goal of ORM is to optimize The goal of ORM is to optimize operational capability and operational capability and

readiness by managing risk to readiness by managing risk to accomplish the mission with accomplish the mission with

minimal loss.minimal loss.

ORM TermsORM Terms

Hazard:Hazard:

A condition with the potential A condition with the potential to cause personal injury or to cause personal injury or death, property damage, or death, property damage, or

mission degradationmission degradation..

ORM TermsORM Terms

ORM TermsORM Terms

Risk: Risk: An expression of possible loss An expression of possible loss

in terms of severity and in terms of severity and probability.probability.

ORM TermsORM Terms

Severity:Severity:

The worst The worst crediblecredibleconsequence which can occur consequence which can occur

as a result of a hazard.as a result of a hazard.

ORM TermsORM Terms

Probability:Probability:The likelihoodThe likelihood

that a hazard will result in athat a hazard will result in amishap or loss.mishap or loss.

HazardHazard RiskRisk

Bad Weather Bad Weather Slipping on trackSlipping on track

Improper StretchingImproper StretchingBefore Exercise Before Exercise

Chance ofChance ofmuscle strainmuscle strain

Running on HardRunning on HardPavementPavement

Chance ofChance ofknee injuryknee injury

Physical Training ExamplePhysical Training Example

ORM TermsORM Terms

Control:Control: A method for reducing A method for reducing

risk for an identified hazard by risk for an identified hazard by lowering the probability of occurrence,lowering the probability of occurrence,

decreasing potential severity, or decreasing potential severity, or both.both.

ORM TermsORM Terms

Risk Assessment: Risk Assessment: The process of detecting hazards and The process of detecting hazards and

assessing associated risks.assessing associated risks.

ORM ProcessORM Process

1.1. Identify HazardsIdentify Hazards

2.2. Assess HazardsAssess Hazards

3.3. Make Risk DecisionsMake Risk Decisions

4.4. Implement ControlsImplement Controls

5.5. SuperviseSupervise

RiskAssessment

RiskAssessment

Causes of RiskCauses of Risk* Change - The “Mother” of Risk* Change - The “Mother” of Risk

* Resource Constraints* Resource Constraints

* New Technology* New Technology

* Complexity* Complexity

* Stress* Stress

* * TEENAGERS!!!!TEENAGERS!!!!

Causes of RiskCauses of Risk

* * Societal ConstraintsSocietal Constraints

* Environmental Influences* Environmental Influences

* Human Nature* Human Nature

* Speed/Tempo of Operation* Speed/Tempo of Operation

* High Energy Levels* High Energy Levels

Four ORM PrinciplesFour ORM Principles

1. 1. Accept risk only when the benefits Accept risk only when the benefits outweigh the probable costs.outweigh the probable costs.

2. 2. Accept no unnecessary risk.Accept no unnecessary risk. 3. 3. Anticipate and manage risk by planning.Anticipate and manage risk by planning. 4. 4. Empower and train subordinates to make Empower and train subordinates to make

risk decisions at the right level.risk decisions at the right level.

ORMORMLevels of ApplicationLevels of Application

1.1. Time-critical - On the runTime-critical - On the run consideration of the 5 Steps consideration of the 5 Steps

2. 2. Deliberate - Application of the Deliberate - Application of the

complete 5-Step Processcomplete 5-Step Process

3. 3. In-depth - Complete 5-Step In-depth - Complete 5-Step

Process with Detailed AnalysisProcess with Detailed Analysisf

Risk Assessment MatrixRisk Assessment Matrix

When conducting a risk assessment, When conducting a risk assessment, you must factor in the severity of you must factor in the severity of

the hazard, the probability of the hazard, the probability of occurrence, and assign a risk occurrence, and assign a risk

assessment code to determine the assessment code to determine the risk level.risk level.

Risk Assessment MatrixRisk Assessment Matrix

Severity:Severity: Category I (Critical)Category I (Critical)

Hazard may cause Hazard may cause deathdeath, , lossloss of of facility/asset or result in facility/asset or result in gravegrave damagedamage to national interests. to national interests.

Risk Assessment MatrixRisk Assessment Matrix

Severity:Severity: Category II (Serious)Category II (Serious)

Hazard may cause Hazard may cause severesevere injury, injury, illness, property illness, property damagedamage, , damagedamage to national or service interests or to national or service interests or degradationdegradation to efficient use of to efficient use of assets.assets.

Risk Assessment MatrixRisk Assessment Matrix

Severity:Severity: Category III (Moderate)Category III (Moderate)

Hazard may cause Hazard may cause minorminor injury, injury, illness, illness, minorminor property damage, property damage, minorminor damage to national, service damage to national, service or command interests or minor or command interests or minor degradation to efficient use of degradation to efficient use of assets.assets.

Risk Assessment MatrixRisk Assessment Matrix

Severity:Severity: Category IV (Minor)Category IV (Minor)

Hazard presents a Hazard presents a minimalminimal threat threat to personnel safety or health, to personnel safety or health, property, national, service or property, national, service or command interests or efficient use command interests or efficient use of assets.of assets.

Risk Assessment MatrixRisk Assessment Matrix

Probability:Probability: Sub Category ASub Category A

LikelyLikely to occur to occur immediatelyimmediately or or within within a short period of timea short period of time. Expected to . Expected to occur occur frequentlyfrequently to an individual to an individual item or personitem or person or or continuously to a continuously to a groupgroup..

Risk Assessment MatrixRisk Assessment Matrix

Probability:Probability: Sub Category BSub Category B

ProbablyProbably will occur will occur in timein time. . Expected to occur several times to Expected to occur several times to an individual item or personan individual item or person or or frequently to a group.frequently to a group.

Risk Assessment MatrixRisk Assessment Matrix

Probability:Probability: Sub Category CSub Category C

MayMay occur in time. Can occur in time. Can reasonably be expected to occur reasonably be expected to occur some time to an individualsome time to an individual or or several times to a groupseveral times to a group..

Risk Assessment MatrixRisk Assessment Matrix

Probability:Probability: Sub Category DSub Category D

UnlikelyUnlikely to occur. to occur.

Risk Assessment MatrixRisk Assessment Matrix

Risk Assessment Code (RAC):Risk Assessment Code (RAC):The RAC is an expression of risk The RAC is an expression of risk which combines hazard severity and which combines hazard severity and mishap probability. Using the matrix, mishap probability. Using the matrix, the RAC is expressed as a single the RAC is expressed as a single number that can be used to help number that can be used to help determine hazard abatement determine hazard abatement priorities.priorities.

Risk Assessment MatrixRisk Assessment Matrix

PROBABILITY OF OCCURENCEPROBABILITY OF OCCURENCE

Likely Probably May UnlikelyLikely Probably May Unlikely

A B C DA B C DSS

EE

VV

EE

RR

II

TT

YY

CriticalCritical

SeriousSerious

ModerateModerate

MinorMinor

11 11 22 33

11 22 33 44

22 33 44 55

33 44 55 55

ORM ORM vs. vs. Non-standard ApproachNon-standard Approach

SystematicSystematic Random, Individual-DependentRandom, Individual-Dependent

ProactiveProactive ReactiveReactive

Integrates All TypesIntegrates All Typesof Risk Into Planof Risk Into Plan

Safety As After-thought OnceSafety As After-thought OncePlan is DonePlan is Done

CommonCommon Non-standard Non-standardProcess TermsProcess Terms

Conscious DecisionConscious Decision “Can Do” Regardless of Risk“Can Do” Regardless of RiskBased on Risk & BenefitBased on Risk & Benefit

The Benefits of ORMThe Benefits of ORM

> Reduction in MishapsReduction in Mishaps

> Improved Mission Improved Mission EffectivenessEffectiveness

Questions??Questions??