Fundamentals of Risk Management

tolerate, treat, transfer and terminate
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added refinement that as the organization is looking to expand, it will have the
option of exiting if the risk appetite and/or risk capacity of the organization would 
be exceeded. This extends the 4Es approach to become 5Es, depending on risk appetite. 
The text box below provides an example of this approach applied to opportunity 
management, although the terminology (as is often the case in risk management) is 
a little different.
The purpose of the evaluation and response is to decide which opportunities require a 
response and what the recommended response will be. The following are the key terms and 
concepts when deciding how to respond to an opportunity and they can be used in 
combination:
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Enhance: the opportunity equivalent of ‘mitigating’ a risk is to enhance the opportunity
by increasing the probability and/or the impact.
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Exploit: equivalent to the ‘avoid’ response, but the ‘exploit’ strategy seeks to make the 
opportunity definitely happen.
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●
Ignore: the ‘acceptance’ strategy takes no measures to deal with a hazard risk, and 
opportunities can be ignored, with a reactive approach but no explicit actions.
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Sharing (transfer) opportunity: ‘share’ strategy for opportunities seeks a partner able
to manage the opportunity who can maximize the chance of it happening.
Opportunity evaluation and response

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16
Risk control 
techniques
types of controls
There are a range of controls that can be applied to hazard risks. The most convenient 
classification system is to describe these controls as preventive, corrective, directive and 
detective. This is the risk classification system suggested in the Orange Book. Table 16.1 
provides a more detailed description of each of these four types of hazard controls.
In relation to hazard risks, the control options of preventive, corrective, directive 
and detective (PCDD) represent a clear hierarchy of controls. The relationship
between these four types of controls and the dominant risk of response for different 
levels of risks is illustrated on the risk matrix shown in Figure 16.1. Table 16.2 gives 
examples of these four types of controls in relation to health and safety risks.