To understand Risk Management, we must first understand the difference between a hazard and a risk as they are the core elements of Risk Management.
A hazard is something that can cause harm or damage, e.g, a bald nose wheel tire. A hazard can be a present condition, event, object or circumstance that could lead or contribute to an unplanned or undesired event.
A risk is the chance or likelihood, high or low and the severity that any hazard will actually cause harm or damage if not controlled or eliminated, e.g., the tire fails during takeoff roll and causes the aircraft to veer off the runway and hit a runway marker.
Risk Management is a decision-making process designed to systematically identify hazards, determine the level of risk (hi/lo), and determine the best course of action. Systematically means that we employe a repeatable process (system) to identify, analyze and mitigate risk. Such a system should involve the use of a Risk Assessment Tool or in our case, a Flight Risk Assessment Tool or FRAT.
The level of risk of a particular hazard is measured in terms of severity and likelihood that the hazard will cause a loss (damage or harm). Another facet in evaluating risk is exposure. How many people or resources will be affected if the risk is not controlled or eliminated. Often this relationship between risk and severity is visualized in a Risk Matrix (see below).
The FRAT uses a risk matrix that incorporates results from the risk assessment and converts them into points to show the level of risk.
Pilot are responsible for determining their own level of risk. To manage risk affectively, it is important for the pilot to be able to understand their perception of risk and their risk threshold. People have different levels of experience, training, knowledge and abilities. An unacceptable level of risk for one pilot may not be unacceptable to another, e.g., a VFR only pilot would find a forecast of IFR unacceptable, but and instrument rated pilot may find the forecast of IFR weather to be within their risk level as a result of their training, knowledge and experience. A serious problem can occur when the pilot falsely perceives they can accept risk that is beyond their capability. The pilot then is exposed to dangerous risk that the pilot does not have the means to control or eliminate.