Explaining Adverse Impact Analysis: A Case Study Example & Free Worksheet

Explaining Adverse Impact Analysis: A Case Study Example & Free Worksheet
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Recognizing Significant Impacts

Planning a project is not just a matter of outlining the phases and laying the guidelines, the methods and the procedures of a venture or mission. It requires an act of inventiveness known as adverse impact analysis that is integrated while formulating the project plans.

Numerous risks that may be known, perceived or anticipated are inherent and associated in all types of businesses for almost every activity like building constructions, use of properties whether public or private, hiring and termination policies and processes, and handling and transport of cash and goods, just to mention a few.

The objective of adverse impact analysis is not to disqualify or exclude a method or procedure that has been proved to be potentially dangerous or damaging to life and property. Such methods or procedures are deemed essential to the completion and attainment of a goal. What the analysis aims to achieve is to identify them in order to put in place the mitigating measures that would curtail their effects.

That way, the damaging effects can be controlled or managed if not totally precluded from happening, since the activities to which they are related are necessary to a project or business process.

Image Credit: Yerkes and Dodson 1908

Case Study Example: Cash-in-Transit (CIT) Adverse Impact Analysis and Assessment

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The handling of cash-in-transit is an essential activity to banks, pawnshops, foreign exchange dealers, CIT security service providers and other businesses that require the transport of large sums of cash to and from the business place and the depository banks. The nature of this particular transaction is highly susceptible to risks, as it attracts felons and presents potentially life-threatening detriments faced by employees involved in the handling and transport of CITs.

The following pertains to the assessment of adverse impacts after all threats, risks and hazards have been identified.

1. Assessment of all evidence that leads to the occurrences of potentially negative effects, with a mindset that is free from bias or partiality. There should be proper consultation with employees and any other persons who are legally involved with handling CIT as part of business procedure. However, due care should be taken by limiting the number of individuals involved in the actual planning in observance of a CIT transaction’s confidential nature.

Assessments of adverse risks should be conducted by referring to the following but should not be limited to:

  • Past records of CIT adverse incidents whether internal or external to the institution, including those known to the industry associations, police force, government regulating bodies for CITs, and occupational health and safety consultants.

  • Feedback from employees directly involved with CITs based on their own experiences and/or academic as well as practical knowledge.

  • Consultation with a professional crime analyst who can perform an assessment of the adverse risks present in the general areas of responsibilities and in the CIT system. This is in order to identify the critical routes, areas, thoroughfares and methods used, all considered as unavoidable for transporting CITs.

  • Feedback of clients who require CIT servicing.

  • Statistical data of crimes involving CIT services and activities; particular attention should be given to the places and modus operandi.

2. Define the necessity of including the phase, method or procedure despite its adverse impact, by providing the justifications for its deviations from the standards. This entails:

  • Describing the purpose of CIT and its related activities in relation to the business.

  • Establishing the criteria and conditions that necessitate CIT servicing, including justifications for using non-armored or soft-skin vehicles.

  • Providing definitions for all terms related to the meaning of Cash-in-Transit and CIT, which includes the CIT Client, the CIT personnel, the CIT armored and non-armored vehicles, the CIT firearms and other security equipment, CIT communication system, the amount of CIT to be serviced, CIT locations, the CIT code of practices for both covert and overt operations, CIT insurance coverage, and all other terminologies or areas of concerns related to CIT activities.

Image Credit: Colin Brown from Silver Lake, CA, U.S.A for Wikimedia Commons

Please proceed to the next page for the continuation of our Case Study Example: Cash-in-Transit (CIT) Adverse Impact Analysis and Assessment

Case Study Example: Cash-in-Transit (CIT) Adverse Impact Analysis and Assessment (continuation)

Pareto principle applied to community fundraising

3. Measure the degree of each risk by using an impact analysis ratio or other practical method of quantifying the high and marginal risks that require mitigation, i.e. Pareto rule, Gantt charts, PERT analysis, the use of statistical evidence or court case decisions and rulings, and past records of insurance recoveries.

Plot estimates for “Likelihoods” into Highly-Likely, Likely, Unlikely, and Highly Unlikely as well as the degree of probabilities: Highly Extreme, Extreme, Major, Moderate and Minor. Consider the worst outcome in the event that the hazard or threats will occur, which pertains to fatalities, injuries, amount of cash involved, environmental or site damages.

Note: Use the Adverse Impact Analysis Worksheet discussed in page 3 of this article, where you can find the link to the free, downloadable worksheet template.

4. Affirm that there are no other alternative measures to replace said phase, method or procedure after comparisons are made against all external sources of qualified, reliable, complete and verifiable data.

There should be proper consultations with the insurance underwriter and head of local and state police, as well as other crime prevention forces, industry associations and an OHSA consultant.

5. Risks shall be considered for all processes, whether financial, implemental, procedural, social, legal, environmental , ethical and all other factors that could possibly bring about a disastrous impact on the project’s outcome.

Compile all relevant federal, statutory, local and common laws; codes of business ethics, publications containing reviews, editorial insights, consumer group issues, concerns of civic organizations, initiatives of industry associations, as well as national and local news events and developments that are all related to CIT transactions.

6. Develop a presentation of the cause and effect scenarios once the trigger factors are launched or activated not as an element that is incidental but as an avoidable part of the project’s procedures.

Create virtual enactments that will depict the scenarios as to when, where, how , whom and what will take place in the event that the perceived hazards happen.

7. Include the preparation of stakeholder analysis, which will provide views of the projected impact whether positive or negative and the trigger factors that could cause the possible transformation of the positive into negative.

Prepare mock-financial analyses and statements that present the adverse impacts of highly-extreme, extreme and major levels of highly-likely and likely scenarios. The potential costs, effects and collateral damages should be projected in their most realistic perspective.

Please proceed to the next page for the continuation of this case study example of adverse impact analysis for cash-in-transit transactions.

Image Credit: Siberianwarcat for Wikimedia Commons

Case Study Example: Cash-in-Transit (CIT) Adverse Impact Analysis and Assessment (continuation)

8. Consider all demographic aspects, the related norms and behaviors and how they will affect and be affected by business necessities or job related functions, essential to the successful completion of the project.

Create profiles of the personalities that may perpetuate the perceived crimes whether as overt or covert operations, regardless of age, race, gender, creed, organization, plus case studies of possible locations where the adverse incidents may take place.

9. Determine all documentations and references necessary to ascertain all possible legal adversities and mitigation remedies.

Prepare a checklist of legal documentation, i.e. contracts, waivers, undertakings, quit-claims, insurance policies, regulatory-body approvals, permits, licenses, clearances, certifications and the like. This is to ensure that all risks and hazards assessed as related to CIT activities have legal recourse and valid support coming from the federal, state and local government units and agencies.

10. Gather all information relevant to environmental and economic hazards and broaden the scope of their impact on a national scale.

This denotes the business’s support for government policies, which are basic essentials for securing the license, permits and clearances that are required for the project’s statutory approval. Consider the possibility that said licenses and permits to continue with CIT activities will be revoked due to non-compliance with the related terms, conditions and clauses contained therein.

Adverse Impact Analysis Worksheet

Adverse Impact Analysis Worksheet.

To complete the adverse impact analysis procedure, finalize the creation of a checklist according to the levels and degrees of likelihood and outcomes as bases for the development of mitigation plans and policies.

Find a free and downloadable Adverse Impact Analysis Worksheet at Bright Hub’s Media Gallery, done in Excel, and use the same for evaluating the likelihood and degree of the risks previously gathered.

The worksheet shall be used in conjunction with the set of mitigation plans wherein the latter should be indicated accordingly. Best practices recommend the coding of mitigation plans to facilitate quick referencing.

Image Credit: Screen-shot image and Adverse Impact Analysis worksheet created for this article by author c.s. cantoria.