generalized tolerability and risk based decision making examples 19 oct
DESCRIPTION
The presentation displays two examples of Phase I Risk Based Decision Making. Phase I means that a preliminary decision is made based on Risk Prioritization alone, without financial comparative evaluations of the alternatives using CDA-ESM (i.e. evaluating the long term cost of the alternatives including upside and downside risks). The first example relates to selecting a different transportation mode (or altering a status quo) for the personnel of a remote operation in a country where traffic accidents represent a very high and well known risk. As you will see in the presentation, none of the considered alternatives actually solves the problem (mitigates the risks below an Acceptability societal risk and/or Client's specific Tolerability threshold. The second example examines a rather complex process (over twenty elements) and defines a prioritized list of mitigative needs. By applying a Tolerability criteria it is possible to rationally, transparently and defensibly focus the attention on the most critical elements of the system. The result? Allotting mitigative funds in the most appropriate and efficient manner.TRANSCRIPT
1 1 1Riskope International SA © 2009 www.riskope.com
ISBN: 978-0-9784462-3-9
By F.+C. Oboni
Examples of Tolerability and Risk Based Decision Making Applications in
Businesses
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ISBN: 978-0-9784462-3-9
Risk Based Decision MakingShowcase 1:
Selecting a Better Personnel Transportation System for a Remote
Production Centre
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ISBN: 978-0-9784462-3-9
After 15 years of flawless service, an employees' shuttle bus had an accident with 2 casualties in a country known for high traffic hazards.
Management decided to study alternatives to bus shuttling before facing internal and/or external scrutiny, media exposure etc.
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ISBN: 978-0-9784462-3-9
Selecting the best alternative in a clear and transparent way was considered of paramount importance.
The penalty: loss of confidence, major strike(s), societal and governmental pressure, etc., unsustainable mitigating costs...
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ISBN: 978-0-9784462-3-9
The following Alternatives were selected for comparison:
Alternative 1 Alternative 2 Alternative 3Bla bla Bla Bla Bla Bla
# 1 # 2 # 3Maintain Status Quo, i.e the bus
shuttling on existing roads
Build an Airport halfway to the location (only
possible location) and then bus shuttle
Increase the safety along the road, i.e. an enhanced Status Quo
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ISBN: 978-0-9784462-3-9
A Status Quo Risk Assessment revealed risks were unacceptable (from a societal standpoint).
These two lines can be interpreted as the “optimistic” and “pessimistic” acceptability criteria as defined by third parties
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ISBN: 978-0-9784462-3-9
Then, as 2 out of 3 options were only planned (not built yet) we had to estimate probabilities and consequences ranges from literature and experts' opinions.
There is no other way to help in this decision making process than going quantitative. Any qualitative approach would only blur the issues...
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ISBN: 978-0-9784462-3-9
* A mathematical model is used
Working with ranges, it was possible to generate maximum and minimum scenarios of each risk, for each alternative.
A stacked bar graph of Risks can then be build leading for each alternative to...
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ISBN: 978-0-9784462-3-9
* A mathematical model is used
...a very simple, and transparent preliminary risk based selection !
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ISBN: 978-0-9784462-3-9
Comparing the results with the societal acceptability curves came next...
Alternative B Alternative C
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ISBN: 978-0-9784462-3-9
NO Alternative actually “solves” the problem (mitigates to acceptability).
Furthermore the implementation costs and life time costs will be very different:
Costs and Risks have to be integrated...CDA/ESM will be the next step!
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ISBN: 978-0-9784462-3-9
Risk Based Decision MakingShowcase 2:
Prioritization of Risks related to Process System, its infrastructure and
the environment.
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ISBN: 978-0-9784462-3-9
This system of elements is quite complex. Domino effects are possible in certain case of failures, many of the infrastructure elements could be the target of malevolence (arson, sabotage etc.).
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ISBN: 978-0-9784462-3-9
Schematic of the System
In yellow all the different elements are identified
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ISBN: 978-0-9784462-3-9
Results of the Quantitative Maximum Risk Assessment for each element, with some scenarios (ranges).
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ISBN: 978-0-9784462-3-9
To deliver a clear prioritization, Risks were compared to Acceptability and Tolerability curves, as consequences could be financial and/or casualties.
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ISBN: 978-0-9784462-3-9
We defined the Client's Tolerability curve, checked it was compliant with the envelope we created over the years...and plotted the risks...
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ISBN: 978-0-9784462-3-9
Then we also compared the prior results with a societal acceptability criteria to make sure we would properly characterize all relevant scenarios.
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ISBN: 978-0-9784462-3-9
We computed the portion of Risks above Tolerability to have a clear Prioritization.
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ISBN: 978-0-9784462-3-9
The results:
Only 8 elements out of the 20 are above Tolerability and only 2 of them require immediate attention!
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ISBN: 978-0-9784462-3-9
What was accomplished ?By using a transparent and sound quantitative approach we were able to:
Scientifically select the most significant risks, Draw attention to the objective highest exposures (filtering emotional perceptions), andPrioritize them to allow reasonable mitigation in a very focused way.
We clearly enhanced the ability to prioritize risks for a rational and sustainable development.
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ISBN: 978-0-9784462-3-9
BUT, more importantly
Create the basis to avoid a slide into a crisis, by proactively controlling
the situation.NB: Long term comparison of Alternatives
requires the use of more sophisticated tools, such as CDA (Comparative Decision Analysis in replacement to classic NPV