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

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