Basic Risk Concepts,

Fire Risk Terminologies

By
G.V.Choudhary
 Definitions of Risk Terminologies
• Risk – Effect of uncertainty on objectives.
• Hazard – Source with the potential to cause harm.
• Likelihood – Chance of an event happening.
• Consequence – Impact of the event.
• Risk Assessment – Identify, analyze, and evaluate risks.
• Risk Treatment – Actions to reduce or manage risks.
• Residual Risk – Risk left after treatment.
• Risk Criteria – Basis for judging risk importance.
• Risk Matrix – Visual risk evaluation tool.
• ALARP – Reduce risk to a reasonable level.
(As Low As Reasonably Practicable)
 What is Risk?
• Definition: The effect of uncertainty on

objectives (ISO 31000).

• Risk = Likelihood × Severity

• Expressed through potential consequences

and their likelihood.

 Hazard & Likelihood

• Hazard: A source with the potential to cause

harm (ISO 45001).
• Examples: Chemicals, fire, electricity,
machinery.
• Likelihood: The chance of something
happening (ISO 31000).
 Consequence & Risk Assessment

• Consequence: Outcome or impact of an event

(minor to catastrophic).
• Risk Assessment: Overall process of
identifying, analyzing, and evaluating risk.
• Includes risk identification, risk analysis, and
risk evaluation.
 Impact on People (Health & Safety)
• Insignificant – No injury or minor first aid.
• Minor – Minor injuries, medical treatment.
• Moderate – Hospitalization, lost time injuries.
• Major – Permanent disability or multiple
injuries.
• Catastrophic – Fatalities or multiple deaths.
 Impact on Property & Assets

• Insignificant – No or negligible damage.

• Minor – Minor, repairable damage.
• Moderate – Partial equipment or
infrastructure damage.
• Major – Extensive damage, major asset loss.
• Catastrophic – Total loss of plant or building.
 Impact on Business / Operations
• Insignificant – No disruption.
• Minor – Temporary interruption, minimal loss.
• Moderate – Hours or days of downtime, moderate
loss.
• Major – Long downtime, significant financial loss.
• Catastrophic – Business closure or permanent
loss.
 Impact on Environment
• Insignificant – No environmental effect.
• Minor – Small contained spill or emission.
• Moderate – Cleanup required, local
contamination.
• Major – Wide impact, long-term recovery
needed.
• Catastrophic – Irreversible ecological damage.
 Impact on Reputation
• Insignificant – No public concern.
• Minor – Limited internal attention.
• Moderate – Negative media coverage,
temporary concern.
• Major – Loss of stakeholder trust.
• Catastrophic – Brand damage, legal/regulatory
loss.
 Example – Fire Incident Severity
• Insignificant – False alarm, no damage.
• Minor – Small electrical fire, controlled
immediately.
• Moderate – Fire in the storeroom, minor injuries.
• Major – Spreads to production, evacuation
needed.
• Catastrophic – Explosion, fatalities, full facility loss.
 Risk Treatment & Residual Risk

• Risk Treatment: Process to modify risk

(eliminate, reduce, transfer, accept).

• Residual Risk: Risk remaining after controls are

applied.
 Risk Treatment – Modify the Risk
There are four main strategies to modify risk:

1. Eliminate

2. Reduce

3. Transfer

4. Accept
 1. Eliminate the Risk
Definition: Remove the hazard completely.
Example:
- Hazard: Use of flammable solvent.

- Action: Replace with non-flammable

water-based agent.

Result: Hazard removed; fire risk eliminated.

 2. Reduce the Risk
Definition: Lower the likelihood or consequences
of the hazard.
Example:
- Hazard: Electrical short circuit.

- Actions: Install circuit breakers, maintain

equipment, and smoke detectors.

- Result: Reduced fire occurrence and impact.

 3. Transfer the Risk
Definition: Shift the impact of the risk to
another party.
Example:

- Hazard: Fire damage to inventory.

- Actions: Buy insurance, outsource storage.

- Result: Financial risk transferred.

 4. Accept the Risk
Definition: Retain the risk when it is tolerable.
Example:

- Hazard: Minor burns from soldering.

- Actions: Train staff, provide PPE.

- Result: Low risk accepted with controls in

place.
 Summary – Risk Treatment Strategies
• Eliminate – Remove hazard (e.g., replace flammable
solvent).

• Reduce – Minimize risk (e.g., alarms, maintenance).

• Transfer – Shift burden (e.g., insurance,

outsourcing).

• Accept – Acknowledge minor risks (e.g., use of

PPE).
 Risk Criteria & Risk Matrix
• Risk Criteria: Basis for evaluating the
significance of risk.

• Depends on legal, technical, and

organizational standards.

• Risk Matrix: Tool to visualize and prioritize

risks based on severity and likelihood.
 What is Risk Criteria?

• Definition: Terms of reference against which

the significance of a risk is evaluated (ISO
31000).

• Used to determine whether a risk is

acceptable, tolerable, or needs treatment.
 Basis for Establishing Risk Criteria
1. Legal and Regulatory Requirements – Fire codes,
safety laws.
2. Industry Standards – NFPA, ISO, OSHA, best
practices.
3. Organizational Policies – Internal risk appetite.
4. Stakeholder Expectations – Employees, public,
investors.
5. Economic Considerations – Cost-benefit analysis.
6. Environmental & Social Impacts – Community or
ecological risk.
7. Historical Incident Data – Past accidents or near misses.
 How Risk Criteria Are Used
Steps Action

1 Identify risk (e.g., fire in storage room)

2 Assess likelihood and consequences

3 Compare with predefined risk criteria

4 Decide: Accept, treat, transfer, or

eliminate
 Example – Risk Criteria Thresholds
• High Risk – Fatality likely; Possible occurrence
→ Unacceptable, take action.

• Medium Risk – Major injury; Unlikely

occurrence → Tolerable with controls.

• Low Risk – Minor injury; Rare occurrence →

Acceptable.
 ALARP Principle
• ALARP: As Low As Reasonably Practicable.

• Balance between risk reduction and

practicality (cost, time, effort).

• Applied in fire safety, chemical plants, nuclear

facilities, etc.
 ALARP Principle – As Low As
Reasonably Practicable
• ALARP means reducing risk to a level where

further risk reduction is grossly

disproportionate to the cost.

• It balances risk severity with the time, effort,

and cost of control measures.

 Steps to Apply ALARP
1. Identify hazards and assess risk.

2. Determine available control options.

3. Conduct cost-benefit analysis (CBA).

4. Apply the 'gross disproportion' test.

5. Implement all reasonably practicable controls.

 Hierarchy of Controls under ALARP
1. Elimination – Remove the hazard.

2. Substitution – Replace with less hazardous option.

3. Engineering Controls – Isolation, fire suppression.

4. Administrative Controls – Training, SOPs.

5. PPE – Fire suits, gloves, helmets.

 Example – ALARP Application
• Hazard: Storage of flammable liquids.

• Controls: Fireproof cabinet (₹50K), Inert gas

system (₹15L).

• Risk: Potential ₹2 Cr loss and fatality.

• Result: Cabinet justified; inert gas system

depends on context.
 ALARP Risk Tolerability Zones
• Acceptable Region – Low risk; no action
needed.

• Tolerable Region – Medium risk; reduce

risk if reasonably practicable.

• Unacceptable Region – High risk; must be

reduced regardless of cost.
 Risk Classification under ALARP

1. Estimate risk using likelihood × consequence.

2. Match to risk zone: Acceptable, Tolerable, or

Unacceptable.

3. Use the gross disproportion test for tolerable

risks.
Use Gross Disproportion Test
In the ALARP (middle) zone:
•Ask: Is the cost of additional risk control
grossly disproportionate to the risk
reduction benefit?

•If yes → ALARP achieved.

•If no → Implement further controls.

 Decision Logic Based on Risk Zone

• Low Risk – Acceptable → No further action

needed.

• Medium Risk – Tolerable → Apply ALARP.

• High Risk – Unacceptable → Must reduce

immediately.
 Examples: Applying ALARP Zones

• Minor electrical fire – Low risk → Acceptable.

• Chemical storage near heat – Medium risk →

Apply ALARP.

• Boiler explosion – High risk → Unacceptable,

take action.
 Summary: ALARP-Based Risk
Evaluation
• Use risk matrix to evaluate risk level.
• Classify as Acceptable, Tolerable (ALARP), or
Unacceptable.
• Apply controls unless the cost is grossly
disproportionate.
• Document decisions with justification.
 Summary – ALARP in Practice
Apply cost-effective risk controls.
Use proportionality: avoid extreme cost for
minor benefit.
Keep records of decisions and reasoning.
Re-evaluate periodically as risks or costs
change.
Thanks for your kind attention

Open for questions…..