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Summary Engineering risk management/ ERM
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ENGENEERING RISK MANAGEMENTINTRODUCTION
Risk = probability * impact = the definition insurance company because they only see it as something negative.
Risk = likelihood * consequence + eventually aversion factor ‘a’ added to consequences.
if you put aversion on the consequence, you are okay with the consequence.
the higher a, the higher, the higher the risk.
- a = 1: risk neutral
- a > 1: More emphasis on the consequence: risk averse
- a < 1: risk seeking
Components of risk
1- Probability
2- Impact/ consequence: Loss of life, material, …
3- Knowledge of scenarios
4- inventory of scenarios
A risk is always a scenario with a probability and consequence. à list possible scenarios!
The scenario quality is based on the knowledge: what do you know about the scenario? (Frequency, probability, …)
Safety ó security: intentionality!
¨ Safety: unintentional losses. You don’t want to cause them, they just happen.
¨ Security: people want to cause losses
Risk analyses of both deal with avoiding losses. Managerial it’s the same, but on an operational level there’s a
difference. You deal with an intelligence of adversary.
If you make a tank as safe as possible. From a safety point of view, it’ll have a low likelihood. However, it does not
consider putting and releasing a bomb (~ security)
Hazard = intrinsic: potentiality that based on a characteristic, the way it’s designed, something will go wrong.
ó security: hazard ~ threat
Risk: calculated/ quantified hazard.
1) Identify hazards in the working place (about safety, health, security, quality, …)
2) Determine direct causes à answer: why?
3) Determine indirect causes à answer the next why?-questions to try and determine the root cause
4) What risk is related to the hazard?
5) Determine prevention measures for (in)direct causes?
6) Classify prevention measures
Example from the slide: analyze the situation on the image
Identify the hazards, direct causes, risks related to the hazard
and define prevention measures. Classify the prevention
measures.
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, HAZARD RISK DIRECT CAUSE INDIRECT CAUSE PREVENTION MEASURE
- Training
- (Better) signs
crash – collision. Was looking somewhere - Better lighting
driving the wrong way Every year x people have The driver didn’t see the sign. else, bad eye sight, bad - Only 1 person/ truck allowed at
injures of degree y. lighting the same time
- Gate only opening in 1
direction
- Locks with keys + key plan
Every 6 months, someone
Door was unlocked, the - authentication
gets radiated – intoxicated
open door for a prohibited Someone unallowed ignores person was curious, the - ‘do not enter’ sign
and has health issues so
area the sign and enters. person doesn’t know the - Educate workers/ visitors
they go to the hospital. + 1
meaning of the sign, … - Avoid using radioactive
day off work.
material if possible
explosion (damage/
explosive substances gas tank falling on the ground inattentive workers - Better storage of the tanks
injuries/ death)
- cables lying around,
chaos on the floor falling/ slipping – injuries unordered not following storage - order and cleanliness rules
- leaked fluid
- inattentiveness of
- signs/ regulation on who is
the pins to pick up things stick driver
sharp point on the forklift stabbing another person allowed where and how (on
out - pedestrians walking in
foot, with the forklift)
non-allowed areas for
- better storage system (‘plint’
negligent workers ignoring
unsafely stacked objects om objecten per niveau
objects on a height falling objects safety rules for objects on a
falling due to imbalance tegenhouden)
height
- helmets in storage areas
Categorizing prevention measures : STOP-categorization
- Strategic/ inherent measure: avoid using radioactive material.
- Technological measures: gate only opening one-way, better lighting, …
- Organizational/ procedural measures: better signs, ‘do not enter signs’.
= rules, cleaning procedures, warning signals, ..
- Personal measures: Training/ education: inform, education, formation about rules, …
= raising awareness, social control, vision policy, …
Acronym: S T O P
The more ‘S’ is used, the ↑ safety, but also ↑ costs.
à Take measures for the indirect cause: = more generic à broader applicable.
à Addressing the direct cause = more situation-related.
Key = doing it in a systematic way. Knowing who is responsible and for what:
- Establish responsibilities
- Train and educate employees
- Plan preventive controls and audits
- Set up a policy in case of non-compliance
- Carry out risk assessments
- Plan and execute preventive and protective measures
Systematic planning, policy-making, executing actions, verifying, improving continuously!
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, CHAPTER ONE: risk management is anything but financial risks
Risk is of all times. The reason behind this =
Human needs Self-fulfilment
Esteem: success, prestige
Belonging: love, social contacts, …
Safety: protection, economic certainty, …
Basic safety needs/ physical basic needs:
food, beverages, sleep, sex, …
Systemic ó analytical thinking
¨ Analytic thinking: the parts are primary and the whole is secondary
à static, linear, simple cause-consequence relationships, additivity of elementary properties
¨ Systemic thinking: the whole is primary and the parts are secondary
à dynamic, circular, complexity, resiliency, ..
Risk management in simple terms:
- Extinguish a manager’s fire and help him for a day. Teach him fire prevention and you help him for a career.
- Being smart is about taking chances (there’s no thing as a zero risk).
- Determining predictive date: RA’s are about predicting the future (in a positive and negative way).
- It’s a never-ending process: watch out for safety paradox!
What are possible failures in RM?
- Failing at measuring and validating methods as a whole or in part
- Using factors that are known to not be effective (watch out for human judgment = systematic
underestimation of risks)
Lack of use of factors that are known to be effective in models
Risk management assures that:
¨ objectives are more likely to be achieved (increase the positive side of risks)
¨ unwanted events will not happen/ are less likely to happen (decrease the negative side of risks)
¨ policy/ measures/ actions/ … include long-term thinking
¨ measures are proportional (losses ó gains)
Safety is a belief: not everyone is a safety thinker, many people are risk thinkers!
‘Intellectuals solve problems, geniuses prevent them’ – safety thinker.
‘Science progresses funeral by funeral’’ – risk thinker.
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, CHAPTER TWO: introduction to engineering and managing risks.
The concept of risk
Negative risks = weighed against individual freedom, personal pleasure, group advantages, financial gains, …
Everyone makes CBA decisions daily and choices contain risks.
ð Weighing potential negative & positive consequences
The general definition of a risk: the effect of uncertainties on achieving objectives. (according to ISO 31 000)
ð Without objectives, you have no risks! & Objectives = things going right.
ð Risks can be positive and negative risks
Negative or positive risk
Metaphor about football:
Production & innovation in a company ~ attacker
ð Excellent attackers lead to winning matches = short-term success
Safety and security in a company ~ defender
ð Excellent defenders lead to winning tournaments = long-term success
People selectively reduce/ increase their exposure to risk: homo prudens (risk averse, zero-risk man) >< homo
aleatorius (gambling man, risk-taking)
àsafety literature is aimed at homo prudens and ignores/ seeks to reform homo aleatorius
The more one knows about risks, the more one realizes how much there is to know
à the complex & multidisciplinary field of risks & risk management should be jointly investigated by anyone
(scientists, economists, engineers, psychologists, …)
Key issue in modern technological development/ society =
Governments, regulators, industrial bodies, … propose & develop techniques to identify & assess (potential) risk
levels and define acceptable risk levels.
ð BUT: expert judgement on consequence & probability ≠ public judgement (= non-expert)
ð How risks are communicated to the public impacts risk perception
Perception influences safety ,because perception influences behavior.
Risk management can be seen as something like uncertainty management:
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