The Concept of Risk

Generally everyone has some understanding of the meaning of the word 'risk'. As children we are taught that something is risky, or we are told not to take risks. But what exatly is 'a risk'?

In fact we all take risks everyday quite happily. We do things knowingly that there is a risk involved. For example, we know that there is a risk involved in driving a car, or riding a bike, or going on a skiing holiday. We accept the level of risk because in our minds, although the potential consequences can be death or serious injury, we think that if we are careful, the chances of something dreadful happening is very low.

When we evaluate a risk, therefore, we take into account two factors - the probability of something happening that we don't want, and the consequences if it does.

An airplane flight is a very good example. The consequence of a airplane crash is usually the loss of most, if not all life on board - dreadful. Fortunately, when we fly, the probability of being in an airplane crash is very small (1 in 52.6 million according to the National transportation Safety Board). This very low probability makes the risk very acceptable.

At the other end of the spectrum, there are risks where the probability is very high but the consequences are relatively low. For example, when we go to work there is a very good chance that we will catch influenza from a work colleague at some time in the year. The probability of this happening might be 1 in 4, but if it does happen we will be just laid up in bed for a week and no serious or long-term damage occurs. This make the risk of getting influenza by going to work quite acceptable.

So whether we choose to accept or decline a risk depends on the mix of two factors:

Identifying, evaluating and understanding risks is a very important aspect of business management. Businesses can also suffer dreadful consequences if risks are not appropriately managed. The most widely understood risks are occupational health and safety risks. Most people generally associate the word 'risk' with injury, health risks and death, but there are many other types of risk faced by any business.

It is useful to think or risks as falling into two categories:

The risk of "harm" is the type of risk that we mostly think about. The word 'harm' is employed in relation to something living, usually a person or the natural environment. In a sport and recreation business, the risk of harm would include injury to a player, sport official, or spectator as a result of:

The risk of "detriment" does not involve injury to something living. It generally means some form of economic loss, which might indeed include a valuation of harm to living things but which also includes damage of a much wider kind. In a sport and recreation organisation, a 'detriment' could involve:

Managers of sport and recreation organisations are expected to be conversant in risk management theory, and to be able to identify and manage risks so that the probability of harm or detriment occuring is less and/or the consequences of risk are reduced. Pressure is brought to bear on sporting organisations to engage in and take seriously risk management. The pressure comes in the form of:

Sport and recreation is a risky business, and it is therefore mandatory for sport managers to have a good understanding of the concept of risk and to engage in risk management.

Recommended reading on this site - Prioritising risks

Learners wishing to obtain further information about Risk Management basics are highly recommended to visit the following web sites:

Sport and Recreation Queensland Sport and Recreation Queensland is an agency of the government of the State of Queensland.

On the home page click on search. Then on the search page type in "Risk" and the search results page will list at the top an article titles "Playing It Safe" (Extract) - OSR Information Paper #3. This is an excellent resource.
State Office of Risk Management (SORM) SORM is an agency of the government of the State of Texas, United States of America.

On the home page click on "Risk Management Guielines". This will lead you to web pages in four volumes on developing and implementing a comprehensive risk management program.
Resources on the Internet do not come any better than this.

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