204
14 Risk Assessment for the Twenty-First Century
in the corporation/government (red bubble in Fig. 14.1). Insurers and lenders may
use this notion to select projects, clients, or create bundles of risks that solve the
unmanageability of one or more specific projects in a portfolio.
Once risks (i.e., p, C) are evaluated for the entire hazard portfolio, then a graph
like the one in Fig. 14.1 can be drawn. The orange curve is the risk tolerance (can be
societal or corporate). We see three different classes of risk in Fig. 14.1, namely, the
blue, yellow, and red. The blue are tolerable; therefore by definition they can be put
aside until there are no more yellow and red risks. The yellow are the risks that can
be mitigated by reducing their probabilities; they are therefore manageable. And the
last class, the red, are the ones that cannot be mitigated unless we change the system.
They are therefore unmanageable.
14.3 What to Do with Those Risks Families?
A risk assessment per se does not really help to make any decisions on risk reduction/accident prevention and other mitigative plans. It becomes rationally operational
only when its results are compared with a threshold generally called “risk tolerance”
(Fischhoff et al. 1982; Chap. 13). Risks that can be mitigated in a sustainable and
economic way below tolerance by reducing their hazard probability are tactical risks.
Instead, risks which require system’s alterations (mitigations to reduce consequences
and get the risk under tolerance) are strategic risks. In fact tactical risks fall under
the responsibility of management, whereas strategic risks might require upper management to shift their objectives. To clarify this distinction with an example, we
might say that buttressing a dam to reduce its breach probability is a tactical mitigation whereas changing the TSF location or not building a mine in a certain area are
strategic mitigations.
The issue becomes more complicated when normalization of deviance is included
in the discussion, as happened for the Oroville dam (https://www.riskope.com/2017/
05/03/oroville-dam-risks-became-unmanageable/) (Sect. 3.1).
Figure 14.2 demonstrates the decrease of risk against increasing mitigative costs.
When risks are very high, a relatively small investment generally makes it possible
to reduce risks quickly whereas investments increase asymptotically when risks are
reduced beyond a certain level. The graph shows the point at which an acceptable
threshold of risk mitigation might be settled—stating explicitly that the mitigative
costs will realistically be too high to achieve a theoretical total abatement of risk.
The vertical line is set in the zone where risks are As Low as Reasonably Achievable
(ALARA), As Low as Reasonably Practical (ALARP), or obey to the Best Available
Control Technology (BACT) concept (Sect. 13.2.1).
Needless to say, the definition of these risk abatement levels is not common
in many industries. In summary, the vertical line of Fig. 14.2 is depicted “in the
commonly-accepted reasonable risk abatement zone”, and its intersection with the
risk abatement and mitigatory investment functions defines the residual risk and the
investment necessary to attain it.
14 Risk Assessment for the Twenty-First Century
in the corporation/government (red bubble in Fig. 14.1). Insurers and lenders may
use this notion to select projects, clients, or create bundles of risks that solve the
unmanageability of one or more specific projects in a portfolio.
Once risks (i.e., p, C) are evaluated for the entire hazard portfolio, then a graph
like the one in Fig. 14.1 can be drawn. The orange curve is the risk tolerance (can be
societal or corporate). We see three different classes of risk in Fig. 14.1, namely, the
blue, yellow, and red. The blue are tolerable; therefore by definition they can be put
aside until there are no more yellow and red risks. The yellow are the risks that can
be mitigated by reducing their probabilities; they are therefore manageable. And the
last class, the red, are the ones that cannot be mitigated unless we change the system.
They are therefore unmanageable.
14.3 What to Do with Those Risks Families?
A risk assessment per se does not really help to make any decisions on risk reduction/accident prevention and other mitigative plans. It becomes rationally operational
only when its results are compared with a threshold generally called “risk tolerance”
(Fischhoff et al. 1982; Chap. 13). Risks that can be mitigated in a sustainable and
economic way below tolerance by reducing their hazard probability are tactical risks.
Instead, risks which require system’s alterations (mitigations to reduce consequences
and get the risk under tolerance) are strategic risks. In fact tactical risks fall under
the responsibility of management, whereas strategic risks might require upper management to shift their objectives. To clarify this distinction with an example, we
might say that buttressing a dam to reduce its breach probability is a tactical mitigation whereas changing the TSF location or not building a mine in a certain area are
strategic mitigations.
The issue becomes more complicated when normalization of deviance is included
in the discussion, as happened for the Oroville dam (https://www.riskope.com/2017/
05/03/oroville-dam-risks-became-unmanageable/) (Sect. 3.1).
Figure 14.2 demonstrates the decrease of risk against increasing mitigative costs.
When risks are very high, a relatively small investment generally makes it possible
to reduce risks quickly whereas investments increase asymptotically when risks are
reduced beyond a certain level. The graph shows the point at which an acceptable
threshold of risk mitigation might be settled—stating explicitly that the mitigative
costs will realistically be too high to achieve a theoretical total abatement of risk.
The vertical line is set in the zone where risks are As Low as Reasonably Achievable
(ALARA), As Low as Reasonably Practical (ALARP), or obey to the Best Available
Control Technology (BACT) concept (Sect. 13.2.1).
Needless to say, the definition of these risk abatement levels is not common
in many industries. In summary, the vertical line of Fig. 14.2 is depicted “in the
commonly-accepted reasonable risk abatement zone”, and its intersection with the
risk abatement and mitigatory investment functions defines the residual risk and the
investment necessary to attain it.