fink and risk a qualitative method of displaying risk for decision making walter g. green iii,...
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FINK AND RISK
A qualitative method of displaying risk for decision making
Walter G. Green III, Ph.D., FACCP
Disaster Theory Series No. 10Copyright 2008 by Walter G. Green III
FIVE BASIC QUESTIONS 1. How intense will it be and how quickly
will it develop? 2. Will there be media or regulatory
scrutiny? 3. Will it interfere with the ability to do
business 4. Are you culpable and are you liable? 5. How will the bottom line be damaged?
A POSSIBLE MODIFIED SET OF QUESTIONS FOR GOVERNMENT
1. How intense will it be and how quickly will it develop?
2. How prepared are you for the event? 3. What will be the damage – lives lost,
injuries, economic impact, disruption? 4. What are the political impacts? How will
the media treat us? 5. What will recovery be like?
FIVE BASIC QUESTIONS Each question is rated from 0 to 10,
with 0 being minimal to no impact and 10 being catastrophic impact.
Ratings are qualitative and subjective, but can be increased in objectivity by using your company’s experience and the similar experiences of other businesses.
QUESTION 1 - ISSUES
What level of intensity can you stand for how long?
What is your definition of intense?
QUESTION 2 - ISSUES
News media interest and coverage of your role – front page versus back page versus none?
Will state and/or federal regulators be involved?
QUESTION 3 - ISSUES
Ability to ship product or provide services?
Supply chain and inventory impacts? Ability to pay creditors? Diverts attention from routine, must-
do items? Personal impact on decision makers?
QUESTION 4 - ISSUES
Are you the victim or the cause? Have you a history of careless
operations or violations that could have caused this?
Have you shown due diligence? Do you have positive credit in the
image bank?
QUESTION 5 - ISSUES
Direct impact on the financial numbers?
Indirect losses – productivity, staff, workers claims, absenteeism, etc.
Reputational loss
IMPACT VALUE
Add the scores for the 5 questions and divide by 5.
This average is plotted on a vertical scale from 0 (low) to 10 (high) with 5 as the mid-point.
PROBABILITY Probability is computed on a
percentage basis. Use all available data on incident
frequency, related to a time line. For example, a 100 year flood does not
happen every 100 years – it is a flood that on average happens once every 100 years – a 1% probability each year
PROBABILITY
If you lack your own data for hazards, look at: the community’s hazard and
vulnerability analysis National Weather Service or Geological
Survey data local historical data experience of others in similar industries
PROBABILITY
And be sure to adjust for: your location may have a greater
probability of a particular event – it is hard to have a train wreck in your front yard if you are 2 miles from the tracks
changes in the environment since the data was gathered
HORIZONS Defining your planning horizon is critical.
for regular events, if your planning horizon is inside event recurrence, probability approaches 0
if recurrence is inside the horizon, probability approaches certainty
For irregular events with data to support analysis, apply forecasting and trend analysis techniques to determine probability
PROBABILITY
Divide the percentage by 10 and plot the resulting number on a horizontal scale of from 0 (no probability) to 10 (certainty).
The horizontal probability scale intersects with the vertical impact scale at 5.
DATA PERFECTION More accurate data for impact and
probability = more exact grid location … but, given the variability in events,
best estimates are good enough … … too much “accuracy” may not be a
good thing - it imparts an exactness that may not be there.
THE SCALES
impact
probability
CONVERTING TO A MATRIX The scales are contained in a square. Upper right – high impact, high
probability – RED Upper left – high impact, low
probability – YELLOW Lower left – low impact, low
probability – GREEN Lower right – low impact, high
probability - GREY
FINK’S MATRIX
HIGH IMPACTLOW PROBABILITY
HIGH IMPACTHIGH PROBABILITY
LOW IMPACTLOWPROBABILITY
LOW IMPACTHIGHPROBABILITY
A SPECIFIC EVENT
Fujita F3 tornado in Fort Morgan, Colorado:
X
THOUGHTS Identifies hazards. Combines hazards and vulnerabilities
as impact. Tool that directly reflects the formula:
impact X probability = risk Visual tool displays outcome of risk
computations in a simple form Multiple events shown on one matrix.