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The Australian and New Zealand Standard AS/NZS 4360:1999 Risk Management classifies risk as the chance of something happening that will have an impact upon objectives. Risk is measured in terms of consequence and likelihood. This description is represented by the formula:

However, this equation does not take into account an individuals perception of the risk event occurring and therefore has been modified by Professor Peter Sandman to include the implications of outrage of a risk event occurring on an individual persons perception and is expressed by the formula:

The level of outrage resulting from a risk event is dependent on the level of understanding by the individual of the consequence of the risk event occurring. When people are angry or frightened, they often overreact to risks that are small or even trivial in technical terms.  It is this overreaction that has a significant impact on the risk and will have an impact on your company whether it is via public image, employee satisfaction, stakeholder confidence etc.

An example of the implications of outrage in risk management can be seen in the following comparison between car accidents and shark attacks. Many people are hurt or killed in serious car accidents every day within Australia, however most of these accidents are unreported within the media and the community accepts the risk of driving a car. However any shark attack is reported in the media and causes public debate about what can be done to minimise the risk of shark attacks on the Australian public. There is a higher level of risk associated with driving a car in comparison to the risk of a shark attack however the outrage associated with a shark attack is much higher than that of a car accident and therefore is perceived as having a higher level of risk which is contrary to the actual risk.

When developing a risk management plan it is essential to consider the implications of the risk event occurring and the potential outrage by community, stakeholder and employee groups to that event to ensure that the full impact of the risk has been addressed adequately.

A risk event that has a small likelihood or consequence but a serious outrage component may not be addressed effectively if outrage is not considered in the management of the risk. For example outrage associated with an outbreak of Legionnaires disease has caused tighter governmental controls on the water treatment of cooling towers across Australia even though there is a higher risk of dying from an asthma attack than Legionnaires disease.

There are many techniques and tools that can be used to identify and reduce outrage to a risk event however all of the techniques revolve around the one central theme – communication. Individuals who are or have been impacted by a risk event should be:

• Consulted;

• Briefed and

• Educated

regarding the risk that they have or are likely to be exposed to and what is being done to control and minimise the risk. Communication will assist the individual in understanding clearly the risk and treatment options used to reduce the likelihood of the risk occurring thereby reducing the associated outrage.

Cetec has assisted public and private sector businesses in identifying risks and preparing management plans to Australian standards and have been involved in managing the outrage associated with a risk event.