OVER VIEW

RISK MANAGEMENT

Zulkifli D
Okt 2016
 Basic Concepts
1) The source of potential harm. This is generally
referred to as a hazard but the breadth of concept
that is encompassed by the word hazard varies.

2) The nature of the harm and how it occurs (both the

word risk and hazard are used for this concept).

3) The magnitude of the risk (which depends on the

magnitude of the harm and its likelihood). This is
called either the risk or the level of risk.
 Risk As a Scientific Method
The Scientific Method
1. Observe a phenomenon.
2. Hypothesize an explanation for the
phenomenon.
3. Predict some measurable consequence that
your hypothesis would have if it turned out to
be true.
4. Test the predictions experimentally.
 Matching of Risk Assessment and
Scientific Method
Scientific Method Risk Management

Observe a phenomenon Risk identification

Hypothesize an explanation for Risk identification

the phenomenon

Predict some measurable

consequence that your hypothesis Risk Assessment
would have if it turned out to be
true
Test the predictions Risk Assessment
experimentally
 Basic Concepts
• The word hazard comes from al zahr: the
Arabic word for “dice” that referred to an
ancient game of chance
• The word Risk comes from al rizq: the Arabic
word for “God’s presents”
• Risk is most commonly defined as the
probability of an event that causes a loss and
the potential magnitude of that loss.
 RISK (Hansson 2004)
• Risk as an unwanted event which may or may not occur.
• Risk as the cause of an unwanted event which may or may not
occur. ( this is also a definition of a hazard.)
• Risk as the probability of an unwanted event which may or
may not occur.
• Risk as the statistical expectation value of unwanted events
which may or may not occur. [A statistical expectation value is
the sum of the values of each possible outcomes multiplied by
its probability].
• Risk as the fact that a decision is made under conditions of
known probabilities (“decision under risk”).
 Risk
• Risk = (likelihood/probability) x (consequence)
= P(L) x C
• Consequence = What can go wrong ?
• Probability = How likely is it ?
 Jenis Risiko
• Total Risk = worst case scenario, without
considering existing program or reliability

• Residual Risk =
Total Risk – Existing program (reliability)
 Residual Risk
• Probability of Failure (PoF)
• Probability of Survive (PoS)

• Reliability = PoS – PoF

• Residual Risk = Reliability/Consequences

= R/C
 Total Risk
• Probability of Failure (PoF)
• Consequences of Failure (CoF)

• Total Risk = PoF x CoF

 Reliability

Hubungan Antara Daya Tahan/Reliability dan Konsekuensi/beban

 Reliability

Hubungan Antara Daya Tahan/Reliability dan Konsekuensi/beban

R=C
 Reliability

Hubungan Antara Daya Tahan/Reliability dan Konsekuensi/beban

R<C
Risk Management Process AS/NZS 4360

Risk Management Process

Establish the context

Identify risks

Analyse risks

Evaluate risks
Assess risks

Treat risks
 Establish the context
• Strategic context - The organisational context
•The risk management context - Develops criteria
•Decide the structure

Identify risks
• What can happen?
•How can it happen?

Analyse Risk
Determine existing control

Determined Likelihood Determined Consequences

Estimate level of risks

Evaluate Risk
• Compare againts criteria
• Set risk priorities

yes
Assess risk Accept
Risk?

no

TREAT Risk
1. Identify treatment option 4. Prepare treatment plan
2. evaluate treatment options 5. Implement Plan
3. select treatment options
 Evaluated and ranked risk
Risk Treatment Process

Risk yes
Acceptable
Accept

N0

Identify
Treatment Reduce Reduce Transfer in
Communication and consult

Avoid
options Likelihood Consequences full or in part

Monitor and review

Consider feasibility costs and benefit
Assess
Treatment
Options Recommend treatment strategies

Select treatment strategy

Prepare
Treatment Prepare treatment plans
Plans

Implement
Treatment Reduce Reduce Transfer in
Avoid
Likelihood Consequences full or in part
plans

Part retained-part transferred

Risk
Acceptable yes
retain

N0
Latar Belakang

Unsafe Act /
Condition

KECELAKAAN
ACCIDENT MODEL

CEDERA
Swiss Cheese Model
Swiss Cheese Model
Swiss Cheese Factors
Swiss Cheese Process
 Pendekatan Safety
• Human Error Approach (Swiss Cheese Model)
– Human Center
– Pengetahuan dan Attitude

• System Approach (Loss Causation Model)

– System Management Center
– Process Operation
 RISK ASSESSMENT
•Probability = all causes start from underlying
causes through immediate
causes

•Consequence = Losses (human, property/

economic, environment)
RISK MEASUREMENT

• Qualitative
• Semi Quantitative
• Quantitative
 Risk Models
• Matrix Model (qualitative)
• Probabilistic Model (quantitative)
• Index/Scoring Model (semi quantitative)
Matrix Model
Qualitative measures of consequences or impact
AS/NZS 4360
Level Descriptor Example detail description
1 Insignificant No injuries, low financial loss

2 Minor First aid treatment, on-site release immediately

contained, medium financial loss

3 Moderate Medical treatment required, on-site release contained

with outside assistance, high financial loss

4 Major Extensive injuries, loss of production capability, off-

site release with no detrimental effects, major
financial loss

5 Catastrophic Death, toxic release off-site with detrimental effect,

huge financial loss
 Qualitative measures of likelihood

Level Descriptor Description

A Almost certain In expected to occur in most circumstances

B Likely Will probably occur in most circumstances

C Possible Might occur in some time

D Unlikely Could occur at some time

E Rare May occur only in exceptional circumstances

 Risk Matrix – Level of Risk
Consequences
Likelihood Insignificant Minor Moderate Major Catastrophic
1 2 3 4 5

A (Almost certain) H H E E E

B (Likely) M H H E E

C (moderate) L M H E E

D (unlikely) L L M H E

E (rare) L L M H H

E : Extreme risk; immediate action required

H : high risk; senior management attention needed
M : moderate risk ; management responsibility must be specified
L : low risk; manage by routine procedures
 PROBABILISTIC MODEL

• PRA (Probability Risk Assessment), e.g. FTA/ETA

• PRA is a mathematical and statistical technique that
relies heavily on historical failure data
• This technique is common used in the nuclear, chemical,
and aerospace industries and, to some extent, in the
petrochemical industry.
• The output of a PRA is usually in a form whereby its
output can be directly compared to other risks such as
motor vehicle fatalities or tornado damages.
• However, in rare-event occurrences, historical data
present an arguably blurred view.
 INDEX/SCORING MODEL
• Numerical values (scores) are assigned to
important conditions and activities on the
operation system that contribute to the risk
picture.
• This includes both risk reducing and risk-
increasing items, or variables.
• Weightings are assigned to each risk variable.
 Generally intolerable Risk cannot be justified
High Except in extraordinary
Risk
circumstances

Basic Safety Limit

ALARP or Tolerable Reduce risk until it reaches

acceptable region.
As Low As Reasobaly Practicable
Residual risk tolerable only if
further risk reduction is
impracticable

Basic Safety Objective

Broadly Acceptable Risk reducation not likely to be

required as resources likely to
be grossly disproportionate to
the reduction achieved
Negligible
Risk

ALARP Concept
 Risk Mapping
33 32
RiskMAP Unacceptable
87 11 53
10.00

35
8.50 168
160128
163 138 126 16 14 9
141 47 15 3 70 121 64 69
158
8.00
145 97 99 62
1 95 75 54 36
7.00
71
5.00

2.50

.50 Acceptable

0
0 0.001 0.010 0.100 0.250 0.500 0.850 1.000

PROBABILITY/LIKELIHOOD
 Selection of The Risk Techniques
When the need is to. Technique to use
Study specific events. perform post-incident Event trees. fault trees,
investigations, compare risks of specific failures. FMEA. PRA, HAZOP
calculate specific event probabilities

Obtain an inexpensive overall risk model, create a Indexing model

resource allocation model, model
the interaction of many potential failure
mechanisms, study or create an operating
discipline

Better quantify a belief, create a simple decision Matrix model

support tool, combine several
beliefs into a single solution, document choices in
resource allocation
 RISK LEVEL
• Basic Level
(without considering the existing program)
• Existing level
(By considering the existing program)
• Predictive Level
(By considering recommended program)
 RISK CONTROL
HIERARCHY OF CONTROL PROBABILITY CONSEQUENCES

ENGINEERING CONTROL

ADMINISTRATIVE
CONTROL

TRAINING/PROMOTION

PPE/APD
TERIMA KASIH