Mining 012 riskope is it true that pi_gs

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Tailings systems in mines are often the object of Risk Assessments. Unfortunately common practices in Risk Assessment, using PIGs (Probability Impact Graphs) are arbitrary, lead to confusing and fuzzy …

Tailings systems in mines are often the object of Risk Assessments. Unfortunately common practices in Risk Assessment, using PIGs (Probability Impact Graphs) are arbitrary, lead to confusing and fuzzy results, offer very little decision making support and misrepresent reality. After demonstrating these pitfalls, the presentation shows how to do better by using ORE (Optimum Risk Estimates), a methodology developed by Riskope.
Riskope has developed a proprietary application that allows to package ORE results into cockpits addressing top and mid-management concerns, allowing strategic integration of risks in corporate policies.

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  • 1. Optimum Risk Estimates (ORE) will help you steering your organization. Is it True that PIGs Fly when Evaluating Risks of Tailings Management Systems? Franco Oboni Oboni Riskope Associates Inc., Vancouver, British Columbia, Canada Cesar Oboni Oboni Riskope Associates Inc., Vancouver, British Columbia, Canada(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 1 of 27 12/10/2012
  • 2. Optimum Risk Estimates (ORE) will help you steering your organization.Risk Management used to be a “Compliance”or “Loss Minimization” afterthought.Companies interpreted theresults of Risk Assessmentswith Probabilities ImpactGraphs (PIGs).PIGs became ubiquitous, despite intrinsicconceptual errors, with potential dramaticnegative consequences on their users. (c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 2 of 27 12/10/2012
  • 3. Optimum Risk Estimates (ORE) will help you steering your organization.Our clients then started asking for realMEASUREMENT OF RISK.They understood that bringing riskmanagement in at (Pre) Feasibility Stagewould CREATE VALUE. VALUE.They are starting now to look atSTRATEGIC INTEGRATION OF RISK.There was no chance that a flawed,simplistic PIG would bring satisfyingreplies...so we started anew.replies...so(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 3 of 27 12/10/2012
  • 4. Optimum Risk Estimates (ORE) will help you steering your organization.Lets first start looking at PIGs flaws:● Arbitrary selection of cell limits● Arbitrary selection of “coloring” frontiers● Simplistic definition of consequences● Lack of “resolution” between risks● Fuzzy results● Etc.(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 4 of 27 12/10/2012
  • 5. Optimum Risk Estimates (ORE) will help you steering your organization. This is a real PIG from a large project Risk Assessment.(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 5 of 27 12/10/2012
  • 6. Optimum Risk Estimates (ORE) will help you steering your organization. If we look at historic and recent set of tolerability criteria...(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 6 of 27 12/10/2012
  • 7. Optimum Risk Estimates (ORE) will help you steering your organization.We can ...and plot the PIG on top, the discrepancyforesee becomes evident!that caseswill bechallengedin Courtsof Lawagainstcompaniesusing PIGsfor theirriskassessmentsand theresultingdecisions. (c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 7 of 27 12/10/2012
  • 8. Optimum Risk Estimates (ORE) will help you steering your organization. To steer away from the PIGs generated hazards and risks you need a “Savior”. One that is in tune with our “modern” world and the numerous (and “new”) challenges we have to face. Optimum Risk Estimates (ORE) will help you from pre-feasibiity stage to operations and closure.(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 8 of 27 12/10/2012
  • 9. Optimum Risk Estimates (ORE) will help you steering your organization.Case Study 1We will use, for this first Case Study, OperationTen (OT) belonging to our client AAA Inc. (AAA)(names, locations and risk names have beenaltered to respect clients confidentiality), amedium sized mining operation. Geographiclocation, mining type and product do not matterfor this discussion.They had done a PIG.... PIG....(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 9 of 27 12/10/2012
  • 10. Optimum Risk Estimates (ORE) will help you steering your organization.Using common procedures andinstructions for the definition ofprobabilitiesClass Frequency of Failure 1 1 in over 100 years 2 1 between10 to 100 years 3 1 between 5 to 10 years 4 1 between 1 to 5 years 5 more than 1 failure per yearClass Severity 1 $0 to $1,000,000 in costs 2 $1,000,000 to $5,000,000 in costs 3 $5,000,000 to $15,000,000 in costs 4 $15,000,000 to $50,000,000 in costs 5 more than $50,000,000 in costs (c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 10 of 27 12/10/2012
  • 11. Optimum Risk Estimates (ORE) will help you steering your organization.50 risks which split into:-0 Severe-14 High-25 Medium-11 Low risksThey called us in because they did notknow how to tackle 14 high, 25medium...too fuzzy, too costly!!!(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 11 of 27 12/10/2012
  • 12. Optimum Risk Estimates (ORE) will help you steering your organization.We deployed ORE (Optimum RiskEstimates) as I have detailed in the shortcourse last Sunday at this conference.ORE is the result of twenty years experienceworld-wide and has been deployed forvarious clients, including Fortune 500 atvarious stages including acquisitions, pre-feasibility, operations, closure.Lets see how focus can be increased withORE so the client gets a clearer roadmap formanaging risks, decision making, etc... making,(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 12 of 27 12/10/2012
  • 13. Optimum Risk Estimates (ORE) will help you steering your organization.Lets build a Tolerability Curve: we display ithere on top of the original PIGs cells, forcomparisonA specific Tolerability Curveexists for any project,operation, company.NB: if uncertainties areincluded then youd see aband instead of a line, andrisks would be plotted as“bubbles”, on this p-Cdiagram. (c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 13 of 27 12/10/2012
  • 14. Optimum Risk Estimates (ORE) will help you steering your organization. For each risk lets evaluate the intolerable part (orange) v.s. tolerable part (blue).(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 14 of 27 12/10/2012
  • 15. Optimum Risk Estimates (ORE) will help you steering your organization. Top 20 Total Risks prioritization. However, we can do better than that!(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 15 of 27 12/10/2012
  • 16. Optimum Risk Estimates (ORE) will help you steering your organization.Risks prioritization with the intolerable part asdiscriminant constitute the core of OREbecause... ...the only risks that actually matter are the ones that extend above the Tolerability Criteria created for your specific project/operation/ company.(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 16 of 27 12/10/2012
  • 17. Optimum Risk Estimates (ORE) will help you steering your organization.Now it is possible to take rational decisions inallotting mitigative funds, planning ahead!ORE show that only 5scenarios count for 83%of the total intolerablerisks. Concentrating onthem will greatly improvethe situation.Five instead of 14 (+25)suggested by PIG!(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 17 of 27 12/10/2012
  • 18. Optimum Risk Estimates (ORE) will help you steering your organization.ORE benefits brought to this operation can besummarized as follows:-The prevalent critical risks are brought forwardin a clear, rational and defensible way.-The number of critical issues is smaller thanoriginally evaluated.-The insurance portfolio was shown to be poorlybalanced and adjustments were proposed.-The new priority list ensures better mitigativeinvestments allotments and frees moneys forother allocations.(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 18 of 27 12/10/2012
  • 19. Optimum Risk Estimates (ORE) will help you steering your organization.Case Study 2This case study bears on a complex tailings pondsystem, as described in the next slide(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 19 of 27 12/10/2012
  • 20. Optimum Risk Estimates (ORE) will help you steering your organization. Map of Acme Mine TSF with Cascading ponds...(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 20 of 27 12/10/2012
  • 21. Optimum Risk Estimates (ORE) will help you steering your organization.Each “Appendix” correponds to the risk assessment ofelements 1 to 17. Left Total Risk, Right ORE Rankingwith Intolerable Risk as discriminant. (c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 21 of 27 12/10/2012
  • 22. Optimum Risk Estimates (ORE) will help you steering your organization. Same results in the pie-diagram format. Total Risk left, ORE Intolerable Risk right.The total risk prioritization lacks definition, leads to poorallocation of funds and causes managers to be overwhelmed bythe number risks that appear “on the radar screen” for possiblemitigation. ORE offers a clearer roadmap. (c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 22 of 27 12/10/2012
  • 23. Optimum Risk Estimates (ORE) will help you steering your organization.-ORE ranked risks bring in clarity, not fuzzyness;ORE does not need scenarios censoring.-Probabilities are defined by selecting the mostappropriate methodology for each scenario.Inevitable uncertainties are given due consideration.-ORE does not require “classes”; does not ask toarbitrarily select “the worse” between physical,human, environmental losses.-The Tolerability Criteria is established usingrepeatable methods specifically for the clientsoperation(s) under consideration (and corporately).(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 23 of 27 12/10/2012
  • 24. Optimum Risk Estimates (ORE) will help you steering your organization.(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 24 of 27 12/10/2012
  • 25. Optimum Risk Estimates (ORE) will help you steering your organization.Let me guess, your car has abetter cockpit than this oldclunker!Modern cars have moresophisticated instruments,right?However, in your company youprobably use this matrix as aRM/ERM cockpit.Your tailings deserve better than this rudimentary,obsolete tool! Manage your tailings and yourcompany using all available information... (c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 25 of 27 12/10/2012
  • 26. Optimum Risk Estimates (ORE) will help you steering your organization. Tailings/Corporate ORE Cockpit.Acme Inc. Sources of Threats4 Divisions:A,B,C,D;Diversified3 countries;InternationalExports. Potential Losses per Product Logistic Risks Media Vulnerability Hazardous Sectors (c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 26 of 27 12/10/2012
  • 27. Optimum Risk Estimates (ORE) will help you steering your organization.ORE are the keyto your businessprosperity,survival andsustainability.Now you candrive safely. CONTACT: Franco Oboni foboni(a)riskope.com(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 27 of 27 12/10/2012