OVER VIEW

RISK MANAGEMENT

Zulkifli D
Sept 2018 S2 K3
 Phylosophy of Risk
• Terminological clarifications
• Argumentation analysis
• The fact–value distinction
 Terminological clarifications
• First, in the early 1980s, attempts were made to identify risk with the probability
of an unwanted event (Fischhoff et al.1981; Royal Society 1983, p. 22). This usage
has some precedents in colloquial language; for instance say that ‘‘the risk that
this will happen is one in twenty.’’

• Secondly, in more recent years, several attempts have been made to identify risk
with the statistical expectation value of unwanted events. By this is meant the
product of an event’s probability with some measure of its undesirability. If there
is a probability of 1 in 100 that three people will die, then ‘‘the risk’’ is said to be
0.03 deaths. (International Organization for Standardization 2002; Cohen 2003).
 Risk and Severity of Risk
• From the viewpoint of philosophical definition theory
(Hansson 2006), this terminology is problematic.

• It conflates ‘‘risk’’ with ‘‘severity of risk.’’ It makes sense to say

that a probability of 1 in 1,000 that one person will die in a
roller coaster accident is ‘‘equally serious’’ as a probability of
1 in 1,000,000 that 1,000 people will die in a nuclear accident,
but it does not make sense to say that these two are the
same risk (namely 0.001deaths). They are in fact risks with
quite different characteristics.
• Therefore, a term such as ‘‘expected damage’’
is much preferable to ‘‘risk’’ as a designation
of the statistical expectation values employed
in risk analysis (Hansson 2005).
 Argumentation analysis
• There are fallacies that are specific to the subject matter of risk. The
following is a sample of such fallacies:

1. Risk X is accepted.
• Y is a smaller risk than X.
• ∴ Y should be accepted.

2. Risk X is natural.
• X should be accepted.
∴
• X does not give rise to any detectable risk.
• ∴ X does not give rise to any unacceptable risk.
3. There is no scientific proof that X is dangerous.
• ∴ No action should be taken against X.

4. Experts and the public do not have the same attitude to risk X.
• ∴ The public is wrong about risk X.

5. A’s attitude to risk X is emotional.

• ∴ A’s attitude to risk X is irrational.
 The Fact–Value Distinction
• The value of naturalness
• Radiation levels are frequently
compared to the natural
background with the tacit
assumption that exposures
lower than the natural
background are unproblematic.
In health risk assessments, this
• In ecological risk assessments, an argument referring to naturalness may be more
is a very weak argument. That
relevant.
somethingIf we want to protect
is natural does not the natural environment, then it is important to
know
prove what is natural.
that its negative effects on
human health are small
• (Hansson appeals to naturalness or unnaturalness are often made in a perfunctory
However,
way in discussions on ecological risk, and there is much need for clarification and
2003).
analysis.
• Attitudes to sensitive individuals

• According to the best available estimates, the radiogenic cancer risk is

around 40% higher for women than for men at any given level of
exposure. There are also small groups in the population who run a much
higher risk. However, the recommended exposure limits are based on a
population average rather than data for subpopulations (Hansson 2009).

• From an ethical point of view, this is problematic. Exposing a person to a

high risk cannot be justified by pointing out that the risk to an average
person would have been much lower
 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
 RISIKO
Yang manakah disebut pekerjaan yang
PALING
BERISIKO dari gambar dibawah ?
 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.
 HAZARDS AND RISKS
A Hazard is something with the potential to
cause harm. This can include chemical
substances, plant, work process and/or other
aspects of the work environment.

• Risk is the likelihood that illness, injury or

even death might result because of the
hazard.
 THE RELATIONSHIP BETWEEN HAZARD AND RISK
HAZARD RIS
Substance: K
Carcinoge The
n likeli
hood
Energy: a likelihood that a maintenance worker might be
The
Electricity resear
electrocuted because of exposure to a damaged electrical
cher of a power tool and there is no earth leakage
cord
might
protection.
Manual Handling contrlikelihood that a person might suffer back strain
The
act
from
cance
manually lifting equipment that weighs 40kg.
Substance: r likelihood Iha t a worker might sustain a needlestick
The
infected from
injury and become inf ected whilst taking a blood sample
blood the a person with infected blood
from
long
Plant: termlikelihood that an Arts student mig ht suffer a
The �
circular saw use
severe cut to the forearm while cutting timber for a
bench of be
project because the
nzene
zuard was removed
being
used
as a
solve
nt
outsid
e a
fume
cupbo
WHEN TO IMPLEMENT RISK MANAGEMENT

Risk management is an ongoing process that

should be undertaken:
– Now, if you have not done it before
– When any new work is planned including
laboratory/workshop/course work
– When a significant change occurs
– After an incident
– At regular predetermined intervals
 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

R > C = SAFE
 Reliability

Hubungan Antara Daya Tahan/Reliability dan Konsekuensi/beban

(R = C) = RISK
 Reliability

Hubungan Antara Daya Tahan/Reliability dan Konsekuensi/beban

R < C = UNSAFE
Latar Belakang

ACCIDENT MODEL
Unsafe Act /
Condition

KECELAKAAN

CEDERA
Swiss Cheese Model
Swiss Cheese Model
Swiss Cheese Factors
 Swiss Cheese Process
Defenses

Hazards

Lure nt
Condit
ion ..[J..,n, c�t
Pathwavs
igation
Local Workplace Factors

Orgunivuuonal Factor;
Risk Management Process

Establish the context

Identify risks

Analyse risks

Evaluate risks
Assess risks

Treat risks
 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 MANAGEMENT PROCESS

• Hazards identified
• Assessment of the risks associated with those
hazards
Decisions on control measures to manage
exposure to the risks
• How and when the control measures are
implemented
Evidence of monitoring and review of the
effectiveness of the controls
 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

Assess risk Accept

yes
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
Accept
Acceptable

N0

Identify
Treatment Reduce Reduce Transfer in
Avoid
options Likelihood Consequences full or in part
Communication and consult

Consider feasibility costs and benefit

Monitor and review

Assess
Treatment
Options Recommend treatment strategies

Select treatment strategy

Prepare
Treatment Prepare treatment plans
Plans

Implement Reduce Reduce Transfer in Avoid

Treatment
Likelihood Consequences full or in part
plans
Part retained-part transferred
Risk
retain
Acceptable yes
N0
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 In expected to occur in most
certain 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 certai
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
High justified
Risk
Except in extraordinary
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
Una
Unacceptable
87 11 53
10.00

35
8.50 160128 168
163 138 126 16 14 9
141 47 15 3 0 121 64 69
158
8.00 7
145 97 99 62
1 95 75 54 36
7.00
71
5.00

2.50

.50 Accep
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 PROBABILITY CONSEQUENCES
CONTROL

ENGINEERING CONTROL

ADMINISTRATIVE
CONTROL

TRAINING/PROMOTION

PPE/APD
TERIMA KASIH