1. An Introduction to Risk Management/Setting the Scene

This chapter introduces risk management. In our Organizations, risk is a natural part of doing business, but the good thing is that risk can be managed. Dealing with risks started in ancient Mesopotamia dating back to about 1754 B.C., but risk management study began after the Second World War. Because of disasters in recent times, risk management became an increasingly important activity. We now live in a complex world, significantly different from 50 to 60 years ago; systems that used to be independent are now interconnected and interdependent, meaning they are by far more complex. The railway system is a complex system, composed of many interconnected subsystems and this affects the safety of the railway system. The basic terms of risk management (Fault–Failure–Hazard–Risk–Safety) are presented and clarified with many examples. The relation of risk to safety as also the parameters that are important for establishing a safe railway system are presented. Governments invest in railway systems that have to be efficient; How and why risk management is as an important factor for a safe and efficient railway system is discussed. By reading this chapter, you will get a basic understanding of risk management and the related basic terms and understand why managing the risks is an essential component for an efficient railway system.