The management of risk is paramount in rail, is highly dependent on the situation and varies from one organisation to another. Risks can be assessed by priority such as high (business critical), medium (business disruptive) or low (business inconvenient).
A rail organisation would not engage in Skills Recognition if there was a high risk to the organisation or the cost of installing Skills Recognition processes was prohibitive.
From a rail organisation perspective, there are seven types of risk that should be avoided and these can be arranged in a hierarchical order of both significance and consequence. They range from operational concerns to tactical leadership and finally, business survival:
Rail organisations cannot compromise safety.
Organisational policies, processes and procedures must comply with legal requirements – both Federal and State.
3) Operational risk:
Rail organisations need to remain functional and perform its activities in an efficient way.
4) Reputation risk:
In rail, reputation determines long-term investment decisions and influences how people choose to travel.
5) Financial viability:
An organisation cannot survive without financial viability.
6) Market support:
Organisations derive much added-value from special relationships built-up over time with customers and suppliers, as part of a supply chain.
7) Business survival:
Organisations that cannot manage the integrity of the previous six types of risk will ultimately put at risk the success of the enterprise.
The risk management pyramid is a simple diagram to illustrate the seven areas of risk to rail organisations at three levels: strategic, tactical and operational.
In each case, the risk mitigation treatment is influenced by the organisations’ values and leadership to overcome each type of risk. Risk management strategy can include avoiding the risk, reducing the risk or sharing/controlling the risk
Risk management pyramid