The Risk Thermostat

Articles

The Risk Thermostat

27/11/2013

When was the last time you took a holiday? Did you look at local activities in the area and planned some in to your schedule?

How does a pleasant beach holiday sound? It comes with a high chance of burns, cuts and lacerations, and a low chance of; falls from heights, dismemberment, decapitation, electrocution or being eaten alive. Don’t forget you need ($10,000,000) public liability insurance in case you damage any property or injure anyone else.

I recently made a decision to take just such a holiday, on a group kite boarding trip to Bali.

Of course the likelihood of serious injuries happening is reasonably low, providing that adequate training has been provided – and it’s advisable never to go alone, because the risk is further decreased when in the presence of others who are more experienced and can assist in an emergency. Sound familiar?

In regular day to day life, at work and in our personal time, we all take risks, even when we are aware of the hazards present.

If we feel the hazards have been adequately controlled, (for example rubber soled boots protect feet from sharp coral) or our perception of the risk changes, we may be more or less inclined to take those risks.

Professor John Adams of University College London describes what he calls ‘the risk thermostat’; the process by which people incorporate perception and experience and then modify their behaviour to a level they believe will appropriately mitigate the risks.

When people commonly speak of ‘managing risks’, what they actually mean is controlling the hazards (which, however, is an act of managing ‘risk to the business’). The risks taken will always be in the hands of the operators or persons undertaking activities in the business. Professor Adams states that most risk management practices address only the bottom loop of the risk thermostat.

The occurrence of accidents, near misses, negative reinforcement and education may increase the perception and awareness of risks, and balance risk-taking behaviour by an individual by making them act more carefully and less likely to take risks.

However, the occurrence of ‘reward’ events (e.g. increased productivity, ‘getting away with it’, absence of accidents witnessed) can have the opposite effect and increase the propensity to take further risks.

When addressing threats in your business, consider which aspects are controllable hazards and which fall under risk-taking behaviour and require cooperation, education and stakeholder buy-in to manage on an ongoing basis.

Remember that human error is normal and should be expected, so where possible, control the hazard to minimise the potential for harm that may occur from either unintentional human error or intentional risk taking behaviours.

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