On the basis of its definition of business risk, the Library of Congress worked with its independent auditors to document substantial risks to the collections and to identify appropriate safeguarding controls.
Based on the results of the audits, the Library decided to conduct formal risk assessments of the environments and control activities within selected divisions. Library management realized that risks would need to be calibrated on the basis of the likelihood of their occurrence and on the magnitude of impact, should they occur. The risk associated with an internal control weakness over the safeguarding of the collection assets is assessed ashigh, moderate, or low, depending upon the degree to which present policies and procedures make it highly probable that: 1. Whether risk was acceptable would be determined by the degree to which one or more of the above situations could occur (likelihood of occurrence) and the degree to which the situation would adversely affect the integrity of the collections (magnitude of impact).
Before the Library could begin its risk assessment, management had to determine which internal controls were relevant. To establish a common language for this segregation by risk, the Library uses names of five precious metals—platinum, gold, silver, bronze, and copper—that describe groups of items in the collections by degree of tolerance for risk. Silver includes items that require special handling and items at particularly high risk of theft, such as computer software, popular titles in print, videos, and compact discs. Other libraries can readily devise similar ranking systems to define degrees of risk specific to their collections.
This risk tolerance category determines the levels of controls placed over the Library's items.
The Library of Congress, as a library of last resort that serves primarily the research needs of Congress, has a low tolerance of risk for monographs and manuscripts. In 1997, the Library chose to start the risk assessment process by examining its Geography & Map Division. The Library has now conducted risk assessments of most of its special collections, its general collections, and areas that perform essential activities to service the collections, such as the Preservation Directorate, the Copyright Office, and the Collections Management Division. The final steps in the risk-assessment process are designed to summarize the results of the assessment and translate them into actions for management.
For those risks that the institution decides it cannot tolerate, management must introduce mitigating control activities. Assessing risk and identifying controls are just two steps in the business risk model. 4 Some special format collections share off-site storage space, but this is undesirable and has been assessed as a risk to the inventory control and preservation of those items. 5 To avoid inconveniencing patrons, managers often resist simple security and preservation controls that greatly reduce risk to the collections, such as requiring researchers to don protective gloves to examine fragile materials or allowing only staff to photocopy materials. In line with best practice, the IDC has instituted a robust Enterprise Risk Management (ERM) process, founded on a framework that is shareholder value-based, organisationally embedded, supported and assured, and reviewed on a continuous basis.
The IDC’s risk assessment process presented in the following diagram incorporates seven steps and is typically performed over an 18-month cycle. Monitoring and Reporting: The Risk Management Department monitors and reports on an ongoing basis to Executive Management and the Board Risk and Sustainability Committee regarding the risks facing the IDC. Risk tolerance is considered an integral part of the process and is an organisation’s readiness to bear the risk after mitigation, in the pursuit of its strategic objectives. Board Risk and Sustainability Committee: In terms of the IDC Board Charter, the Board Risk and Sustainability Committee is responsible for assessing and prioritising risk.
ERM is the application of risk management throughout the IDC rather than only in selected business areas or disciplines. Risk at the level of the operations is identified through the Risk Management Department’s operational risk activities.
Accordingly, risk management at the IDC is decentralised and centralised with every staff member of the IDC being responsible for risk management. It is therefore essential that we thoroughly understand the risks facing the IDC across our major risk categories, these being Strategic risk, Financial risk, Operational risk, Governance risk and Information Technology Governance risk.
In some cases, FRA may be extended to assessment of options to mitigate the risk (either through reducing the likelihood of occurrence or magnitude of consequences), although this is also part of the risk management process. Fire Risk Assessment Process4 Risk Assessment Objectives, Metrics and Thresholds Some of the most important steps in the FRA process are identifying the objectives of the risk assessment, the measure(s) that will be used to express risk, and how the risk measures will be presented or communicated for decision making purposes. One might also choose fire-per-building type, risk of untenable conditions, or some other metric. Qualitative approaches treat both frequencies and consequences qualitatively, and include methods such as risk matrices and risk indices. Rather, they are directed at assisting practitioners in selecting the appropriate methodology for any given building and ensuring that the process of risk assessment and approval is undertaken in a proper engineering manner.
The SFPE Fire Risk Assessment Guide does not specify particular risk assessment methods or techniques. However, it highlights A recommended process for fire risk assessment (Figure 1) Tools that may be used for hazard identification Sources of data for risk assessment Approaches to consequence modeling Methods for calculating fire risk Documentation of fire risk assessment The SFPE Guide is structured to follow the flowchart represented in Figure 1, providing guidance and information association with each step in the process.
It provides a framework that describes the properties of a fire risk assessment, particularly where it is being used in a performance-based regulatory framework.
NFPA 551 Review Process (Reprinted with permission from NFPA 551-2013, Guide for the Evaluation of Fire Risk Assessments, Copyright © 2013, National Fire Protection Association, Quincy, MA. The final document, Part 7, provides guidance for the probabilistic risk assessment of buildings.14 The document provides a framework for risk assessment commensurate with a number of approaches. As described by ISO 16732-1, risk management includes risk assessment, but also typically includes risk treatment, risk acceptance, and risk communication (see Figure 4).
While not focused solely on fire, the text provides information on assessing likelihood of occurrence, potential impacts, and strategies for mitigation for a wide range of extreme events – natural, technological, and deliberate, while aiming to achieve a balance of acceptable levels of risk, performance, and cost. Risk Analysis in Building Fire Safety Engineering, Butterworth-Heinemann, Oxford, England, 2007. This process followed generally accepted standards for internal control developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).3 The COSO report on internal control, Internal Control-Integrated Framework, was written to establish a common language that business people, regulators, legislators, and others could use when communicating about internal control. The business risk model presented in this report was developed to satisfy the second of the five elements of the COSO framework, namely risk assessment.
Risk assessment is the identification and analysis of internal and external risks relevant to the achievement of objectives.
Control activities are the policies and procedures an organization develops to ensure that management's directives are carried out and objectives are met. To conduct control activities and identify risks, mechanisms must exist within the organization to capture and communicate relevant information at all levels.


The focus of the auditors' assessment was control activities, which in the Library range from cataloging standards and practices to protocols for the physical handling of acetate disks or eight-track tapes. The assessments would be done in the divisions where collections of differing formats were either permanently stored or temporarily handled as they arrived, or where they were serviced in some manner within the Library. These situations may occur because of the absence of an effective policy or procedure, or failure to adhere to the policy or procedure. Just as the clues to uncovering business risk are found in the mission statement, relevant controls are derived from an examination of business risks. The degree and type of control placed on an item depend upon its relative value and risk of loss or deterioration relative to other items in the collection. 10-11, defines the Library's four relevant controls, provides examples of each type, and describes risks that may be present if these controls are weak. A single-page manuscript has a higher risk of physical loss than does a large monograph. KPMG provided the structure for the risk assessments, employing internal control evaluation techniques similar to those used for financial statement audits. Using the documentation describing the control environment, the team identified and documented the important internal controls that were in place and functioning in each process. After the risk-assessment results had been reported, management was expected to institute new controls or strengthen existing controls to reduce unacceptable risks. It attempted to examine every type of collection item that carried specific risks so that it could extrapolate what had been learned to other similar materials that were not scheduled for assessment.
Some risks can be overcome by changes in policies or procedures; overcoming others requires additional monetary or personnel resources.
IDC’s Risk Management Framework lays out guiding principles for the IDC’s management of risk on an ERM basis. Strategy: The first step in the risk cycle is to assess the risks arising from the IDC’s strategic objectives and those risks which could prevent the IDC from achieving its strategic objectives.
One of the key practices of risk management in IDC is the determination and quantification of our risk appetite based on what is of strategic importance.
Risk Management Department (RMD): RMD proactively promotes risk awareness and has the capacity to monitor and oversee the management of key risks facing the Corporation on the basis of the ERM Framework. Our risk assessment cycle for 2012 has resulted in a Risk Universe and Risk Register of the material risks that the Corporation may be exposed to.
This framework comprises the totality of all the structures, policies, strategies and procedures within the IDC that deal with risk management at the strategic or ERM level. Risks are assessed on a residual risk basis; that is, the possible impact and likelihood taking into consideration the Corporation’s existing controls. This process enables IDC’s Executive Management and Board to highlight areas where additional focus is required.
One framework for the FRA process is shown in Figure 1.4 Figure 1.
Characterizing the population and their risk thresholds is important as it will help drive scenarios of consideration and risk estimation and evaluation later in the process. However, they can also make use of historical data, from similar operations or occupancies, at least to benchmark the process. The NFPA Fire Safety Evaluation System,8 the risk matrix approach in MIL-STD-882D,9 and the risk binning approach outlined in DOE-STD-300910 are examples of this.
The document provides guidance on the selection and use of risk assessment techniques and provides a recommended process to follow. This information is supported with many references and a comprehensive list of information sources for further reading for each step of the risk assessment process. As a result, this guide is suited to a building or fire official or other authority having jurisdiction required to evaluate or approve a building design where the design is being supported by a fire risk assessment.
This reprinted material is not the complete and official position of the NFPA on the referenced subject, which is represented only by the guide in its entirety.) NFPA 551 defines five categories of fire risk assessment methods in order of increasing complexity, namely Qualitative methods Semi-qualitative criteria-based methods Semi-qualitative consequence methods Quantitative methods Cost-benefit risk methods It highlights the importance of identifying the objectives of any fire risk assessment and other factors that should be considered by those undertaking fire risk assessments. Specifically, the document provides guidance with regard to acceptance criteria for life safety and financial assessments, which may use either comparative or absolute methodologies.
As another indicator of the growing interest in fire risk assessment, and the desire for information relative to tools and techniques for fire risk assessment, a number of textbooks have been published in the last decade. The text outlines how risk-informed performance-based analyses can be used to help make important risk mitigation decisions. Principles of Fire Risk Assessment in Buildings, John Wiley & Sons Ltd, Chichester, England, 2008. Despite the absence of a baseline risk assessment for the collections, the auditors could draw significant conclusions about the control environment and note what information was gathered, how well it was communicated, and how various monitoring systems operated. That way, staff could assess the risk to items over the course of their life cycle—from acquisition to cataloging and from service to storage. For example, from the four salient types of risk the Library identified, it derived four corresponding types of "safeguarding controls" that mitigate those risks to its collections.
While not all libraries will face the same risks in equal measure and degree, the risks they face will fall into these four categories, as will the controls designed to mitigate them. Therefore, the risk-assessment process would be more efficient if collections were first segregated by major format types that tend to share similar risk. But not all libraries have closed stacks, even if it places their collections at some risk. This has allowed the Library to build a baseline assessment of risk and mitigating controls that meet the requirements of the audit process and yield critical information about the ongoing needs of the collections.
No situation or environment can ever be totally risk-free, and reducing risk costs money, whether in the form of additional insurance coverage or of funding to implement tighter controls.
For instance, if the risk assessment reveals that existing physical security is inadequate, the institution will likely need to acquire security personnel or equipment to reduce the risk to an acceptable level. Measuring process performance is one way to identify control failure, but constant monitoring is also essential. Risk taking is a necessary element of the IDC’s business model, largely in the form of loans and equity, for potential developmental and financial returns. Risk Assessment: Having identified the risks, these are prioritised based on the probable impact following an occurrence as well as the likelihood of the occurrence happening. Internal Audit Department: The Internal Audit Department assists by reviewing critical control systems and risk management processes.


This process strives to achieve the identification of the critical risks the Corporation may face to enable the Corporation to formulate appropriate risk strategies and action plans to mitigate and address these risks where necessary.
Internal Audit, as the Corporation’s main assurance provider, utilises this risk assessment in the formulation of its Internal Audit Programme. The determination of the IDC’s risk appetite plays an important role in its ERM activities and is linked and aligned to its mandate and business objectives.
What one chooses to address can influence the assessment, and whether or not all scenarios of concern are selected will depend on the focus.
Consequence Ranking, Frequency Ranking and Risk Matrix11 Semi-quantitative approches combine quantitative and qualitative aspects. This guidance document is directed at those responsible for approving or evaluating fire and life safety solutions based on a fire risk assessment. Like the SFPE Engineering Guide: Fire Risk Assessment, NFPA 551 neither specifies particular fire risk assessment methods nor attempts to set acceptance criteria. In ISO 16732-1, principles underlying the quantification of risk are presented in terms of the steps to be taken in conducting a fire risk assessment.
This book was authored by an expert in the field who has developed models for fire risk assessment. Assessments are a continuous part of the internal control process because emerging economic, regulatory, political, and operating conditions will change the type and degree of risks faced by an organization.
These differences affect the amount of risk to the assets that management is willing to tolerate. In addition, and unlike many other divisions, the primary processes of creating the inventory, bibliographical, preservation, and physical security controls all take place within one physically integrated, purpose-built space. Figure 1 on page 16 depicts the procedures that made up the risk assessment process. From this comparison, management determined whether business risks were acceptable or whether controls needed to be instituted to mitigate some of them. It described the processes used to accession, catalog, and prepare the items for use.
For each weakness, the team assessed the degree of risk and whether management was willing to accept the risk. The risks that management was not willing to accept were sorted by level of risk (high, medium, or low) and by control type (bibliographic, inventory, preservation, or physical). At this point in the risk assessment process, management must decide how much risk the institution is willing to accept—a decision that usually comes down to cost versus benefit, because no institution has unlimited resources. Risk Mitigation: Controls for each of the risks are identified through business-focused workshops with Strategic Business Unit and Departmental heads and other senior role players.
Risk appetite is defined as the amount and type of risk that IDC is willing to pursue or retain. Divisional Executives, in turn, assign responsibility for the establishment of more specific risk management policies and procedures to Strategic Business Unit and Departmental heads. Event trees are developed for a scenario, with frequencies and consequences described, and the risk then estimated.
Rather, it sets out the technical review process and documentation that should be used by those evaluating or approving.
These quantification steps are initially placed in the context of the overall management of fire risk and then explained within the context of fire safety engineering.
The frequency and depth of the monitoring activities depend on the amount and degree of risk faced by the organization. For example, the risks to a recent monograph on the Japanese economy, printed on acid-free paper and of little artifactual value, would be different from the risks to a Hollywood feature film from 1956 or to the 1991 Sports Illustrated swimsuit issue.
Creating and enforcing such a policy would greatly reduce the risk of theft, loss, or misplacement of Library materials. College libraries, for example, usually have open access to their stacks and so must institute policies and procedures that mitigate the havoc that can result when students pull books from the shelves and incorrectly reshelve them, or take them to the dormitory without checking them out. Management has less risk tolerance for items of considerable value that cannot be replaced than for those items that can be bought in the marketplace. These considerations, together with a highly knowledgeable and experienced staff, made this particular collection an ideal place to begin the process of translating library practice into a business model. The degree of risk was measured by both the likelihood of occurrence and the magnitude of impact. Management analyzed the types of risks within each level to determine whether there were any pervasive weaknesses of a particular control type. The impact of a high-risk behavior is obviously greater if the item at risk is a holograph Emily Dickinson poem rather than the second copy of the fourth edition of Joseph Heller's Catch 22. Execution and Monitoring: The results of the risk assessment, including key controls under review, are presented to IDC’s Executive Management and the IDC Board Risk and Sustainability Committee.
Moreover, Internal Audit performs an effectiveness review of management’s risk assessments and the organisation’s internal controls whilst providing guidance around the design and improvement of control systems and risk mitigation strategies. It also means that unknown or unacceptable life safety or financial loss concerns might exist in any given building, particularly if there are attributes of the building, its occupants, processes or mission, which are not specifically addressed by applicable codes and standards. Each item has its own risks, based on physical features of the recording medium and perceived value, and in each case, the risks are dynamic and change over time. College library managers may accept the risk to their collections when those controls fail occasionally, because it is worth it to meet student needs. Similarly, risk may be unacceptable if a monograph is not cataloged or the number of copies the institution holds is not noted in a bibliographical database.
Assurance: Assurance that the risks identified and the associated controls are appropriate and effective is the responsibility of the assurance providers, as identified in the assessment.
One way to determine whether such a potential exists is by undertaking a fire risk assessment of the building or facility. A judicious choice of formats and genres produces a risk assessment that allows extrapolation from these data to similar types of collection items. In contrast, risk may be acceptable if individual pieces of a collection of manuscript correspondence do not receive item-level description, provided there are compensating controls in place.



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