Fault Tree; a Pro-Active Technique to Manage Risk

This is another very useful technique for identifying and eliminating risk. Fault tree tries to understand the potential for failure and possible causes of failure. It considers the chain of events that could occur from collecting of raw material to the finishing of goods including the supplies, delivery of product, creation of resources etc. It is the type of flow chart which reveals all the sources from which the problem can arise and with which the risk is connected. It looks at all the production process and then analyzes that from where they supply chain can be broken.

Risk Manager will prepare a list of all the possible faults, that list will be called as fault tree. For example in a manufacturing concern, if there is fire in a plant, the risk manager will list down all the possible risks because of which the fire in the plant occurred. Risk Manager will usually ask “What If “questions. Maximum possible events will be collected and then a fault tree will be created.

FAULT TREE OF FIRE IN A PLANT

  1. Short circuit
  2. Mechanical Problem
  3. Smoking in the working area
  4. Poor Maintenance
  5. Poor Management
  6. Hazards of Raw Material
  7. Fuel placed nearby the plant
  8. Over heating
  9. Electrical Fluctuation
  10. Intentional Fire
  11. Terrorism
  12. Riot & Strike Damage
  13. Earthquake

Probability of occurrence of any event will be different for example a risk manager will consider that what can be the cause of short circuit, it could be the break down of cables in the vicinity of plant and the fluctuation in the electricity voltage. The risk manager will then calculate and assess all the data and then will tell the organization the chances of occurrence of short circuit. The risk manager will try to identify the root cause of any unexpected occurrence and will take steps to minimize the risk. The risk manager will make a list of all the faults due to which an unpleasant event can occur in advance and will also take steps to eliminate the risk, therefore it is known as a pro-active technique.

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