Definition of terms

Risk:

Risk is the exposure to the possibility of financial loss, physical damage, personnel injury, or project delay as a consequence of uncertainties associated with following a particular course of action. The level of risk is a function of the chance of an event occurring and the severity of the likely consequences. Management of risk relies on the ability to reduce either:

• the probability of the event occurring,
  or
• the severity of the consequences.

Hazards are, threats, unwanted events, unforeseen conditions, or other failure modes which might occur during the project including the following:

• accidents to personnel fires and explosions
• accidents to equipment
• serious equipment failure
• unforeseen geological conditions
• adverse operating conditions
• inadequate operating procedures
• inadequate equipment or plant
• significant design inadequacies

Consequences considered will vary depending upon the type of project and the scope of the analysis. Examples of project consequences include:

• Safety - serious injuries, non-serious injuries and total hours lost due to accidents
• Environmental - additional environmental impacts
• Schedule - project completion delay due to extension of critical path activities
• Cost - additional project costs.