Risk Management: Session Objectives

• Concepts & Terminology

• Hazards relevant to Products, Processes and Systems
• Risk Management Process
– Problem Formulation
– Risk Assessment
– Risk Decision
– Risk Reporting
• Benefits for Engineering Management
• Resources

Dr Gera Troisi
Concepts and Definitions

 Hazard is a property or situation that in

some circumstances could lead to harm

 Risk takes account of both the chance

that a hazard will occur and the extent of
the harm that might result
Hazard versus Risk ....

...an acid can be highly corrosive so it is a hazard.

BUT it is only a potential risk to human health if humans
are exposed to it

...and the level of hazard will be dependent on the specific

exposure scenario…..

if a person comes into contact with strongly diluted acid

(low exposure), the risk of hazard is minimal but with
undiluted acid (high exposure) it is significant
 Types of Hazards
• Fault or failure - Engineering Hazard!
– Affects robustness (reliability-quality)
• Energy - heat, sound, movement, radiation
• Physical - waste
• Chemical - pollutants
• Biological - bio-hazard (e.g. Legionella spp)
• Sources of hazard
– faults usually lead to other hazards occurring – route cause!
– Release of hazard at any stage of the product life cycle
• Routine release (extraction, manufacture, use, disposal)
• Accidental release (e.g. oil spill, explosion, sabotage, human error)
What are we trying to protect?

• Protect Human Life and avoid injury

• Wildlife
− Plants
− Animals
• The Environment (environmental media)
− Air
− Land (soil/sediment)
− Water (fresh, estuarine, marine)
What is Risk Management?

Definition
A process to identify & estimate risks (e.g.
faults/failures) to decide if they are within
acceptable limits to all stakeholders,
providing mitigation and monitoring options
for unacceptable risks to reduce them to,
and keep them at, safe levels.

All information is reported in a transparent

manner to all stakeholders.
ISO 31000 Risk Management Standard Series

• This standard specifies principles and guidelines of risk

management to identify, assess and mitigate risks faced by
organisations.

• It’s designed to aid organisations to conformity with regulatory

requirements and international norms.

• It increases possibility of achieving organisational objectives,

improves identification of threats and opportunities, and aids
organisations to identify and minimise risks.
 Risk Management: Engineering Benefits
• Applied to critical aspects of an engineered system and its operation to
maximise robustness (reliability & safety)

• Assists decision-making process when prioritising sources of failure and

hazards to system robustness and safety in a quantitative and logical,
transparent manner

• Helps to identify appropriate mitigation options to reduce/eliminate risks

• System hazards/faults are foreseen – proactive not reactive approach!

• Helps managers bring in projects safely, and on/under budget and

schedule! (better, faster, cheaper, safer)
 Risk Management: Users
– Chemical manufacture and processing industries
– Nuclear power industry
– Medical device industry
– Ministry of Defence
– NASA and European Space Agency
– Pharmaceutical manufacturers
– Transport (air, rail, sea)
– Government agencies

• Common characteristics of above:

Complex systems
High severity component of risk
Enlightened management (costly past experiences!)
Government regulatory requirements
Risk Management: Legal Requirement (compliance)
Hazard Regulation
Adverse Health, Injury, Death Management of Health & Safety at Work Regulations
Fire Fire precautions (Workplace) Regulations 1992
Excess Noise Noise at Work Regulations 1989
Chemical Toxicity Control of Substances Hazardous to Humans (COSHH)

Radiation Radioactive Substances Act 1993

Chemical Toxicity & Ecotoxicity REACH (Registration, Evaluation, Authorisation & restriction of chemicals)

Major Accidents Control of Major Accidents (COMAH) Regulation

Fire Highly Flammable Liquids Regulation 1992
Lead Toxicity Lead at work Regulation 1985
Radiation Ionising Radiation Regulations 1985
Asbestos toxicity Asbestos at Work Regulations 1989
Electrocution Electricity at Work Regulations 1989
Pressurized gas systems Pressurised Systems & Transportable Gas Containers Regulations 1989
Dangerous Substances and Explosive Atmospheres Regulation
Genetically modified organisms (GMOs) Genetic Manipulation Regulations 1989
Display screen equipment Display Screen Equipment Regulations 1992
Risk Management: The process
Risk Management: Problem Formulation
Set Purpose of the RM and risk acceptability criteria - Goal Posts
• Are acceptable levels already set/pre-determined? (regulatory compliance, e.g. emission
limits; specification-standards
• Industry performance requirements e.g. SAE for aerospace
• Is RM for accreditation purposes? For example, ISO 9001: 2008 (International Standard
for Quality Management System) expects risks to be managed within the design and
implementation of an organization's quality management system.

Set boundaries of RM project

• Consider space-time scale and resources (and technical expertise)
• Decide level of influence on RM decision-making
• Identify stake-holders
• Consider whole product Life Cycle?
• Develop conceptual model of relationships between the sources, pathways and
receptors of hazards
Risk Management: Problem Formulation

Conceptual Model for Hazard-Risk

Property, substance, activity or event that represents a

SOURCE
hazard

Mechanism by which the source and receptor can come

PATHWAY
into contact

An entity that may be affected by a hazard, including

RECEPTOR
people, property and the natural or physical environment
Risk Management: Problem Formulation
Information to be Collated for Problem Formulation
Info relating to system and its operation/intended use; including:
•Design drawings, design specifications, operating manuals
•Definition of what is a system hazards/failure(s)
•Failure data, reliance on expert judgement, past evidence, etc
•Design intent
•Physical and functional descriptions of the system including system boundaries
(electrical, mechanical, operational interfaces) and interfaces with other systems
(functional block diagram/system schematic)
•Operational profile under normal-abnormal operation
•Environmental conditions & human aspects (user profile, maintenance personnel,
operator/human errors)
•Social issues
•Influence of resource limitations and how this will be overcome
Problem Formulation: System Identification

BREAK DOWN YOUR SYSTEM IN TO BITE-SIZE CHUNKS TO

FACILITATE FURTHER ANALYSIS
Problem Formulation:
System Identification
Problem Formulation: System Identification

Enclosed Heating-Ventilation-Cooling System dissected

Source: BS 5760-5:1991
Power-train System – Fuel, lubrication and cooling
Brunel Formula Student Car

Air Cleaner Fuel Fuel System

Injection Transmission
Throttle
Coolant Lubrication
Body
System System Flywheel &
Ignition Clutch
Primary System
Pipe &
Restrictor
Combustion Pistons Con-rods & Crankshaft
Plenum Chamber bearings & bearings

Secondary Exhaust
Muffler Exhaust Engine
Pipes Pipes

Intake
Primary Drive

Input Shaft Differential Driveshaft with CV Joints

Transmission Sub-system Gear train Final Drive

Flange

Gear Selection Output Shaft

Module

Hub
Risk Management: The process
 Risk Assessment: Summary of steps
• Hazard Identification
– Identify potential hazards that may arise to the system and consider
consequences should they occur.
• Risk Analysis
– Assess Exposure to Hazard (probability/frequency/occurrence)
– Assess Severity of Hazard (think consequences)
– Determine Risk
• Risk Evaluation
– Determine whether risk is acceptable/unacceptable against acceptability
limits
– Evaluate mitigation options
– Determine Residual Risk (falls within acceptable limits?)
 Risk Assessment: Hazard Identification

• Engineers focus on electrical and mechanical faults or failures

developing under normal & adverse operating conditions
• They would consider what consequences are likely should these faults
occur, for example;
– System shut down / malfunction
– Reduced productivity/efficiency/profit
– Environmental contamination via incidental, routine or accidental
releases of chemical/physical/biological hazards
– Occupational Health & Safety hazards (electrocution)
– Customer-related hazards (product use phase)
 Risk Assessment:
Hazard Identification

Potential Machinery Hazards

and their Consequences
Source: ISO 12100:2010
 Risk Assessment:
Hazard Identification

Potential Machinery Hazards and their

Consequences
Contd.
Source: ISO 12100:2010
 Risk Assessment:
Hazard Identification

Potential Machinery Hazards and their

Consequences
Contd.
Source: ISO 12100:2010
 Risk Assessment:
Hazard Identification

Potential Machinery Hazards and their

Consequences.
Source: ISO 12100:2010
Risk Management: The process
Risk Assessment: Risk Analysis

We quantify risk as follows:

Estimate/determine probability that
hazard will occur and estimate/determine
severity of consequences if it DID occur

RISK = PROBABILITY x SEVERITY

 Risk Assessment: Risk Analysis - Data
• Probability and severity data for
Risk Analysis can be obtained
from
– Published sources
– Unpublished sources
– Expert Judgement
• No consensus on best method for
Risk Analysis – because of variety
in application
• No legal requirement for a specific
method
• Good practice guidance is available
mainly from International
Standardisation Organisation (ISO)
(see ref list)
• Engineers mainly use probabilistic
risk analysis (PRA) methods for risk
analysis, such as:
– FMECA (Failure Mode, Effects &
Criticality Analysis)
– FTA and ETA (fault & event tree
analyses
 Risk Analysis: Obtaining Data
• Measuring component & • Emission Monitoring (Exposure):
system failure rates
– Wear testing
– Corrosion testing
– Fatigue testing
– Thermal cycling tests
– Accelerated life tests
– Questionnaire-surveys
– Human (occupational) monitoring, e.g.
Personal exposure monitors (PEMs)
– Environmental dispersion of pollutants
• Indoor Air quality (occupational)
• Atmospheric discharges
• Solid Wastes and ash
• Liquid waste effluents
– Modelling Software (ERA, CFD)

• Modelling failure rates • Measure Severity

– Questionnaires-surveys
– FEA
– Toxicity testing
– CFD – Occupational epidemiology studies
– Modelling Software (SARs)
 Risk Analysis: Risk “Ranking” as a Minimum
• Need to prioritise as there are
usually many potential risks
• Risk screening and
prioritisation by different
methods. Scoring and ranking
most popular
• Risk ranking is a qualitative
approach combining severity
and probability of hazard to
estimate magnitude of risk
• Black Zone prioritised for
mitigation action
Risk Raking Matrix
 Risk Analysis: Sources of Uncertainty & Error

• National Academy of Sciences estimated that incidence of Bladder

Cancers in US from consuming saccharin sweeteners over a lifetime
exposure, ranged between 0.22 and 1,144,000 cases!!

• US Dept. Energy estimated that number of fatalities associated with

emissions from coal-fired power stations ranges from 1 to 305 /year

• U.S. Nuclear Regulatory agency estimated that risk of core-melt at

nuclear power plants ranged from 1 chance in 10,000 to 1 chance in 1
million
Risk Analysis: Sources of Uncertainty & Error
• Inappropriate and subjective assumptions for extrapolation
• Use of surrogate or inaccurate data
• Data/ Statistical/ parameter/ judgemental/ model uncertainty
• Completeness Uncertainty - a crucial flaw is failure to describe &
characterise uncertainties in risk estimates
• Error from inherent natural variation
• Error introduced from expert judgement from under-qualified experts
or persons not representing full range of scientific opinion
 Risk Analysis: Possible Solutions to uncertainty
• Adopt a “worse-case-scenario” which assumes that consequences will
definitely occur (apply precautionary principle)

• Assign a substitute “default” or surrogate value – if a range of values

available can use mean/median/mode. Where no values available
derived from similar studies, systems, components, etc

• Use safety factors (although a source of uncertainty, offer increased

protection forcing the uncertainty in a protective direction). For example
risk is 10 apply safety factor (x10) = 100 risk 10 fold higher

• Collect more information (research) to improve knowledge and/or data

relevant to the uncertainty = Least used option due to time and cost!

• Disclose all sources of uncertainty in risk management reports to avoid a

false sense of accuracy
Risk Management: The process
Risk Assessment: Risk Evaluation
• Refer to original Risk Acceptability Criteria
set in Problem Formulation
– Within acceptability range =
Risk Acceptance
– Exceed acceptability range =

Risk Reduction (Mitigation)

• At this point consider risk management
principals to explain/justify risk level and
acceptability/not of risk
Risk Evaluation
Some important risk management principals:
•BATNEEC and variations (BAT)
– Best Available Techniques Not Entailing Excessive Costs
– Promotes use of state of the art technology that is economically feasible for preventing or
reducing pollutant emissions and environmental impact
– Integrated pollution prevention & control (IPPC) EU Directive 96/61/EC promotes application of
BATNEEC to control of pollution.
•ALARP and variations
– As Low As Reasonably Practicable (i.e. practical & economical)
– As Low As Reasonably Achievable (time-scale, budget, other) (ALARA)
– So Far As Is Reasonably Practicable (SFAIRP)
– Enforced by Health & Safety Executive (HSE) on Duty Holders (Duty of Care) (e.g. Railway)
within the Health & Safety at work Act 1974 placing duty on employers to protect employees
Risk Evaluation & ALARP
Risk Evaluation
Visualising
Residual Risk

Risk
=> Mitigation
=> Residual Risk
 Risk Evaluation: Deciding Mitigation
Risk Reduction
Reduce exposure to risk or severity hazard to hazardous
agent. For example:
• use lowest (ALARP) amounts of toxic lubricant and
improved containment and disposal to minimise
exposure

Risk communication
inform receptors and thereby minimise probability of
hazard using hazard labels, signs, training, webinars, etc.

Greater use of instructions/warning –

improve info on safe use in handbooks
regards containment & disposal of
hazardous agents 39
 Risk Evaluation: Mitigation Options
• Risk Substitution - use alternative methods processes or substances where
available.
• Risk Transfer – insurance or risk sharing (investor), outsourcing, contracting
elements out to other company (externalising risk retention)

External stakeholders can Control Risk

• Consumers choice can force more sales of lower risk options on
manufacturers by not purchasing high risk products
• Regulators can limit market availability of product in the market - embargo-
or ban on production/importation (e.g. REACH regulation of chemicals)
• Other stakeholders may influence choice of risk controls such as reducing
funds (shareholders/investors) moving operations etc
Risk Management: The process
 Risk Management: Risk Decision
• No universally-accepted “decision-making” (options appraisal) methods
• Trade-off between costs & benefits of risks in context of quality,
robustness, safety, sustainability, social benefit and value for money.
• Where risk level is pre-determined by government it is a legal requirement
(compliance) to reduce the risk to acceptable levels
• Where no guidance exists observe industry "norms” and relevant
precedents on a case-by-case basis
• All mitigation options are systematically weighed-up to decide best
alternative approach applying ALARP and BATNEEC principles
 Risk Decision

Risk is perceived differently by different Stake-holders (see above)

Value judgements - What is valuable and should be protected is different to
different people (human life, wildlife, environment, profit, image).
Risk Decisions are made by Management following Stake-holder Consultation
Risk Decision: Risk Perception in Decision-Making

• Government perception
– Regulatory enforcement (of variable effectiveness – resource issues)
– Public pressure focusses attention on high profile cases, e.g. nuclear
reactors, spills, illegal dumping, conservation issues
– Must protect consumer safety. US Consumer Product Safety
Commission deals with > 30,000 consumer deaths and > 20 million
injuries per year due to unsafe products
– Must protect health & safety of the community
– Must protect the environment and environmental resources

• Consumer perception – priority is risk but affordable quality product

 Risk Decision: Risk Perception
• Public perception
– Complex & dynamic due to constantly changing society.
– Varies by culture (location, affluence, education, ethnicity, religion).
– Psycho-social issues “not in my back yard”

• Industry Perception – PROFIT is priority!

– Risk management COSTS (e.g. FTA for industrial facility can cost over
~£0.5million and take 2 years to complete)
– What’s the minimum expenditure on RM for legal compliance?
– Investment in quality management depends on competition.
– Corporate & social responsibility. Public image
– Safety of employees and infrastructure
 Risk Assessment: Reporting Elements

• Report of risks identified, characterised and quantified

• A statement on degree of confidence in risk estimates with supporting evidence
(was there enough info to make reliable judgements?)
• Interpretation of the consequences of project risks(s) to all stakeholders,
recommending mitigation options for priority risks and residual risk for each option
• Will contain sufficient detail to facilitate understanding of risks by all stakeholders
(transparent non-technical language) to allow informed decision-making
• Risk Management Decisions made on basis of RA report and a Risk Management
Report appending information on the risk decisions, basis for those decisions and
any monitoring to be put in place to ensure risk is “managed”

46
 Risk Management: Benefits

• Demonstrates responsible management of risks and logic behind why

specific actions are taken to manage risk

• Assists accreditation for other management systems (e.g. Quality

(e.g. ISO9001 and occupational H&S Management (e.g. ISO45001)

• Helps target resources for a proportionate, risk-based response -

minimise effort, maximise resource use (RM costs are recovered)

• Although it costs the organisation there is customer value creation.

By managing risks and uncertainties, these capabilities turn into a
source of competitive advantage
 Risk Management: Benefits
• Reduces chances of a major risks being missed

• Provides an empirical foundation for balancing risks v benefits

• Helps target research for most effective resolution of uncertainty and reduces
uncertainty in decision-making

• Translates risk information, which occurs in different formats, into a condensed

standardised common language providing transparency (auditable trial)

• Provides an auditable trail explaining basis for omission or prioritisation of each

risk (transparency)
Risk Management
Process Summary
Flow Chart

Source: ISO 12100:2010

 Summary
• Hazard is an unwanted event (failure, harm, threat, danger)

• Risk = severity of hazard x probability that hazard will occur

• We can manage hazards by determining the risk via risk assessment

• Risks are managed within a Management System (ISO 3100 Series)

• Risks should be managed to be ALARP and BATNEEC methods should be

employed to reduce risk to acceptable limits where they are unacceptable
• Risk is perceived differently by different stakeholders and this influence
risk decisions in an organisations – engineering sense does not always
prevail within the larger scheme of things
• There is always uncertainty when we determine risk level and so degree of
confidence should be provided
 Further Reading: Risk Management Resources
• Royal Academy of Engineering - Common Methodologies for Risk Assessment &
Management
• http://www.hse.gov.uk/risk/index.htm resources for safety audits/risk assessments

• ISO 3100 Series of Risk Management Standards

 ISO 31000 Risk Management - Guidelines
 ISO 31004 Principles and guidelines on implementation of ISO3100
 ISO 31100 Code of Practice for Implementation of ISO31000
 ISO 31010 Risk Assessment Techniques

• Other related Risk Management standards

 ISO 8444-3 Part 3. Guide to the Risk Analysis of Technological systems
 ISO 17666 Space systems – Risk Management
 ISO 12100 Safety of Machinery – General principals for design – Risk Assessment & Risk
Reduction
 ISO 14971 Risk Management of Medical Devices