Risk Analysis Boundaries2
- 2. Risk Analysis BoundariesRisk Engineering Society3 September 2009Richard D Rhimes Principal: Rhimes Consulting Pty LtdRisk management; environment, health & safety; and engineering projects
- 3. Risk Analysis BoundariesRisk studies must have boundaries that are set in conjunction with the customer to meet project objectives and study useDefining what’s in the study boundary and what’s not is of importanceAll credible scenarios within the study boundary to be evaluated Risk studies usually cover negative outcomes however feasibility, business and optimization studies should also cover the positives
- 4. Risk Analysis BoundariesI have facilitated or been involved in about 500 hazard & risk studies over the last 25 yearsExamples varied from a temporary valve by-pass request, a facility site review, a bulk LPG route study, a ship>ship crude transfer analysis, $A 250 million Fluid-bed Catalytic Cracker design check and a 6 division-wide analysis of maximum plausible events for a $US 56 million premium insurance programDuration being from a few hours to 12 months
- 5. Risk Analysis IssuesAssumptionsUncertaintyConsequence boundaryLikelihood boundaryRisk ToleranceQualitative study boundaryRisk Matrix issuesQuantitative study boundaryWorst Case vs Credible Worst Case
- 6. AssumptionsInput of customer requirements, especially scope, and on-going reviewsReview issues and processes prior to a study, as well as consequence and failure frequency dataUse of appropriate methodology eg Lessons Learned lists, HAZOP, What-if? Computer based studies and QRAGood study facilities and adequate time framesExperienced team leader & trained and representative team
- 7. Uncertainty It is important to bear in mind that there is a significant degree of uncertainty around the analysis of risk. There are a number of ways this uncertainty can be manifested:For risks where there is a range of impacts we cannot predict where in the range the impact will be. A simple example might be the duration of an industrial stoppage by airline ground handling staff – it could be anywhere from four hours to four days.Risks where we do not know all of the possible outcomes or their likelihood. Security and terrorism risks might be a good example.Risks where there is a causal chain involved and some of the links are not fully understood. This commonly occurs when looking at complex risks, say to air safety or airworthiness, where typically a number of failures (5-7) are required and we may be trying to assess one risk (or link) in the chain.
- 8. Consequence BoundarySignificant consequences not trivial onesConsequence to be expressed in terms appropriate to the study methodology and that are defensibleIf only those consequences that have previously occurred are covered then study is limitedNot beyond foresee-ability
- 9. An Aviation Consequence Table
- 10. Likelihood Boundary Need to set a sensible cap on probability of events:Qualitative: probabilities of say once in a plant life or over 100 years Most significant occupational health & safety issues will approach Pr=1 over above time framesQuantitative: say E-5 chances p.a Some credible industrial incidents, that should be identified, will approach Pr=0 over much longer time frames
- 11. Risk Tolerance The term ‘tolerable risk’ is sometimes used instead of ‘acceptable risk’ to give a more realistic impression of the reluctance with which some risks can be tolerated by people. Although a simple ‘treat/do not treat’ approach based on risk level or other criteria is workable, a more realistic approach is to look at risk as being divided into three types:An ‘intolerable’ area where negative risks are intolerable and must be reduced.A ‘tolerable’ area where the risks are small enough that no particular treatment is necessary.An area in between these where the cost of reducing the risk and the benefits the activity brings need to be weighed against the risk.This area in the middle is often referred to as the ‘ALARP’ zone. ‘ALARP’ stands for As Low As Reasonably Practicable. This concept is often applied to safety risks but can also apply equally well to business risks. In essence it means that action is taken to reduce the risks unless the cost is disproportionate to the benefit. The term ‘Practicable’ in this context means both practical (can it be accomplished) and cost effective (is it worthwhile). This comparison can be a difficult one, particularly when for example the safety of aircraft and people is involved: and also given ‘duty of care’ requirements. Nevertheless it is a necessary one, because if the decision is not made explicitly within the risk management process, it will be made implicitly outside the risk management process.
- 12. Qualitative StudiesStudy team to look beyond their (often limited) experience, leading to missed scenariosTeam leader (facilitator) needs to provide wider view from other plants/operations and historyFor each scenario more than one consequence-likelihood set needs to considered as sometimes worse risk levels, than for the worst consequence event, can be missed - some mitigation approaches may be different
- 13. Risk Matrix IssuesUsed for qualitative and semi-quantitative studiesConsequence & Likelihood categories and Risk levels are descriptors not values Action to be taken for high risk levels are then based on values or levels of (in)toleranceQualitatively determined risk levels are regions, not definitive risk ’values’ and should not be used for regulated ALARP calculations
- 14. Quantitative StudiesRisk Management is both a science and an artUsed either for regulatory requirements or to develop an otherwise not easily determined qualitative riskScenario development is criticalOn-site acceptable risk levels need to meet regulatory limits and be in accordance with company cultureCost of life is an issue to enable ALARP calculationsCommunication of risk studies is an issue, particularly when made in the community arena
- 15. Worst Case vs Credible Worst CaseI subscribe to credible worst case. In worst case often “everyone in the vicinity dies.”California studies require worst case – one example: 5,000 fatalities over radius of 25 miles –helpful to the community? Sensible to communicate? what about probability?What’s credible is more than what has happened locally and also in incident records
- 16. So, Reasons for Risk AnalysisRisk analysis is vital to the prevention of incidentsRisk analysis can be considered as a reverse incident investigation. The same type of information is required: What can happen? …. What did happen?.... How can we prevent it from happening?Determining reasonable risk boundaries is vital ……
- 17. Risk Analysis BoundariesFirst & Last Photo slides by Patrick Notley – an autistic German PhotographerQuestions?