risk analysis

Source: Eurotunnel

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis
scope
• risk as potential for acute, catastrophic failure
• for example…
• rail crashes (Ladbroke Grove: 34 dead)
• aviation collisions (Tenerife: 583 dead)
• maritime losses (Herald of Free Enterprise: 187 dead)
• stadium disturbances (Hillsborough: 95 dead)
• offshore explosions (Piper Alpha: 167 dead)
• process plant discharges (Bhopal: 20 000 dead)
• food contamination (Wishaw: 18 dead)

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis
definition
• product of consequence & probability
• both material to our experience of ‘risk’
• consistent with the principle of taking ‘expectations’
• neglect of probability produces risk aversion (March & Shapiro)
• abstract enough for comparison across domains

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis

definition
• product of consequence & probability
• both material to our experience of ‘risk’
• consistent with the principle of taking ‘expectations’
• neglect of probability produces risk aversion (March & Shapiro)
• abstract enough for comparison across domains
• probability as:
• subjective degree of credibility
• measured frequency of events
• logical inference from a model
• consequence as:
• monetary wealth
• ‘quality adjusted life years’
• fatalities

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis

risk analysis
risk in a system
• the loss of Piper A
• typical in its organisational origin/physical manifestation
• pivotal in the move towards ‘goal setting’ regulatory regimes
• watch the video
• what were the significant events & conditions?
• how were they connected over time?

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis

risk analysis
assessing risk in a system
strongly production-oriented culture
permit-to-work procedure compromised
pressure to reinstate production
system started in incomplete state
gas leak
ignition source
explosion
deluge pumps switched to manual
support vessel attempt at extinguishing failed
helicopter access denied by flames
evacuation procedure confused
other platforms continued production

time
Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis
risk analysis
assessing risk in a system
strongly production-oriented culture causation
permit-to-work procedure compromised
causal
pressure to reinstate production
tree
system started in incomplete state
analysis
gas leak
ignition source
explosion systemic failure
deluge pumps switched to manual event
support vessel attempt at extinguishing failed tree
helicopter access denied by flames analysis
evacuation procedure confused
other platforms continued production
consequence
time

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis
event tree analysis
causal tree analysis

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis
event tree analysis
logic
• development of potential consequences from initiating event
• typically defined by success or failure of successive safeguards
• or other influencing conditions
• usually involving only binary nodes
• leading to ‘scenarios’ carrying estimates of consequence
• with conditional branching probabilities multiplied out

oil deluge support evacuation scenario (fatalities)

explosion system vessel
(0.1) succeeds (0.9) minor (0)
fails (0.1) succeeds (0.6) minor (0)
fails (0.4) succeeds (0.8) major (5)
fails (0.2) catastrophic (100)

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis
event tree analysis
procedure
bound system
• physical limits eg installation cognitively simple
• analytical assumptions eg preclude terrorism politically hard
• initial conditions eg pristine or degraded system

identify initiating events

• usually arise from intrinsic hazards eg toxicity, collision, explosion

identify influencing phenomena

• safeguards eg containment, antidote/extinguishing, evacuation
• phenomena eg weather, crowding

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis
event tree analysis
procedure
construct event tree
• conventionally horizontal with initiating event to left
• branch up to success/down to failure so scenarios ordered minor to major
analyse probability & consequence
• add conditional probabilities & multiply through
• generally scenarios ordered from high to low probability

oil deluge support evacuation scenario

explosion system vessel
(0.1) succeeds (0.9) minor (0.09)
fails (0.1) succeeds (0.6) minor (0.006)
fails (0.4) succeeds (0.8) major (0.0032)
fails (0.2) catastrophic (0.0008)

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis explosion

causal (fault) tree analysis

presence of explosive ignition
logic gas mixture source
• apex as systemic failure
• ‘causation’ by binary events
• events combine in distinct ways
system startup in
• over successive levels
incomplete state
• aim to find apex probability

permit-to-work pressure to
procedure violated reinstate production

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis
top event
AND ‘gate’ (necessity) explosion

causal tree analysis

presence of explosive ignition
procedure gas mixture source
• start with the top event
• search for immediate potential causes
• combine them with appropriate logic

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis top event
AND ‘gate’ (necessity) explosion

causal tree analysis

presence of explosive ignition
procedure gas mixture source
• start with the top event
• search for immediate potential causes
• keep developing until
system startup in
bottom events can be given
probabilities
incomplete state OR ‘gate’
• and are independent (sufficiency)

permit-to-work pressure to
procedure violated reinstate production

basic event basic event

Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 risk analysis top event
AND ‘gate’ (necessity) explosion

causal tree analysis

presence of explosive ignition
procedure gas mixture source
• start with the top event
• search for immediate potential causes
• keep developing until
system startup in
bottom events can be given
probabilities
incomplete state OR ‘gate’
• not until reach original causes (sufficiency)

permit-to-work pressure to
procedure violated reinstate production

strong production history of tacitly

culture sanctioned violations
Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
 top event
risk analysis explosion

causal tree analysis

presence of explosive ignition
procedure gas mixture source
• start with the top event
• search for immediate potential causes
• keep developing until
system startup in people still working
bottom events can be given
incomplete state in zone
probabilities
• not until reach original causes
• events can occur N times
permit-to-work pressure to
procedure violated reinstate production

pressure to
reinstate production
strong production history of tacitly
culture sanctioned violations
Slack, Chambers and Johnston, Operations Management 5 th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007