Identifying and assessing hazards is the essential first step in operational risk management.

Which steps are part of the risk assessment portion of ORM?

• A. Identify and Implement Controls
• B. Assess and Supervise
• C. Identify and Assess Hazards
• D. Make Decisions and Implement

Answer: (C)

The correct answer highlights the crucial initial phases of operational risk management, focusing specifically on identifying potential hazards and assessing their associated risks. This step is fundamental because it establishes a clear understanding of what risks exist within an organization and evaluates their potential impact. By identifying and assessing hazards, organizations can prioritize risks based on their likelihood of occurrence and potential severity, which is essential for effective risk management. The process of risk assessment typically involves gathering data, analyzing the nature and extent of risks, and understanding how those risks can affect operations. This foundational knowledge enables organizations to craft informed strategies for risk mitigation and control implementation in subsequent stages. Identifying and assessing hazards is integral to ORM because it forms the basis for making informed decisions about risk management strategies, resource allocation, and the effectiveness of existing controls. By thoroughly evaluating these aspects, organizations are better equipped to navigate the complexities of operational risks.

Outline (skeleton)

• Hook: Why risk assessment starts with noticing hazards, not guessing at outcomes

• What risk assessment means in ORM: hazards, risks, and the breath between them

• The two core steps: Identify hazards and Assess hazards

• How it plays out in practice: data, conversations, and simple tools

• Quick examples across industries to ground the idea

• Common missteps and how to keep them in check

• How this step connects to the rest of ORM

• Takeaway: start by spotting what could cause trouble, then judge how big that trouble might be

Identify and Assess Hazards: The First Quiet, Yet Powerful, Step in ORM

Let’s start with a simple picture. Think of operating risk as a factory floor where things can go wrong. Some risks are obvious, loud, even dramatic. Others are quiet—hiding behind a process, tucked away in a corner of a workflow, waiting to surprise. The risk assessment phase in Operational Risk Management is all about surfacing those quiet hazards and judging how much trouble they could cause. That’s why the correct step in the classic ORM sequence is Identify and Assess Hazards. It’s the moment you move from “maybe this is risky” to “we know which hazards matter and why.”

What exactly is risk assessment in ORM?

In plain terms, risk assessment is the process of finding hazards and figuring out how likely they are to cause harm, plus how bad the harm would be if it happened. Hazards are anything that could go wrong, from a slippery floor in a warehouse to a faulty software update that disrupts operations. Risk, in turn, blends two ideas: probability (will this happen?) and impact (how bad would it be if it did?). When you map those two ideas together, you get a clearer picture of where to focus your attention.

A good risk assessment isn’t a guessing game. It’s built on data, conversations, and a honest look at how work actually gets done. You pull in incident histories, near-miss reports, maintenance logs, and even frontline insights. You don’t just ask what could go wrong—you ask what could go wrong in the way we actually operate, under real conditions, with real people.

The two core steps, plainly

Identify hazards. This is the ground floor. You scan processes, places, people, tools, suppliers—everything that touches operations—to surface potential hazards. It helps to bring in a cross-section of voices: operators, supervisors, maintenance staff, IT folks, and even external partners. The point is to collect a broad map of what could cause trouble.

Assess hazards. Once you’ve listed hazards, you judge them. How likely is each hazard to occur? If it does, how severe would the impact be on safety, operations, costs, reputation, or regulatory standing? A simple risk matrix can help here: plot likelihood on one axis and consequence on the other. Hazards near the top-right are the ones to address first. This step isn’t about perfection; it’s about prioritization so you can allocate resources where they’ll actually move the needle.

Let me explain how these ideas come to life in real work

Data, conversations, and practical tools

• Data you probably already collect. Incident reports, maintenance tickets, downtime logs, and service records. These are the clues that tell you what’s happening, not just what could happen.

• Frontline conversations. Sit down with operators on the floor, not just executives in a conference room. Ask open questions: “What’s surprised you lately?” “Where do things slow down or fail?” You’ll learn about hazards that aren’t obvious from charts alone.

• Simple analysis methods. A risk matrix is a friendly starting point, but don’t stop there. In some teams, a hazard walk-through or a quick bow-tie diagram can illuminate causes and consequences in a straightforward way. If you have process maps, use them to trace how a hazard travels through steps and handoffs.

• Documentation that travels with the work. Create a concise hazard register or a living list that teams can reference, update, and discuss in regular reviews. It’s not about a long report; it’s about a usable map the whole organization can navigate.

Concrete examples to anchor the concept

• Manufacturing floor. A hazy coating on a floor, a misaligned machine guard, or a stale lockout-tagout procedure are hazards. Assess how likely a slip, injury, or equipment damage could be, and how severe the outcome would be. Then you can decide if you need a quick fix (better housekeeping) or a more substantial control (automatic shutoffs or revised maintenance schedules).

• Healthcare setting. Think about patient flow, or med administration workflows. Hazards might include mislabeled meds, interruptions during handoffs, or overcrowding in triage. Evaluating these hazards helps you prioritize changes that keep patients safer and care smoother.

• Office operations. Even in a non-industrial context, hazards show up—cyber threats to data, power outages affecting critical systems, or supplier delays for essential equipment. Hazard identification helps you plan more robust backups and contingency steps.

From hazard to action without losing momentum

Identifying hazards is about awareness; assessing hazards is about judgment. The two together set the stage for the next steps in ORM—deciding what controls to put in place and how to monitor them. You don’t want to drown in paperwork. You want to land on clear, practical actions that are visible in day-to-day work.

Common missteps to watch for—and how to sidestep them

• Treating risk assessment as a one-off activity. Hazards change as processes evolve, teams grow, or new tools show up. Revisit the hazards and the risk judgments on a regular cadence, not just when something breaks.

• Focusing only on the big, dramatic hazards. The little, stubborn hazards can bite you later. A slippery floor, a lag in data backups, or a small software bug can cascade into bigger problems if left unaddressed.

• Relying on a single data source. Incident reports are essential, but they tell only part of the story. Bring in frontline input, maintenance logs, and even supplier performance data to get a fuller view.

• Overcomplicating the process. The goal is clarity, not endless bells and whistles. Use simple tools that your team can actually use and understand. If a risk matrix feels heavy, start with a basic scoring system and evolve gradually.

How this step fits into the broader ORM cycle

Operational Risk Management isn’t a one-and-done exercise. It’s a cycle that keeps organizations safer and more resilient. Here’s where Identify and Assess Hazards sits in that loop:

• Identify hazards. The openness to surface what could cause trouble is the spark. This is where you define the problem in real terms.

• Assess hazards. Here you evaluate likelihood and impact, and set priorities. This is where you decide which hazards warrant attention first.

• Decide on controls. Based on the risk picture, you choose safeguards, training, or process changes. This is the moment to align resources with reality.

• Implement and monitor controls. Put the fixes in place and track how they’re working. If a control isn’t doing what you hoped, adjust it.

• Review and improve. After a period, reassess—hazards may shift, and controls may need tweaking. The cycle continues, getting smarter with each pass.

In this loop, Identify and Assess Hazards is the compass. It tells you what to protect and where to invest effort. Without a solid start in hazard identification and assessment, even the best controls can miss the mark.

A quick takeaway you can carry into the week

Hazard identification and risk assessment aren’t glamorous, but they’re incredibly practical. They lay down the map that guides every other decision in ORM. Start by asking: What could go wrong here, and how likely is it? Then ask how bad it would be if it did. Use the data you already have, talk with the people who do the work, and keep the process simple enough to keep the team engaged. Do that, and you’re setting up a rhythm that makes risk management feel like a natural part of daily operations rather than a separate project.

Final thought: risk assessment as a habit, not a checklist

Hazards aren’t static. The moment you treat hazard identification and assessment as a living habit—part of how teams plan, build, and operate—you bring risk management out of the realm of “plans on a shelf” and into practical, day-to-day vigilance. And that’s where real resilience begins: when people at every level recognize hazards early, talk about them openly, and act on them with clear priorities.

If you’re exploring how organizations keep things steady in the face of uncertainty, remember this: the strongest starting move is spotting what could go wrong and judging how big the potential impact could be. Identify and Assess Hazards is the core of that approach, a simple yet powerful lens you can apply again and again across industries, teams, and workflows.