Risk management is a formalized method to address risk in order to lower the dangers of flight.
The first step in risk management is to identity the risk, such as using the PAVE checklist. Once identified, the risk level must be evaluated.
A basic process to identity the level of risk is to consider the probability of an event occurring in relation to the consequences or impact of that event. The two elements can be combined to determine the risk level. This process can be formally done during pre-planning or informally during actual flight.
Risk Level = Probability X Impact
When evaluating the risk level, a pilot should consider the consequences, alternatives, reality, and external pressures (CARE).
Consequences: What will be the result if this risk is not addressed?
Alternatives: What other options are available?
Reality: How likely is this to occur?
External Pressures: Are there outside influences affecting this decision?
After the risk level is determined, there are several choices that can be done. The risk can be transferred, eliminated, accepted, or mitigated (TEAM).
Transfer: The pilot may choose to transfer the risk, by asking a more skilled pilot to take the flight.
Eliminate: Can the risk or hazard be eliminated?
Accept: A risk is generally accepted when the level is low compared to the cost of reducing the risk.
Mitigate: Can the risk be reduced to an acceptable level?
Risk management is an ongoing process that occurs throughout the flight.
FAA-H-8083-21A Helicopter Flying Handbook pg. 14-9
FAA-P-8740-69 Aeronautical Decision Making