RISK MANAGEMENT IN

THE NATIONAL SYSTEM

A Practical Guide
Contents
Introduction 2
Terms associated with risk management 3
The risk management process 3
Step 1 – Identify hazards 3
Step 2 – Consider the risks associated with the identified hazards 4
Step 3 – Identify and implement ways to control the risks 6
Step 4 – SMS/review 9
Appendix A – Risk register examples 10
Appendix B – Further example of risk assessment/control and the completed risk register 12

Risk Management in the National System - A Practical Guide 1

RISK MANAGEMENT IN THE NATIONAL SYSTEM
A PRACTICAL GUIDE
Introduction
The Marine Safety (Domestic Commercial Vessel) National Law Act 2012 (the National Law) provides a single national
framework for ensuring the safe operation, design, construction and equipping of domestic commercial vessels (DCVs).
The National Law imposes safety duty obligations on owners and masters of DCVs to ‘so far is reasonably practicable’
ensure the safety of their vessels, marine safety equipment that relates to the vessel, and the operation of the vessel.
DCV owners and masters must implement and maintain Safety Management Systems (SMS) on their vessels to comply
with their statutory safety obligations. Documented SMS are one way in which DCV owners can demonstrate that they
comply with the SMS requirements of the National Law.

The Marine Order 504 (Certificates of operation and operation requirements — national law) – MO504 specifies the
minimum requirements for the safe operation of DCVs.

Marine Order 504 makes clear the owner’s responsibility to manage the risks associated with the operational safety of
a DCV. Risk management is a key component in developing an effective SMS.

Marine Order 504 requires that a risk assessment of the operation of any Class 1, 2, 3 & 4 vessels, be carried out which
identify:

• key daily tasks to be performed by all crew members

• any potential risks involved in the conduct of any task that may expose the vessel, operational environment, or
persons on or near the vessel to unacceptable risk

• the appropriate crew for the vessel

• a person who is responsible for ensuring that actions needed to correct any identified potential risk is carried
out.

One of the key responsibilities of a DCV owner is to ensure the risk management process is documented and kept up-
to-date. It’s equally important that a DCV owner regularly monitors and reviews the appropriateness and effectiveness of
risk controls. Identified risks must be reassessed and risk controls revised as necessary if the vessel’s normal operation
changes or if the master considers that the risk to the safe operation of the vessel has changed. These reviews ensure
the risk management process remains relevant to the vessel’s ongoing operation and increases the capacity of those
involved to effectively manage risk.

References
• AS/NZS ISO 31000

• IALA Guideline - G1138 The Use Of The Simplified IALA Risk Assessment Method (SIRA)

• SA/SNZ HB 436:2013, Risk management guidelines — Companion to AS/NZS ISO 31000:2009

• HB 158—2010, Delivering assurance based on ISO 31000:2009 Risk management — Principles and guidelines

2 Risk Management in the National System - A Practical Guide

Terms associated with risk assessment
Hazard Consequence
A hazard has the potential to cause death, injury, illness The type and or severity of harm that a person could
or environmental damage, for example: sustain if they came in contact with the hazard.
• the environment in which the vessel operates
• unsuitable vessel
• machinery plant and lifting devices Risk rating
• inadequate safety systems The result of using a likelihood and consequence matrix
It’s everyone’s responsibility to identify hazards. to determine the severity or rating of a risk.

Risk Risk controls

Risks arise from interactions with one or more hazards Risk control is a risk modification process. It involves
that may have a detrimental impact on safety selecting and implementing one or more control options.
Once a control has been implemented it assists with
managing the risk. You have many control options.
Elimination or removal of hazards and their associated
Risk assessment risks is always the best option. However this is not always
The process of evaluating the likelihood of an incident feasible or possible. So in these circumstances, risk
or injury: controls are used to reduce the risks to an acceptable
level.
• What could cause harm (hazard)?
Examples of risk controls are: fire suppression systems,
• What could go wrong (risk)?
wearing lifejackets when on deck and thorough induction
• How likely is it to happen (likelihood)? and training programs.
• How bad will it be (consequences)?

Risk register
Likelihood A risk register is a central point where all identified risks
The possibilities, high or low, that someone will come are listed. It includes all relevant information to the
into contact with the hazard. vessel’s risks and must be updated regularly.

The risk management process

The following steps should be completed to effectively manage risk as part of the vessel’s Safety Management
System (SMS). It is important to note that vessel owners, masters and crew should be involved in all of the following
four steps of the risk management process.

STEP 1 STEP 2 STEP 3 STEP 4

Hazard identification Risk assessment Control SMS/Review

Step 1 – Identify hazards

Identify and document all hazards associated with the vessel and its operation. This should be the start of your risk
register (examples at Appendix A).

Every vessel operation is different and some hazards are likely to be unique to a particular operation. There could be
hazards associated with the:
• vessel’s machinery, plant and equipment
• the type of operation the vessel is involved in for example dive charter and fishing operations
• the daily activities of the crew such as fuelling, loading of stores and hauling nets
• passenger access and accommodation
• operating area and environment.
Risk Management in the National System - A Practical Guide 3
Example
A commercial fishing vessel owner and crew identify the trawl winch associated with fishing operations is a
hazard that poses a potential threat to the safety of crew. The hazard is entered into the vessel’s risk register.
(Refer Appendix A)

Step 2 – Consider the risks associated with the identified hazards

Once the hazards have been identified consideration needs to be given to the possible impact of these hazards on the
safety of people who operate the winch.

The winch has been identified as a potential hazard. The risks associated with the winch are:
• Crew could be injured during its operation by being drawn into the winch.
• Crew could be entangled in the net during setting and dragged overboard.

The associated risks have been recorded in the vessel’s risk register at Appendix A.

In order to determine the potential impact of the hazard we need to consider the chance of someone being hurt which
we will refer to as the likelihood. We also need to consider the possible harm that it could cause them which we will
refer to as the consequence. This is known as the risk assessment phase.

The following tables are based on examples in Australian Standard 31000:2009 and help us to determine the
likelihood and consequence.

4 Risk Management in the National System - A Practical Guide

The vessel owner, master and crew have decided it is likely that a crew member could be caught in the trawl winch so
they have circled this on the table.

Likelihood tables, examples

Category Explanation

Almost certain/frequent Expected to occur in most circumstances, or often in the life of a vessel’s operation.

Probably occur in most circumstances but unlikely to occur often in the life of a vessel’s
Likely
operation.

Might occur at some time, unlikely to occur to every vessel but may occur to a few vessels of a
Possible
particular type.

Unlikely/remote Unlikely to occur but should be considered as possible.

So extremely remote that it should not be considered as possible unless exceptional

Rare/improbable
circumstances exist.

The descriptors and value for the “Likelihood” of an incident

Descriptor Percentage Chance Per Year

Almost certain Common event 95% Weekly occurrence

Likely Known to occur 60% Monthly event

Possible Could occur, heard of it happening 40% Up to three times a year

Unlikely Not likely to occur 20% Once in a year

Rare Practically impossible 5% Unheard of occurring

Reference: IALA Guideline - G1138 THE USE OF THE SIMPLIFIED IALA RISK ASSESSMENT METHOD (SIRA)

The vessel owner, master and crew have decided that injuries from the trawl winch could be fatal or very serious, so
they assign a consequence rating of major as circled.

Consequence tables, examples

Category Human injury Financial cost Work/income/reputation Environment

Catastrophe Multiple fatalities Loss of vessel, total Operations halted, image / Extensive
loss of income reputation is severely damaged environmental damage

Major Fatality Extensive financial Major disruption to operations, Major environmental

loss temporary loss of income, image damage
/ reputation impacted

Moderate Disabling injury requires Significant financial Significant disruption to Significant

medical treatment loss operations, image / reputation environmental damage
suffers

Minor First aid treatment for Not notable financial Minor disruption to operations Minor environmental
bruises or minor cuts, loss damage
abrasions

Insignificant No injuries Negligible financial No adverse effect on operations Negligible

loss environmental damage

Risk Management in the National System - A Practical Guide 5

The likelihood and consequence matrix helps the vessel owner, master and crew to use the likelihood and
consequence ratings that they’ve assigned to determine the risk rating. As you will see below, the risk rating for a crew
member being caught in the trawl winch is extreme.

Likelihood and consequence matrix

Ref. ISO 31000 Consequence

Likelihood Insignificant Minor Moderate Major Catastrophic

Almost Certain Moderate High Extreme Extreme Extreme

Likely Moderate High High Extreme Extreme

Possible Low Moderate High Extreme Extreme

Unlikely Low Low Moderate High Extreme

Rare Low Low Moderate Moderate High

Step 3 – Identify and implement ways to control the risks

Once the risks have been assessed they need to be controlled. Risks must be either eliminated or reduced to a level
that is as low as is reasonably practicable. Risk controls are specific actions taken by vessel owners to eliminate risks
or reduce risks to an acceptable level.

Here are some examples of risk controls:

• developing operational procedures

• training and inducting crew

• developing effective emergency response plans

• regular inspection and maintenance of the vessel, the machinery onboard and the equipment

• use of effective personal protective equipment.

6 Risk Management in the National System - A Practical Guide

The hierarchy of controls as outlined in the table below is part of a globally recognised tool that helps vessel owners,
masters and crew to determine the most appropriate approach to control risks. While elimination of the hazard is
always the preferred option, it is not always feasible or possible. If a hazard cannot be eliminated steps must be taken
to implement a range of risk controls to reduce the risks to an acceptable level.

Hierarchy of controls
Control Effectiveness Description

Elimination Most effective Eliminate the hazard or risk

Substitution Replace with something similar with less risk

Isolation / engineering For example - install guards on machine, redesign the task

Administration / training Implement policies, procedures and training

Personal protective Provide equipment such as gloves, self-inflating lifejackets,

equipment (PPE) Least effective personal locator beacons and so on

For the trawl winch the vessel owner, master and crew agree that removal of the winch from the vessel is not
a practical step to take. They decide to implement a range of risk control measures to reduce the risk to an
acceptable level.

The type of risk controls that can applied will depend on a number of factors that will vary on a case by case basis.
Here are some of the factors:
• nature of the hazard

• any limitations or constraints imposed by the design of the vessel, machinery or plant

• competency of crew who interact with the hazard

• cost of control options by comparison with the likelihood and possible consequence of the risk occurrence

Once suitable risk controls are identified they need to be implemented as soon as possible to help manage the risk.

Risk Management in the National System - A Practical Guide 7

 The vessel owner, master and crew decide the company’s existing fitness for work procedure, fatigue
management policy and planned maintenance program are sufficient, however, they agree to implement the
following risk controls:

1. Standard operating procedures (SOPs) need to be established for operating the trawl winch and for net
operations.

2. All crew will be introduced to the SOPs at the safety induction when they first join the vessel.

3. All crew will receive refresher training every three months to ensure their currency of knowledge of the
SOPs.

4. An emergency stop will be fitted to the trawl winch.

5. Install additional deck lighting for night operations.

6. All crew will be provided with personal protective equipment (PPE) and be required to wear their inflatable
lifejacket while on deck.

7. The new SOPs will form a part of the vessel’s SMS.

The risk controls have been entered into the risk register at Appendix A.

Once suitable risk controls are applied, it is useful to re-assess the risk to see if the risk rating has changed. In many
cases the likelihood of a risk occurring will reduce when effective risk controls are in place.

The vessel owner, master and crew re-assess the risks associated with the trawl winch once all of the proposed
risk controls have been implemented. This time they find that the likelihood has been reduced from likely to
unlikely and that the possible consequence has been reduced from major to moderate.
The overall risk rating has therefore dropped from an extreme risk to a moderate risk (see risk matrix below).
The details are all captured in the vessel’s risk register (see appendix A).

Ref. ISO 31000 Consequence

Likelihood Insignificant Minor Moderate Major Catastrophic

Almost Certain Moderate High Extreme Extreme Extreme

Likely Moderate High High Extreme Extreme

Possible Low Moderate High Extreme Extreme

Unlikely Low Low Moderate High Extreme

Rare Low Low Moderate Moderate High

8 Risk Management in the National System - A Practical Guide

Step 4 – SMS/review
Once risk controls have been put in place for all identified risks they should form part of the operation’s SMS and be
monitored and reviewed to verify their effectiveness. The outcomes of the review and verification process should be
documented. If the monitoring and review process identifies a short coming or failure in the risk control measures, the
risk assessment process should be revisited.

The Marine Order 504 requires the SMS and therefore the risk management process upon which it is based to be
reviewed at least annually. In addition, another trigger for reviewing the risk register could be as a result of a near
miss, incident or accident.

The review of the SMS and risk management process ensures their currency and relevance through the DCV owner
and crew/s commitment to continuous improvement. Continuous improvement ensures DCV owners and crew are
actively involved in the ongoing maintenance of the SMS and risk management process and this is essential to the
development of a safety culture.

Risk Management in the National System - A Practical Guide 9

 Appendix A – Risk register examples
Risk registers come in various formats. The following examples are provided as a guide for vessel owners to assist them with the risk assessment and control process, vessel owners have the
flexibility to determine which type of risk register best suits their needs. The first entry in the example below shows how the outcomes of the trawl winch risk assessment and control process
have been recorded.

Example No. 1
Pre-control Post-control
Likelihood Likelihood
 Initial risk  Residual Accept
Activity Hazard / risk Risk control
Consequence rating Consequence risk rating Yes or No

Fishing Trawl winch Likely Extreme • Standard operating procedures for safe use of the winch and Unlikely Moderate Yes
net operations
• Emergency stop installed on trawl winch
• Installed additional deck lighting for night operations
• Crew receive safety induction and refresher training

10 Risk Management in the National System - A Practical Guide

Major Moderate
• Fitness for work and fatigue management policy
• Master has senior first aid certificate
• Inspection and maintenance program for winch
• Non-skid deck
• PPE for crew (lifejackets, strobe light and personal locator
beacons)

Loading Manual handling injuries and Likely Extreme • Loading procedure Unlikely Low Yes
stores falls • Training and induction
Major injuries • First aiders Minor injuries
General Person overboard, drowning Possible Extreme • Guard rails, boarding ladder, MOB procedure, training and Unlikely Low Yes
induction, self-inflating lifejackets, locator beacons
Major Minor injuries

Incomplete
 Example No. 2
Here is an example of a simplified risk register, one that might be found on a small commercial fishing vessel. It is important to note, that while not shown in the example the
owner/skipper has considered the likelihood and consequence of the risks that have been identified.

Controls in place
Activity Hazard Risk Controls
Yes No
Preparation Lifting or carrying weights Manual handling injury • Lifting procedure 
• Manual handling training
Preparation Slippery boat ramp or crush between vessel and Crush injury or slip on boat ramp • Suitable footware 
trailer • Launch and recovery procedure
• Training and induction
Operations Crew affected by alcohol/drugs Injury, endanger vessel operations • Fitness for work policy 
Operations Navigational hazards Collision, grounding • Qualified skipper 
• Good local knowledge
• Emergency plan
• Adequate lookout
• Fitness for work policy
Incomplete

Example No. 3
Pre-control Post-control

Activity Hazard/risk Risk rating Risk controls Risk rating Person responsible for implementing

Cruise Passenger overboard Extreme • Deckhand lookouts Moderate Owner and master
• Life rings, lights
• Person overboard procedure
• Training and induction
• Quarterly drills
Incomplete

Risk Management in the National System - A Practical Guide 11

 Appendix B – Further example of risk assessment/control and the completed risk register
The owner/skipper and deckhand of a 10 metre outboard propelled long line fishing boat conduct a risk assessment as part of the process of documenting the SMS for the operation.
In order to make the task easier they break their operation down into the various activities that they do on a day-to-day basis. As a result of their deliberations and discussions they
identify the following hazards and risks.

While not shown in this example the owner/skipper has considered the likelihood and consequence of the risks identified in the following table. The owner/skipper has then recorded the type of
controls that are proposed to either eliminate each risk or reduce the likelihood or the potential consequence of each risk. The owner/skipper then develops and documents the relevant policies
and procedures that they need to support implementation of the controls. In addition, the owner/skipper ensures that other controls such as personal protective equipment and the inspection and
maintenance of the vessel are in place.
Controls in place
Activity Hazard Risk Controls
Yes No
Preparation Lifting or carrying weights Manual handling injury • Lifting procedure
• Manual handling training
Preparation Slippery boat ramp or crush Crush injury or slip on boat ramp • Suitable footware
between vessel and trailer • Launch and recovery procedure
• Training and induction
Preparation Adverse weather Capsize • Weather assessment and access to weather information at sea

12 Risk Management in the National System - A Practical Guide

Preparation Vessel not ready for sea (fuel, Vessel or equipment break down, fire • Programmed inspection and maintenance
maintenance, safety equipment) • Daily check procedure
Preparation Refuelling Fire / explosion • Programmed inspection and maintenance
• Refuelling procedure
• Smoking policy
Operations Crew affected by alcohol/drugs Injury, endanger vessel operations • Fitness for work policy
Operations Navigational hazards Collision, grounding • Qualified skipper
• Good local knowledge
• Emergency plan
• Adequate lookout
• Fitness for work policy
Operations Knives Body injury • Training and induction
• First aid
• Emergency procedure
Operations Hooks – long line Crewman overboard, severe injury / • Long line procedure
potential • Training and induction
• PPE (inflatable lifejackets, knife/lanyard, personal locator beacon)
• Emergency procedure
Operations Loss of stability / capsize Crewman overboard • Long line procedure
• Training and induction
• PPE (inflatable lifejackets, knife/lanyard, personal locator beacon)
Operations Dangerous by-catch Crew injury • PPE, gloves,
Operations Fire at sea Fire / explosion • Programmed inspection and maintenance
• Fire extinguisher
• Smoking policy
• Emergency plans
Operations Exposure Heat stress / sunburn • PPE (sunscreen, hats)
Vessel (trailering/unloading) As per preparation above
 Australian Maritime Safety Authority
GPO Box 2181 Canberra City ACT 2601
02 6279 5000
AMSA 651 (7/18)
amsa.gov.au