THE

LEGAL CONTEXT TO QUANTIFIED RISK

ASSESSMENT

Tim Procter
Partner
R2A Due Diligence Engineers Pty Ltd
All slides © Copyright FPA Australia
 THE PURPOSE OF SAFETY RISK
ASSESSMENT

Australia is an egalitarian society.

è No one should be inequitably exposed to risk of harm.

All slides © Copyright FPA Australia

 THE LEGAL CONTEXT TO SAFETY RISK
ASSESSMENT

•  LegislaEon
•  e.g. OHS/WHS Acts – “so far as is reasonably pracEcable”

•  Common law
•  i.e. duty of care, negligence

All slides © Copyright FPA Australia

 THE LEGAL CONTEXT TO SAFETY RISK
ASSESSMENT

All slides © Copyright FPA Australia

 ASPECTS OF GOOD RISK ASSESSMENT

•  SystemaEc, not haphazard

•  ObjecEve (as far as possible)

•  Demonstrate equity
•  i.e. that people are not unreasonably exposed to potenEal damage, or risk

All slides © Copyright FPA Australia

 FOUNDATIONS OF MODERN
QUANTIFIED SAFETY RISK ASSESSMENT
© Andrew Stacey

All slides © Copyright FPA Australia

 FOUNDATIONS OF MODERN
QUANTIFIED SAFETY RISK ASSESSMENT

That the HSE:

•  “should formulate and publish guidance on the tolerable levels of
individual and social risk to workers and the public from nuclear
power sta8ons.” Layfield, Sizewell B Inquiry (1987)

All slides © Copyright FPA Australia

 FOUNDATIONS OF MODERN
QUANTIFIED SAFETY RISK ASSESSMENT

All slides © Copyright FPA Australia

 FOUNDATIONS OF MODERN
QUANTIFIED SAFETY RISK ASSESSMENT
The Tolerability of Risk from
Nuclear Power Sta8ons, HSE
(1988, revised 1992) Risk cannot be jusEfied save in
Unacceptable region extraordinary circumstances

Tolerable only if risk reducEon is

impracEcable or its cost is
grossly disproporEonate to the
improvement gained
The ALARP or Tolerability
region

(Risk is undertaken only if a
benefit is desired)
Tolerable if cost of
reducEon would exceed
the improvement gained

Broadly acceptable region Necessary to maintain

assurance that risk
(No need for detailed working to remains at this level
demonstrate ALARP)
All slides © Copyright FPA Australia Negligible risk
 FOUNDATIONS OF MODERN
QUANTIFIED SAFETY RISK ASSESSMENT
The Tolerability of Risk from
Nuclear Power Sta8ons, HSE
(1988, revised 1992) Risk cannot be jusEfied save in
Unacceptable region extraordinary circumstances

1E-04
Tolerable only if risk reducEon is
impracEcable or its cost is
grossly disproporEonate to the
improvement gained
The ALARP or Tolerability
region

(Risk is undertaken only if a
benefit is desired)
Tolerable if cost of
reducEon would exceed
the improvement gained
1E-06
Broadly acceptable region Necessary to maintain
assurance that risk
(No need for detailed working to remains at this level
demonstrate ALARP)
All slides © Copyright FPA Australia Negligible risk
 THE LEGAL CONTEXT TO SAFETY RISK
ASSESSMENT

All slides © Copyright FPA Australia

 LEGAL CONTEXT OF QUANTIFIED
SAFETY RISK ASSESSMENT
Precaution focussed

Judicial
Scrutiny

Future Uncertainty Safety critical

Decision Unwanted Event/s Judgement Time

Future Uncertainty
Scientific
and
technical
risk
targets
Hazard focussed
All slides © Copyright FPA Australia
 LEGAL CONTEXT OF QUANTIFIED
SAFETY RISK ASSESSMENT
Common law approach Hazard identification Target risk approach
(precaution based and criticality driven) (Foreseeability) (hazard based and risk driven)

Criticality
Establish critical Hazard analysis and risk calculation
hazards process to determine the nature of risk
and the level of risk
Preventability
(inherently unrepeatable)
Identify all practicable
precautions for each critical
hazard following the hierarchy
of controls Selected risk criteria
terms of reference against which the
significance of a risk is evaluated
(inherently subjective)
Risk Management
Reasonableness of downside (negative or pure) risk
Determine which practicable Compare against criteria
precautions are reasonable process of comparing the results of risk
based on the High Court analysis with risk criteria to determine whether
established balance the risk and/or its magnitude is acceptable
(disproportionality) (may eliminate further consideration of
acceptable or tolerable risks)

Implementation
of reasonably practicable Risk mitigation and management options
precautions SFAIRP ALARP process to modify risk.
(may not follow the hierarchy of controls)

Monitoring and Review

(Quality assurance)

Due Diligence

All slides © Copyright FPA Australia

 DIFFERING ALARP REGION
BOUNDARIES

All slides © Copyright FPA Australia

 LEGAL CONTEXT OF QUANTIFIED
SAFETY RISK ASSESSMENT
Common law approach Hazard identification Target risk approach
(precaution based and criticality driven) (Foreseeability) (hazard based and risk driven)

Criticality
Establish critical Hazard analysis and risk calculation
hazards process to determine the nature of risk
and the level of risk
Preventability
(inherently unrepeatable)
Identify all practicable
precautions for each critical
hazard following the hierarchy
of controls Selected risk criteria
terms of reference against which the
significance of a risk is evaluated
(inherently subjective)
Risk Management
Reasonableness of downside (negative or pure) risk
Determine which practicable Compare against criteria
precautions are reasonable process of comparing the results of risk
based on the High Court analysis with risk criteria to determine whether
established balance the risk and/or its magnitude is acceptable
(disproportionality) (may eliminate further consideration of
acceptable or tolerable risks)

Implementation
of reasonably practicable Risk mitigation and management options
precautions SFAIRP ALARP process to modify risk.
(may not follow the hierarchy of controls)

Monitoring and Review

(Quality assurance)

Due Diligence

All slides © Copyright FPA Australia

 LEGAL CONTEXT OF QUANTIFIED
SAFETY RISK ASSESSMENT
Adapted from Sappideen
& SEllman (1995)

MAGNITUDE OF
EXPENSE
RISK
PROBABILITY OF DIFFICULTY AND
OCCURANCE INCONVENIENCE
SEVERITY OF HARM UTILITY OF CONDUCT

All slides © Copyright FPA Australia

 LEGAL CONTEXT OF QUANTIFIED
SAFETY RISK ASSESSMENT
Common law approach Hazard identification Target risk approach
(precaution based and criticality driven) (Foreseeability) (hazard based and risk driven)

Criticality
Establish critical Hazard analysis and risk calculation
hazards process to determine the nature of risk
and the level of risk
Preventability
(inherently unrepeatable)
Identify all practicable
precautions for each critical
hazard following the hierarchy
of controls Selected risk criteria
terms of reference against which the
significance of a risk is evaluated
(inherently subjective)
Risk Management
Reasonableness of downside (negative or pure) risk
Determine which practicable Compare against criteria
precautions are reasonable process of comparing the results of risk
based on the High Court analysis with risk criteria to determine whether
established balance the risk and/or its magnitude is acceptable
(disproportionality) (may eliminate further consideration of
acceptable or tolerable risks)

Implementation
of reasonably practicable Risk mitigation and management options
precautions SFAIRP ALARP process to modify risk.
(may not follow the hierarchy of controls)

Monitoring and Review

(Quality assurance)

Due Diligence

All slides © Copyright FPA Australia

 APPLICATIONS OF QUANTIFIED SAFETY
RISK ASSESSMENT IN A LEGAL CONTEXT

Common law approach Hazard identification Target risk approach
(precaution based and criticality driven) (Foreseeability) (hazard based and risk driven)

CriEcality
Criticality
Establish critical Hazard analysis and risk calculation
hazards process to determine the nature of risk
and the level of risk
Preventability
(inherently unrepeatable)
Identify all practicable
precautions for each critical
hazard following the hierarchy
of controls Selected risk criteria

CriLcality
terms of reference against which the
significance of a risk is evaluated
(inherently subjective)
Risk Management
Reasonableness of downside (negative or pure) risk
Determine which practicable Compare against criteria
precautions are reasonable process of comparing the results of risk
based on the High Court analysis with risk criteria to determine whether
established balance the risk and/or its magnitude is acceptable
(disproportionality) (may eliminate further consideration of
acceptable or tolerable risks)

Implementation
of reasonably practicable Risk mitigation and management options
precautions SFAIRP ALARP process to modify risk.
(may not follow the hierarchy of controls)

Monitoring and Review

(Quality assurance)

Due Diligence

•  IdenEfy criEcal issues through detailed consequence modelling

•  especially in new or unusual designs

All slides © Copyright FPA Australia

 APPLICATIONS OF QUANTIFIED SAFETY
RISK ASSESSMENT IN A LEGAL CONTEXT

Common law approach Hazard identification Target risk approach
(precaution based and criticality driven) (Foreseeability) (hazard based and risk driven)

Criticality
Establish critical Hazard analysis and risk calculation
hazards process to determine the nature of risk
and the level of risk
Preventability
(inherently unrepeatable)
Identify all practicable
precautions for each critical
hazard following the hierarchy
of controls Selected risk criteria

Reasonableness
terms of reference against which the

Reasonableness
significance of a risk is evaluated
(inherently subjective)
Risk Management
Reasonableness of downside (negative or pure) risk
Determine which practicable Compare against criteria
precautions are reasonable process of comparing the results of risk
based on the High Court analysis with risk criteria to determine whether
established balance the risk and/or its magnitude is acceptable
(disproportionality) (may eliminate further consideration of
acceptable or tolerable risks)

Implementation
of reasonably practicable Risk mitigation and management options
precautions SFAIRP ALARP process to modify risk.
(may not follow the hierarchy of controls)

Monitoring and Review

(Quality assurance)

Due Diligence

•  Choose between compeEng opEons through comparison of

quanEfied risk levels
•  pure risk
•  risk reducEon per dollar outlay
•  tradiEonal risk contour mapping
etc.

All slides © Copyright FPA Australia

 APPLICATIONS OF QUANTIFIED SAFETY
RISK ASSESSMENT IN A LEGAL CONTEXT

Common law approach Hazard identification Target risk approach
(precaution based and criticality driven) (Foreseeability) (hazard based and risk driven)

Criticality
Establish critical Hazard analysis and risk calculation
hazards process to determine the nature of risk
and the level of risk
Preventability
(inherently unrepeatable)
Identify all practicable
precautions for each critical
hazard following the hierarchy
of controls Selected risk criteria

Quality assurance
terms of reference against which the
significance of a risk is evaluated
(inherently subjective)
Risk Management
Reasonableness of downside (negative or pure) risk
Determine which practicable Compare against criteria
precautions are reasonable process of comparing the results of risk
based on the High Court analysis with risk criteria to determine whether
established balance the risk and/or its magnitude is acceptable
(disproportionality) (may eliminate further consideration of
acceptable or tolerable risks)

Quality assurance
Implementation
of reasonably practicable Risk mitigation and management options

precautions SFAIRP ALARP process to modify risk.
(may not follow the hierarchy of controls)

Monitoring and Review

(Quality assurance)

Due Diligence

•  Comparison of por]olio assets on a safety risk basis

•  map trends over Eme
•  idenEfy benchmarks and outliers

•  Asset management
•  Regulatory oversight
All slides © Copyright FPA Australia
 QUANTIFIED SAFETY RISK ASSESSMENT
IN A LEGAL CONTEXT

•  The ‘ALARP’ approach was a good idea
•  but it has been explored to its limits,
•  and it does not meet society’s objecEves as expounded by the courts.

•  QuanEficaEon of safety risk is immensely valuable

•  It fits very well into the ‘SFAIRP’ approach – but it must be based in a legal
context.

All slides © Copyright FPA Australia

 TIMELINE OF KEY AUSTRALIAN RISK
CONCEPTS AND EVENTS Blue relates to the precauEon-based (SFAIRP) approach
Red relates to the hazard-based (ALARP) approach

1932 Concept of ‘neighbours’ developed for negligence cases in the UK[1]. 1990 ‘Safety Case’ concept authoritaEvely arEculated in the UK[10].
1949 DisproporEonality ‘unpacked’ in the Coal Boards case in the UK.[2]. 1995 AS4360 risk management standard released, explicitly adopEng the
ALARP approach[11]. Revised in 1999, retains the ALARP approach[12].
1974 ‘So Far As Is Reasonably PracEcable’ (SFAIRP) concept introduced in UK
safety legislaEon [3]. This incorporated a demonstraEon of risk equity in the 2001 That ALARP is equal to SFAIRP formally arEculated in UK[13].
form of minimum levels of precauEons
2004 Maxwell QC reviews failures of acceptable or tolerable risk target
1980 InterpretaEon of ‘reasonableness’, the common law precauEonary approach to safety. ArEculates SFAIRP[14]. Equates Victorian OHS Act ‘so far as
balance established by the High Court of Australia (HCA)[4]. pracEcable’ to SFAIRP.
1982 Issues not ‘remote or fanciful’ must be considered (HCA)[5]. 2004 AS4360:2004 released, maintaining the ALARP approach[15].
1985 Victorian OccupaEonal Health and Safety (OHS) Act adopts ‘so far as 2004 Victorian Parliament adopts SFAIRP in legislaEon[16].
pracEcable’[6]
2009 AS31000:2009 released, incorporaEng the ALARP approach from
1986 EliminaEon of the remaining Ees between the legislature and judiciary AS4360[17]. This is subsequently referred to in other standards including
of Australia and the UK making the High Court of Australia judicially paramount AS55000:2014 (asset management)[18], and AS5050:2010 (business
in Australia[7]. conEnuity)[19].
1987 UK public inquiry (the Layfield Sizewell B review) recommends the UK 2011 Model Work Health and Safety (WHS) legislaEon adopts SFAIRP
Health & Safety ExecuEve (HSE) develop guidance as to the tolerability of approach following the Victorian OH&S Act and due diligence[20] case law.
safety risk from nuclear power plants.[8]
2011 Victorian Government accepts precauEonary approach embodied in
1988 Concept of ‘As Low As Reasonably PracEcable’ (ALARP) introduced by model WHS legislaEon by adopEng all recommendaEons of the Powerline
UK HSE in response to the Layfield review recommendaEon. This appears to be Bushfire Safety Taskforce[21].
an akempt to make safety risk a ‘science’[9] by using target (acceptable or
tolerable) levels of risk to demonstrate risk equity. 2014 Engineers Australia arEculates the difference between SFAIRP and
ALARP and issues guidance accordingly[22].

All slides © Copyright FPA Australia
 TIMELINE OF KEY AUSTRALIAN RISK
CONCEPTS AND EVENTS
References –
[1] UK House of Lords. Donoghue v Stevenson (1932) UKHL 100 1932. [13] Reducing Risks, ProtecEng People. UK Health and Safety Directorate
(2001).
[2] UK Court of Appeal CA. Edwards v. NaEonal Coal Board. (1949)
[14] OccupaEonal Health and Safety Act Review. C Maxwell (2004).
[3] UK Health and Safety at Work etc Act 1974.
[15] AS4360:2004 – Risk management. SAI Global (2004).
[4] High Court of Australia. Wyong Shire Council vs Shirt (1980) 146 CLR 40.
[16] OccupaEonal Health and Safety Act 2004. Act No. 107/2004
[5] High Court of Australia. Turner v. South Australia (1982) 42 ALR 669.
[17] AS31000:2009 – Risk management – Principles and guidelines. SAI Global
[6] OccupaEonal Health and Safety Act 1985. Parliament of Victoria. (1999).
[7] Australia Act 1986 (Cth), Australia Act 1986 (UK). [18] AS55000:2014 – Asset management – Overview, principles and
[8] F. H. B. Layfield, Great Britain Department of Energy (1987). Sizewell B terminology. SAI Global (2014).
Public Inquiry Report. [19] AS5050:2010 – Business conEnuity – Managing disrupEon-related risk. SAI
[9] The Tolerability of Risk from Nuclear Power StaEons. UK Health and Safety Global (2010).
ExecuEve. [20] Model Work Health and Safety Bill. 23 June 2011. Safe Work Australia.
[10] The Public Inquiry into the Piper Alpha Disaster. W D Cullen (1990) [21] Victorian Government Response to The Victorian Bushfires Royal
London. HMSO. Commission RecommendaEons 27 and 32. December 2011
[11] AS4360:1995 – Risk management. SAI Global (1995). [22] Engineers Australia, Risk Engineering Society (2014). Safety Case
[12] AS4360:1999 – Risk management. SAI Global (1999). Guideline. Third ediEon.

All slides © Copyright FPA Australia