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  Dimitar Zayakov December 22, 2010 8:13

  I think that the difference between the risk elimination and risk substitution is that they are a different ways to manage risk. Of course, they are not the only way and which way we will decide to go depends on the particular problem. But all of you know this as it is obvious of the discussion.  My point is what is preferable - to eliminate (if and when it is possible) or to substitute (when and if it is possible), or to avoid (again when and if it is possible), or to do something else. The answer, form my point of view is that it is depends on the balance  of the  existing factors, which determine the case. Some times the resources needed to avoid risk are more then the eventual looses after his implementation.
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  Abdul Rauf Danka December 22, 2010 6:45

  I agree to opinion of David L Russell, PE. A risk can be reduced, transfered and shared but it is not possible to eliminate. Elimination of risk tantmounts to  either change in process and loction of operation which might increase the cost of risk mitigation that could be higher in dollar amount of risk and may also involve new risks as suggested by David.

  Regards,  
  
  David L Russell, PE said:

  I'll offer a bit of an explanation.  I'm sure others may disagree.

  The concept of risk relates to the concept of vulnerability. If there is no vulnerability, the risk is non-existent. I'll talk in terms of vulnerability reduction and substitution because the definition of risk is anthromorphic

  You can eliminate vulnerability by moving a facility or massively over designing the facility to withstand both external and internal vulnerabilities.  Consider:  Relocate the refinery inland to eliminate the risk from hurricane damage and the vulnerability from the same.  But you may introduce a vulnerability to damage from earthquake or prairie fire or forest fire or airplane crash.

  In that regard, there is no such thing as a facility with "no risk" or no vulnerability. When we attempt to make things foolproof, nature invents a better class of fool.

  Vulnerability by substitution can occur through use of such things as intrinsic safe design or chemical substitution which eliminates certain classes of vulnerability from explosion or toxic formations because the chemistry is different.  (Consider what might have happened at Bophal if Union Carbide had not been using MIC for the reactions.

  So: To summarize:  Vulnerability elimination occurs with specific actions and reduces certain types of vulnerabilities - through relocation or redesign.  Vulnerability substitution occurs when one makes changes in the type of operation to change the basic process to eliminate one or more types of vulnerabilities from specifi sources while producing the same products.

  Hope that helps.

   
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  mohamed badr December 22, 2010 0:40

  Hello Alex,
  ok, may be that is right, any how it is just an example showing the difference between the risk elimination & risk substiution process, how ever which of their risk is higher.
  regards
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  Alex Dali December 21, 2010 23:23

  Hello Mohamed,

  
  A quick note regarding your example : in most countries, travelling by plane is less dangerous than travelling by car

  
  Regards

  Alex

   

  mohamed badr said:

  Dear All,
  I agree with Grant Purdy , we should first define the hazards then evaluate the risk, risk can be (Risk elimination) that means ending the risk arised from that hazard such as stopping a certain risky activity (for example: stop travelling by airplane is a risk elimination of airplane travel accident),
  while the (Risk Substitiution), is to replace a risky activty by another more safe one, (for example: to travel by car instead of aireplane) that will decrease the risk of travel accident.
  
  regards
  i hope that help understanding the difference between them
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  mohamed badr December 21, 2010 23:23

  of course risk can be managed through a systmmatic process well known for all, as follow:
  1- Identification of hazards.
  2- Evaluation of risk to determine (the likely FREQUENCY of losses coming from it & the probable SEVERITY of these losses)
  3- Development Control for dealing with each risk.
  4- Implementing the selected Control.
  5- Monitor the perfomance & review the remaining risks
  
  regards
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  mohamed badr December 21, 2010 23:15

  Dear All,
  I agree with Grant Purdy , we should first define the hazards then evaluate the risk, risk can be (Risk elimination) that means ending the risk arised from that hazard such as stopping a certain risky activity (for example: stop travelling by airplane is a risk elimination of airplane travel accident),
  while the (Risk Substitiution), is to replace a risky activty by another more safe one, (for example: to travel by car instead of aireplane) that will decrease the risk of travel accident.
  
  regards
  i hope that help understanding the difference between them
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  Grant Purdy December 21, 2010 22:51

  The problem lies in the question, not in finding the answer here.  Elimination and substitution concern how you might deal with hazards not with risks as defined in ISO 31000, the global risk management standard.  Strategies involve avoiding a risk by deciding not to start or continue an activity that gives rise to the risk or taking or increasing the risk in order to pursue an opportunity.  You can also remove the risk source for a risk with negative consequences.  The most widely applicable strategies are to change the likelihood or the consequences.  
  Risk reduction is not a defines term in ISO 31000 (or ISO Guide 73 - the risk management vocabulary) as it implies that risk is negative.  Risk, as the effect of uncertainty on objectives, is neutral.  The consequences can be negative, positive or both.
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  Alex Dali December 21, 2010 20:19

  Risk should, must be managed !
  
  jacob szafranski said:

  Nagesh, well put. You hit the nail on the head. It is not a matter of substitution or elimination, as you said its management. If you are not prepared to take risk, you should not play.
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  Alex Dali December 21, 2010 20:17

  Of course, risk can be eliminated !!!
  
  Nagesh Bharadwaj said:

  There is nothing called "Risk Elimination".  Any risk management practioner will tell you that Risk cannot be eliminated.  As a matter of opinion, risk need not be eliminated.  If there were no risk in an activity then the activity would not be that profitable after all.  It is your "beta" from the investment lingo.  Another way to look at it is not taking a preceived risk is also a risk in itself.

  The operating parameter then is that you want to manage risk so that it is at a tolerable level or it will be as expected delivering close to the results you expect in your activity.

   

  Having said that, the discussion of whether something is risk elimination or risk substitution is mere theoritical, you can perceive the way you chose to, I guess.

   
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  Alex Dali December 21, 2010 20:16

  1. This is contractual transfer for risk control
  2. This is risk avoidance (risk elimination)

  
  James Cole said:

  I suspect the answer to your question is often going to be "both".

  1. A company with a problematic IT operation. The Board decides to eliminate that known source of risk to its business by outsourcing IT - in doing so it eliminates one risk but substitutes a new risk (and one that may prove to be a very different animal indeed!)
  2. A company with a problematic line of business may wish to eliminate the risk to its business by ceasing that line of business, removing all the business and operational risks relating to it. Of course, in doing so it also may be removing its opportunity for profit, so no doubt it will substitute a new line of business with the attendant risks that this will bring.

  Does that help? Do you have specific examples in mind?

   

  regards

   

  James