Healthcare institutions are known to be risky environments that still lag behind other industries in the development and application of risk management tools. Awareness of risk is an important aspect of a risk management program. People depend on high awareness to take precautions to manage risk. The Situation Awareness framework describes how a person perceives elements of the environment, comprehends and projects its actions into the future, and analyzes the cognitive process used. Consequently, it allows the integration of the cognitive model and the risk assessment model into one single framework, provides a means of examining if the risk awareness is calibrated to the true risk levels of the institutions, and a better understanding of the issues with adverse events notification systems. In this paper we discuss how the situation awareness model can be used in the assessment of risk awareness, for understanding risk awareness and safety culture, and finally, for designing more effective risk management systems. For the purpose of this paper, we focus on the adverse event notification system.