The Risk Management Tool Box Blog

ALARP and Cost-Benefit Analysis

Graham Marshall - Monday, November 07, 2011

ALARP is short for “as low as reasonably practicable” and the core of this concept is “reasonable practicality”.  

That means weighing the risk of something occurring and its level of consequences against the time, effort, and resources needed to control it.

Assessing if something is “reasonably practicable” allows for a risk-based approach to health and safety rather than a prescriptive approach. This flexibility is a great advantage of the safety-case regime found in the UK and Australia over the OSHA regime found in the USA.

Deciding whether a risk is ALARP requires good judgement.  In most cases, decision-making about ALARP is straight-forward and uses reference to existing standards of good practice.

 "Good practice” is defined by the UK Health and Safety Executive as: “those standards for controlling risk that HSE has judged and recognized as satisfying the law, when applied to a particular relevant case, in an appropriate manner.”

For hazards in complex or novel situations, however, ALARP builds on good practice, using more formal risk assessment and risk management processes such as Cost-Benefit Analysis (CBA).

You should also remember, as well, that "reasonably practicable" is a narrower term than "physically possible".  In essence, making sure a risk has been reduced to ALARP is about weighing the risk against the sacrifice needed to further reduce it.

The decision is weighted in favour of health and safety because the presumption is that the duty-holder should implement the risk reduction measure.

To avoid having to make unwarranted sacrifices in time, effort, or resources, however,  the organization involved must be able to show that it would be grossly disproportionate to the benefits of risk reduction that would be achieved.

Thus, the process is not one of balancing the costs and benefits of measures but, rather, of adopting measures except where they are ruled out because they involve grossly disproportionate sacrifices.  Extreme examples might be:

+   To spend £1m to prevent an employee suffering a cut finger is obviously grossly disproportionate; but

+   To spend £1m to prevent 150 fatalities in a gas explosion is obviously proportionate.

In most situations, deciding whether the risk is ALARP involves a comparison between the control measures an organization has in place and the control measures one would normally expect to see in such circumstances.

Once what is good practice has been determined,  assessing if a particular risk is ALARP is likely to be concerned with the relevance of the good practice, and how appropriately it has been (or will be) implemented.  Where there is relevant, recognized good practice, the regulators in both the UK and Australia will expect organizations to follow it.

 If organizations want to implement something different, they must be able to demonstrate to the Regulators satisfaction that the measures they propose to use are at least as effective in controlling the risk.

Where the situation is complex, it may be difficult to reach a decision on the basis of good practice alone. There may be cases involving a new technology or process condition where there is no relevant good practice. In such cases, good practice should be followed as far as it can be, and then consideration given to whether there is any more that can be done to reduce the risk. If there is more, the presumption is that duty-holders will implement these further measures but this needs to be confirmed by going back to first principles to compare the risk with the sacrifice involved in further reducing it.

Often such “first principles” comparisons can be done by applying common sense and/or exercising professional judgment or experience.

For example if the costs are clearly very high and the reduction in risk is only marginal, then it is likely that the situation is already ALARP and further improvements are not required.

In other circumstances the improvements may be relatively simple or cheap to implement and the risk reduction significant: here the existing situation is unlikely to be ALARP and the improvement is required. In many of these cases a decision can be reached without further analysis.

But there are some instances in high hazard industries with potentially serious consequences where the situation is less clear-cut.

In these instances, a more formal Cost Benefit Analysis (CBA) may provide additional insight to help come to a judgment about ALARP.

In a standard CBA, the usual rule applied is that the measure should be adopted only if benefits outweigh costs.

However, in ALARP judgments, the rule is that the measure must be adopted unless the sacrifice is grossly disproportionate to the risk.

So, the costs can outweigh benefits and the measure could still be reasonably practicable to introduce.

How much costs can outweigh benefits before being judged grossly disproportionate depends on many  factors.  In all cases, however, good judgement and sound use of the risk assessment methodology will assist to arrive at the right decisions.

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