What Is Risk Assessment and Why Is It Important?

By Indeed Editorial Team

Published 29 September 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Keeping a workplace safe is an essential component for businesses to ensure the happiness and health of employees and create a comfortable work environment. Inspectors often take preventative measures, like risk assessments, to understand and prioritise potential issues. Learning about this process can help you understand why it's crucial for workplace safety and compliance. In this article, we discuss what risk assessment is and provide key details about it, like why it's important, what the different types are and how to perform one.

What is risk assessment?

Risk assessment is a process that organisations use to ensure health and safety in the workplace. It often involves several steps to evaluate the current conditions of the workplace to ensure they meet organisational, local and federal guidelines. These guidelines help protect employees and ensure the proper handling of materials or equipment across industries.

This type of assessment has three main parts:

  1. Identification: The identification stage is where someone assesses potential risks in the workplace. This often involves a full walkthrough of the work environment or looking at standard risks, like potential fire safety issues or electrical problems.

  2. Analysis: After identifying potential risks, professionals assess the severity of each. This means learning if the risks have a high chance of causing danger to people or property and how soon a company might face these issues.

  3. Recording: Recording the issues is a crucial part of this assessment, as it allows you to track common or high-potential risks. This often includes preparing formal documentation that professionals can use for future assessments or when filing for repairs, replacement or other remediation efforts.

Related: A Complete Guide to the Risk Management Process (With Steps)

Types of risk assessments

There are several common types of assessments of risk you might find in different workplaces:

  • Fire assessments: These combine fire safety management techniques to assess potential issues in a workplace. This includes ensuring proper safety protocol is in place, emergency exits are clear and the appropriate equipment is available.

  • Manual handling assessments: This is common in warehouses, construction sites and other places where people might perform manual labour. These assessments identify the likelihood and severity of accidents when mismanaging equipment.

  • Display screen equipment (DSE) assessments: These are technology assessments that measure the likelihood of hazards or injury to people using screens.

  • Control of Substances Hazardous to Health (COSHH) assessments: These are assessments that measure the risk levels in areas where people handle, store or use hazardous materials.

Related: What Is the Role of a Risk Manager? (With Duties and Skills)

Why is risk assessment important?

There are several key reasons why performing this type of assessment can be important for businesses:

  • Identifying risks: These assessments help you to identify health, safety or security threats you can fix. Without safety measures, the issues may continue and cause different risks.

  • Evaluating controls: These assessments allow you to evaluate the current controls in place to manage risks. Ensuring the proper controls are present can bring the level of risk down.

  • Prioritising maintenance: During these assessments, you can identify future repairs or requirements to mitigate risks. When assessing different aspects of a location, prioritise those with the highest risks.

Related: What Is RAID in Project Management? (With Benefits)

Differences between risks, accidents and hazards

Risks are similar to other key safety terms, but there are some key differences. Two similar terms are accidents and hazards:

  • Accident: An accident is an unplanned workplace event that causes loss or harm.

  • Hazard: A hazard is something within the workplace that has the potential to cause harm but hasn't yet.

These are different from risks, which measure the possibility and potential severity of occurrences that could cause harm or loss in the workplace.

Related: 8 Interview Questions about Safety with Sample Answers

How to conduct a risk assessment

The steps in this assessment can vary depending on your work environment and the type of assessment you perform. These are common steps you might follow:

1. Walk around the workplace to identify hazards and risks

An assessment walk-through gives you the opportunity to identify hazards in the workplace. As you conduct the walk-through, examine all areas of the work environment for potential hazards, including equipment, crawl spaces and underneath sinks. It's common to segment workplace hazards into four categories. These are:

  • Mental: Mental hazards are things like harassment, bullying and stress. Anything that can cause the workplace to be an excessively stressful or hostile environment might fall into this category.

  • Physical: Physical hazards are those that are strenuous on the body or can cause bodily injuries, with the exception of those in biohazards and chemicals. Things like heavy equipment and machinery can be physical hazards.

  • Biohazards: Biohazards include exposure to infectious diseases, bodily fluids or biological waste. These often occur in the medical field in professions like nursing and home health care.

  • Chemical: Exposing skin, lungs or other organs to chemicals can be very dangerous, so chemicals pose unique hazards in the work environment.

Related: What Does a Safety Inspector Do? (With Tips and Skills)

2. Survey employees and determine who the hazards might affect

Employee feedback is a crucial step in risk assessment. If you work in a warehouse or other environment where physical safety is a concern, getting feedback from employees can reveal potential issues that might not be obvious. For example, employees might identify faulty machinery or areas of a site that could pose a safety threat. You can have employees complete written or verbal assessments and compare the results to identify any high-profile risks.

Related: 5 Tips to Managing Electrical Hazards in the Workplace

3. Evaluate risks and note possible actions and outcomes

Once you understand the potential risks in a workplace, you can evaluate them for severity. For example, you might find exposed wires that can cause immediate physical harm to people or start a fire. During this evaluation, you can note the different solutions you might pursue. These can include replacing or fixing faulty materials. Human error may have the potential to cause hazards, so training and development can be a potential way for you to safeguard yourself and teams from risks.

Related: What Does a Machine Operator Do? Duties, Skills and Salary

4. Record your findings

To complete your findings, record them in a shareable document that offers transparency about hazards and employee risk. A common recording tactic requires learning how to create a risk assessment matrix. This matrix helps you prioritise risks systematically, using categories like 'impact' and 'likelihood' on a scale of very low to very high. You can structure the rows of the matrix as follows:

  • Catastrophic: Devastating impact on financial standing, business operations or people in the workplace.

  • Critical: Major impact on financial standing, business operations or people in the workplace.

  • Moderate: Very noticeable impact on financial standing, business operations or people in the workplace.

  • Minor: Some impact on financial standing, business operations or people in the workplace.

  • Insignificant: Little to no impact on financial standing, business operations or people in the workplace.

You can structure the columns like this:

  • Definite: Hazard is most likely to occur.

  • Likely: Hazard is somewhat likely to occur.

  • Occasional: Hazard may occur

  • Seldom: Hazard could occur but is not likely.

  • Unlikely: Hazard could occur but is not likely in regular circumstances.

Using an assessment matrix offers clear communication that you can share with employees and those responsible for resolving hazards.

5. Review and update your assessment

Workplace hazards are always changing, so it's important to review your assessment as needed. Changes to employee work practises and routines, new equipment or substances and other variables can all prompt a review of your assessment document. Reviewing the document also allows you to ensure that all full-time and part-time employees are using the agreed-upon safety practises in daily operations. When you identify new risks, update the assessment document to reflect them.

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