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Atack of the Black Swan
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Atack of the Black Swan

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Transcript

  • 1. An Introduction to Risk Assessment
    Steven Lipton M.Ed. LEHP, CP-FS
    President , Biotest Services Inc.
    Vice President, Operations Quality, Scientific Device Laboratory Inc.
  • 2. Objectives
    Define risk
    Identify the risk within a process, product or event.
    Indentify the three major risk levels
    Create a risk analysis chart
    Identify and evaluate actions concerning potential Black Swans.
  • 3. What is Risk
    A relationship between
    Likeliness of an event
    Impact of that event
  • 4. Impact
    May be Positive or negative
    WIN!!!
    LOSE!!!
  • 5. Risk Management
    Outside of finance, risk management generally deals with negative impacts.
  • 6. A simple dice game
    Roller rolls 5 times
    Roller Pays Bank $1 on rolls of 3,4,5
    Bank Pays Roller $1 on rolls of 1,2,6
  • 7. A simple dice game
    Roller rolls 5 times
    Roller Pays Bank $1 on rolls of 5,6,7,8,9
    Bank Pays Roller $1 on rolls of 2,3, 4,10,11,12
  • 8. Possible impacts
    Lose
    Low: $1
    Moderate: $3
    High: $5
    Win
    Low: $1
    Moderate: $3
    High: $5
  • 9. Probability
    High - greater than 50% chance P(A)>0.50
    Medium– 25% to 50% 0.25 ≤P(A) ≤ 0.50
    Medium Low – 13% up to 25% 0.13 ≤ P(A) ≤ 0.25
    Low - 13% P(A)<0.13
  • 10. Risk Table
    I Just don’t want to lose!!!!
  • 11. Risk Table
  • 12. Types of risk
    Intolerable risk - IR
    Alarm or As Low as Reasonably Practical (ALARP) - AL
    Broadly acceptable – BA
  • 13. Risk Table
  • 14. Risk Table
  • 15. Risk Table
  • 16. Risk Table
  • 17. Risk Table
  • 18. Risk Table
  • 19. Risk Table
  • 20. Risk Table
  • 21. Risk assessment Form
  • 22. A simple dice game
    Based on evidence for 1-die game, assume even odds.
    WAIT!!! There are really only 11 possibilities, not 12! P for dealer is (5/11)- 45%/throw, P for player is (6/11) 54%
  • 23. A simple dice game
    Lose 5 – 1.8%  P1
    Lose 3 – 11.6%  P1
    Lose 1 – 27.1% P3
    Lose 0 – 59.5%P5
  • 24. Risk assessment Form
  • 25. A simple dice game
    Roller rolls 5 times
    Roller Pays Bank $1 on rolls of 5,6,7,8,9
    Bank Pays Roller $1 on rolls of 2,3, 4,10,11,12
    Now Play the game!!!
  • 26. Class Results
  • 27. Probability
    Some events are more likely to happen than others
  • 28. Simulation Results
  • 29. A sucker bet
  • 30. Original Risk Assessment
  • 31. Revised Risk for Probability
  • 32. Risk Table
    The Black Swan
  • 33. The Black Swan
    Nicholas Nassim Taleb (2006)
    A reference to Europeans who only saw white swans and thus thought all swans were white – until they got to Australia.
    A black swan event is a High impact, Low probability event.
    After a Black Swan event, the event looks like it was inevitable with a simple, obvious explanation.
  • 34. Changing the rules
    If roller wearing anything white, the payoffs to bank and roller switch.
    What happens?
  • 35. Control Measures
    Control measures change the impact or the probability of an outcome, and thus change the risk.
  • 36. Control Measures
    Control measures are found by determining the root cause, and finding a way to prevent minimize or eliminate that root cause
  • 37. Revised Probabilities & Risk
  • 38. Revised Probabilities & Risk
  • 39. Stopping Black swans
    Be creative
    Expert advice is anchored to the means, not the extremes
    Examine for false impacts and probabilities
    Examine for false risk
    Examine for hidden risk
    Apply control measures once found
  • 40. Stopping Black Swans
    You can’t stop all Black Swans
    When you do stop one, virtually no one will know. (Jonah’s Dilemma)
  • 41. Risk assessment charts
    Brainstorm all possible events
    Brainstorm all possible outcomes
    Place on form and calculate risk
    Identify root causes
    If there is a control measure for the root cause, note it.
    If there is a significant residual risk, see if that is another event/outcome.
  • 42. Brainstorming
    Write down all possibilities for the topic without any editing or rejections
    Organize the results
  • 43. Brainstorming
    Write down all possibilities for the topic without any editing or rejections
    Organize the results
  • 44. A Short Risk Analysis
    Step 1: Decide in your groups a case
    Food borne outbreak
    Terrorist event
    Natural disaster
    Epidemic
    Step 2: Brain storm all events that could happen during a topic.
  • 45. Step 3: Events and Effect
  • 46. Define Impact
  • 47.
  • 48. Set up risk table
  • 49. Step 7: Calculate your risk
  • 50. Step 8: Find the root cause
  • 51. Step 9: Control measure
  • 52. Step 3: Calculate residual risk
  • 53. Questions?
    Steven Lipton
    Biotest Services
    411 East Jarvis Ave Des Plaines IL 60018
    steven.j.lipton@gmail.com
    Steve@scientificdevice.com
    Twitter: @Biotest
    http://www.biotestservices.com/risk.php