Session 42_2 Peter Fries-Hansen

Peter Friis-Hansen 12 January 2010

Introduction to risk analysis and risk acceptance setting

Transportforum, 2010, Jan. 13-14, Linköbing, Sweden

© Det Norske Veritas AS. All rights reserved.


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Risk analysis: a tool for decision making

Analysis of accidents Risk analysis

Others practise

Look backward Look forward

Look aside



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Steps in a risk analysis

What might go wrong?

How likely is it and what are the consequences?

How can matters be improved?

How much will it cost and how much better will it be?

What actions are worthwhile to take?ActPlan

Improve Measure

$

Consequence

Probability



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Phases in the risk analysis Phase 0

- Setting the purpose of the risk analysis and the boundaries of the analysis- Setting the acceptable level of risk ... or rather: defining what is unacceptable

Phase 1- Identification of what may go wrong – dangers, unwanted events- Coarse risk analysis for screening identified unwanted events

Phase 2- Detailed risk analysis



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Risk-based design – questions

What is risk ? … the (annual) expected loss

How does the risk analysis enter the decision process of the owner ?

How large a risk does the operator impose on society by his activities ?

How large benefit does society gain form the activity … and how large should the benefit be to cover the loss of society ?

How safe is safe enough … or … how much are we willing to invest in safety ?



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Coarse Risk Analysis

Usage

More detailed hazard identification(from HAZOP or FMEA)

Classification of hazardous situations for identification and making priorities for risk-reducing actions

Basis for definition of detailed areas for analysis

Methodology

“Guesstimate” of frequency

Identification of barriers

Coarse estimates of consequences of hazards

Classification in risk matrix

Consequence

Probability



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Frequency matrix: 10class

Frequency class Label More than X incidents per year

2 Daily -Monthly 101 Monthly-year 10 1-10 y 0,1-1 10-100 y 0,01-2 100-1000 y 0,001-3 1000-10.000 y 0,0001-4 10.000-100.000 y 0,00001-5 > 100.000 y 0,000001

Freq

uenc

y de

crea

ses b

y de

cade

s

5.010 Fcf

possible rare

unlikely

likely

remote



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Consequence matrix: in €Label None Minor Significant Serious Critical Catastrophic

Consequence class Abbreviation 2 3 4 5 6 7

Crew PDBruises and minor injuries that do not

require hospitalization

Minor injuries that causes 1 week of

absence

Serious injuries that causes a month or

more in hospitalization

Several injuries that require hospitalization

/ invalidity at one or more.

1 - 2 fatalities More than 3 fatalities

ND Discomfort / malaiseBruises and minor injuries that do not

require hospitalization

Minor injuries that causes 1 week of

absence

Serious injuries that causes a month or

more in hospitalization

Several injuries that require

hospitalization / invalidity at one or

more.

1 - 2 fatalities

NF 500 person hours 5000 person hours 50000 person hours 1/2 mill person hours 5 mill person hours

50 mill person hours

Material MK

Negligible damages that may be

immediately repaired by the crew

Damages it takes days to repair

Damages it takes several weeks to repair and which

influences the functioning of the

system

Damages it takes several months to repair with several

follow-up consequences

Significant material damages

Significant parts of the plant destroyed

Environmental EMNegligible

environmental damages

Minor environmental damages

Significant environmental

damages

Serious environmental

damages

Critical environmental

damages

Catastrophic environmental

damages

Monetary value 100 1.000 10.000 100.000 1.000.000 10.000.000

Acceptability per year Negligible Tolerable Unwanted Unacceptable Unacceptable Unacceptable

Passengers

Com

para

ble

5.010 ClL

Consequences increases by decades



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Scenario analysis Initiating failure unwanted consequences

Setting up a scenario

Identification of type of unwanted consequences

Identification of the chain of events

Identification of preventive controls (barriers)

Initiating event

Hazardouscondition

Unwanted consequences

Hazardouscondition

Barrier Barrier Barrier BarrierBarrierFc Cl



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Risk: the annual monetary expected loss

ClFcClFcLfR 101010 5.05.0

i

ClFc PR Barrier10



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Consequence

Probability

What should we choose ?

What is best ?

Risk matrix and RCO’s

CFRNRank

6RN is too high andmust be reduced

11 CRN Alt 1:

A1

A2A322 CRN Alt 2:

33 CRN Alt 3:



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Mitigation efficiency

Expense per unit reduction in risk

Used to rank different alternatives

May be used to identify limit for investments

lossin Reduction Expense

RiskCostefficiency Mitigation



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Prioritizing alternatives

1

1

RC

Alt 1 Alt 2 Alt 3

1

The RISK-rank RN is converted to €: R=10RN1 – 10RN2

Remember: a coarse analysis gives a coarse order of prioritiesConsequence

Probability

6A1A1

A2A2A3A3



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Use Results From Coarse Analysis to... To identify the most critical events in the

business

To evaluate the safety of production system

To evaluate the buildings / layout of the plant as regard to possible accidents

To set focus on possible accident scenarios for temporary activities

To calculate the risk levels of employees and 3. Parts

To establish a fundament for emergency plans and teams

To establish a fundament for plant inspection actions

To provide documentation - NOT JUST TO satisfy authorities

Note: No system effects taken into account.An event identified as being acceptable may become unacceptable due to system effects.



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Integrating risk into the decision process and risk acceptance setting

Time

$

g

AccidentsFrequency : Consequence:

ciExpected loss = T



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Design with respect to optimal monetary gain

T

tTN

n

Tn dtetGeXc gnl

0

)(

0

)(),(

Initial costs

Loss

Income

)1()1(),(][ T

g

T

l

gl egecLE

Expected loss

Owner will minimise his loss



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Design with respect to optimal monetary gain

ci(,)

T

design

loss

Best design

Owners optimisation

)1()1(),(][ T

g

T

l

gl egecLE

)1(),();1(),( T

l

T

l

ll ecec

Optimality condition



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Optimality at the limit

No solution for l = 0 if T is infinite

Optimal solution depends on T

Decision model with finite T and zero interest rate is equivalent to a decision model with infinite T and l = 1/T

Tl ;0

0;),(;),(

lTcTc

Tcc

ll

;),(;),(



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Interest rate on human life value

”It is unethical to use an interest rate on human life value”

T=1 year for the acceptance related to casualties

T= entire reference period related to other values

For T=1 year the equivalent interest rate is l = 1/T. Interest capitalization factor becomes e 1 ~ 2.27

A reasonable interest capitalization factor is e 0.05 ~ 1.05. The equivalent decision theoretic time horizon without capitalization is therefore 1/l = 20 years lower adverse event frequency



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Risk acceptance

Owners net gain: 0 og

The societal gain should at least cover the public loss

po rg

How large a risk should society be willing to accept ?

Society gain: rg o )(

is related to the wealth of the society, i.e. GDPp

Corporate social responsibility is to cover ALL the losses the activity imposes on society



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A rational acceptance criteria

111

o

po

rg



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Safeguarding life, property and the environment

www.dnv.com



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HAZARDIDENTIFICATION

Identify all "risk agents" and the conditions under which they may produce adverse impacts.

Describe and quantify the risk by evaluation of all scenarios that lead to the adverse events.

RISKASSESSMENT

Compare the risk to acceptable standards and judge the significance of risk mitigation.

RISKEVALUATION

RISK ANALYSIS

Identify solutions for managing risk during the lifetime. Evaluate cost and compare alternatives.

OPTIONEVALUATION

RISK CONTROL

Select one or more of the solution alternatives for implementation.

OPTIONSELECTION

Implementing, monitoring, and enforcing solution alternatives.

IMPLEMENTATION& ENFORCEMENT

SAFETY PHILOSOPHY

The safety philosophy should define goals for the future, the fundament for priorities, and standards.

SAFETY GOALS

Reflects the willingness of people and society to accept risk. Normally the cost of fulfilling the criteria is not considered.

ACCEPTANCECRITERIA

Risk information (of accident scenarios, demands to emergency teams, operation, and modifications).

General information(technical, political, economical, performed risk studies, etc.).



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Frequency Classes

Definition of frequency classes

Frequency class

Description Frequent

(F4)

Moderate

(F3)

Rare

(F2)

Very rare

(F1)

Extremely rare

(F0)

Frequency More than 1 incident per year

May happen with 1 to 10 years of interval



Happens more rarely than once each 1000 year

Frequency decreases by decades



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Consequence Categories

Consequence type

None / negligible

(0)

Small

(1)

Significant

(2)

Serious

(3)

Very serious

(4) Personnel risk (P)

None / small injuries < 1 week of absence

Minor injuries causing 1 week to 1 month of absence

Serious injuries causing 1 month of absence

Possibility of death

Possibility of several death

Risk for 3. Party (N)

Malaise (discomfort)

None / small injuries

Minor injuries Serious injuries Possibility of death

Environmental risk (E)

No / negligible environmental damages

Minor environmental damages

Significant environmental damages

Serious and long restoration time

Very serious / very long restoration time

Materiel damage (M)

None / negligible damage to equipment

Minor damage to equipment

Significant damages to equipment / spreading to other equipment

Large damage to equipment / spreading to other fire cell / building

Major parts of the plant is destroyed

Consequences increases by decades

Com

para

ble



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Frequency/consequence Matrix

Matrix for•Personnel•3. party•Environment•Materiel

None /negligible

consequences(0)

Minorconsequences

(1)

Significantconsequences

(2)

Seriousconsequences

(3)

Very seriousconsequences

(4)Frequent

(4)ALARP

Moderate(3)

ALARP

Rare(2)

ALARP

Very rare(1)

ALARP

Extremely rare(0)

ALARP

Not acceptable

Acceptable

Consequence

Probability



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RISK Risk is the expected loss

Log10(Risk) = Frequency class + Consequence class

Cost-benefit analysis becomes straight forward

Session 42_2 Peter Fries-Hansen

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