Calculating Risks: Fine’s Mathematical Formula 30 Years Later

Abstract

Abstract Calculating risks, in the sense of giving the risk some objective measure, in an outdoor program may be a highly desirable activity to assist in the process of prioritising the allocation of resources to risk management, however most risk management models, while recommending the assessment or evaluation of risks, do not provide a mechanism to do so. This article draws on a model developed 30 years ago and seeks to demonstrate its potential use in calculating risks in an outdoor and experiential learning environment. The formula is applied to several outdoor scenarios as an example of its use with suggestions of possible actions that may be implemented to minimise the risks. While suggesting a process of risk calculation may imply that risk identification and assessment is an objective process, it is argued here that risk management, even with a mathematical formula, remains a subjective process based upon human judgment. Introduction One of the many challenges facing program managers in outdoor and experiential learning is the issue of risk management. A variety of approaches may be implemented to manage risks, these include strategies suggested by the Australian and New Zealand Standard on Risk Management (AS/NZS 4360:1999), as well as a range of articles, books and resources that focus upon risk management in the outdoors (Brown, 1998; Cockrell, 1991; Haddock, 1993; Priest and Gass, 1997; Tasmanian Outdoor Leadership Council, 1996). One may infer from many of the writings on risk management that the process of analysing risks is a simple, almost mathematical process, with terms such as analysis, evaluation and flow charts used freely. However, this inference may not fully reflect the intricacies of the risk management process. This desire to calculate or effectively quantify risks is not new. In 1971, William Fine, the then chief of the Safety Department at the Naval Ordinance Laboratory in Silver Spring Maryland, USA wrote an article that attempted to provide a mathematical evaluation for controlling hazards (Fine, 1971). This article seeks to summarise the key points of Fine's method and then makes suggestions as to the benefits and limitations of its application for outdoor and experiential learning. What is Risk and Risk Management? Risk, within the context of outdoor and experiential learning, is frequently defined using Priest and Baillie's definition (originally published in 1987): "the potential to lose something of value" (Brown, 1998; Haddock, 1993; Priest and Baillie, 1995, 309; Priest and Gass, 1997). This definition further suggests that in "the case of a negative adventure experience, this loss may take the form of a physical, mental, or social injury" (Priest and Baillie, 1995, 309). The focus of this definition may not fully address the breadth of the term, risk, nor does it necessarily concur with the meaning used in the broader community. A standard on risk management, designed to be applicable to all industries and economic sectors, presents a much broader definition of risk: "the chance of something happening that will have an impact upon objectives. It is measured in terms of consequences and likelihood" (Standards Australia and Standards New Zealand, 1999, 3). It may be implied that the "objectives" referred to in the standard could be relevant to the individual, the group, the program as well as the organisation. Risk management is not unique to outdoor and experiential learning; its origins are in insurance and engineering (Cross et al., 2000). Within the outdoor context, it is suggested that risk management is about reducing the risks to acceptable levels (Haddock, 1993). AS/NZS 4360 defines risk management as "the culture, processes and structures that are directed towards the effective management of potential opportunities and adverse effects" (Standards Australia and Standards New Zealand, 1999, 4). The standard outlines risk management as a process that includes: establishing the context, identifying the risks, analysing the risks, evaluating the risks, treating the risks, within an environment of continuous monitoring and reviewing, and communicating and consultation (Standards Australia and Standards New Zealand, 1999). …