SlideShare a Scribd company logo

The Challenger Disaster A Case-study in Engineering Ethics.docx

•Download as DOCX, PDF•
•
K
karisariddell

The Challenger Disaster A Case-study in Engineering Ethics • Shuttle Components – Orbiter – Liquid Rocket Booster – Solid Rocket Booster Shuttle Components Chronology of the Related Events • 1974 – NASA contracts Morton Thiokol • 1976 – NASA accepts the design based on the Titan missiles – The joints are sealed by • Two synthetic rubber O-rings, • 177 clevis pins, • Heat shield putty The Cause of the Disaster Early Problems • 1977 – Tests at Thiokol show O-ring leakage – Joint is made stronger by changing sizes • 1981 – Post-launch investigation showed O-ring erosion due to hot gages. Early Problems • January of 1985 launch – First cold-weather launch – Post-launch investigation showed joint failure – Tests showed O-rings inability to fill the gap due to joint rotation at lower temperatures Early Problems • July 1985 – Thiokol redesigns the joints w/o O-rings – The design was not ready for Challenger launch Political Climate • Congress is unhappy with NASA • Competition with Russians to be the first to observe Halley’s comet. • Pressure to launch before President Reagan’s State of the Union Address Days before Launch • First launch attempt postponed • The next launch date was set and was to be attended by Vice President Bush. • The temperature at launch: 29 degrees F. Days Before Launch • NASA starts an investigation of the effect of low temperatures on the O-ring seals • Organization involved – NASA – Marshall Space Flight Center – Morton Thiokol Engineering Investigation Before Launch • Players at NASA – Larry Mulloy: SRB Project Manager at Marshall • Players at Thiokol – Roger Boisjoly: A SRB engineer – Arnie Johnson: A SRB engineer – Joe Kilminster: SRB engineering manager – Alan McDonald: SRB engineering director – Bob Lund: Vice president for engineering – Jerald Mason: General manager Engineering Investigation Before Launch • Boisjoly and Johnson recommend the launch to be postponed. • Bob Lund, the VP for engineering agrees and makes a similar recommendation. Investigation Before Launch • Larry Mulloy, the NASA manager of SRB asks Joe Kilminister, the SRB manager at Thiokol, for his opinion. • Kilminister agrees with other Thiokol engineers and recommends a launch delay. Investigation Before Launch • After discussion with Mason • Lund reverses his decision regarding launch! • Thiokol recommend the launch to proceed The Launch in January 1986 • The overnight temperatures drop to 8 F • The temperature of SRB at launch is 28 F • There is an immediate blow-by of hot gas at launch. The seal fails quickly over an arc of 70 degrees. The Launch in January 1986 • The by-products of combustion forms a glassy oxide that reseals the joint. • The brittle oxide is shattered • Hot gases quickly burn through ...

Education
1 of 120
The Challenger Disaster A Case-study in Engineering Ethics • Shuttle Components – Orbiter – Liquid Rocket Booster – Solid Rocket Booster Shuttle Components Chronology of the Related Events • 1974 – NASA contracts Morton Thiokol • 1976 – NASA accepts the design based on the Titan missiles
– The joints are sealed by • Two synthetic rubber O-rings, • 177 clevis pins, • Heat shield putty The Cause of the Disaster Early Problems • 1977 – Tests at Thiokol show O-ring leakage – Joint is made stronger by changing sizes • 1981 – Post-launch investigation showed O-ring erosion due to hot gages. Early Problems • January of 1985 launch
– First cold-weather launch – Post-launch investigation showed joint failure – Tests showed O-rings inability to fill the gap due to joint rotation at lower temperatures Early Problems • July 1985 – Thiokol redesigns the joints w/o O-rings – The design was not ready for Challenger launch Political Climate • Congress is unhappy with NASA • Competition with Russians to be the first to observe Halley’s comet. • Pressure to launch before President
Reagan’s State of the Union Address Days before Launch • First launch attempt postponed • The next launch date was set and was to be attended by Vice President Bush. • The temperature at launch: 29 degrees F. Days Before Launch • NASA starts an investigation of the effect of low temperatures on the O-ring seals • Organization involved – NASA – Marshall Space Flight Center – Morton Thiokol
Engineering Investigation Before Launch • Players at NASA – Larry Mulloy: SRB Project Manager at Marshall • Players at Thiokol – Roger Boisjoly: A SRB engineer – Arnie Johnson: A SRB engineer – Joe Kilminster: SRB engineering manager – Alan McDonald: SRB engineering director – Bob Lund: Vice president for engineering – Jerald Mason: General manager Engineering Investigation Before Launch • Boisjoly and Johnson recommend the launch to be postponed. • Bob Lund, the VP for engineering agrees
and makes a similar recommendation. Investigation Before Launch • Larry Mulloy, the NASA manager of SRB asks Joe Kilminister, the SRB manager at Thiokol, for his opinion. • Kilminister agrees with other Thiokol engineers and recommends a launch delay. Investigation Before Launch • After discussion with Mason • Lund reverses his decision regarding launch! • Thiokol recommend the launch to proceed The Launch in January 1986 • The overnight temperatures drop to 8 F
• The temperature of SRB at launch is 28 F • There is an immediate blow-by of hot gas at launch. The seal fails quickly over an arc of 70 degrees. The Launch in January 1986 • The by-products of combustion forms a glassy oxide that reseals the joint. • The brittle oxide is shattered • Hot gases quickly burn through the liquid rocket booster The Aftermath • Causes of the accident are attributed to – Inability of the O-rings to expand and seal at low temperatures.
– Heat shield putty did not perform at low temperatures – Fits and seating of the O-ring was affected by low temperature. The Aftermath • After all the testimonials – Biosjoly is taken off the project and subtly harassed by Thiokol management. Public Administration and Information Technology Volume 10 Series Editor Christopher G. Reddick San Antonio, Texas, USA
More information about this series at http://www.springer.com/series/10796 Marijn Janssen • Maria A. Wimmer Ameneh Deljoo Editors Policy Practice and Digital Science Integrating Complex Systems, Social Simulation and Public Administration in Policy Research 2123 Editors Marijn Janssen Ameneh Deljoo Faculty of Technology, Policy, and Faculty of Technology, Policy, and Management Management Delft University of Technology Delft University of Technology Delft Delft The Netherlands The Netherlands Maria A. Wimmer Institute for Information Systems Research University of Koblenz-Landau Koblenz
Germany ISBN 978-3-319-12783-5 ISBN 978-3-319-12784-2 (eBook) Public Administration and Information Technology DOI 10.1007/978-3-319-12784-2 Library of Congress Control Number: 2014956771 Springer Cham Heidelberg New York London © Springer International Publishing Switzerland 2015 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper Springer is part of Springer Science+Business Media
(www.springer.com) Preface The last economic and financial crisis has heavily threatened European and other economies around the globe. Also, the Eurozone crisis, the energy and climate change crises, challenges of demographic change with high unemployment rates, and the most recent conflicts in the Ukraine and the near East or the Ebola virus disease in Africa threaten the wealth of our societies in different ways. The inability to predict or rapidly deal with dramatic changes and negative trends in our economies and societies can seriously hamper the wealth and prosperity of the European Union and its Member States as well as the global networks. These societal and economic challenges demonstrate an urgent need for more effective and efficient processes of governance and policymaking, therewith specifically addressing crisis management and economic/welfare impact reduction. Therefore, investing in the exploitation of innovative information and commu- nication technology (ICT) in the support of good governance and policy modeling has become a major effort of the European Union to position itself and its Member States well in the global digital economy. In this realm, the European Union has
laid out clear strategic policy objectives for 2020 in the Europe 2020 strategy1: In a changing world, we want the EU to become a smart, sustainable, and inclusive economy. These three mutually reinforcing priorities should help the EU and the Member States deliver high levels of employment, productivity, and social cohesion. Concretely, the Union has set five ambitious objectives—on employment, innovation, education, social inclusion, and climate/energy—to be reached by 2020. Along with this, Europe 2020 has established four priority areas—smart growth, sustainable growth, inclusive growth, and later added: A strong and effective system of eco- nomic governance—designed to help Europe emerge from the crisis stronger and to coordinate policy actions between the EU and national levels. To specifically support European research in strengthening capacities, in overcom- ing fragmented research in the field of policymaking, and in advancing solutions for 1 Europe 2020 http://ec.europa.eu/europe2020/index_en.htm v vi Preface ICT supported governance and policy modeling, the European Commission has co- funded an international support action called eGovPoliNet2. The
overall objective of eGovPoliNet was to create an international, cross- disciplinary community of re- searchers working on ICT solutions for governance and policy modeling. In turn, the aim of this community was to advance and sustain research and to share the insights gleaned from experiences in Europe and globally. To achieve this, eGovPo- liNet established a dialogue, brought together experts from distinct disciplines, and collected and analyzed knowledge assets (i.e., theories, concepts, solutions, findings, and lessons on ICT solutions in the field) from different research disciplines. It built on case material accumulated by leading actors coming from distinct disciplinary backgrounds and brought together the innovative knowledge in the field. Tools, meth- ods, and cases were drawn from the academic community, the ICT sector, specialized policy consulting firms as well as from policymakers and governance experts. These results were assembled in a knowledge base and analyzed in order to produce com- parative analyses and descriptions of cases, tools, and scientific approaches to enrich a common knowledge base accessible via www.policy- community.eu. This book, entitled “Policy Practice and Digital Science— Integrating Complex Systems, Social Simulation, and Public Administration in Policy Research,” is one of the exciting results of the activities of eGovPoliNet—fusing community building
activities and activities of knowledge analysis. It documents findings of comparative analyses and brings in experiences of experts from academia and from case descrip- tions from all over the globe. Specifically, it demonstrates how the explosive growth in data, computational power, and social media creates new opportunities for policy- making and research. The book provides a first comprehensive look on how to take advantage of the development in the digital world with new approaches, concepts, instruments, and methods to deal with societal and computational complexity. This requires the knowledge traditionally found in different disciplines including public administration, policy analyses, information systems, complex systems, and com- puter science to work together in a multidisciplinary fashion and to share approaches. This book provides the foundation for strongly multidisciplinary research, in which the various developments and disciplines work together from a comprehensive and holistic policymaking perspective. A wide range of aspects for social and professional networking and multidisciplinary constituency building along the axes of technol- ogy, participative processes, governance, policy modeling, social simulation, and visualization are tackled in the 19 papers. With this book, the project makes an effective contribution to the overall objec- tives of the Europe 2020 strategy by providing a better understanding of different
approaches to ICT enabled governance and policy modeling, and by overcoming the fragmented research of the past. This book provides impressive insights into various theories, concepts, and solutions of ICT supported policy modeling and how stake- holders can be more actively engaged in public policymaking. It draws conclusions 2 eGovPoliNet is cofunded under FP 7, Call identifier FP7-ICT- 2011-7, URL: www.policy- community.eu Preface vii of how joint multidisciplinary research can bring more effective and resilient find- ings for better predicting dramatic changes and negative trends in our economies and societies. It is my great pleasure to provide the preface to the book resulting from the eGovPoliNet project. This book presents stimulating research by researchers coming from all over Europe and beyond. Congratulations to the project partners and to the authors!—Enjoy reading! Thanassis Chrissafis Project officer of eGovPoliNet European Commission DG CNECT, Excellence in Science, Digital Science
Contents 1 Introduction to Policy-Making in the Digital Age . . . . . . . . . . . . . . . . . 1 Marijn Janssen and Maria A. Wimmer 2 Educating Public Managers and Policy Analysts in an Era of Informatics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Christopher Koliba and Asim Zia 3 The Quality of Social Simulation: An Example from Research Policy Modelling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Petra Ahrweiler and Nigel Gilbert 4 Policy Making and Modelling in a Complex World . . . . . . . . . . . . . . . . 57 Wander Jager and Bruce Edmonds 5 From Building a Model to Adaptive Robust Decision Making Using Systems Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Erik Pruyt 6 Features and Added Value of Simulation Models Using Different Modelling Approaches Supporting Policy-Making: A Comparative Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Dragana Majstorovic, Maria A.Wimmer, Roy Lay-Yee, Peter Davis and Petra Ahrweiler
7 A Comparative Analysis of Tools and Technologies for Policy Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Eleni Kamateri, Eleni Panopoulou, Efthimios Tambouris, Konstantinos Tarabanis, Adegboyega Ojo, Deirdre Lee and David Price 8 Value Sensitive Design of Complex Product Systems . . . . . . . . . . . . . . . 157 Andreas Ligtvoet, Geerten van de Kaa, Theo Fens, Cees van Beers, Paulier Herder and Jeroen van den Hoven ix x Contents 9 Stakeholder Engagement in Policy Development: Observations and Lessons from International Experience . . . . . . . . . . . . . . . . . . . . . . 177 Natalie Helbig, Sharon Dawes, Zamira Dzhusupova, Bram Klievink and Catherine Gerald Mkude 10 Values in Computational Models Revalued . . . . . . . . . . . . . . . . . . . . . . . 205 Rebecca Moody and Lasse Gerrits 11 The Psychological Drivers of Bureaucracy: Protecting the Societal Goals of an Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Tjeerd C. Andringa
12 Active and Passive Crowdsourcing in Government . . . . . . . . . . . . . . . . 261 Euripidis Loukis and Yannis Charalabidis 13 Management of Complex Systems: Toward Agent-Based Gaming for Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291 Wander Jager and Gerben van der Vegt 14 The Role of Microsimulation in the Development of Public Policy . . . 305 Roy Lay-Yee and Gerry Cotterell 15 Visual Decision Support for Policy Making: Advancing Policy Analysis with Visualization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321 Tobias Ruppert, Jens Dambruch, Michel Krämer, Tina Balke, Marco Gavanelli, Stefano Bragaglia, Federico Chesani, Michela Milano and Jörn Kohlhammer 16 Analysis of Five Policy Cases in the Field of Energy Policy . . . . . . . . . 355 Dominik Bär, Maria A.Wimmer, Jozef Glova, Anastasia Papazafeiropoulou and Laurence Brooks 17 Challenges to Policy-Making in Developing Countries and the Roles of Emerging Tools, Methods and Instruments: Experiences from Saint Petersburg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379 Dmitrii Trutnev, Lyudmila Vidyasova and Andrei Chugunov 18 Sustainable Urban Development, Governance and Policy: A Comparative Overview of EU Policies and Projects . . . . . . . .
. . . . . 393 Diego Navarra and Simona Milio 19 eParticipation, Simulation Exercise and Leadership Training in Nigeria: Bridging the Digital Divide . . . . . . . . . . . . . . . . . . . . . . . . . . . 417 Tanko Ahmed Contributors Tanko Ahmed National Institute for Policy and Strategic Studies (NIPSS), Jos, Nigeria Petra Ahrweiler EA European Academy of Technology and Innovation Assess- ment GmbH, Bad Neuenahr-Ahrweiler, Germany Tjeerd C. Andringa University College Groningen, Institute of Artificial In- telligence and Cognitive Engineering (ALICE), University of Groningen, AB, Groningen, the Netherlands Tina Balke University of Surrey, Surrey, UK Dominik Bär University of Koblenz-Landau, Koblenz, Germany Cees van Beers Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands Stefano Bragaglia University of Bologna, Bologna, Italy
Laurence Brooks Brunel University, Uxbridge, UK Yannis Charalabidis University of the Aegean, Samos, Greece Federico Chesani University of Bologna, Bologna, Italy Andrei Chugunov ITMO University, St. Petersburg, Russia Gerry Cotterell Centre of Methods and Policy Application in the Social Sciences (COMPASS Research Centre), University of Auckland, Auckland, New Zealand Jens Dambruch Fraunhofer Institute for Computer Graphics Research, Darmstadt, Germany Peter Davis Centre of Methods and Policy Application in the Social Sciences (COMPASS Research Centre), University of Auckland, Auckland, New Zealand Sharon Dawes Center for Technology in Government, University at Albany, Albany, New York, USA xi xii Contributors Zamira Dzhusupova Department of Public Administration and Development Man- agement, United Nations Department of Economic and Social Affairs (UNDESA),
NewYork, USA Bruce Edmonds Manchester Metropolitan University, Manchester, UK Theo Fens Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands Marco Gavanelli University of Ferrara, Ferrara, Italy Lasse Gerrits Department of Public Administration, Erasmus University Rotterdam, Rotterdam, The Netherlands Nigel Gilbert University of Surrey, Guildford, UK Jozef Glova Technical University Kosice, Kosice, Slovakia Natalie Helbig Center for Technology in Government, University at Albany, Albany, New York, USA Paulier Herder Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands Jeroen van den Hoven Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands Wander Jager Groningen Center of Social Complexity Studies, University of Groningen, Groningen, The Netherlands Marijn Janssen Faculty of Technology, Policy, and
Management, Delft University of Technology, Delft, The Netherlands Geerten van de Kaa Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands Eleni Kamateri Information Technologies Institute, Centre for Research & Technology—Hellas, Thessaloniki, Greece Bram Klievink Faculty of Technology, Policy and Management, Delft University of Technology, Delft, The Netherlands Jörn Kohlhammer GRIS, TU Darmstadt & Fraunhofer IGD, Darmstadt, Germany Christopher Koliba University of Vermont, Burlington, VT, USA Michel Krämer Fraunhofer Institute for Computer Graphics Research, Darmstadt, Germany Roy Lay-Yee Centre of Methods and Policy Application in the Social Sciences (COMPASS Research Centre), University of Auckland, Auckland, New Zealand Deirdre Lee INSIGHT Centre for Data Analytics, NUIG, Galway, Ireland Contributors xiii
Andreas Ligtvoet Faculty of Technology, Policy, and Management, Delft Univer- sity of Technology, Delft, The Netherlands Euripidis Loukis University of the Aegean, Samos, Greece Dragana Majstorovic University of Koblenz-Landau, Koblenz, Germany Michela Milano University of Bologna, Bologna, Italy Simona Milio London School of Economics, Houghton Street, London, UK Catherine Gerald Mkude Institute for IS Research, University of Koblenz-Landau, Koblenz, Germany Rebecca Moody Department of Public Administration, Erasmus University Rotterdam, Rotterdam, The Netherlands Diego Navarra Studio Navarra, London, UK Adegboyega Ojo INSIGHT Centre for Data Analytics, NUIG, Galway, Ireland Eleni Panopoulou Information Technologies Institute, Centre for Research & Technology—Hellas, Thessaloniki, Greece Anastasia Papazafeiropoulou Brunel University, Uxbridge, UK David Price Thoughtgraph Ltd, Somerset, UK
Erik Pruyt Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands; Netherlands Institute for Advanced Study, Wassenaar, The Netherlands Tobias Ruppert Fraunhofer Institute for Computer Graphics Research, Darmstadt, Germany Efthimios Tambouris Information Technologies Institute, Centre for Research & Technology—Hellas, Thessaloniki, Greece; University of Macedonia, Thessaloniki, Greece Konstantinos Tarabanis Information Technologies Institute, Centre for Research & Technology—Hellas, Thessaloniki, Greece; University of Macedonia, Thessa- loniki, Greece Dmitrii Trutnev ITMO University, St. Petersburg, Russia Gerben van der Vegt Faculty of Economics and Business, University of Groningen, Groningen, The Netherlands Lyudmila Vidyasova ITMO University, St. Petersburg, Russia Maria A. Wimmer University of Koblenz-Landau, Koblenz, Germany Asim Zia University of Vermont, Burlington, VT, USA
Chapter 1 Introduction to Policy-Making in the Digital Age Marijn Janssen and Maria A. Wimmer We are running the 21st century using 20th century systems on top of 19th century political structures. . . . John Pollock, contributing editor MIT technology review Abstract The explosive growth in data, computational power, and social media creates new opportunities for innovating governance and policy- making. These in- formation and communications technology (ICT) developments affect all parts of the policy-making cycle and result in drastic changes in the way policies are devel- oped. To take advantage of these developments in the digital world, new approaches, concepts, instruments, and methods are needed, which are able to deal with so- cietal complexity and uncertainty. This field of research is sometimes depicted as e-government policy, e-policy, policy informatics, or data science. Advancing our knowledge demands that different scientific communities collaborate to create practice-driven knowledge. For policy-making in the digital age disciplines such as complex systems, social simulation, and public administration need to be combined. 1.1 Introduction Policy-making and its subsequent implementation is necessary
to deal with societal problems. Policy interventions can be costly, have long-term implications, affect groups of citizens or even the whole country and cannot be easily undone or are even irreversible. New information and communications technology (ICT) and models can help to improve the quality of policy-makers. In particular, the explosive growth in data, computational power, and social media creates new opportunities for in- novating the processes and solutions of ICT-based policy- making and research. To M. Janssen (�) Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands e-mail: [email protected] M. A. Wimmer University of Koblenz-Landau, Koblenz, Germany © Springer International Publishing Switzerland 2015 1 M. Janssen et al. (eds.), Policy Practice and Digital Science, Public Administration and Information Technology 10, DOI 10.1007/978-3-319-12784-2_1 2 M. Janssen and M. A. Wimmer take advantage of these developments in the digital world, new approaches, con- cepts, instruments, and methods are needed, which are able to deal with societal and computational complexity. This requires the use of knowledge
which is traditionally found in different disciplines, including (but not limited to) public administration, policy analyses, information systems, complex systems, and computer science. All these knowledge areas are needed for policy-making in the digital age. The aim of this book is to provide a foundation for this new interdisciplinary field in which various traditional disciplines are blended. Both policy-makers and those in charge of policy implementations acknowledge that ICT is becoming more and more important and is changing the policy-making process, resulting in a next generation policy-making based on ICT support. The field of policy-making is changing driven by developments such as open data, computa- tional methods for processing data, opinion mining, simulation, and visualization of rich data sets, all combined with public engagement, social media, and participatory tools. In this respect Web 2.0 and even Web 3.0 point to the specific applications of social networks and semantically enriched and linked data which are important for policy-making. In policy-making vast amount of data are used for making predictions and forecasts. This should result in improving the outcomes of policy-making. Policy-making is confronted with an increasing complexity and uncertainty of the outcomes which results in a need for developing policy models that are able to deal
with this. To improve the validity of the models policy-makers are harvesting data to generate evidence. Furthermore, they are improving their models to capture complex phenomena and dealing with uncertainty and limited and incomplete information. Despite all these efforts, there remains often uncertainty concerning the outcomes of policy interventions. Given the uncertainty, often multiple scenarios are developed to show alternative outcomes and impact. A condition for this is the visualization of policy alternatives and its impact. Visualization can ensure involvement of nonexpert and to communicate alternatives. Furthermore, games can be used to let people gain insight in what can happen, given a certain scenario. Games allow persons to interact and to experience what happens in the future based on their interventions. Policy-makers are often faced with conflicting solutions to complex problems, thus making it necessary for them to test out their assumptions, interventions, and resolutions. For this reason policy-making organizations introduce platforms facili- tating policy-making and citizens engagements and enabling the processing of large volumes of data. There are various participative platforms developed by government agencies (e.g., De Reuver et al. 2013; Slaviero et al. 2010; Welch 2012). Platforms can be viewed as a kind of regulated environment that enable developers, users, and others to interact with each other, share data, services, and
applications, enable gov- ernments to more easily monitor what is happening and facilitate the development of innovative solutions (Janssen and Estevez 2013). Platforms should provide not only support for complex policy deliberations with citizens but should also bring to- gether policy-modelers, developers, policy-makers, and other stakeholders involved in policy-making. In this way platforms provide an information- rich, interactive 1 Introduction to Policy-Making in the Digital Age 3 environment that brings together relevant stakeholders and in which complex phe- nomena can be modeled, simulated, visualized, discussed, and even the playing of games can be facilitated. 1.2 Complexity and Uncertainty in Policy-Making Policy-making is driven by the need to solve societal problems and should result in interventions to solve these societal problems. Examples of societal problems are unemployment, pollution, water quality, safety, criminality, well-being, health, and immigration. Policy-making is an ongoing process in which issues are recognized as a problem, alternative courses of actions are formulated, policies are affected, implemented, executed, and evaluated (Stewart et al. 2007). Figure 1.1 shows the
typical stages of policy formulation, implementation, execution, enforcement, and evaluation. This process should not be viewed as linear as many interactions are necessary as well as interactions with all kind of stakeholders. In policy-making processes a vast amount of stakeholders are always involved, which makes policy- making complex. Once a societal need is identified, a policy has to be formulated. Politicians, members of parliament, executive branches, courts, and interest groups may be involved in these formulations. Often contradictory proposals are made, and the impact of a proposal is difficult to determine as data is missing, models cannot citizen s Policy formulation Policy implementation Policy execution Policy enforcement and evaluation politicians
Policy- makers Administrative organizations b u sin esses Inspection and enforcement agencies experts Fig. 1.1 Overview of policy cycle and stakeholders 4 M. Janssen and M. A. Wimmer capture the complexity, and the results of policy models are difficult to interpret and even might be interpreted in an opposing way. This is further complicated as some proposals might be good but cannot be implemented or are too costly to implement. There is a large uncertainty concerning the outcomes. Policy implementation is done by organizations other than those that formulated the policy. They often have to interpret the policy and have to make implemen-
tation decisions. Sometimes IT can block quick implementation as systems have to be changed. Although policy-making is the domain of the government, private organizations can be involved to some extent, in particular in the execution of policies. Once all things are ready and decisions are made, policies need to be executed. During the execution small changes are typically made to fine tune the policy formu- lation, implementation decisions might be more difficult to realize, policies might bring other benefits than intended, execution costs might be higher and so on. Typ- ically, execution is continually changing. Evaluation is part of the policy-making process as it is necessary to ensure that the policy-execution solved the initial so- cietal problem. Policies might become obsolete, might not work, have unintended affects (like creating bureaucracy) or might lose its support among elected officials, or other alternatives might pop up that are better. Policy-making is a complex process in which many stakeholders play a role. In the various phases of policy-making different actors are dominant and play a role. Figure 1.1 shows only some actors that might be involved, and many of them are not included in this figure. The involvement of so many actors results in fragmentation and often actors are even not aware of the decisions made by other actors. This makes it difficult to manage a policy-making process as each actor has
other goals and might be self-interested. Public values (PVs) are a way to try to manage complexity and give some guidance. Most policies are made to adhere to certain values. Public value management (PVM) represents the paradigm of achieving PVs as being the primary objective (Stoker 2006). PVM refers to the continuous assessment of the actions performed by public officials to ensure that these actions result in the creation of PV (Moore 1995). Public servants are not only responsible for following the right procedure, but they also have to ensure that PVs are realized. For example, civil servants should ensure that garbage is collected. The procedure that one a week garbage is collected is secondary. If it is necessary to collect garbage more (or less) frequently to ensure a healthy environment then this should be done. The role of managers is not only to ensure that procedures are followed but they should be custodians of public assets and maximize a PV. There exist a wide variety of PVs (Jørgensen and Bozeman 2007). PVs can be long-lasting or might be driven by contemporary politics. For example, equal access is a typical long-lasting value, whereas providing support for students at universities is contemporary, as politicians might give more, less, or no support to students. PVs differ over times, but also the emphasis on values is different in the policy-making
cycle as shown in Fig. 1.2. In this figure some of the values presented by Jørgensen and Bozeman (2007) are mapped onto the four policy-making stages. Dependent on the problem at hand other values might play a role that is not included in this figure. 1 Introduction to Policy-Making in the Digital Age 5 Policy formulation Policy implementation Policy execution Policy enforcement and evaluation efficiency efficiency accountability transparancy responsiveness public interest
will of the people listening citizen involvement evidence-based protection of individual rights accountability transparancy evidence-based equal access balancing of interests robust honesty fair timelessness reliable flexible fair Fig. 1.2 Public values in the policy cycle
Policy is often formulated by politicians in consultation with experts. In the PVM paradigm, public administrations aim at creating PVs for society and citizens. This suggests a shift from talking about what citizens expect in creating a PV. In this view public officials should focus on collaborating and creating a dialogue with citizens in order to determine what constitutes a PV. 1.3 Developments There is an infusion of technology that changes policy processes at both the individual and group level. There are a number of developments that influence the traditional way of policy-making, including social media as a means to interact with the public (Bertot et al. … www.it-ebooks.info http://www.it-ebooks.info/ www.it-ebooks.info http://www.it-ebooks.info/ Additional Praise for Implementing Enterprise Risk Management
“Educators the world over seeking to make the management of risk an integral part of management degrees have had great difficulties in providing their students with a definitive ERM text for their course. The Standards and associated Handbooks helped, but until the arrival of Implementing Enterprise Risk Management: Case Stud- ies and Best Practices, there has been no text to enlighten students on the application of an effective program to manage risk across an enterprise so that objectives are maximized and threats minimized. Fraser, Simkins, and Narvaez have combined with a group of contributors that represent the cream of risk practitioners, to pro- vide the reader with a clear and concise journey through the management of risk within a wide range of organizations and industries. The knowledge, skills, and experience in the management of risk contained within the covers of this book are second to none. It will provide a much needed resource to students and practition- ers for many years to come and should become a well-used reference on the desk of every manager of risk.” —Kevin W. Knight AM, chairman, ISO/TC 262—Risk Management “The authors—Fraser, Simkins, and Narvaez—have done an invaluable service to advance the science of enterprise risk management by collecting an extensive num- ber of wonderful case studies that describe innovative risk
management practices in a diverse set of companies around the world. This book should be an extremely valuable source of knowledge for anyone interested in the emerging and evolving field of risk management.” —Robert S. Kaplan, senior fellow, Marvin Bower Professor of Leadership Development, emeritus, Harvard University “Lessons learned from case studies and best practices represent an efficient way to gain practical insights on the implementation of ERM. Implementing Enterprise Risk Management provides such insights from a robust collection of ERM pro- grams across public companies and private organizations. I commend the editors and contributors for making a significant contribution to ERM by sharing their experiences.” —James Lam, president, James Lam & Associates; director and Risk Oversight Committee chairman, E∗ TRADE Financial Corporation; author, Enterprise Risk Management—From Incentives to Controls “For those who still think that enterprise risk management is just a fad, the varied examples of practical value-generating uses contained in this book should dispel any doubt that the discipline is here to stay! The broad collection of practices is
insightful for students, academics, and executives, as well as seasoned risk man- agement professionals.” —Carol Fox, ARM, director of Strategic and Enterprise Risk Practice, RIMS “Managing risk across the enterprise is the new frontier of business management. Doing so effectively, in my view, will be the single most important differentiating factor for many enterprises in the twenty-first century. Implementing Enterprise Risk Management: Case Studies and Best Practices is an innovative and important addition to the literature and contains a wealth of insight in this critical area. This book’s integration of theory with hands-on, real-world lessons in managing enterprise risk provides an opportunity for its readers to gain insight and understanding that could otherwise be acquired only through many years of hard- earned experience. www.it-ebooks.info http://www.it-ebooks.info/ I highly recommend this book for use by executives, line managers, risk managers, and business students alike.” —Douglas F. Prawitt, professor of Accounting at Brigham Young University, and Committee of Sponsoring Organizations (COSO)
Executive Board member “The real beauty of and value in this book is its case study focus and the wide variety of firms profiled and writers’ perspectives shared. This will provide readers with a wealth of details and views that will help them chart an ERM journey of their own that is more likely to fit the specific and typically customized ERM needs of the firms for whom they toil.” —Chris Mandel, senior vice president, Strategic Solution s for Sedgwick; former president of the Risk Management Society and the 2004 Risk Manager of the Year “Implementing Enterprise Risk Management looks at many industries through excel- lent case studies, providing a real-world base for its recommendations and an important reminder that ERM is valuable in many industries. I highly recommend this text.”
—Russell Walker, Clinical associate professor, Kellogg School of Management; author of Winning with Risk Management “The body of knowledge in Implementing Enterprise Risk Management continues to develop as business educators and leaders confront a complex and rapidly chang- ing environment. This book provides a valuable resource for academics and prac- titioners in this dynamic area.” —Mark L. Frigo, director, Strategic Risk Management Lab, Kellstadt Graduate School of Business, DePaul University “The management of enterprise risk is one of the most vexatious problems con- fronting boards and executives worldwide. This is why this latest book by Fraser, Simkins, and Narvaez is a much needed and highly refreshing approach to the sub- ject. The editors have managed to assemble an impressive list of contributors who, through a series of fascinating real-life case studies, adroitly
help educate readers to better understand and deal with the myriad of risks that can assault, seriously maim, and/or kill an organization. This is a ‘how to’ book written with the ‘risk management problem solver’ in mind. It provides the link that has been missing for effectively teaching ERM at the university and executive education levels and it is an exceptional achievement by true risk management advocates.” —Dr. Chris Bart, FCPA, founder and lead faculty, The Directors College of Canada “The Institute of Risk Management welcomes the publication of this highly practi- cal text which should be of great interest to our students and members around the world. Implementing Enterprise Risk Management brings together a fine collection of detailed case studies from organizations of varying sizes and working in differ- ent sectors, all seeking to enhance their business performance by managing their
risks more effectively, from the boardroom to the shop floor. This book makes a valuable contribution to the body of knowledge of what works that will benefit the development of the risk profession.” —Carolyn Williams, technical director, Institute of Risk Management www.it-ebooks.info http://www.it-ebooks.info/ IMPLEMENTING ENTERPRISE RISK MANAGEMENT www.it-ebooks.info http://www.it-ebooks.info/ The Robert W. Kolb Series in Finance provides a comprehensive view of the field
of finance in all of its variety and complexity. The series is projected to include approximately 65 volumes covering all major topics and specializations in finance, ranging from investments, to corporate finance, to financial institutions. Each vol- ume in the Kolb Series in Finance consists of new articles especially written for the volume. Each volume is edited by a specialist in a particular area of finance, who develops the volume outline and commissions articles by the world’s experts in that partic- ular field of finance. Each volume includes an editor’s introduction and approx- imately thirty articles to fully describe the current state of financial research and practice in a particular area of finance. The essays in each volume are intended for practicing finance professionals, grad- uate students, and advanced undergraduate students. The goal of each volume is to encapsulate the current state of knowledge in a particular
area of finance so that the reader can quickly achieve a mastery of that special area of finance. www.it-ebooks.info http://www.it-ebooks.info/ IMPLEMENTING ENTERPRISE RISK MANAGEMENT Case Studies and Best Practices Editors John R.S. Fraser Betty J. Simkins Kristina Narvaez The Robert W. Kolb Series in Finance www.it-ebooks.info
http://www.it-ebooks.info/ Cover Design: Wiley Cover Image: © iStock.com/clauiad Copyright © 2015 by John R.S. Fraser, Betty J. Simkins, Kristina Narvaev. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978)
646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748- 6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com. Library of Congress Cataloging-in-Publication Data: ISBN 978-1-118-69196-0 (Hardcover) ISBN 978-1-118-74576-2 (ePDF) ISBN 978-1-118-74618-9 (ePub)
Printed in the United States of America. 10 9 8 7 6 5 4 3 2 1 www.it-ebooks.info http://www.copyright.com http://www.wiley.com/go/permissions http://booksupport.wiley.com http://www.wiley.com http://www.it-ebooks.info/ To Wendy, my wonderful wife and my inspiration, and to my parents who instilled in me a lifelong thirst for learning. —John Fraser To my husband (Russell) and our family: sons and daughters- in-law (Luke & Stephanie and Walt & Lauren), daughter and son-in-law (Susan & Jason), and our youngest daughter (April). Thank you for your love, support, and encouragement! —Betty Simkins I would like to thank my husband and four children for support-
ing me on my journey of writing two chapters and co-editing this book. I would also like to thank the Risk and Insurance Manage- ment Society for supporting me during my educational years and providing great workshops and conferences on enterprise risk management. —Kristina Narvaez www.it-ebooks.info http://www.it-ebooks.info/ www.it-ebooks.info http://www.it-ebooks.info/ Contents Foreword xiii 1 Enterprise Risk Management Case Studies: An Introduction and Overview 1
John R.S. Fraser, Betty J. Simkins, and Kristina Narvaez PART I Overview and Insights for Teaching ERM 17 2 An Innovative Method to Teaching Enterprise Risk Management: A Learner-Centered Teaching Approach 19 David R. Lange and Betty J. Simkins PART II ERM Implementation at Leading Organizations 37 3 ERM at Mars, Incorporated: ERM for Strategy and Operations 39 Larry Warner 4 Value and Risk: Enterprise Risk Management at Statoil 59 Alf Alviniussen and Håkan Jankensgård 5 ERM in Practice at the University of California Health System 75 Grace Crickette 6 Strategic Risk Management at the LEGO Group: Integrating Strategy and Risk Management 93 Mark L. Frigo and Hans Læssøe
7 Turning the Organizational Pyramid Upside Down: Ten Years of Evolution in Enterprise Risk Management at United Grain Growers 107 John Bugalla ix www.it-ebooks.info http://www.it-ebooks.info/ x Contents 8 Housing Association Case Study of ERM in a Changing Marketplace 119 John Hargreaves 9 Lessons from the Academy: ERM Implementation in the University Setting 143 Anne E. Lundquist 10 Developing Accountability in Risk Management: The British Columbia Lottery Corporation Case Study 179 Jacquetta C. M. Goy
11 Starting from Scratch: The Evolution of ERM at the Workers’ Compensation Fund 207 Dan M. Hair 12 Measuring Performance at Intuit: A Value-Added Component in ERM Programs 227 Janet Nasburg 13 TD Bank’s Approach to an Enterprise Risk Management Program 241 Paul Cunha and Kristina Narvaez PART III Linking ERM to Strategy and Strategic Risk Management 251 14 A Strategic Approach to Enterprise Risk Management at Zurich Insurance Group 253 Linda Conrad and Kristina Narvaez 15 Embedding ERM into Strategic Planning at the City of Edmonton 281 Ken Baker 16 Leveraging ERM to Practice Strategic Risk Management 305
John Bugalla and James Kallman PART IV Specialized Aspects of Risk Management 319 17 Developing a Strategic Risk Plan for the Hope City Police Service 321 Andrew Graham 18 Blue Wood Chocolates 335 Stephen McPhie and Rick Nason www.it-ebooks.info http://www.it-ebooks.info/ CONTENTS xi 19 Kilgore Custom Milling 363 Rick Nason and Stephen McPhie 20 Implementing Risk Management within Middle Eastern Oil and Gas Companies 377 Alexander Larsen
21 The Role of Root Cause Analysis in Public Safety ERM Programs 397 Andrew Bent 22 JAA Inc.—A Case Study in Creating Value from Uncertainty: Best Practices in Managing Risk 427 Julian du Plessis, Arnold Schanfield, and Alpaslan Menevse 23 Control Complacency: Rogue Trading at Société Générale 461 Steve Lindo 24 The Role of VaR in Enterprise Risk Management: Calculating Value at Risk for Portfolios Held by the Vane Mallory Investment Bank 489 Allissa A. Lee and Betty J. Simkins 25 Uses of Efficient Frontier Analysis in Strategic Risk Management: A Technical Examination 501 Ward Ching and Loren Nickel PART V Mini-Cases on ERM and Risk 523 26 Bim Consultants Inc. 525 John R.S. Fraser
27 Nerds Galore 529 Rob Quail 28 The Reluctant General Counsel 535 Norman D. Marks 29 Transforming Risk Management at Akawini Copper 539 Grant Purdy 30 Alleged Corruption at Chessfield: Corporate Governance and the Risk Oversight Role of the Board of Directors 547 Richard Leblanc www.it-ebooks.info http://www.it-ebooks.info/ xii Contents 31 Operational Risk Management Case Study: Bon Boulangerie 555 Diana Del Bel Belluz
PART VI Other Case Studies 559 32 Constructive Dialogue and ERM: Lessons from the Financial Crisis 561 Thomas H. Stanton 33 Challenges and Obstacles of ERM Implementation in Poland 577 Zbigniew Krysiak and Sl̄ awomir Pijanowski 34 Turning Crisis into Opportunity: Building an ERM Program at General Motors 607 Marc S. Robinson, Lisa M. Smith, and Brian D. Thelen 35 ERM at Malaysia’s Media Company Astro: Quickly Implementing ERM and Using It to Assess the Risk-Adjusted Performance of a Portfolio of Acquired Foreign Companies 623 Patrick Adam K. Abdullah and Ghislain Giroux Dufort About the Editors 649 Index 651
www.it-ebooks.info http://www.it-ebooks.info/ Foreword E nterprise Risk Management is an evolving discipline focused on a com- plex and still imperfectly-understood subject. In such a situation, science is advanced best by collecting data from multiple, independent sites. A rich set of observations educates the field’s scholars and practitioners and provides the foundation for them to develop descriptive and normative theories as well as cod- ified best practices about the subject. The authors—Fraser, Simkins, and Narvaez—have done an invaluable service to advance the science of enterprise risk management by collecting an extensive
number of wonderful case studies that describe innovative risk management prac- tices in a diverse set of companies around the world. This book should be an extremely valuable source of knowledge for anyone interested in the emerging and evolving field of risk management. We should be grateful to the editors and to each chapter author for expanding the body of knowledge for risk management professionals and academics. Robert S. Kaplan Senior Fellow, Marvin Bower Professor of Leadership Development, Emeritus Harvard University xiii www.it-ebooks.info http://www.it-ebooks.info/
www.it-ebooks.info http://www.it-ebooks.info/ CHAPTER 1 Enterprise Risk Management Case Studies An Introduction and Overview JOHN R.S. FRASER Senior Vice President, Internal Audit, and former Chief Risk Officer, Hydro One Networks Inc. BETTY J. SIMKINS Williams Companies Chair of Business and Professor of Finance, Oklahoma State University KRISTINA NARVAEZ President and Owner of ERM Strategies, LLC Businesses, business schools, regulators, and the public are now
scrambling to catch up with the emerging field of enterprise risk management. —Robert Kaplan (quote from Foreword in Fraser and Simkins, 2010) Most executives with MBA degrees were not taught ERM. In fact, there are only a few universities that teach ERM. So some business school graduates are strong in finance, marketing, and management theory, but they are limited in terms of critical thinking, business acumen, and risk analysis skills. —Paul Walker1 THE EVOLUTION OF ENTERPRISE RISK MANAGEMENT Over the past two decades enterprise risk management (ERM) has evolved from concepts and visions of how risks should be addressed to a method- ology that is becoming entrenched in modern management and is now increasingly expected by those in oversight roles (e.g.,
governing bodies and regulators). As Felix Kloman describes in his chapter “A Brief History of Risk Man- agement,” published in Fraser and Simkins (2010), many of the concepts go back a very long time and many of the so-called newly discovered techniques can be 1 www.it-ebooks.info http://www.it-ebooks.info/ 2 Implementing Enterprise Risk Management referenced to the earlier writings and practices described by Kloman. However, it is only from around the mid-1990s that the concept of giving a name to manag- ing risks in a holistic way across the many operating silos of an enterprise started to take hold. In the 1990s, terms such as integrated risk management and enterprise-
wide risk management were also used. Many thought leaders, for example, those who created ISO 31000,2 believe that the term risk management is all that is needed to describe good risk management; however, many others believe that the latter term is often used to describe risk management at the lower levels of the organiza- tion and does not necessarily capture the concepts of enterprise- level approaches to risk. As a result, the term ERM is used throughout this book. As ERM continues to evolve there is still much discussion and confusion over exactly what it is and how it should be achieved. It is important to realize that it is still evolving and may take many more years before it is fully codified and practiced in a consistent way. In fact, there is a grave danger now of believing that there is only one way of doing ERM. This is probably a mistake by regula- tors who have too eagerly seized some of these concepts and are trying to impose them when the methods are not fully understood, and in some
cases the require- ments are unlikely to produce the desired results. As Fraser and Simkins (2010) noted in their first book on ERM: “While regulatory interest can force ERM into companies, if not done well, it can become another box-ticking exercise that adds little value.”3 The leading and most commonly agreed4 guideline to holistic risk manage- ment is ISO 31000. However, it should be mentioned that in the United States the COSO 2004 Enterprise Risk Management–Integrated Framework has been the dominant framework used to date. Many organizations are currently adopting one or the other of these frameworks and then customizing them to their own context. WHY THE NEED FOR A BOOK WITH ERM CASE STUDIES? Following the success of the earlier Enterprise Risk Management: Today’s Leading
Research and Best Practices for Tomorrow’s Executives by Fraser and Simkins (2010), we found through our own teaching experiences, and by talking to others, that there was an urgent need for a university-level textbook of ERM case studies to help educate executives, risk practitioners, academics, and students alike about the evolving methodology. As a result, Fraser and Simkins, together with Kristina Narvaez, approached many of the leading ERM specialists to write case studies for this book. Surveys have also shown that there is a dire need for more case studies on ERM (see Fraser, Schoening-Thiessen, and Simkins 2008). Additionally, surveys of risk executives report that business risk is increasing due to new technologies, faster rate of change, increases in regulatory risk, and more (PWC 2014). As Paul Walker of St. John’s University points out in the opening quote of the 2014 American Pro- ductivity & Quality Center (APQC) report on ERM, “Most
executives with MBA degrees were not taught ERM. In fact, there are only a few universities that teach ERM. So some business school graduates are strong in finance, marketing, and www.it-ebooks.info http://www.it-ebooks.info/ ENTERPRISE RISK MANAGEMENT CASE STUDIES 3 management theory, but they are limited in terms of critical thinking, business acu- men, and risk analysis skills.” Learning Centered Teaching (LCT), as discussed in Chapter 2, is an ideal way to achieve this. Using LCT and the case study approach, students actively participate in the learning process through constructive reflective reasoning, critical thinking and analysis, and discussion of key issues. This is the first book to provide such a broad coverage of case studies on ERM.
The case studies that follow are from some of the leading academics and prac- titioners of enterprise risk management. While many of the cases are about real-life situations, there are also those that, while based on real-life experiences, have had names changed to maintain confidentiality or are composites of several situations. We are deeply indebted to the authors and to the organizations that agreed so kindly to share their stories to help benefit future generations of ERM practition- ers. In addition, we have added several chapters where we feel the fundamentals of these specialized techniques (e.g., VaR) deserve to be understood by ERM stu- dents and practitioners. Each case study provides opportunities for executives, risk practitioners, and students to explore what went well, what could have been done differently, and what lessons are to be learned. Teachers of ERM will find a wealth of material to use in demonstrating ERM
principles to students. These can be used for term papers or class discussions, and the approaches can be contrasted to emphasize different contexts that may require customized approaches. This book introduces the reader to a wide range of con- cepts and techniques for managing risks in a holistic way, by correctly identifying risks and prioritizing the appropriate responses. It offers a broad overview of the various types of ERM techniques, the role of the board of directors, risk tolerances, profiles, workshops, and allocation of resources, while focusing on the principles that determine business success. Practitioners interested in implementing ERM, enhancing their knowledge on the subject, or wishing to mature their ERM program, will find this book an abso- lute must resource to have. Case studies are one of the best ways to learn more on this topic. This book is a companion to Enterprise Risk Management:
Today’s Leading Research and Best Practices for Tomorrow’s Executives (Fraser and Simkins 2010). Together, these two books can create a curriculum of study for business students and risk practitioners who desire to have a better understanding of the world of enterprise risk management and where it is heading in the future. Boards and senior leadership teams in progressive organizations are now engaging in building ERM into their scenario-planning and decision-making processes. These forward- looking organizations are also integrating ERM into the business-planning pro- cess with resource allocation and investment decisions. At the business unit level, ERM is being used to measure the performance of risk- taking activities of employees. As these case studies demonstrate, ERM is a continuous improvement process and takes time to evolve. As can be gleaned from these case studies, most firms that
have taken the ERM journey started with a basic ERM language, risk identification, and risk-assessment process and then moved down the road to broaden their pro- grams to include risk treatments, monitoring, and reporting processes. The ulti- mate goal of ERM is to have it embedded into the risk culture of the organization and drive the decision-making process to make more sound business decisions. www.it-ebooks.info http://www.it-ebooks.info/ 4 Implementing Enterprise Risk Management SUMMARY OF THE BOOK CHAPTERS As mentioned earlier, the purpose of this book is to provide case studies on ERM in order to educate executives, risk practitioners, academics, and students alike about this evolving methodology. To achieve this goal, the book is organized into
the following sections: Part I: Overview and Insights for Teaching ERM Part II: ERM Implementation at Leading Organizations Part III: Linking ERM to Strategy and Strategic Risk Management Part IV: Specialized Aspects of Risk Management Part V: Mini-Cases on ERM and Risk Part VI: Other Case Studies Brief descriptions of the contributors and the chapters are provided next. PART I: OVERVIEW AND INSIGHTS FOR TEACHING ERM The first two chapters provide an overview of ERM and guidance on ERM educa- tion. As we have pointed out, education on ERM is crucial and more universities need to offer courses in this area. Our conversations with many ERM educators and consultants highlight how extremely challenging it is to achieve excellence in ERM education.
Chapter 2, “An Innovative Method to Teaching Enterprise Risk Manage- ment: A Learner-Centered Teaching Approach,” offers insights and suggestions on teaching ERM. This chapter covers the concept of flipping the classroom with learner-centered teaching (LCT), distinguishes it from traditional lectures, and describes how it can be used in teaching ERM. The LCT approach emphasizes active student participation and collaboration on in-class activities such as case studies versus the traditional lecture approach. This chapter provides several examples as to how LCT can be applied in teaching ERM, utilizing Fraser and Simkins’ (2010) book. David R. Lange and Betty J. Simkins, both experienced ERM educators, team together to write this chapter. David Lange, DBA, is an Auburn University Montgomery (AUM) Distinguished Research and Teaching Professor of Finance. He has received many prestigious awards for both research and teaching from the University and from several academic associations. He
has taught many courses in the area of risk management and has consulted in a significant num- ber of individual and class insurance–related cases in both state and federal court. Betty Simkins, PhD, the Williams Companies Chair of Business and Professor of Finance at Oklahoma State University, is coeditor of this book. PART II: ERM IMPLEMENTATION AT LEADING ORGANIZATIONS Part II is a collection of ERM case studies that give examples of how ERM was developed and applied in major organizations around the world. Note that there is no perfect ERM case study and the objective is for readers to assess what they believe was successful or not so successful about these ERM programs. www.it-ebooks.info http://www.it-ebooks.info/
ENTERPRISE RISK MANAGEMENT CASE STUDIES 5 The first case study in this book describes ERM at Mars, Inc. Larry Warner, who is the former corporate risk manager at Mars, Inc. and now is president of Warner Risk Group, describes the ERM program at the company in Chapter 3. Mars is a global food company and one of the largest privately held corporations in the United States. It has more than 72,000 associates and annual net sales in excess of $33 billion across six business segments—Petcare, Chocolate, Wrigley, … Engineering Ethics Case Study: The Challenger Disaster Course No: LE3-001 Credit: 3 PDH
Mark Rossow, PhD, PE, Retired Continuing Education and Development, Inc. 9 Greyridge Farm Court Stony Point, NY 10980 P: (877) 322-5800 F: (877) 322-4774 [email protected] Engineering Ethics Case Study: The
Challenger Disaster Mark P. Rossow, P.E., Ph.D. 2
© 2012 Mark P. Rossow All rights reserved. No part of this work may be reproduced in any manner without the written permission of the author. 3 Preface On January 28, 1986, the Space Shuttle Challenger burst into flame shortly after liftoff. All
passengers aboard the vehicle were killed. A presidential commission was formed to investigate the cause of the accident and found that the O-ring seals had failed, and, furthermore, that the seals had been recognized as a potential hazard for several years prior to the disaster. The commission’s report, Report to the President by the Presidential Commission on the Space Shuttle Challenger Accident, stated that because managers and engineers had known in advance of the O-ring danger, the accident was principally caused by a lack of communication between engineers and management and by poor management practices. This became the standard interpretation of the cause of the Challenger disaster and routinely appears in popular articles and books about engineering, management, and ethical issues.
But the interpretation ignores much of the history of how NASA and the contractor’s engineers had actually recognized and dealt with the O-ring problems in advance of the disaster. When this history is considered in more detail, the conclusions of the Report to the President become far less convincing. Two excellent publications that give a much more complete account of events leading up to the disaster are The Challenger Launch Decision by Diane Vaughan, and Power To Explore -- History of Marshall Space Flight Center 1960-1990 by Andrew Dunar and Stephen Waring. As Dunar and Waring put it—I would apply their remarks to Vaughan’s work as well— “Allowing Marshall engineers and managers to tell their story, based on pre-accident documents and on post-accident testimony and interviews, leads
to a more realistic account of the events leading up to the accident than that found in the previous studies.” I would strongly encourage anyone with the time and interest to read both of these publications, which are outstanding works of scholarship. For those persons lacking the time—the Vaughan book is over 550 pages—I have written the present condensed description of the Challenger incident. I have drawn the material for Sections 1-8 and 10 from multiple sources but primarily from Vaughan, the Report to the President, and Dunnar and Waring. Of course, any errors introduced during the process of fitting their descriptions and ideas into my narrative are mine and not the fault of these authors. Sections 9, 11, and 12 are original contributions of my own. All figures
have been taken from Report to the President. Mark Rossow 4 Introduction Course Content This course provides instruction in engineering ethics through a case study of the Space Shuttle Challenger disaster. The course begins by presenting the minimum technical details needed to
understand the physical cause of the Shuttle failure. The disaster itself is chronicled through NASA photographs. Next the decision-making process— especially the discussions occurring during the teleconference held on the evening before the launch—is described. Direct quotations from engineers interviewed after the disaster are frequently used to illustrate the ambiguities of the data and the pressures that the decision-makers faced in the period preceding the launch. The course culminates in an extended treatment of six ethical issues raised by Challenger. Purpose of Case Studies Principles of engineering ethics are easy to formulate but sometimes hard to apply. Suppose, for
example, that an engineering team has made design choice X, rather than Y, and X leads to a bad consequence—someone was injured. To determine if the engineers acted ethically, we have to answer the question of whether they chose X rather than Y because 1) X appeared to be the better technical choice, or 2) X promoted some other end (for example, financial) in the organization. Abstract ethics principles alone cannot answer this question; we must delve into the technical details surrounding the decision. The purpose of case studies in general is to provide us with the context—the technical details—of an engineering decision in which an ethical principle may have been violated. Case Study of Challenger Disaster
On January 28, 1986, the NASA space Shuttle Challenger burst into a ball of flame 73 seconds after take-off, leading to the death of the seven people on board. Some months later, a commission appointed by the President to investigate the causes of the disaster determined that the cause of the disaster was the failure of a seal in one of the solid rocket boosters (Report to the President 1986, vol. 1, p. 40). Furthermore, Morton Thiokol, the contractor responsible for the seal design, had initiated a teleconference with NASA on the evening before the launch and had, at the beginning of the teleconference, recommended against launching because of concerns about the performance of the seal. This recommendation was reversed during the teleconference,
with fatal consequences. To understand the decisions that led to the Challenger disaster, you must first understand what the technical problems were. Accordingly, this course begins by presenting the minimum technical details you will need to understand the physical cause of the seal failure. After laying this groundwork, we examine what occurred in the teleconference. You will probably find, as you learn more and more about the Challenger project, that issues that had appeared simple initially are actually far more complex; pinpointing responsibility and assigning blame are not nearly as easy as many popular accounts have made them. The purpose of the present course is 1) to consider some of the issues and show by example how
difficult it can be to distinguish unethical behavior from technical mistakes (with severe consequences), and 2) to equip you to think critically and act appropriately when confronted with ethical decisions in your own professional work. 5 The course is divided into the following topics: 1. Two Common Errors of Interpretation 2. Configuration of Shuttle 3. Function of O-rings 4. History of Problems with Joint Seals 5. Teleconference 6. Accident 7. Ethical issue: Did NASA take extra risks because of pressure
to maintain Congressional funding? 8. Ethical issue: Did Thiokol take extra risks because of fear of losing its contract with NASA? 9. Ethical issue: Was the Principle of Informed Consent violated? 10. Ethical issue: What role did whistle blowing have in the Challenger story? 11. Ethical issue: Who had the right to Thiokol documents relating to the Challenger disaster? 12. Ethical issue: Why are some engineering disasters considered ethical issues and others are not? 13. Summary 1. Two Common Errors of Interpretation
Persons studying the history of an engineering disaster must be alert to the danger of committing one of the following common errors: 1) the myth of perfect engineering practice, and 2) the retrospective fallacy. The Myth of Perfect Engineering Practice The sociologist, Diane Vaughan, who has written one of the most thorough books on Challenger, has pointed out that the mere act of investigating an accident can cause us to view, as ominous, facts and events that we otherwise would consider normal: “When technical systems fail, … outside investigators consistently find an engineering world characterized by ambiguity, disagreement, deviation from design specifications and
operating standards, and ad hoc rule making. This messy situation, when revealed to the public, automatically becomes an explanation for the failure, for after all, the engineers and managers did not follow the rules. … [On the other hand,] the engineering process behind a ‘nonaccident’ is never publicly examined. If nonaccidents were investigated, the public would discover that the messy interior of engineering practice, which after an accident investigation looks like ‘an accident waiting to happen,’ is nothing more or less than ‘normal technology.” (Vaughan 1996, p. 200) Thus as you read the description of the Challenger disaster on the pages to follow, keep in mind that just because some of the engineering practices described are not neat and tidy processes in which
consensus is always achieved and decisions are always based on undisputed and unambiguous data, that fact alone may not explain the disaster; such practices may simply be part of normal technology—that usually results in a nonaccident. The Retrospective Fallacy Engineering projects sometimes fail. If the failure involves enough money or injuries to innocent people, then investigators may be brought in to determine the causes of the failure and 6 identify wrongdoers. The investigators then weave a story explaining how decision-makers
failed to assess risks properly, failed to heed warning signs, used out-of-date information, ignored quality-control, took large risks for personal gain, etc. But there is a danger here: the story is constructed by selectively focusing on those events that are known to be important in retrospect, that is, after the failure has occurred and observers look back at them. At the time that the engineers were working on the project, these events may not have stood out from dozens or even hundreds of other events. “Important” events do not come labeled “PARTICULARLY IMPORTANT: PAY ATTENTION”; they may appear important only in retrospect. To the extent that we retrospectively identify events as particularly important—even though they may
not have been thought particularly important by diligent and competent people working at the time—we are committing the “retrospective fallacy.” (Vaughan 1996, p. 68-70) In any discussion of the Challenger disaster, the tendency to commit the retrospective fallacy exists, because we all know the horrendous results of the decisions that were made—and our first reaction is to say, “How could they have ignored this?” or, “Why didn’t they study that more carefully?” But to understand what happened, it is crucial to put yourself in the place of the engineers and to focus on what they knew and what they thought to be important at the time. For example, NASA classified 745 components on the Shuttle as “Criticality 1”, meaning failure of
the component would cause the loss of the crew, mission, and vehicle (NASA’s Response to the Committee’s Investigation of the “Challenger” Accident 1987). With the advantage of 20-20 hindsight, we now know that the engineers made a tragic error in judging the possibility of failure of a particular one of those 745 components—the seals— an “acceptable risk.” But at the time, another issue—problems with the Shuttle main engines— attracted more concern (McDonald 2009, pp. 64-65). Similarly, probably most of the decisions made by the Shuttle engineers and managers were influenced to some extent by considerations of cost. As a result, after the disaster it was a straightforward matter to pick out specific decisions and claim that the decision-makers had sacrificed safety for budgetary reasons.
But our 20-20 hindsight was not available to the people involved in the Challenger project, and as we read the history we should continually ask questions such as “What did they know at the time?,” “Is it reasonable to expect that they should have seen the significance of this or that fact?,” and “If I were in their position and knew only what they knew, what would I have done?” Only through such questions can we hope to understand why the Challenger disaster occurred and to evaluate its ethical dimensions. 2. Configuration of Shuttle. NASA had enjoyed widespread public support and generous funding for the Apollo program to put a man on the moon. But as Apollo neared completion and concerns about the cost of the
Vietnam War arose, continued congressional appropriations for NASA were in jeopardy. A new mission for NASA was needed, and so the Space Shuttle program was proposed. The idea was to development an inexpensive (compared to Apollo) system for placing human beings and hardware in orbit. The expected users of the system would be commercial and academic experimenters, the military, and NASA itself. On January 5, 1972, President Nixon announced the government’s approval of the Shuttle program. 7 Fig. 1 Configuration of the Shuttle
Because a prime goal was to keep costs down, reusable space vehicles were to be developed. After many design proposals and compromises—for example, the Air Force agreed not to develop any launch vehicles of its own, provided that the Shuttle was designed to accommodate military needs—NASA came up with the piggyback design shown in Figure 1. The airplane-like craft (with the tail fin) shown in side view on the right side of the figure is the “Orbiter.” The Orbiter contains the flight crew and a 60 feet long and 15 feet wide payload bay designed to hold cargo such as communications satellites to be launched into orbit, an autonomous Spacelab to be used for experiments in space, or satellites already orbiting that have been retrieved for repairs.
Before launch, the Orbiter is attached to the large (154 feet long and 27 1/2 feet in diameter) External Tank—the middle cylinder with the sharp-pointed end shown in the figure; the External 8 Tank contains 143,000 gallons of liquid oxygen and 383,000 gallons of liquid hydrogen for the Orbiter's engines. The two smaller cylinders on the sides of the External Tank are the Solid Rocket Boosters (SRBs). The SRBs play a key role in the Challenger accident and accordingly will be described
here in some detail. The SRBs contain solid fuel, rather than the liquid fuel contained by the External Tank. The SRBs provide about 80 percent of the total thrust at liftoff; the remainder of the thrust is provided by the Orbiter's three main engines. Morton-Thiokol Inc. held the contract for the development of the SRBs. The SRBs fire for about two minutes after liftoff, and then, their fuel exhausted, are separated from the External Tank. A key goal of the Shuttle design was to save costs by re-using the SRBs and the Orbiter. The conical ends of the SRBs contain parachutes that are deployed, after the SRBs have been separated from the External Tank, and allow
the SRBs to descend slowly to the ocean below. The SRBs are then picked out of the water by recovery ships and taken to repair facilities, where preparations are made for the next flight. After the SRBs are detached, the Orbiter’s main engines continue firing until it achieves low earth orbit. Then the External Tank is jettisoned towards earth where it burns up in the atmosphere—the External Tank is not re- used. Once the crew has completed its mission in orbit, the Orbiter returns to earth where it glides (No propulsion is used.) to a landing on a conventional airstrip. The Orbiter can then be refurbished for its next launch. More Details about the SRBs
Fig. 2 Solid Rocket Booster with Exploded View Showing Segments and Joints 9 Figure 2 shows the subassemblies that make up the SRB. Because the total length of the SRB was almost 150 feet, it was too large to ship as a single unit by rail from Thiokol’s manufacturing facility in Utah to the Kennedy Space Center launch site in Florida. Furthermore, shipping the SRB as a single unit would mean that a large amount of rocket fuel would be concentrated in a single container—creating the potential for an
enormous explosion. For these reasons, Thiokol manufactured the SRB from individual cylindrical segments each approximately 12 feet in diameter. At Thiokol’s plant in Utah, individual segments were welded together to form four “casting” segments, into which propellant was poured (cast). The welded joints within a casting segment were called “factory joints.” The four casting segments were then shipped individually by rail to Kennedy, where they were assembled—by stacking, not welding—to form the solid rocket motor (SRM) of the SRB. The joints created by the assembly process at Kennedy were called “field joints.” The sealing problem that led to the Challenger’s destruction occurred in the field joint at the right end of the AFT MID SEGMENT in Figure 2.
Hot combustion gases from the SRM leaked through the joint and either weakened or burned a hole in the External Tank, igniting the contents of the Tank and producing a catastrophic fireball. 3. Function of O-rings The cutaway view of the SRB in Figure 3 shows the aft field joint location in the assembled SRB. Fig. 3. Location of the Problematic Aft Field Joint 10
Fig. 4. Cross Section of Field Joint Figure 4 shows how the upper SRM segment in a field joint is connected to the lower segment by a pin passing through the “tang” (the tongue on the upper segment) and the “clevis” (the U- shaped receptacle cut in the lower segment); 177 such steel pins are inserted around the circumference of each joint. When the propellant is burning and generating hot combustion gases under the enormous pressure necessary to accelerate the SRB, the joint must be sealed to prevent the gases from leaking and possibly damaging exterior parts of the Shuttle. This sealing is accomplished by a primary O-ring backed up by a secondary O-ring (O-rings are widely used
in machine design and, when functioning properly, can seal pressures in the range of thousands of psi). An SRM O-ring has been compared to “a huge length of licorice—same color, same diameter (only 0.28”)—joined at the ends so it forms a circle 12’ across” (Vaughan 1996, p. 40). SRM O-rings were made of a rubberlike synthetic material called Viton. To prevent the hot combustion gases from contacting and thus degrading the Viton when the propellant was ignited, zinc chromate putty was applied in the region shown in Figure 4 prior to assembly of the SRM segments.
11 Fig. 5. Effect of Compression of the O-ring in Inhibiting Pressure Actuation Pressure Actuation of the O-ring Seal Besides protecting the O-rings from the corrosive effects of the hot combustion gases, the putty is intended to be pushed outward from the combustion chamber during ignition, compress the air ahead of the primary O-ring, and thus force the O-ring into the tang-clevis gap, thereby sealing the gap. This process is referred to as “pressure-actuated sealing.” Experiments show that pressure actuation is most effective when the high-pressure air acts over the largest possible
portion of the high-pressure side of the O-ring. In the leftmost sketch in Figure 5, for example, the high-pressure side extends from the “Response Node” at the top to the point of tangency at the bottom of the groove. If, however, the O-ring is initially compressed during assembly, then the O-ring may deform sufficiently to cause contact with the left-hand side of the groove, as shown in the rightmost sketch in Figure 5. In that case, the high-pressure air acts over only the surface of the upper left-hand side of the O-ring, and pressure actuation of the seal is impaired. This problem is lessened if, upon ignition, the joint gap opens, and the O-ring is able to spring back elastically and lose contact with sides of the groove, as in the middle sketch in Figure 5.
However, when the temperature is low, the O-ring loses much of its elasticity and as a result may retain its compressed shape, as in the right-hand sketch of Figure 5. This retention of the compressed shape has three unfortunate consequences: 1) pressure actuation is delayed or impaired because the high-pressure air cannot get to the lower left-hand side of the O-ring, 2) pressure actuation is delayed or impaired because the O-ring does not seal the opened gap, and the actuation pressure on the O-ring decreases as the fluid is able to pass by the O-ring, and 3) because of the lack of sealing, compressed air, putty, and then hot combustion gas may blow by through the gap, and in the process, damage or even destroy the O-ring. In general, pressure actuation was also affected negatively by
several other factors, such as the behavior of the putty and the increase in gap size caused by re- use of the SRM. From consideration of all these factors and from observation of the explosion, the Presidential Commission concluded ”that the cause of the Challenger accident was the failure of the pressure seal in the aft field joint of the right Solid Rocket Motor [Italics in the original]. The failure was due to a faulty design unacceptably sensitive to a number of factors. These factors were the 12 effects of temperature, physical dimensions, the character of materials, the effects of reusability,
processing, and the reaction of the joint to dynamic loading.” (Report to the President 1986, vol. 1, p. 69) 4. History of Problems with Joint Seals From the very beginning, in 1973, of Thiokol’s contract to develop the SRM, problems arose with the joints. The Thiokol design for the SRM was based on the Air Force’s Titan III, one of the most reliable solid-fuel rockets produced up to that time. But Thiokol engineers could not simply copy the Titan design—the SRM was larger than the Titan’s motor and had to be designed for refurbishment and repeated use. One particular area in which the two motors differed was the field joints, and Thiokol’s initial design for the SRM field joints worried
engineers at the Marshall Space Flight Center, who were responsible for monitoring Thiokol’s contract. Many modifications and reviews of the design ensued, and Thiokol and Marshall finally began various load tests in 1976. Early tests were successful and gave engineers confidence. In an important test in 1977, however, the joint seals surprised the engineers by exhibiting “joint rotation,” illustrated in Fig. 6. Of particular concern is the loss of redundancy in the design because not just the primary but also the secondary O-ring is rendered ineffective if the gap opens sufficiently. (It is important to realize the scale of the events being described: the gap between the tang and clevis in the unpressurized joint is tiny: 0.004”, in the pressurized joint
the gap was estimated to lie between 0.042” and 0.06,”—caused by a joint rotation that occurs in the first 0.6 seconds of ignition.) 13 Fig. 6 Joint Rotation Other sealing problems—some but not all related to joint rotation—such as blow-by, ring charring, ring erosion, loss of resilience of the O-ring material at low temperature, and performance of the putty were observed later in various static
tests and launches. Engineers both at Thiokol and at the Marshall were aware of these problems. On July 31, 1985, Roger Boisjoly, a Thiokol engineer specializing in O-rings, wrote a memo to Thiokol vice president Robert Lund with the subject line, "O-ring Erosion/Potential Failure Criticality", after nozzle joint erosion was detected in an SRB: “This letter is written to insure that management is fully aware of the seriousness of the current O-ring erosion problem in the SRM joints from an engineering standpoint. “ "The mistakenly accepted position on the joint problem was to fly without fear of failure and to run a series of design evaluations which would ultimately lead to a solution or at
least a significant reduction of the erosion problem. This position is now changed as a result of the [51-B] nozzle joint erosion which eroded a secondary O-ring with the primary O-ring never sealing. If the same scenario should occur in a field joint (and it could), then it is a jump ball whether as to the success or failure of the joint because the secondary O-ring cannot respond to the clevis opening rate and may not be capable of pressurization. The result would be a catastrophe of the highest order-loss of human life… 14
Boisjoly urged that a team be set up to work on the O-ring problem, and ended by saying "It is my honest and very real fear that if we do not take immediate action to dedicate a team to solve the problem, with the field joint having the number one priority, then we stand in jeopardy of losing a flight along with all the launch pad facilities." [quoted in Vaughan 1996, p. 447] Boisjoly later charged that Thiokol management failed to provide adequate follow-up and support to correct the problem described in his memo. Readers tempted to commit the retrospective fallacy after
reading Boisjoly’s memo should note that the memo does not mention temperature effects on the seal. The years of concern about the sealing problems eventually led to a briefing at NASA Headquarters in Washington on August 19 th , 1985, by Marshall and Thiokol, in which they presented both an engineering evaluation and a redesign plan. They noted that only 5 of 111 primary O-rings in field joints and 12 of 47 primary O-rings in nozzle joints had shown erosion in various tests and flights. Thiokol argued that various experimental and flight data verified the safety of the design. They said, however, that the field joint was the “highest concern” and
presented plans for improving the joints both with short-term fixes and longer-term fixes that would take over two years to implement. Data from studies by Arnie Thompson (Boisjoly’s boss) of the effect of temperature on ring resiliency were presented, but imposing a temperature launch constraint was not mentioned. The review judged that leak checks and careful assembly made it “safe to continue flying [the] existing design.” Nevertheless NASA needed “to continue at an accelerated pace to eliminate SRM seal erosion.” In the meantime, the risks were considered acceptable. [Dunnar and Waring, p. 363]. 5. Teleconference After several delays, the Challenger launch was scheduled for January 28, 1986, at 9:38 AM
EST. At about 1 PM on the 27 th , however, NASA personnel became concerned about the unusually low temperatures—in the low 20’s—predicted for early morning of the next day. A Marshall manager asked Thiokol engineers to review the effect the low temperatures might have on the SRM. Accordingly, a meeting was held at Thiokol’s Utah facility. Engineers there stated their concern that the extreme cold would greatly reduce O-ring resiliency and ability to seal the joints. A teleconference among Thiokol, Marshall, and Kennedy personnel was set for 5:45 PM EST to discuss the situation. At the teleconference, Thiokol engineers made no official
recommendation about delaying the launch. The discussion centered on their concerns about the effect of the low temperatures on the O-rings. However, some of the teleconference participants were unable to hear well, because of a poor telephone connection, and some key personnel had not been located in time to be included in the teleconference, so the teleconference was ended, and a second one scheduled for 8:15 PM EST. In the interim, Thiokol engineers had time to organize their data in charts and fax them to Marshall and Kennedy. 15
A total of thirty-four managers and engineers from Thiokol, Marshall, and Kennedy took part in the second teleconference. Thiokol engineers began the teleconference by discussing the charts that they had faxed to the other teleconference participants. The Thiokol position was that because significant O-ring blow-by and damage had been observed in the coldest previous launch—53°F—the O-ring material would lose much of its resilience and the joint could fail, were the launch to be conducted at a temperature in the 20’s or low 30’s. When directly asked by Larry Mulloy, Manager of the SRB project at Marshall, Thiokol Vice President Joe Kilminster …
The Challenger Disaster A Case-study in Engineering Ethics.docx

Recommended

Chapter 2 Assignment The Economic Problem Scarcity & Choice.docx
Chapter 2 Assignment The Economic Problem Scarcity & Choice.docxChapter 2 Assignment The Economic Problem Scarcity & Choice.docx
Chapter 2 Assignment The Economic Problem Scarcity & Choice.docxwalterl4
 
Submission UUID ae3366f9-f6c3-6efa-4b5a-7e82baceef95Origi.docx
Submission UUID ae3366f9-f6c3-6efa-4b5a-7e82baceef95Origi.docxSubmission UUID ae3366f9-f6c3-6efa-4b5a-7e82baceef95Origi.docx
Submission UUID ae3366f9-f6c3-6efa-4b5a-7e82baceef95Origi.docxdeanmtaylor1545
 
Discussion 1 Please review the chapter once again. Chapter 1 is a.docx
Discussion 1 Please review the chapter once again. Chapter 1 is a.docxDiscussion 1 Please review the chapter once again. Chapter 1 is a.docx
Discussion 1 Please review the chapter once again. Chapter 1 is a.docxcuddietheresa
 
20141119 CEP lunchtime seminar
20141119 CEP lunchtime seminar20141119 CEP lunchtime seminar
20141119 CEP lunchtime seminarMatthew Hannon
 
Chapter 12 – From our weekly chapter reading, we learned that Crow.docx
Chapter 12 – From our weekly chapter reading, we learned that Crow.docxChapter 12 – From our weekly chapter reading, we learned that Crow.docx
Chapter 12 – From our weekly chapter reading, we learned that Crow.docxbartholomeocoombs
 
DescriptionBanking DomainThis is only exampleCrea.docx
DescriptionBanking DomainThis is only exampleCrea.docxDescriptionBanking DomainThis is only exampleCrea.docx
DescriptionBanking DomainThis is only exampleCrea.docxcuddietheresa
 
2014 asae gr symposium global issues
2014 asae gr symposium global issues2014 asae gr symposium global issues
2014 asae gr symposium global issuesTrevor S. Mitchell, CAE
 
Dr. Richard ChuaJWI 550 date Insert NameJack Welch Man.docx
Dr. Richard ChuaJWI 550 date Insert NameJack Welch Man.docxDr. Richard ChuaJWI 550 date Insert NameJack Welch Man.docx
Dr. Richard ChuaJWI 550 date Insert NameJack Welch Man.docxmadlynplamondon
 

Recommended

Chapter 2 Assignment The Economic Problem Scarcity & Choice.docx
Chapter 2 Assignment The Economic Problem Scarcity & Choice.docxChapter 2 Assignment The Economic Problem Scarcity & Choice.docx
Chapter 2 Assignment The Economic Problem Scarcity & Choice.docxwalterl4
 
Submission UUID ae3366f9-f6c3-6efa-4b5a-7e82baceef95Origi.docx
Submission UUID ae3366f9-f6c3-6efa-4b5a-7e82baceef95Origi.docxSubmission UUID ae3366f9-f6c3-6efa-4b5a-7e82baceef95Origi.docx
Submission UUID ae3366f9-f6c3-6efa-4b5a-7e82baceef95Origi.docxdeanmtaylor1545
 
Discussion 1 Please review the chapter once again. Chapter 1 is a.docx
Discussion 1 Please review the chapter once again. Chapter 1 is a.docxDiscussion 1 Please review the chapter once again. Chapter 1 is a.docx
Discussion 1 Please review the chapter once again. Chapter 1 is a.docxcuddietheresa
 
20141119 CEP lunchtime seminar
20141119 CEP lunchtime seminar20141119 CEP lunchtime seminar
20141119 CEP lunchtime seminarMatthew Hannon
 
Chapter 12 – From our weekly chapter reading, we learned that Crow.docx
Chapter 12 – From our weekly chapter reading, we learned that Crow.docxChapter 12 – From our weekly chapter reading, we learned that Crow.docx
Chapter 12 – From our weekly chapter reading, we learned that Crow.docxbartholomeocoombs
 
DescriptionBanking DomainThis is only exampleCrea.docx
DescriptionBanking DomainThis is only exampleCrea.docxDescriptionBanking DomainThis is only exampleCrea.docx
DescriptionBanking DomainThis is only exampleCrea.docxcuddietheresa
 
2014 asae gr symposium global issues
2014 asae gr symposium global issues2014 asae gr symposium global issues
2014 asae gr symposium global issuesTrevor S. Mitchell, CAE
 
Dr. Richard ChuaJWI 550 date Insert NameJack Welch Man.docx
Dr. Richard ChuaJWI 550 date Insert NameJack Welch Man.docxDr. Richard ChuaJWI 550 date Insert NameJack Welch Man.docx
Dr. Richard ChuaJWI 550 date Insert NameJack Welch Man.docxmadlynplamondon
 
Problems of the Environment in the Science Classroom. Introducing the STSE
Problems of the Environment in the Science Classroom. Introducing the STSEProblems of the Environment in the Science Classroom. Introducing the STSE
Problems of the Environment in the Science Classroom. Introducing the STSESEENET-MTP
 
(Springer briefs in applied sciences and technology) thomas brewer transpor...
(Springer briefs in applied sciences and technology) thomas brewer transpor...(Springer briefs in applied sciences and technology) thomas brewer transpor...
(Springer briefs in applied sciences and technology) thomas brewer transpor...Ivoy Elqila
 
Paris april 2013
Paris april 2013Paris april 2013
Paris april 2013Jack Stilgoe
 
OECD STIG: Governance of International Science, Technology and Innovation for...
OECD STIG: Governance of International Science, Technology and Innovation for...OECD STIG: Governance of International Science, Technology and Innovation for...
OECD STIG: Governance of International Science, Technology and Innovation for...Per Koch
 
Community Assessment, Analysis, Diagnosis, Plan, and Evaluation.docx
Community Assessment, Analysis, Diagnosis, Plan, and Evaluation.docxCommunity Assessment, Analysis, Diagnosis, Plan, and Evaluation.docx
Community Assessment, Analysis, Diagnosis, Plan, and Evaluation.docxdrennanmicah
 
Sustainable Building Design.ppt
Sustainable Building Design.pptSustainable Building Design.ppt
Sustainable Building Design.pptTantish QS, UTM
 
ETIP PV conference: 'Photovoltaics: centre-stage in the power system
ETIP PV conference: 'Photovoltaics: centre-stage in the power systemETIP PV conference: 'Photovoltaics: centre-stage in the power system
ETIP PV conference: 'Photovoltaics: centre-stage in the power systemCluster TWEED
 
16. global warming(anil chari)
16. global warming(anil chari)16. global warming(anil chari)
16. global warming(anil chari)Anil Mrperfect
 
Consider some of the organizations you have been affiliated with..docx
Consider some of the organizations you have been affiliated with..docxConsider some of the organizations you have been affiliated with..docx
Consider some of the organizations you have been affiliated with..docxbobbywlane695641
 
Required Resources TextSchneider, A. (2017). Managerial Accounti.docx
Required Resources TextSchneider, A. (2017). Managerial Accounti.docxRequired Resources TextSchneider, A. (2017). Managerial Accounti.docx
Required Resources TextSchneider, A. (2017). Managerial Accounti.docxaudeleypearl
 
Public Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxPublic Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxdenneymargareta
 
Public Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxPublic Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxleonorepour284
 
Presentation of the OECD project on governance of STI for global challenges
Presentation of the OECD project on governance of STI for global challengesPresentation of the OECD project on governance of STI for global challenges
Presentation of the OECD project on governance of STI for global challengesPer Koch
 
CSR and the new 2015 environment law in China (abstract) - Maverlinn
CSR and the new 2015 environment law in China (abstract) - MaverlinnCSR and the new 2015 environment law in China (abstract) - Maverlinn
CSR and the new 2015 environment law in China (abstract) - MaverlinnOlivier Coispeau
 
Quiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docx
Quiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docxQuiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docx
Quiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docxaudeleypearl
 
Age group is Adolescent 13-18The Integrating the Field of Develo.docx
Age group is Adolescent 13-18The Integrating the Field of Develo.docxAge group is Adolescent 13-18The Integrating the Field of Develo.docx
Age group is Adolescent 13-18The Integrating the Field of Develo.docxdaniahendric
 
The transition to a circular economy
The transition to a circular economyThe transition to a circular economy
The transition to a circular economyKyiv National Economic University
 
Evolutionary architecture: What can we learn from Nature?
Evolutionary architecture: What can we learn from Nature?Evolutionary architecture: What can we learn from Nature?
Evolutionary architecture: What can we learn from Nature?Chris Howe-Jones
 
231232233234235236.docx
231232233234235236.docx231232233234235236.docx
231232233234235236.docxnovabroom
 
Public Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxPublic Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxwoodruffeloisa
 
1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docx
1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docx1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docx
1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docxkarisariddell
 
1-Why is it the case that single men are prominently represented in .docx
1-Why is it the case that single men are prominently represented in .docx1-Why is it the case that single men are prominently represented in .docx
1-Why is it the case that single men are prominently represented in .docxkarisariddell
 

More Related Content

Similar to The Challenger Disaster A Case-study in Engineering Ethics.docx

Problems of the Environment in the Science Classroom. Introducing the STSE
Problems of the Environment in the Science Classroom. Introducing the STSEProblems of the Environment in the Science Classroom. Introducing the STSE
Problems of the Environment in the Science Classroom. Introducing the STSESEENET-MTP
 
(Springer briefs in applied sciences and technology) thomas brewer transpor...
(Springer briefs in applied sciences and technology) thomas brewer transpor...(Springer briefs in applied sciences and technology) thomas brewer transpor...
(Springer briefs in applied sciences and technology) thomas brewer transpor...Ivoy Elqila
 
OECD STIG: Governance of International Science, Technology and Innovation for...
OECD STIG: Governance of International Science, Technology and Innovation for...OECD STIG: Governance of International Science, Technology and Innovation for...
OECD STIG: Governance of International Science, Technology and Innovation for...Per Koch
 
Community Assessment, Analysis, Diagnosis, Plan, and Evaluation.docx
Community Assessment, Analysis, Diagnosis, Plan, and Evaluation.docxCommunity Assessment, Analysis, Diagnosis, Plan, and Evaluation.docx
Community Assessment, Analysis, Diagnosis, Plan, and Evaluation.docxdrennanmicah
 
Sustainable Building Design.ppt
Sustainable Building Design.pptSustainable Building Design.ppt
Sustainable Building Design.pptTantish QS, UTM
 
ETIP PV conference: 'Photovoltaics: centre-stage in the power system
ETIP PV conference: 'Photovoltaics: centre-stage in the power systemETIP PV conference: 'Photovoltaics: centre-stage in the power system
ETIP PV conference: 'Photovoltaics: centre-stage in the power systemCluster TWEED
 
16. global warming(anil chari)
16. global warming(anil chari)16. global warming(anil chari)
16. global warming(anil chari)Anil Mrperfect
 
Consider some of the organizations you have been affiliated with..docx
Consider some of the organizations you have been affiliated with..docxConsider some of the organizations you have been affiliated with..docx
Consider some of the organizations you have been affiliated with..docxbobbywlane695641
 
Required Resources TextSchneider, A. (2017). Managerial Accounti.docx
Required Resources TextSchneider, A. (2017). Managerial Accounti.docxRequired Resources TextSchneider, A. (2017). Managerial Accounti.docx
Required Resources TextSchneider, A. (2017). Managerial Accounti.docxaudeleypearl
 
Public Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxPublic Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxdenneymargareta
 
Public Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxPublic Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxleonorepour284
 
Presentation of the OECD project on governance of STI for global challenges
Presentation of the OECD project on governance of STI for global challengesPresentation of the OECD project on governance of STI for global challenges
Presentation of the OECD project on governance of STI for global challengesPer Koch
 
CSR and the new 2015 environment law in China (abstract) - Maverlinn
CSR and the new 2015 environment law in China (abstract) - MaverlinnCSR and the new 2015 environment law in China (abstract) - Maverlinn
CSR and the new 2015 environment law in China (abstract) - MaverlinnOlivier Coispeau
 
Quiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docx
Quiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docxQuiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docx
Quiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docxaudeleypearl
 
Age group is Adolescent 13-18The Integrating the Field of Develo.docx
Age group is Adolescent 13-18The Integrating the Field of Develo.docxAge group is Adolescent 13-18The Integrating the Field of Develo.docx
Age group is Adolescent 13-18The Integrating the Field of Develo.docxdaniahendric
 
Evolutionary architecture: What can we learn from Nature?
Evolutionary architecture: What can we learn from Nature?Evolutionary architecture: What can we learn from Nature?
Evolutionary architecture: What can we learn from Nature?Chris Howe-Jones
 
231232233234235236.docx
231232233234235236.docx231232233234235236.docx
231232233234235236.docxnovabroom
 
Public Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxPublic Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxwoodruffeloisa
 

Similar to The Challenger Disaster A Case-study in Engineering Ethics.docx (20)

Problems of the Environment in the Science Classroom. Introducing the STSE
Problems of the Environment in the Science Classroom. Introducing the STSEProblems of the Environment in the Science Classroom. Introducing the STSE
Problems of the Environment in the Science Classroom. Introducing the STSE
 
(Springer briefs in applied sciences and technology) thomas brewer transpor...
(Springer briefs in applied sciences and technology) thomas brewer transpor...(Springer briefs in applied sciences and technology) thomas brewer transpor...
(Springer briefs in applied sciences and technology) thomas brewer transpor...
 
Paris april 2013
Paris april 2013Paris april 2013
Paris april 2013
 
OECD STIG: Governance of International Science, Technology and Innovation for...
OECD STIG: Governance of International Science, Technology and Innovation for...OECD STIG: Governance of International Science, Technology and Innovation for...
OECD STIG: Governance of International Science, Technology and Innovation for...
 
Community Assessment, Analysis, Diagnosis, Plan, and Evaluation.docx
Community Assessment, Analysis, Diagnosis, Plan, and Evaluation.docxCommunity Assessment, Analysis, Diagnosis, Plan, and Evaluation.docx
Community Assessment, Analysis, Diagnosis, Plan, and Evaluation.docx
 
Sustainable Building Design.ppt
Sustainable Building Design.pptSustainable Building Design.ppt
Sustainable Building Design.ppt
 
ETIP PV conference: 'Photovoltaics: centre-stage in the power system
ETIP PV conference: 'Photovoltaics: centre-stage in the power systemETIP PV conference: 'Photovoltaics: centre-stage in the power system
ETIP PV conference: 'Photovoltaics: centre-stage in the power system
 
16. global warming(anil chari)
16. global warming(anil chari)16. global warming(anil chari)
16. global warming(anil chari)
 
Consider some of the organizations you have been affiliated with..docx
Consider some of the organizations you have been affiliated with..docxConsider some of the organizations you have been affiliated with..docx
Consider some of the organizations you have been affiliated with..docx
 
Required Resources TextSchneider, A. (2017). Managerial Accounti.docx
Required Resources TextSchneider, A. (2017). Managerial Accounti.docxRequired Resources TextSchneider, A. (2017). Managerial Accounti.docx
Required Resources TextSchneider, A. (2017). Managerial Accounti.docx
 
Public Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxPublic Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docx
 
Public Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxPublic Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docx
 
Presentation of the OECD project on governance of STI for global challenges
Presentation of the OECD project on governance of STI for global challengesPresentation of the OECD project on governance of STI for global challenges
Presentation of the OECD project on governance of STI for global challenges
 
CSR and the new 2015 environment law in China (abstract) - Maverlinn
CSR and the new 2015 environment law in China (abstract) - MaverlinnCSR and the new 2015 environment law in China (abstract) - Maverlinn
CSR and the new 2015 environment law in China (abstract) - Maverlinn
 
Quiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docx
Quiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docxQuiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docx
Quiz 3.2 Outline FORMAT for JE 3Method 3 – Similarities and Diff.docx
 
Age group is Adolescent 13-18The Integrating the Field of Develo.docx
Age group is Adolescent 13-18The Integrating the Field of Develo.docxAge group is Adolescent 13-18The Integrating the Field of Develo.docx
Age group is Adolescent 13-18The Integrating the Field of Develo.docx
 
The transition to a circular economy
The transition to a circular economyThe transition to a circular economy
The transition to a circular economy
 
Evolutionary architecture: What can we learn from Nature?
Evolutionary architecture: What can we learn from Nature?Evolutionary architecture: What can we learn from Nature?
Evolutionary architecture: What can we learn from Nature?
 
231232233234235236.docx
231232233234235236.docx231232233234235236.docx
231232233234235236.docx
 
Public Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docxPublic Administration and InformationTechnologyVolum.docx
Public Administration and InformationTechnologyVolum.docx
 

More from karisariddell

1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docx
1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docx1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docx
1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docxkarisariddell
 
1-Why is it the case that single men are prominently represented in .docx
1-Why is it the case that single men are prominently represented in .docx1-Why is it the case that single men are prominently represented in .docx
1-Why is it the case that single men are prominently represented in .docxkarisariddell
 
1-Think for a while about cultural practices and how they affect hea.docx
1-Think for a while about cultural practices and how they affect hea.docx1-Think for a while about cultural practices and how they affect hea.docx
1-Think for a while about cultural practices and how they affect hea.docxkarisariddell
 
1-Holding everything else constant, an increase in the growth rate.docx
1-Holding everything else constant, an increase in the growth rate.docx1-Holding everything else constant, an increase in the growth rate.docx
1-Holding everything else constant, an increase in the growth rate.docxkarisariddell
 
1-Please write the difference and examples between coccus, bacillus,.docx
1-Please write the difference and examples between coccus, bacillus,.docx1-Please write the difference and examples between coccus, bacillus,.docx
1-Please write the difference and examples between coccus, bacillus,.docxkarisariddell
 
1-2 paragraphs for each person. There are 6 people.Everett.docx
1-2 paragraphs for each person. There are 6 people.Everett.docx1-2 paragraphs for each person. There are 6 people.Everett.docx
1-2 paragraphs for each person. There are 6 people.Everett.docxkarisariddell
 
1-2 paragraphsapa formatreferencesneed in 8 hours!.docx
1-2 paragraphsapa formatreferencesneed in 8 hours!.docx1-2 paragraphsapa formatreferencesneed in 8 hours!.docx
1-2 paragraphsapa formatreferencesneed in 8 hours!.docxkarisariddell
 
1. A In your viewpoint, what are the Humanities Formulate a de.docx
1. A In your viewpoint, what are the Humanities Formulate a de.docx1. A In your viewpoint, what are the Humanities Formulate a de.docx
1. A In your viewpoint, what are the Humanities Formulate a de.docxkarisariddell
 
1-2 PAGESIdentify an ethical consideration besides establishin.docx
1-2 PAGESIdentify an ethical consideration besides establishin.docx1-2 PAGESIdentify an ethical consideration besides establishin.docx
1-2 PAGESIdentify an ethical consideration besides establishin.docxkarisariddell
 
1-2 page single spaced pages in 12-point font. Reference Listed.docx
1-2 page single spaced pages in 12-point font. Reference Listed.docx1-2 page single spaced pages in 12-point font. Reference Listed.docx
1-2 page single spaced pages in 12-point font. Reference Listed.docxkarisariddell
 
1-2 page typed (double space) research and reflection essay on a mus.docx
1-2 page typed (double space) research and reflection essay on a mus.docx1-2 page typed (double space) research and reflection essay on a mus.docx
1-2 page typed (double space) research and reflection essay on a mus.docxkarisariddell
 
1. The law of demand implies that sellers will offer .docx
1. The law of demand implies that sellers will offer .docx1. The law of demand implies that sellers will offer .docx
1. The law of demand implies that sellers will offer .docxkarisariddell
 
1-2 page critique of the film after selecting a character in the mov.docx
1-2 page critique of the film after selecting a character in the mov.docx1-2 page critique of the film after selecting a character in the mov.docx
1-2 page critique of the film after selecting a character in the mov.docxkarisariddell
 
1. Which of the following changes will result in a shift of the agg.docx
1. Which of the following changes will result in a shift of the agg.docx1. Which of the following changes will result in a shift of the agg.docx
1. Which of the following changes will result in a shift of the agg.docxkarisariddell
 
1-2 page critique of the film after analyzing the main character (Jo.docx
1-2 page critique of the film after analyzing the main character (Jo.docx1-2 page critique of the film after analyzing the main character (Jo.docx
1-2 page critique of the film after analyzing the main character (Jo.docxkarisariddell
 
1. John, a 15 year old who loves skateboarding, wants to buy th.docx
1. John, a 15 year old who loves skateboarding, wants to buy th.docx1. John, a 15 year old who loves skateboarding, wants to buy th.docx
1. John, a 15 year old who loves skateboarding, wants to buy th.docxkarisariddell
 
1-Read and print the data from the brain.csv file2-Extraxt t.docx
1-Read and print the data from the brain.csv file2-Extraxt t.docx1-Read and print the data from the brain.csv file2-Extraxt t.docx
1-Read and print the data from the brain.csv file2-Extraxt t.docxkarisariddell
 
1. Duncan Fisher (2019, march). Children of Divorce The Key Rol.docx
1. Duncan Fisher (2019, march). Children of Divorce The Key Rol.docx1. Duncan Fisher (2019, march). Children of Divorce The Key Rol.docx
1. Duncan Fisher (2019, march). Children of Divorce The Key Rol.docxkarisariddell
 
1. When Thomas Paine writes about reconciliation, he is referring .docx
1. When Thomas Paine writes about reconciliation, he is referring .docx1. When Thomas Paine writes about reconciliation, he is referring .docx
1. When Thomas Paine writes about reconciliation, he is referring .docxkarisariddell
 
1-This discussion question is based on pp. 135-158 ofThe E.docx
1-This discussion question is based on pp. 135-158 ofThe E.docx1-This discussion question is based on pp. 135-158 ofThe E.docx
1-This discussion question is based on pp. 135-158 ofThe E.docxkarisariddell
 

More from karisariddell (20)

1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docx
1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docx1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docx
1. 1250 Words (min) - 1450 Words (max), Bibliography and Titles no.docx
 
1-Why is it the case that single men are prominently represented in .docx
1-Why is it the case that single men are prominently represented in .docx1-Why is it the case that single men are prominently represented in .docx
1-Why is it the case that single men are prominently represented in .docx
 
1-Think for a while about cultural practices and how they affect hea.docx
1-Think for a while about cultural practices and how they affect hea.docx1-Think for a while about cultural practices and how they affect hea.docx
1-Think for a while about cultural practices and how they affect hea.docx
 
1-Holding everything else constant, an increase in the growth rate.docx
1-Holding everything else constant, an increase in the growth rate.docx1-Holding everything else constant, an increase in the growth rate.docx
1-Holding everything else constant, an increase in the growth rate.docx
 
1-Please write the difference and examples between coccus, bacillus,.docx
1-Please write the difference and examples between coccus, bacillus,.docx1-Please write the difference and examples between coccus, bacillus,.docx
1-Please write the difference and examples between coccus, bacillus,.docx
 
1-2 paragraphs for each person. There are 6 people.Everett.docx
1-2 paragraphs for each person. There are 6 people.Everett.docx1-2 paragraphs for each person. There are 6 people.Everett.docx
1-2 paragraphs for each person. There are 6 people.Everett.docx
 
1-2 paragraphsapa formatreferencesneed in 8 hours!.docx
1-2 paragraphsapa formatreferencesneed in 8 hours!.docx1-2 paragraphsapa formatreferencesneed in 8 hours!.docx
1-2 paragraphsapa formatreferencesneed in 8 hours!.docx
 
1. A In your viewpoint, what are the Humanities Formulate a de.docx
1. A In your viewpoint, what are the Humanities Formulate a de.docx1. A In your viewpoint, what are the Humanities Formulate a de.docx
1. A In your viewpoint, what are the Humanities Formulate a de.docx
 
1-2 PAGESIdentify an ethical consideration besides establishin.docx
1-2 PAGESIdentify an ethical consideration besides establishin.docx1-2 PAGESIdentify an ethical consideration besides establishin.docx
1-2 PAGESIdentify an ethical consideration besides establishin.docx
 
1-2 page single spaced pages in 12-point font. Reference Listed.docx
1-2 page single spaced pages in 12-point font. Reference Listed.docx1-2 page single spaced pages in 12-point font. Reference Listed.docx
1-2 page single spaced pages in 12-point font. Reference Listed.docx
 
1-2 page typed (double space) research and reflection essay on a mus.docx
1-2 page typed (double space) research and reflection essay on a mus.docx1-2 page typed (double space) research and reflection essay on a mus.docx
1-2 page typed (double space) research and reflection essay on a mus.docx
 
1. The law of demand implies that sellers will offer .docx
1. The law of demand implies that sellers will offer .docx1. The law of demand implies that sellers will offer .docx
1. The law of demand implies that sellers will offer .docx
 
1-2 page critique of the film after selecting a character in the mov.docx
1-2 page critique of the film after selecting a character in the mov.docx1-2 page critique of the film after selecting a character in the mov.docx
1-2 page critique of the film after selecting a character in the mov.docx
 
1. Which of the following changes will result in a shift of the agg.docx
1. Which of the following changes will result in a shift of the agg.docx1. Which of the following changes will result in a shift of the agg.docx
1. Which of the following changes will result in a shift of the agg.docx
 
1-2 page critique of the film after analyzing the main character (Jo.docx
1-2 page critique of the film after analyzing the main character (Jo.docx1-2 page critique of the film after analyzing the main character (Jo.docx
1-2 page critique of the film after analyzing the main character (Jo.docx
 
1. John, a 15 year old who loves skateboarding, wants to buy th.docx
1. John, a 15 year old who loves skateboarding, wants to buy th.docx1. John, a 15 year old who loves skateboarding, wants to buy th.docx
1. John, a 15 year old who loves skateboarding, wants to buy th.docx
 
1-Read and print the data from the brain.csv file2-Extraxt t.docx
1-Read and print the data from the brain.csv file2-Extraxt t.docx1-Read and print the data from the brain.csv file2-Extraxt t.docx
1-Read and print the data from the brain.csv file2-Extraxt t.docx
 
1. Duncan Fisher (2019, march). Children of Divorce The Key Rol.docx
1. Duncan Fisher (2019, march). Children of Divorce The Key Rol.docx1. Duncan Fisher (2019, march). Children of Divorce The Key Rol.docx
1. Duncan Fisher (2019, march). Children of Divorce The Key Rol.docx
 
1. When Thomas Paine writes about reconciliation, he is referring .docx
1. When Thomas Paine writes about reconciliation, he is referring .docx1. When Thomas Paine writes about reconciliation, he is referring .docx
1. When Thomas Paine writes about reconciliation, he is referring .docx
 
1-This discussion question is based on pp. 135-158 ofThe E.docx
1-This discussion question is based on pp. 135-158 ofThe E.docx1-This discussion question is based on pp. 135-158 ofThe E.docx
1-This discussion question is based on pp. 135-158 ofThe E.docx
 

Recently uploaded

SECOND SEMESTER TOPIC COVERAGE SY 2023-2024 Trends, Networks, and Critical Th...
SECOND SEMESTER TOPIC COVERAGE SY 2023-2024 Trends, Networks, and Critical Th...SECOND SEMESTER TOPIC COVERAGE SY 2023-2024 Trends, Networks, and Critical Th...
SECOND SEMESTER TOPIC COVERAGE SY 2023-2024 Trends, Networks, and Critical Th...KokoStevan
 
fourth grading exam for kindergarten in writing
fourth grading exam for kindergarten in writingfourth grading exam for kindergarten in writing
fourth grading exam for kindergarten in writingTeacherCyreneCayanan
 
Class 11th Physics NEET formula sheet pdf
Class 11th Physics NEET formula sheet pdfClass 11th Physics NEET formula sheet pdf
Class 11th Physics NEET formula sheet pdfAyushMahapatra5
 
The basics of sentences session 2pptx copy.pptx
The basics of sentences session 2pptx copy.pptxThe basics of sentences session 2pptx copy.pptx
The basics of sentences session 2pptx copy.pptxheathfieldcps1
 
Seal of Good Local Governance (SGLG) 2024Final.pptx
Seal of Good Local Governance (SGLG) 2024Final.pptxSeal of Good Local Governance (SGLG) 2024Final.pptx
Seal of Good Local Governance (SGLG) 2024Final.pptxnegromaestrong
 
Mixin Classes in Odoo 17 How to Extend Models Using Mixin Classes
Mixin Classes in Odoo 17 How to Extend Models Using Mixin ClassesMixin Classes in Odoo 17 How to Extend Models Using Mixin Classes
Mixin Classes in Odoo 17 How to Extend Models Using Mixin ClassesCeline George
 
microwave assisted reaction. General introduction
microwave assisted reaction. General introductionmicrowave assisted reaction. General introduction
microwave assisted reaction. General introductionMaksud Ahmed
 
Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhi
Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in DelhiRussian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhi
Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhikauryashika82
 
Unit-V; Pricing (Pharma Marketing Management).pptx
Unit-V; Pricing (Pharma Marketing Management).pptxUnit-V; Pricing (Pharma Marketing Management).pptx
Unit-V; Pricing (Pharma Marketing Management).pptxVishalSingh1417
 
Accessible design: Minimum effort, maximum impact
Accessible design: Minimum effort, maximum impactAccessible design: Minimum effort, maximum impact
Accessible design: Minimum effort, maximum impactdawncurless
 
Basic Civil Engineering first year Notes- Chapter 4 Building.pptx
Basic Civil Engineering first year Notes- Chapter 4 Building.pptxBasic Civil Engineering first year Notes- Chapter 4 Building.pptx
Basic Civil Engineering first year Notes- Chapter 4 Building.pptxDenish Jangid
 
Unit-IV; Professional Sales Representative (PSR).pptx
Unit-IV; Professional Sales Representative (PSR).pptxUnit-IV; Professional Sales Representative (PSR).pptx
Unit-IV; Professional Sales Representative (PSR).pptxVishalSingh1417
 
PROCESS RECORDING FORMAT.docx
PROCESS RECORDING FORMAT.docxPROCESS RECORDING FORMAT.docx
PROCESS RECORDING FORMAT.docxPoojaSen20
 
Measures of Dispersion and Variability: Range, QD, AD and SD
Measures of Dispersion and Variability: Range, QD, AD and SDMeasures of Dispersion and Variability: Range, QD, AD and SD
Measures of Dispersion and Variability: Range, QD, AD and SDThiyagu K
 
How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17Celine George
 
Beyond the EU: DORA and NIS 2 Directive's Global Impact
Beyond the EU: DORA and NIS 2 Directive's Global ImpactBeyond the EU: DORA and NIS 2 Directive's Global Impact
Beyond the EU: DORA and NIS 2 Directive's Global ImpactPECB
 
1029-Danh muc Sach Giao Khoa khoi 6.pdf
1029-Danh muc Sach Giao Khoa khoi 6.pdf1029-Danh muc Sach Giao Khoa khoi 6.pdf
1029-Danh muc Sach Giao Khoa khoi 6.pdfQucHHunhnh
 
Paris 2024 Olympic Geographies - an activity
Paris 2024 Olympic Geographies - an activityParis 2024 Olympic Geographies - an activity
Paris 2024 Olympic Geographies - an activityGeoBlogs
 

Recently uploaded (20)

SECOND SEMESTER TOPIC COVERAGE SY 2023-2024 Trends, Networks, and Critical Th...
SECOND SEMESTER TOPIC COVERAGE SY 2023-2024 Trends, Networks, and Critical Th...SECOND SEMESTER TOPIC COVERAGE SY 2023-2024 Trends, Networks, and Critical Th...
SECOND SEMESTER TOPIC COVERAGE SY 2023-2024 Trends, Networks, and Critical Th...
 
fourth grading exam for kindergarten in writing
fourth grading exam for kindergarten in writingfourth grading exam for kindergarten in writing
fourth grading exam for kindergarten in writing
 
Mehran University Newsletter Vol-X, Issue-I, 2024
Mehran University Newsletter Vol-X, Issue-I, 2024Mehran University Newsletter Vol-X, Issue-I, 2024
Mehran University Newsletter Vol-X, Issue-I, 2024
 
Class 11th Physics NEET formula sheet pdf
Class 11th Physics NEET formula sheet pdfClass 11th Physics NEET formula sheet pdf
Class 11th Physics NEET formula sheet pdf
 
The basics of sentences session 2pptx copy.pptx
The basics of sentences session 2pptx copy.pptxThe basics of sentences session 2pptx copy.pptx
The basics of sentences session 2pptx copy.pptx
 
Seal of Good Local Governance (SGLG) 2024Final.pptx
Seal of Good Local Governance (SGLG) 2024Final.pptxSeal of Good Local Governance (SGLG) 2024Final.pptx
Seal of Good Local Governance (SGLG) 2024Final.pptx
 
Mattingly "AI & Prompt Design: Structured Data, Assistants, & RAG"
Mattingly "AI & Prompt Design: Structured Data, Assistants, & RAG"Mattingly "AI & Prompt Design: Structured Data, Assistants, & RAG"
Mattingly "AI & Prompt Design: Structured Data, Assistants, & RAG"
 
Mixin Classes in Odoo 17 How to Extend Models Using Mixin Classes
Mixin Classes in Odoo 17 How to Extend Models Using Mixin ClassesMixin Classes in Odoo 17 How to Extend Models Using Mixin Classes
Mixin Classes in Odoo 17 How to Extend Models Using Mixin Classes
 
microwave assisted reaction. General introduction
microwave assisted reaction. General introductionmicrowave assisted reaction. General introduction
microwave assisted reaction. General introduction
 
Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhi
Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in DelhiRussian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhi
Russian Escort Service in Delhi 11k Hotel Foreigner Russian Call Girls in Delhi
 
Unit-V; Pricing (Pharma Marketing Management).pptx
Unit-V; Pricing (Pharma Marketing Management).pptxUnit-V; Pricing (Pharma Marketing Management).pptx
Unit-V; Pricing (Pharma Marketing Management).pptx
 
Accessible design: Minimum effort, maximum impact
Accessible design: Minimum effort, maximum impactAccessible design: Minimum effort, maximum impact
Accessible design: Minimum effort, maximum impact
 
Basic Civil Engineering first year Notes- Chapter 4 Building.pptx
Basic Civil Engineering first year Notes- Chapter 4 Building.pptxBasic Civil Engineering first year Notes- Chapter 4 Building.pptx
Basic Civil Engineering first year Notes- Chapter 4 Building.pptx
 
Unit-IV; Professional Sales Representative (PSR).pptx
Unit-IV; Professional Sales Representative (PSR).pptxUnit-IV; Professional Sales Representative (PSR).pptx
Unit-IV; Professional Sales Representative (PSR).pptx
 
PROCESS RECORDING FORMAT.docx
PROCESS RECORDING FORMAT.docxPROCESS RECORDING FORMAT.docx
PROCESS RECORDING FORMAT.docx
 
Measures of Dispersion and Variability: Range, QD, AD and SD
Measures of Dispersion and Variability: Range, QD, AD and SDMeasures of Dispersion and Variability: Range, QD, AD and SD
Measures of Dispersion and Variability: Range, QD, AD and SD
 
How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17How to Give a Domain for a Field in Odoo 17
How to Give a Domain for a Field in Odoo 17
 
Beyond the EU: DORA and NIS 2 Directive's Global Impact
Beyond the EU: DORA and NIS 2 Directive's Global ImpactBeyond the EU: DORA and NIS 2 Directive's Global Impact
Beyond the EU: DORA and NIS 2 Directive's Global Impact
 
1029-Danh muc Sach Giao Khoa khoi 6.pdf
1029-Danh muc Sach Giao Khoa khoi 6.pdf1029-Danh muc Sach Giao Khoa khoi 6.pdf
1029-Danh muc Sach Giao Khoa khoi 6.pdf
 
Paris 2024 Olympic Geographies - an activity
Paris 2024 Olympic Geographies - an activityParis 2024 Olympic Geographies - an activity
Paris 2024 Olympic Geographies - an activity
 

The Challenger Disaster A Case-study in Engineering Ethics.docx

  • 1. The Challenger Disaster A Case-study in Engineering Ethics • Shuttle Components – Orbiter – Liquid Rocket Booster – Solid Rocket Booster Shuttle Components Chronology of the Related Events • 1974 – NASA contracts Morton Thiokol • 1976 – NASA accepts the design based on the Titan missiles
  • 2. – The joints are sealed by • Two synthetic rubber O-rings, • 177 clevis pins, • Heat shield putty The Cause of the Disaster Early Problems • 1977 – Tests at Thiokol show O-ring leakage – Joint is made stronger by changing sizes • 1981 – Post-launch investigation showed O-ring erosion due to hot gages. Early Problems • January of 1985 launch
  • 3. – First cold-weather launch – Post-launch investigation showed joint failure – Tests showed O-rings inability to fill the gap due to joint rotation at lower temperatures Early Problems • July 1985 – Thiokol redesigns the joints w/o O-rings – The design was not ready for Challenger launch Political Climate • Congress is unhappy with NASA • Competition with Russians to be the first to observe Halley’s comet. • Pressure to launch before President
  • 4. Reagan’s State of the Union Address Days before Launch • First launch attempt postponed • The next launch date was set and was to be attended by Vice President Bush. • The temperature at launch: 29 degrees F. Days Before Launch • NASA starts an investigation of the effect of low temperatures on the O-ring seals • Organization involved – NASA – Marshall Space Flight Center – Morton Thiokol
  • 5. Engineering Investigation Before Launch • Players at NASA – Larry Mulloy: SRB Project Manager at Marshall • Players at Thiokol – Roger Boisjoly: A SRB engineer – Arnie Johnson: A SRB engineer – Joe Kilminster: SRB engineering manager – Alan McDonald: SRB engineering director – Bob Lund: Vice president for engineering – Jerald Mason: General manager Engineering Investigation Before Launch • Boisjoly and Johnson recommend the launch to be postponed. • Bob Lund, the VP for engineering agrees
  • 6. and makes a similar recommendation. Investigation Before Launch • Larry Mulloy, the NASA manager of SRB asks Joe Kilminister, the SRB manager at Thiokol, for his opinion. • Kilminister agrees with other Thiokol engineers and recommends a launch delay. Investigation Before Launch • After discussion with Mason • Lund reverses his decision regarding launch! • Thiokol recommend the launch to proceed The Launch in January 1986 • The overnight temperatures drop to 8 F
  • 7. • The temperature of SRB at launch is 28 F • There is an immediate blow-by of hot gas at launch. The seal fails quickly over an arc of 70 degrees. The Launch in January 1986 • The by-products of combustion forms a glassy oxide that reseals the joint. • The brittle oxide is shattered • Hot gases quickly burn through the liquid rocket booster The Aftermath • Causes of the accident are attributed to – Inability of the O-rings to expand and seal at low temperatures.
  • 8. – Heat shield putty did not perform at low temperatures – Fits and seating of the O-ring was affected by low temperature. The Aftermath • After all the testimonials – Biosjoly is taken off the project and subtly harassed by Thiokol management. Public Administration and Information Technology Volume 10 Series Editor Christopher G. Reddick San Antonio, Texas, USA
  • 9. More information about this series at http://www.springer.com/series/10796 Marijn Janssen • Maria A. Wimmer Ameneh Deljoo Editors Policy Practice and Digital Science Integrating Complex Systems, Social Simulation and Public Administration in Policy Research 2123 Editors Marijn Janssen Ameneh Deljoo Faculty of Technology, Policy, and Faculty of Technology, Policy, and Management Management Delft University of Technology Delft University of Technology Delft Delft The Netherlands The Netherlands Maria A. Wimmer Institute for Information Systems Research University of Koblenz-Landau Koblenz
  • 10. Germany ISBN 978-3-319-12783-5 ISBN 978-3-319-12784-2 (eBook) Public Administration and Information Technology DOI 10.1007/978-3-319-12784-2 Library of Congress Control Number: 2014956771 Springer Cham Heidelberg New York London © Springer International Publishing Switzerland 2015 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper Springer is part of Springer Science+Business Media
  • 11. (www.springer.com) Preface The last economic and financial crisis has heavily threatened European and other economies around the globe. Also, the Eurozone crisis, the energy and climate change crises, challenges of demographic change with high unemployment rates, and the most recent conflicts in the Ukraine and the near East or the Ebola virus disease in Africa threaten the wealth of our societies in different ways. The inability to predict or rapidly deal with dramatic changes and negative trends in our economies and societies can seriously hamper the wealth and prosperity of the European Union and its Member States as well as the global networks. These societal and economic challenges demonstrate an urgent need for more effective and efficient processes of governance and policymaking, therewith specifically addressing crisis management and economic/welfare impact reduction. Therefore, investing in the exploitation of innovative information and commu- nication technology (ICT) in the support of good governance and policy modeling has become a major effort of the European Union to position itself and its Member States well in the global digital economy. In this realm, the European Union has
  • 12. laid out clear strategic policy objectives for 2020 in the Europe 2020 strategy1: In a changing world, we want the EU to become a smart, sustainable, and inclusive economy. These three mutually reinforcing priorities should help the EU and the Member States deliver high levels of employment, productivity, and social cohesion. Concretely, the Union has set five ambitious objectives—on employment, innovation, education, social inclusion, and climate/energy—to be reached by 2020. Along with this, Europe 2020 has established four priority areas—smart growth, sustainable growth, inclusive growth, and later added: A strong and effective system of eco- nomic governance—designed to help Europe emerge from the crisis stronger and to coordinate policy actions between the EU and national levels. To specifically support European research in strengthening capacities, in overcom- ing fragmented research in the field of policymaking, and in advancing solutions for 1 Europe 2020 http://ec.europa.eu/europe2020/index_en.htm v vi Preface ICT supported governance and policy modeling, the European Commission has co- funded an international support action called eGovPoliNet2. The
  • 13. overall objective of eGovPoliNet was to create an international, cross- disciplinary community of re- searchers working on ICT solutions for governance and policy modeling. In turn, the aim of this community was to advance and sustain research and to share the insights gleaned from experiences in Europe and globally. To achieve this, eGovPo- liNet established a dialogue, brought together experts from distinct disciplines, and collected and analyzed knowledge assets (i.e., theories, concepts, solutions, findings, and lessons on ICT solutions in the field) from different research disciplines. It built on case material accumulated by leading actors coming from distinct disciplinary backgrounds and brought together the innovative knowledge in the field. Tools, meth- ods, and cases were drawn from the academic community, the ICT sector, specialized policy consulting firms as well as from policymakers and governance experts. These results were assembled in a knowledge base and analyzed in order to produce com- parative analyses and descriptions of cases, tools, and scientific approaches to enrich a common knowledge base accessible via www.policy- community.eu. This book, entitled “Policy Practice and Digital Science— Integrating Complex Systems, Social Simulation, and Public Administration in Policy Research,” is one of the exciting results of the activities of eGovPoliNet—fusing community building
  • 14. activities and activities of knowledge analysis. It documents findings of comparative analyses and brings in experiences of experts from academia and from case descrip- tions from all over the globe. Specifically, it demonstrates how the explosive growth in data, computational power, and social media creates new opportunities for policy- making and research. The book provides a first comprehensive look on how to take advantage of the development in the digital world with new approaches, concepts, instruments, and methods to deal with societal and computational complexity. This requires the knowledge traditionally found in different disciplines including public administration, policy analyses, information systems, complex systems, and com- puter science to work together in a multidisciplinary fashion and to share approaches. This book provides the foundation for strongly multidisciplinary research, in which the various developments and disciplines work together from a comprehensive and holistic policymaking perspective. A wide range of aspects for social and professional networking and multidisciplinary constituency building along the axes of technol- ogy, participative processes, governance, policy modeling, social simulation, and visualization are tackled in the 19 papers. With this book, the project makes an effective contribution to the overall objec- tives of the Europe 2020 strategy by providing a better understanding of different
  • 15. approaches to ICT enabled governance and policy modeling, and by overcoming the fragmented research of the past. This book provides impressive insights into various theories, concepts, and solutions of ICT supported policy modeling and how stake- holders can be more actively engaged in public policymaking. It draws conclusions 2 eGovPoliNet is cofunded under FP 7, Call identifier FP7-ICT- 2011-7, URL: www.policy- community.eu Preface vii of how joint multidisciplinary research can bring more effective and resilient find- ings for better predicting dramatic changes and negative trends in our economies and societies. It is my great pleasure to provide the preface to the book resulting from the eGovPoliNet project. This book presents stimulating research by researchers coming from all over Europe and beyond. Congratulations to the project partners and to the authors!—Enjoy reading! Thanassis Chrissafis Project officer of eGovPoliNet European Commission DG CNECT, Excellence in Science, Digital Science
  • 16. Contents 1 Introduction to Policy-Making in the Digital Age . . . . . . . . . . . . . . . . . 1 Marijn Janssen and Maria A. Wimmer 2 Educating Public Managers and Policy Analysts in an Era of Informatics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Christopher Koliba and Asim Zia 3 The Quality of Social Simulation: An Example from Research Policy Modelling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Petra Ahrweiler and Nigel Gilbert 4 Policy Making and Modelling in a Complex World . . . . . . . . . . . . . . . . 57 Wander Jager and Bruce Edmonds 5 From Building a Model to Adaptive Robust Decision Making Using Systems Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Erik Pruyt 6 Features and Added Value of Simulation Models Using Different Modelling Approaches Supporting Policy-Making: A Comparative Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Dragana Majstorovic, Maria A.Wimmer, Roy Lay-Yee, Peter Davis and Petra Ahrweiler
  • 17. 7 A Comparative Analysis of Tools and Technologies for Policy Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Eleni Kamateri, Eleni Panopoulou, Efthimios Tambouris, Konstantinos Tarabanis, Adegboyega Ojo, Deirdre Lee and David Price 8 Value Sensitive Design of Complex Product Systems . . . . . . . . . . . . . . . 157 Andreas Ligtvoet, Geerten van de Kaa, Theo Fens, Cees van Beers, Paulier Herder and Jeroen van den Hoven ix x Contents 9 Stakeholder Engagement in Policy Development: Observations and Lessons from International Experience . . . . . . . . . . . . . . . . . . . . . . 177 Natalie Helbig, Sharon Dawes, Zamira Dzhusupova, Bram Klievink and Catherine Gerald Mkude 10 Values in Computational Models Revalued . . . . . . . . . . . . . . . . . . . . . . . 205 Rebecca Moody and Lasse Gerrits 11 The Psychological Drivers of Bureaucracy: Protecting the Societal Goals of an Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Tjeerd C. Andringa
  • 18. 12 Active and Passive Crowdsourcing in Government . . . . . . . . . . . . . . . . 261 Euripidis Loukis and Yannis Charalabidis 13 Management of Complex Systems: Toward Agent-Based Gaming for Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291 Wander Jager and Gerben van der Vegt 14 The Role of Microsimulation in the Development of Public Policy . . . 305 Roy Lay-Yee and Gerry Cotterell 15 Visual Decision Support for Policy Making: Advancing Policy Analysis with Visualization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321 Tobias Ruppert, Jens Dambruch, Michel Krämer, Tina Balke, Marco Gavanelli, Stefano Bragaglia, Federico Chesani, Michela Milano and Jörn Kohlhammer 16 Analysis of Five Policy Cases in the Field of Energy Policy . . . . . . . . . 355 Dominik Bär, Maria A.Wimmer, Jozef Glova, Anastasia Papazafeiropoulou and Laurence Brooks 17 Challenges to Policy-Making in Developing Countries and the Roles of Emerging Tools, Methods and Instruments: Experiences from Saint Petersburg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379 Dmitrii Trutnev, Lyudmila Vidyasova and Andrei Chugunov 18 Sustainable Urban Development, Governance and Policy: A Comparative Overview of EU Policies and Projects . . . . . . . .
  • 19. . . . . . 393 Diego Navarra and Simona Milio 19 eParticipation, Simulation Exercise and Leadership Training in Nigeria: Bridging the Digital Divide . . . . . . . . . . . . . . . . . . . . . . . . . . . 417 Tanko Ahmed Contributors Tanko Ahmed National Institute for Policy and Strategic Studies (NIPSS), Jos, Nigeria Petra Ahrweiler EA European Academy of Technology and Innovation Assess- ment GmbH, Bad Neuenahr-Ahrweiler, Germany Tjeerd C. Andringa University College Groningen, Institute of Artificial In- telligence and Cognitive Engineering (ALICE), University of Groningen, AB, Groningen, the Netherlands Tina Balke University of Surrey, Surrey, UK Dominik Bär University of Koblenz-Landau, Koblenz, Germany Cees van Beers Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands Stefano Bragaglia University of Bologna, Bologna, Italy
  • 20. Laurence Brooks Brunel University, Uxbridge, UK Yannis Charalabidis University of the Aegean, Samos, Greece Federico Chesani University of Bologna, Bologna, Italy Andrei Chugunov ITMO University, St. Petersburg, Russia Gerry Cotterell Centre of Methods and Policy Application in the Social Sciences (COMPASS Research Centre), University of Auckland, Auckland, New Zealand Jens Dambruch Fraunhofer Institute for Computer Graphics Research, Darmstadt, Germany Peter Davis Centre of Methods and Policy Application in the Social Sciences (COMPASS Research Centre), University of Auckland, Auckland, New Zealand Sharon Dawes Center for Technology in Government, University at Albany, Albany, New York, USA xi xii Contributors Zamira Dzhusupova Department of Public Administration and Development Man- agement, United Nations Department of Economic and Social Affairs (UNDESA),
  • 21. NewYork, USA Bruce Edmonds Manchester Metropolitan University, Manchester, UK Theo Fens Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands Marco Gavanelli University of Ferrara, Ferrara, Italy Lasse Gerrits Department of Public Administration, Erasmus University Rotterdam, Rotterdam, The Netherlands Nigel Gilbert University of Surrey, Guildford, UK Jozef Glova Technical University Kosice, Kosice, Slovakia Natalie Helbig Center for Technology in Government, University at Albany, Albany, New York, USA Paulier Herder Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands Jeroen van den Hoven Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands Wander Jager Groningen Center of Social Complexity Studies, University of Groningen, Groningen, The Netherlands Marijn Janssen Faculty of Technology, Policy, and
  • 22. Management, Delft University of Technology, Delft, The Netherlands Geerten van de Kaa Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands Eleni Kamateri Information Technologies Institute, Centre for Research & Technology—Hellas, Thessaloniki, Greece Bram Klievink Faculty of Technology, Policy and Management, Delft University of Technology, Delft, The Netherlands Jörn Kohlhammer GRIS, TU Darmstadt & Fraunhofer IGD, Darmstadt, Germany Christopher Koliba University of Vermont, Burlington, VT, USA Michel Krämer Fraunhofer Institute for Computer Graphics Research, Darmstadt, Germany Roy Lay-Yee Centre of Methods and Policy Application in the Social Sciences (COMPASS Research Centre), University of Auckland, Auckland, New Zealand Deirdre Lee INSIGHT Centre for Data Analytics, NUIG, Galway, Ireland Contributors xiii
  • 23. Andreas Ligtvoet Faculty of Technology, Policy, and Management, Delft Univer- sity of Technology, Delft, The Netherlands Euripidis Loukis University of the Aegean, Samos, Greece Dragana Majstorovic University of Koblenz-Landau, Koblenz, Germany Michela Milano University of Bologna, Bologna, Italy Simona Milio London School of Economics, Houghton Street, London, UK Catherine Gerald Mkude Institute for IS Research, University of Koblenz-Landau, Koblenz, Germany Rebecca Moody Department of Public Administration, Erasmus University Rotterdam, Rotterdam, The Netherlands Diego Navarra Studio Navarra, London, UK Adegboyega Ojo INSIGHT Centre for Data Analytics, NUIG, Galway, Ireland Eleni Panopoulou Information Technologies Institute, Centre for Research & Technology—Hellas, Thessaloniki, Greece Anastasia Papazafeiropoulou Brunel University, Uxbridge, UK David Price Thoughtgraph Ltd, Somerset, UK
  • 24. Erik Pruyt Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands; Netherlands Institute for Advanced Study, Wassenaar, The Netherlands Tobias Ruppert Fraunhofer Institute for Computer Graphics Research, Darmstadt, Germany Efthimios Tambouris Information Technologies Institute, Centre for Research & Technology—Hellas, Thessaloniki, Greece; University of Macedonia, Thessaloniki, Greece Konstantinos Tarabanis Information Technologies Institute, Centre for Research & Technology—Hellas, Thessaloniki, Greece; University of Macedonia, Thessa- loniki, Greece Dmitrii Trutnev ITMO University, St. Petersburg, Russia Gerben van der Vegt Faculty of Economics and Business, University of Groningen, Groningen, The Netherlands Lyudmila Vidyasova ITMO University, St. Petersburg, Russia Maria A. Wimmer University of Koblenz-Landau, Koblenz, Germany Asim Zia University of Vermont, Burlington, VT, USA
  • 25. Chapter 1 Introduction to Policy-Making in the Digital Age Marijn Janssen and Maria A. Wimmer We are running the 21st century using 20th century systems on top of 19th century political structures. . . . John Pollock, contributing editor MIT technology review Abstract The explosive growth in data, computational power, and social media creates new opportunities for innovating governance and policy- making. These in- formation and communications technology (ICT) developments affect all parts of the policy-making cycle and result in drastic changes in the way policies are devel- oped. To take advantage of these developments in the digital world, new approaches, concepts, instruments, and methods are needed, which are able to deal with so- cietal complexity and uncertainty. This field of research is sometimes depicted as e-government policy, e-policy, policy informatics, or data science. Advancing our knowledge demands that different scientific communities collaborate to create practice-driven knowledge. For policy-making in the digital age disciplines such as complex systems, social simulation, and public administration need to be combined. 1.1 Introduction Policy-making and its subsequent implementation is necessary
  • 26. to deal with societal problems. Policy interventions can be costly, have long-term implications, affect groups of citizens or even the whole country and cannot be easily undone or are even irreversible. New information and communications technology (ICT) and models can help to improve the quality of policy-makers. In particular, the explosive growth in data, computational power, and social media creates new opportunities for in- novating the processes and solutions of ICT-based policy- making and research. To M. Janssen (�) Faculty of Technology, Policy, and Management, Delft University of Technology, Delft, The Netherlands e-mail: [email protected] M. A. Wimmer University of Koblenz-Landau, Koblenz, Germany © Springer International Publishing Switzerland 2015 1 M. Janssen et al. (eds.), Policy Practice and Digital Science, Public Administration and Information Technology 10, DOI 10.1007/978-3-319-12784-2_1 2 M. Janssen and M. A. Wimmer take advantage of these developments in the digital world, new approaches, con- cepts, instruments, and methods are needed, which are able to deal with societal and computational complexity. This requires the use of knowledge
  • 27. which is traditionally found in different disciplines, including (but not limited to) public administration, policy analyses, information systems, complex systems, and computer science. All these knowledge areas are needed for policy-making in the digital age. The aim of this book is to provide a foundation for this new interdisciplinary field in which various traditional disciplines are blended. Both policy-makers and those in charge of policy implementations acknowledge that ICT is becoming more and more important and is changing the policy-making process, resulting in a next generation policy-making based on ICT support. The field of policy-making is changing driven by developments such as open data, computa- tional methods for processing data, opinion mining, simulation, and visualization of rich data sets, all combined with public engagement, social media, and participatory tools. In this respect Web 2.0 and even Web 3.0 point to the specific applications of social networks and semantically enriched and linked data which are important for policy-making. In policy-making vast amount of data are used for making predictions and forecasts. This should result in improving the outcomes of policy-making. Policy-making is confronted with an increasing complexity and uncertainty of the outcomes which results in a need for developing policy models that are able to deal
  • 28. with this. To improve the validity of the models policy-makers are harvesting data to generate evidence. Furthermore, they are improving their models to capture complex phenomena and dealing with uncertainty and limited and incomplete information. Despite all these efforts, there remains often uncertainty concerning the outcomes of policy interventions. Given the uncertainty, often multiple scenarios are developed to show alternative outcomes and impact. A condition for this is the visualization of policy alternatives and its impact. Visualization can ensure involvement of nonexpert and to communicate alternatives. Furthermore, games can be used to let people gain insight in what can happen, given a certain scenario. Games allow persons to interact and to experience what happens in the future based on their interventions. Policy-makers are often faced with conflicting solutions to complex problems, thus making it necessary for them to test out their assumptions, interventions, and resolutions. For this reason policy-making organizations introduce platforms facili- tating policy-making and citizens engagements and enabling the processing of large volumes of data. There are various participative platforms developed by government agencies (e.g., De Reuver et al. 2013; Slaviero et al. 2010; Welch 2012). Platforms can be viewed as a kind of regulated environment that enable developers, users, and others to interact with each other, share data, services, and
  • 29. applications, enable gov- ernments to more easily monitor what is happening and facilitate the development of innovative solutions (Janssen and Estevez 2013). Platforms should provide not only support for complex policy deliberations with citizens but should also bring to- gether policy-modelers, developers, policy-makers, and other stakeholders involved in policy-making. In this way platforms provide an information- rich, interactive 1 Introduction to Policy-Making in the Digital Age 3 environment that brings together relevant stakeholders and in which complex phe- nomena can be modeled, simulated, visualized, discussed, and even the playing of games can be facilitated. 1.2 Complexity and Uncertainty in Policy-Making Policy-making is driven by the need to solve societal problems and should result in interventions to solve these societal problems. Examples of societal problems are unemployment, pollution, water quality, safety, criminality, well-being, health, and immigration. Policy-making is an ongoing process in which issues are recognized as a problem, alternative courses of actions are formulated, policies are affected, implemented, executed, and evaluated (Stewart et al. 2007). Figure 1.1 shows the
  • 30. typical stages of policy formulation, implementation, execution, enforcement, and evaluation. This process should not be viewed as linear as many interactions are necessary as well as interactions with all kind of stakeholders. In policy-making processes a vast amount of stakeholders are always involved, which makes policy- making complex. Once a societal need is identified, a policy has to be formulated. Politicians, members of parliament, executive branches, courts, and interest groups may be involved in these formulations. Often contradictory proposals are made, and the impact of a proposal is difficult to determine as data is missing, models cannot citizen s Policy formulation Policy implementation Policy execution Policy enforcement and evaluation politicians
  • 31. Policy- makers Administrative organizations b u sin esses Inspection and enforcement agencies experts Fig. 1.1 Overview of policy cycle and stakeholders 4 M. Janssen and M. A. Wimmer capture the complexity, and the results of policy models are difficult to interpret and even might be interpreted in an opposing way. This is further complicated as some proposals might be good but cannot be implemented or are too costly to implement. There is a large uncertainty concerning the outcomes. Policy implementation is done by organizations other than those that formulated the policy. They often have to interpret the policy and have to make implemen-
  • 32. tation decisions. Sometimes IT can block quick implementation as systems have to be changed. Although policy-making is the domain of the government, private organizations can be involved to some extent, in particular in the execution of policies. Once all things are ready and decisions are made, policies need to be executed. During the execution small changes are typically made to fine tune the policy formu- lation, implementation decisions might be more difficult to realize, policies might bring other benefits than intended, execution costs might be higher and so on. Typ- ically, execution is continually changing. Evaluation is part of the policy-making process as it is necessary to ensure that the policy-execution solved the initial so- cietal problem. Policies might become obsolete, might not work, have unintended affects (like creating bureaucracy) or might lose its support among elected officials, or other alternatives might pop up that are better. Policy-making is a complex process in which many stakeholders play a role. In the various phases of policy-making different actors are dominant and play a role. Figure 1.1 shows only some actors that might be involved, and many of them are not included in this figure. The involvement of so many actors results in fragmentation and often actors are even not aware of the decisions made by other actors. This makes it difficult to manage a policy-making process as each actor has
  • 33. other goals and might be self-interested. Public values (PVs) are a way to try to manage complexity and give some guidance. Most policies are made to adhere to certain values. Public value management (PVM) represents the paradigm of achieving PVs as being the primary objective (Stoker 2006). PVM refers to the continuous assessment of the actions performed by public officials to ensure that these actions result in the creation of PV (Moore 1995). Public servants are not only responsible for following the right procedure, but they also have to ensure that PVs are realized. For example, civil servants should ensure that garbage is collected. The procedure that one a week garbage is collected is secondary. If it is necessary to collect garbage more (or less) frequently to ensure a healthy environment then this should be done. The role of managers is not only to ensure that procedures are followed but they should be custodians of public assets and maximize a PV. There exist a wide variety of PVs (Jørgensen and Bozeman 2007). PVs can be long-lasting or might be driven by contemporary politics. For example, equal access is a typical long-lasting value, whereas providing support for students at universities is contemporary, as politicians might give more, less, or no support to students. PVs differ over times, but also the emphasis on values is different in the policy-making
  • 34. cycle as shown in Fig. 1.2. In this figure some of the values presented by Jørgensen and Bozeman (2007) are mapped onto the four policy-making stages. Dependent on the problem at hand other values might play a role that is not included in this figure. 1 Introduction to Policy-Making in the Digital Age 5 Policy formulation Policy implementation Policy execution Policy enforcement and evaluation efficiency efficiency accountability transparancy responsiveness public interest
  • 35. will of the people listening citizen involvement evidence-based protection of individual rights accountability transparancy evidence-based equal access balancing of interests robust honesty fair timelessness reliable flexible fair Fig. 1.2 Public values in the policy cycle
  • 36. Policy is often formulated by politicians in consultation with experts. In the PVM paradigm, public administrations aim at creating PVs for society and citizens. This suggests a shift from talking about what citizens expect in creating a PV. In this view public officials should focus on collaborating and creating a dialogue with citizens in order to determine what constitutes a PV. 1.3 Developments There is an infusion of technology that changes policy processes at both the individual and group level. There are a number of developments that influence the traditional way of policy-making, including social media as a means to interact with the public (Bertot et al. … www.it-ebooks.info http://www.it-ebooks.info/ www.it-ebooks.info http://www.it-ebooks.info/ Additional Praise for Implementing Enterprise Risk Management
  • 37. “Educators the world over seeking to make the management of risk an integral part of management degrees have had great difficulties in providing their students with a definitive ERM text for their course. The Standards and associated Handbooks helped, but until the arrival of Implementing Enterprise Risk Management: Case Stud- ies and Best Practices, there has been no text to enlighten students on the application of an effective program to manage risk across an enterprise so that objectives are maximized and threats minimized. Fraser, Simkins, and Narvaez have combined with a group of contributors that represent the cream of risk practitioners, to pro- vide the reader with a clear and concise journey through the management of risk within a wide range of organizations and industries. The knowledge, skills, and experience in the management of risk contained within the covers of this book are second to none. It will provide a much needed resource to students and practition- ers for many years to come and should become a well-used reference on the desk of every manager of risk.” —Kevin W. Knight AM, chairman, ISO/TC 262—Risk Management “The authors—Fraser, Simkins, and Narvaez—have done an invaluable service to advance the science of enterprise risk management by collecting an extensive num- ber of wonderful case studies that describe innovative risk
  • 38. management practices in a diverse set of companies around the world. This book should be an extremely valuable source of knowledge for anyone interested in the emerging and evolving field of risk management.” —Robert S. Kaplan, senior fellow, Marvin Bower Professor of Leadership Development, emeritus, Harvard University “Lessons learned from case studies and best practices represent an efficient way to gain practical insights on the implementation of ERM. Implementing Enterprise Risk Management provides such insights from a robust collection of ERM pro- grams across public companies and private organizations. I commend the editors and contributors for making a significant contribution to ERM by sharing their experiences.” —James Lam, president, James Lam & Associates; director and Risk Oversight Committee chairman, E∗ TRADE Financial Corporation; author, Enterprise Risk Management—From Incentives to Controls “For those who still think that enterprise risk management is just a fad, the varied examples of practical value-generating uses contained in this book should dispel any doubt that the discipline is here to stay! The broad collection of practices is
  • 39. insightful for students, academics, and executives, as well as seasoned risk man- agement professionals.” —Carol Fox, ARM, director of Strategic and Enterprise Risk Practice, RIMS “Managing risk across the enterprise is the new frontier of business management. Doing so effectively, in my view, will be the single most important differentiating factor for many enterprises in the twenty-first century. Implementing Enterprise Risk Management: Case Studies and Best Practices is an innovative and important addition to the literature and contains a wealth of insight in this critical area. This book’s integration of theory with hands-on, real-world lessons in managing enterprise risk provides an opportunity for its readers to gain insight and understanding that could otherwise be acquired only through many years of hard- earned experience. www.it-ebooks.info http://www.it-ebooks.info/ I highly recommend this book for use by executives, line managers, risk managers, and business students alike.” —Douglas F. Prawitt, professor of Accounting at Brigham Young University, and Committee of Sponsoring Organizations (COSO)
  • 40. Executive Board member “The real beauty of and value in this book is its case study focus and the wide variety of firms profiled and writers’ perspectives shared. This will provide readers with a wealth of details and views that will help them chart an ERM journey of their own that is more likely to fit the specific and typically customized ERM needs of the firms for whom they toil.” —Chris Mandel, senior vice president, Strategic Solution s for Sedgwick; former president of the Risk Management Society and the 2004 Risk Manager of the Year “Implementing Enterprise Risk Management looks at many industries through excel- lent case studies, providing a real-world base for its recommendations and an important reminder that ERM is valuable in many industries. I highly recommend this text.”
  • 41. —Russell Walker, Clinical associate professor, Kellogg School of Management; author of Winning with Risk Management “The body of knowledge in Implementing Enterprise Risk Management continues to develop as business educators and leaders confront a complex and rapidly chang- ing environment. This book provides a valuable resource for academics and prac- titioners in this dynamic area.” —Mark L. Frigo, director, Strategic Risk Management Lab, Kellstadt Graduate School of Business, DePaul University “The management of enterprise risk is one of the most vexatious problems con- fronting boards and executives worldwide. This is why this latest book by Fraser, Simkins, and Narvaez is a much needed and highly refreshing approach to the sub- ject. The editors have managed to assemble an impressive list of contributors who, through a series of fascinating real-life case studies, adroitly
  • 42. help educate readers to better understand and deal with the myriad of risks that can assault, seriously maim, and/or kill an organization. This is a ‘how to’ book written with the ‘risk management problem solver’ in mind. It provides the link that has been missing for effectively teaching ERM at the university and executive education levels and it is an exceptional achievement by true risk management advocates.” —Dr. Chris Bart, FCPA, founder and lead faculty, The Directors College of Canada “The Institute of Risk Management welcomes the publication of this highly practi- cal text which should be of great interest to our students and members around the world. Implementing Enterprise Risk Management brings together a fine collection of detailed case studies from organizations of varying sizes and working in differ- ent sectors, all seeking to enhance their business performance by managing their
  • 43. risks more effectively, from the boardroom to the shop floor. This book makes a valuable contribution to the body of knowledge of what works that will benefit the development of the risk profession.” —Carolyn Williams, technical director, Institute of Risk Management www.it-ebooks.info http://www.it-ebooks.info/ IMPLEMENTING ENTERPRISE RISK MANAGEMENT www.it-ebooks.info http://www.it-ebooks.info/ The Robert W. Kolb Series in Finance provides a comprehensive view of the field
  • 44. of finance in all of its variety and complexity. The series is projected to include approximately 65 volumes covering all major topics and specializations in finance, ranging from investments, to corporate finance, to financial institutions. Each vol- ume in the Kolb Series in Finance consists of new articles especially written for the volume. Each volume is edited by a specialist in a particular area of finance, who develops the volume outline and commissions articles by the world’s experts in that partic- ular field of finance. Each volume includes an editor’s introduction and approx- imately thirty articles to fully describe the current state of financial research and practice in a particular area of finance. The essays in each volume are intended for practicing finance professionals, grad- uate students, and advanced undergraduate students. The goal of each volume is to encapsulate the current state of knowledge in a particular
  • 45. area of finance so that the reader can quickly achieve a mastery of that special area of finance. www.it-ebooks.info http://www.it-ebooks.info/ IMPLEMENTING ENTERPRISE RISK MANAGEMENT Case Studies and Best Practices Editors John R.S. Fraser Betty J. Simkins Kristina Narvaez The Robert W. Kolb Series in Finance www.it-ebooks.info
  • 46. http://www.it-ebooks.info/ Cover Design: Wiley Cover Image: © iStock.com/clauiad Copyright © 2015 by John R.S. Fraser, Betty J. Simkins, Kristina Narvaev. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978)
  • 47. 646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748- 6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
  • 48. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com. Library of Congress Cataloging-in-Publication Data: ISBN 978-1-118-69196-0 (Hardcover) ISBN 978-1-118-74576-2 (ePDF) ISBN 978-1-118-74618-9 (ePub)
  • 49. Printed in the United States of America. 10 9 8 7 6 5 4 3 2 1 www.it-ebooks.info http://www.copyright.com http://www.wiley.com/go/permissions http://booksupport.wiley.com http://www.wiley.com http://www.it-ebooks.info/ To Wendy, my wonderful wife and my inspiration, and to my parents who instilled in me a lifelong thirst for learning. —John Fraser To my husband (Russell) and our family: sons and daughters- in-law (Luke & Stephanie and Walt & Lauren), daughter and son-in-law (Susan & Jason), and our youngest daughter (April). Thank you for your love, support, and encouragement! —Betty Simkins I would like to thank my husband and four children for support-
  • 50. ing me on my journey of writing two chapters and co-editing this book. I would also like to thank the Risk and Insurance Manage- ment Society for supporting me during my educational years and providing great workshops and conferences on enterprise risk management. —Kristina Narvaez www.it-ebooks.info http://www.it-ebooks.info/ www.it-ebooks.info http://www.it-ebooks.info/ Contents Foreword xiii 1 Enterprise Risk Management Case Studies: An Introduction and Overview 1
  • 51. John R.S. Fraser, Betty J. Simkins, and Kristina Narvaez PART I Overview and Insights for Teaching ERM 17 2 An Innovative Method to Teaching Enterprise Risk Management: A Learner-Centered Teaching Approach 19 David R. Lange and Betty J. Simkins PART II ERM Implementation at Leading Organizations 37 3 ERM at Mars, Incorporated: ERM for Strategy and Operations 39 Larry Warner 4 Value and Risk: Enterprise Risk Management at Statoil 59 Alf Alviniussen and Håkan Jankensgård 5 ERM in Practice at the University of California Health System 75 Grace Crickette 6 Strategic Risk Management at the LEGO Group: Integrating Strategy and Risk Management 93 Mark L. Frigo and Hans Læssøe
  • 52. 7 Turning the Organizational Pyramid Upside Down: Ten Years of Evolution in Enterprise Risk Management at United Grain Growers 107 John Bugalla ix www.it-ebooks.info http://www.it-ebooks.info/ x Contents 8 Housing Association Case Study of ERM in a Changing Marketplace 119 John Hargreaves 9 Lessons from the Academy: ERM Implementation in the University Setting 143 Anne E. Lundquist 10 Developing Accountability in Risk Management: The British Columbia Lottery Corporation Case Study 179 Jacquetta C. M. Goy
  • 53. 11 Starting from Scratch: The Evolution of ERM at the Workers’ Compensation Fund 207 Dan M. Hair 12 Measuring Performance at Intuit: A Value-Added Component in ERM Programs 227 Janet Nasburg 13 TD Bank’s Approach to an Enterprise Risk Management Program 241 Paul Cunha and Kristina Narvaez PART III Linking ERM to Strategy and Strategic Risk Management 251 14 A Strategic Approach to Enterprise Risk Management at Zurich Insurance Group 253 Linda Conrad and Kristina Narvaez 15 Embedding ERM into Strategic Planning at the City of Edmonton 281 Ken Baker 16 Leveraging ERM to Practice Strategic Risk Management 305
  • 54. John Bugalla and James Kallman PART IV Specialized Aspects of Risk Management 319 17 Developing a Strategic Risk Plan for the Hope City Police Service 321 Andrew Graham 18 Blue Wood Chocolates 335 Stephen McPhie and Rick Nason www.it-ebooks.info http://www.it-ebooks.info/ CONTENTS xi 19 Kilgore Custom Milling 363 Rick Nason and Stephen McPhie 20 Implementing Risk Management within Middle Eastern Oil and Gas Companies 377 Alexander Larsen
  • 55. 21 The Role of Root Cause Analysis in Public Safety ERM Programs 397 Andrew Bent 22 JAA Inc.—A Case Study in Creating Value from Uncertainty: Best Practices in Managing Risk 427 Julian du Plessis, Arnold Schanfield, and Alpaslan Menevse 23 Control Complacency: Rogue Trading at Société Générale 461 Steve Lindo 24 The Role of VaR in Enterprise Risk Management: Calculating Value at Risk for Portfolios Held by the Vane Mallory Investment Bank 489 Allissa A. Lee and Betty J. Simkins 25 Uses of Efficient Frontier Analysis in Strategic Risk Management: A Technical Examination 501 Ward Ching and Loren Nickel PART V Mini-Cases on ERM and Risk 523 26 Bim Consultants Inc. 525 John R.S. Fraser
  • 56. 27 Nerds Galore 529 Rob Quail 28 The Reluctant General Counsel 535 Norman D. Marks 29 Transforming Risk Management at Akawini Copper 539 Grant Purdy 30 Alleged Corruption at Chessfield: Corporate Governance and the Risk Oversight Role of the Board of Directors 547 Richard Leblanc www.it-ebooks.info http://www.it-ebooks.info/ xii Contents 31 Operational Risk Management Case Study: Bon Boulangerie 555 Diana Del Bel Belluz
  • 57. PART VI Other Case Studies 559 32 Constructive Dialogue and ERM: Lessons from the Financial Crisis 561 Thomas H. Stanton 33 Challenges and Obstacles of ERM Implementation in Poland 577 Zbigniew Krysiak and Sl̄ awomir Pijanowski 34 Turning Crisis into Opportunity: Building an ERM Program at General Motors 607 Marc S. Robinson, Lisa M. Smith, and Brian D. Thelen 35 ERM at Malaysia’s Media Company Astro: Quickly Implementing ERM and Using It to Assess the Risk-Adjusted Performance of a Portfolio of Acquired Foreign Companies 623 Patrick Adam K. Abdullah and Ghislain Giroux Dufort About the Editors 649 Index 651
  • 58. www.it-ebooks.info http://www.it-ebooks.info/ Foreword E nterprise Risk Management is an evolving discipline focused on a com- plex and still imperfectly-understood subject. In such a situation, science is advanced best by collecting data from multiple, independent sites. A rich set of observations educates the field’s scholars and practitioners and provides the foundation for them to develop descriptive and normative theories as well as cod- ified best practices about the subject. The authors—Fraser, Simkins, and Narvaez—have done an invaluable service to advance the science of enterprise risk management by collecting an extensive
  • 59. number of wonderful case studies that describe innovative risk management prac- tices in a diverse set of companies around the world. This book should be an extremely valuable source of knowledge for anyone interested in the emerging and evolving field of risk management. We should be grateful to the editors and to each chapter author for expanding the body of knowledge for risk management professionals and academics. Robert S. Kaplan Senior Fellow, Marvin Bower Professor of Leadership Development, Emeritus Harvard University xiii www.it-ebooks.info http://www.it-ebooks.info/
  • 60. www.it-ebooks.info http://www.it-ebooks.info/ CHAPTER 1 Enterprise Risk Management Case Studies An Introduction and Overview JOHN R.S. FRASER Senior Vice President, Internal Audit, and former Chief Risk Officer, Hydro One Networks Inc. BETTY J. SIMKINS Williams Companies Chair of Business and Professor of Finance, Oklahoma State University KRISTINA NARVAEZ President and Owner of ERM Strategies, LLC Businesses, business schools, regulators, and the public are now
  • 61. scrambling to catch up with the emerging field of enterprise risk management. —Robert Kaplan (quote from Foreword in Fraser and Simkins, 2010) Most executives with MBA degrees were not taught ERM. In fact, there are only a few universities that teach ERM. So some business school graduates are strong in finance, marketing, and management theory, but they are limited in terms of critical thinking, business acumen, and risk analysis skills. —Paul Walker1 THE EVOLUTION OF ENTERPRISE RISK MANAGEMENT Over the past two decades enterprise risk management (ERM) has evolved from concepts and visions of how risks should be addressed to a method- ology that is becoming entrenched in modern management and is now increasingly expected by those in oversight roles (e.g.,
  • 62. governing bodies and regulators). As Felix Kloman describes in his chapter “A Brief History of Risk Man- agement,” published in Fraser and Simkins (2010), many of the concepts go back a very long time and many of the so-called newly discovered techniques can be 1 www.it-ebooks.info http://www.it-ebooks.info/ 2 Implementing Enterprise Risk Management referenced to the earlier writings and practices described by Kloman. However, it is only from around the mid-1990s that the concept of giving a name to manag- ing risks in a holistic way across the many operating silos of an enterprise started to take hold. In the 1990s, terms such as integrated risk management and enterprise-
  • 63. wide risk management were also used. Many thought leaders, for example, those who created ISO 31000,2 believe that the term risk management is all that is needed to describe good risk management; however, many others believe that the latter term is often used to describe risk management at the lower levels of the organiza- tion and does not necessarily capture the concepts of enterprise- level approaches to risk. As a result, the term ERM is used throughout this book. As ERM continues to evolve there is still much discussion and confusion over exactly what it is and how it should be achieved. It is important to realize that it is still evolving and may take many more years before it is fully codified and practiced in a consistent way. In fact, there is a grave danger now of believing that there is only one way of doing ERM. This is probably a mistake by regula- tors who have too eagerly seized some of these concepts and are trying to impose them when the methods are not fully understood, and in some
  • 64. cases the require- ments are unlikely to produce the desired results. As Fraser and Simkins (2010) noted in their first book on ERM: “While regulatory interest can force ERM into companies, if not done well, it can become another box-ticking exercise that adds little value.”3 The leading and most commonly agreed4 guideline to holistic risk manage- ment is ISO 31000. However, it should be mentioned that in the United States the COSO 2004 Enterprise Risk Management–Integrated Framework has been the dominant framework used to date. Many organizations are currently adopting one or the other of these frameworks and then customizing them to their own context. WHY THE NEED FOR A BOOK WITH ERM CASE STUDIES? Following the success of the earlier Enterprise Risk Management: Today’s Leading
  • 65. Research and Best Practices for Tomorrow’s Executives by Fraser and Simkins (2010), we found through our own teaching experiences, and by talking to others, that there was an urgent need for a university-level textbook of ERM case studies to help educate executives, risk practitioners, academics, and students alike about the evolving methodology. As a result, Fraser and Simkins, together with Kristina Narvaez, approached many of the leading ERM specialists to write case studies for this book. Surveys have also shown that there is a dire need for more case studies on ERM (see Fraser, Schoening-Thiessen, and Simkins 2008). Additionally, surveys of risk executives report that business risk is increasing due to new technologies, faster rate of change, increases in regulatory risk, and more (PWC 2014). As Paul Walker of St. John’s University points out in the opening quote of the 2014 American Pro- ductivity & Quality Center (APQC) report on ERM, “Most
  • 66. executives with MBA degrees were not taught ERM. In fact, there are only a few universities that teach ERM. So some business school graduates are strong in finance, marketing, and www.it-ebooks.info http://www.it-ebooks.info/ ENTERPRISE RISK MANAGEMENT CASE STUDIES 3 management theory, but they are limited in terms of critical thinking, business acu- men, and risk analysis skills.” Learning Centered Teaching (LCT), as discussed in Chapter 2, is an ideal way to achieve this. Using LCT and the case study approach, students actively participate in the learning process through constructive reflective reasoning, critical thinking and analysis, and discussion of key issues. This is the first book to provide such a broad coverage of case studies on ERM.
  • 67. The case studies that follow are from some of the leading academics and prac- titioners of enterprise risk management. While many of the cases are about real-life situations, there are also those that, while based on real-life experiences, have had names changed to maintain confidentiality or are composites of several situations. We are deeply indebted to the authors and to the organizations that agreed so kindly to share their stories to help benefit future generations of ERM practition- ers. In addition, we have added several chapters where we feel the fundamentals of these specialized techniques (e.g., VaR) deserve to be understood by ERM stu- dents and practitioners. Each case study provides opportunities for executives, risk practitioners, and students to explore what went well, what could have been done differently, and what lessons are to be learned. Teachers of ERM will find a wealth of material to use in demonstrating ERM
  • 68. principles to students. These can be used for term papers or class discussions, and the approaches can be contrasted to emphasize different contexts that may require customized approaches. This book introduces the reader to a wide range of con- cepts and techniques for managing risks in a holistic way, by correctly identifying risks and prioritizing the appropriate responses. It offers a broad overview of the various types of ERM techniques, the role of the board of directors, risk tolerances, profiles, workshops, and allocation of resources, while focusing on the principles that determine business success. Practitioners interested in implementing ERM, enhancing their knowledge on the subject, or wishing to mature their ERM program, will find this book an abso- lute must resource to have. Case studies are one of the best ways to learn more on this topic. This book is a companion to Enterprise Risk Management:
  • 69. Today’s Leading Research and Best Practices for Tomorrow’s Executives (Fraser and Simkins 2010). Together, these two books can create a curriculum of study for business students and risk practitioners who desire to have a better understanding of the world of enterprise risk management and where it is heading in the future. Boards and senior leadership teams in progressive organizations are now engaging in building ERM into their scenario-planning and decision-making processes. These forward- looking organizations are also integrating ERM into the business-planning pro- cess with resource allocation and investment decisions. At the business unit level, ERM is being used to measure the performance of risk- taking activities of employees. As these case studies demonstrate, ERM is a continuous improvement process and takes time to evolve. As can be gleaned from these case studies, most firms that
  • 70. have taken the ERM journey started with a basic ERM language, risk identification, and risk-assessment process and then moved down the road to broaden their pro- grams to include risk treatments, monitoring, and reporting processes. The ulti- mate goal of ERM is to have it embedded into the risk culture of the organization and drive the decision-making process to make more sound business decisions. www.it-ebooks.info http://www.it-ebooks.info/ 4 Implementing Enterprise Risk Management SUMMARY OF THE BOOK CHAPTERS As mentioned earlier, the purpose of this book is to provide case studies on ERM in order to educate executives, risk practitioners, academics, and students alike about this evolving methodology. To achieve this goal, the book is organized into
  • 71. the following sections: Part I: Overview and Insights for Teaching ERM Part II: ERM Implementation at Leading Organizations Part III: Linking ERM to Strategy and Strategic Risk Management Part IV: Specialized Aspects of Risk Management Part V: Mini-Cases on ERM and Risk Part VI: Other Case Studies Brief descriptions of the contributors and the chapters are provided next. PART I: OVERVIEW AND INSIGHTS FOR TEACHING ERM The first two chapters provide an overview of ERM and guidance on ERM educa- tion. As we have pointed out, education on ERM is crucial and more universities need to offer courses in this area. Our conversations with many ERM educators and consultants highlight how extremely challenging it is to achieve excellence in ERM education.
  • 72. Chapter 2, “An Innovative Method to Teaching Enterprise Risk Manage- ment: A Learner-Centered Teaching Approach,” offers insights and suggestions on teaching ERM. This chapter covers the concept of flipping the classroom with learner-centered teaching (LCT), distinguishes it from traditional lectures, and describes how it can be used in teaching ERM. The LCT approach emphasizes active student participation and collaboration on in-class activities such as case studies versus the traditional lecture approach. This chapter provides several examples as to how LCT can be applied in teaching ERM, utilizing Fraser and Simkins’ (2010) book. David R. Lange and Betty J. Simkins, both experienced ERM educators, team together to write this chapter. David Lange, DBA, is an Auburn University Montgomery (AUM) Distinguished Research and Teaching Professor of Finance. He has received many prestigious awards for both research and teaching from the University and from several academic associations. He
  • 73. has taught many courses in the area of risk management and has consulted in a significant num- ber of individual and class insurance–related cases in both state and federal court. Betty Simkins, PhD, the Williams Companies Chair of Business and Professor of Finance at Oklahoma State University, is coeditor of this book. PART II: ERM IMPLEMENTATION AT LEADING ORGANIZATIONS Part II is a collection of ERM case studies that give examples of how ERM was developed and applied in major organizations around the world. Note that there is no perfect ERM case study and the objective is for readers to assess what they believe was successful or not so successful about these ERM programs. www.it-ebooks.info http://www.it-ebooks.info/
  • 74. ENTERPRISE RISK MANAGEMENT CASE STUDIES 5 The first case study in this book describes ERM at Mars, Inc. Larry Warner, who is the former corporate risk manager at Mars, Inc. and now is president of Warner Risk Group, describes the ERM program at the company in Chapter 3. Mars is a global food company and one of the largest privately held corporations in the United States. It has more than 72,000 associates and annual net sales in excess of $33 billion across six business segments—Petcare, Chocolate, Wrigley, … Engineering Ethics Case Study: The Challenger Disaster Course No: LE3-001 Credit: 3 PDH
  • 75. Mark Rossow, PhD, PE, Retired Continuing Education and Development, Inc. 9 Greyridge Farm Court Stony Point, NY 10980 P: (877) 322-5800 F: (877) 322-4774 [email protected] Engineering Ethics Case Study: The
  • 76. Challenger Disaster Mark P. Rossow, P.E., Ph.D. 2
  • 77. © 2012 Mark P. Rossow All rights reserved. No part of this work may be reproduced in any manner without the written permission of the author. 3 Preface On January 28, 1986, the Space Shuttle Challenger burst into flame shortly after liftoff. All
  • 78. passengers aboard the vehicle were killed. A presidential commission was formed to investigate the cause of the accident and found that the O-ring seals had failed, and, furthermore, that the seals had been recognized as a potential hazard for several years prior to the disaster. The commission’s report, Report to the President by the Presidential Commission on the Space Shuttle Challenger Accident, stated that because managers and engineers had known in advance of the O-ring danger, the accident was principally caused by a lack of communication between engineers and management and by poor management practices. This became the standard interpretation of the cause of the Challenger disaster and routinely appears in popular articles and books about engineering, management, and ethical issues.
  • 79. But the interpretation ignores much of the history of how NASA and the contractor’s engineers had actually recognized and dealt with the O-ring problems in advance of the disaster. When this history is considered in more detail, the conclusions of the Report to the President become far less convincing. Two excellent publications that give a much more complete account of events leading up to the disaster are The Challenger Launch Decision by Diane Vaughan, and Power To Explore -- History of Marshall Space Flight Center 1960-1990 by Andrew Dunar and Stephen Waring. As Dunar and Waring put it—I would apply their remarks to Vaughan’s work as well— “Allowing Marshall engineers and managers to tell their story, based on pre-accident documents and on post-accident testimony and interviews, leads
  • 80. to a more realistic account of the events leading up to the accident than that found in the previous studies.” I would strongly encourage anyone with the time and interest to read both of these publications, which are outstanding works of scholarship. For those persons lacking the time—the Vaughan book is over 550 pages—I have written the present condensed description of the Challenger incident. I have drawn the material for Sections 1-8 and 10 from multiple sources but primarily from Vaughan, the Report to the President, and Dunnar and Waring. Of course, any errors introduced during the process of fitting their descriptions and ideas into my narrative are mine and not the fault of these authors. Sections 9, 11, and 12 are original contributions of my own. All figures
  • 81. have been taken from Report to the President. Mark Rossow 4 Introduction Course Content This course provides instruction in engineering ethics through a case study of the Space Shuttle Challenger disaster. The course begins by presenting the minimum technical details needed to
  • 82. understand the physical cause of the Shuttle failure. The disaster itself is chronicled through NASA photographs. Next the decision-making process— especially the discussions occurring during the teleconference held on the evening before the launch—is described. Direct quotations from engineers interviewed after the disaster are frequently used to illustrate the ambiguities of the data and the pressures that the decision-makers faced in the period preceding the launch. The course culminates in an extended treatment of six ethical issues raised by Challenger. Purpose of Case Studies Principles of engineering ethics are easy to formulate but sometimes hard to apply. Suppose, for
  • 83. example, that an engineering team has made design choice X, rather than Y, and X leads to a bad consequence—someone was injured. To determine if the engineers acted ethically, we have to answer the question of whether they chose X rather than Y because 1) X appeared to be the better technical choice, or 2) X promoted some other end (for example, financial) in the organization. Abstract ethics principles alone cannot answer this question; we must delve into the technical details surrounding the decision. The purpose of case studies in general is to provide us with the context—the technical details—of an engineering decision in which an ethical principle may have been violated. Case Study of Challenger Disaster
  • 84. On January 28, 1986, the NASA space Shuttle Challenger burst into a ball of flame 73 seconds after take-off, leading to the death of the seven people on board. Some months later, a commission appointed by the President to investigate the causes of the disaster determined that the cause of the disaster was the failure of a seal in one of the solid rocket boosters (Report to the President 1986, vol. 1, p. 40). Furthermore, Morton Thiokol, the contractor responsible for the seal design, had initiated a teleconference with NASA on the evening before the launch and had, at the beginning of the teleconference, recommended against launching because of concerns about the performance of the seal. This recommendation was reversed during the teleconference,
  • 85. with fatal consequences. To understand the decisions that led to the Challenger disaster, you must first understand what the technical problems were. Accordingly, this course begins by presenting the minimum technical details you will need to understand the physical cause of the seal failure. After laying this groundwork, we examine what occurred in the teleconference. You will probably find, as you learn more and more about the Challenger project, that issues that had appeared simple initially are actually far more complex; pinpointing responsibility and assigning blame are not nearly as easy as many popular accounts have made them. The purpose of the present course is 1) to consider some of the issues and show by example how
  • 86. difficult it can be to distinguish unethical behavior from technical mistakes (with severe consequences), and 2) to equip you to think critically and act appropriately when confronted with ethical decisions in your own professional work. 5 The course is divided into the following topics: 1. Two Common Errors of Interpretation 2. Configuration of Shuttle 3. Function of O-rings 4. History of Problems with Joint Seals 5. Teleconference 6. Accident 7. Ethical issue: Did NASA take extra risks because of pressure
  • 87. to maintain Congressional funding? 8. Ethical issue: Did Thiokol take extra risks because of fear of losing its contract with NASA? 9. Ethical issue: Was the Principle of Informed Consent violated? 10. Ethical issue: What role did whistle blowing have in the Challenger story? 11. Ethical issue: Who had the right to Thiokol documents relating to the Challenger disaster? 12. Ethical issue: Why are some engineering disasters considered ethical issues and others are not? 13. Summary 1. Two Common Errors of Interpretation
  • 88. Persons studying the history of an engineering disaster must be alert to the danger of committing one of the following common errors: 1) the myth of perfect engineering practice, and 2) the retrospective fallacy. The Myth of Perfect Engineering Practice The sociologist, Diane Vaughan, who has written one of the most thorough books on Challenger, has pointed out that the mere act of investigating an accident can cause us to view, as ominous, facts and events that we otherwise would consider normal: “When technical systems fail, … outside investigators consistently find an engineering world characterized by ambiguity, disagreement, deviation from design specifications and
  • 89. operating standards, and ad hoc rule making. This messy situation, when revealed to the public, automatically becomes an explanation for the failure, for after all, the engineers and managers did not follow the rules. … [On the other hand,] the engineering process behind a ‘nonaccident’ is never publicly examined. If nonaccidents were investigated, the public would discover that the messy interior of engineering practice, which after an accident investigation looks like ‘an accident waiting to happen,’ is nothing more or less than ‘normal technology.” (Vaughan 1996, p. 200) Thus as you read the description of the Challenger disaster on the pages to follow, keep in mind that just because some of the engineering practices described are not neat and tidy processes in which
  • 90. consensus is always achieved and decisions are always based on undisputed and unambiguous data, that fact alone may not explain the disaster; such practices may simply be part of normal technology—that usually results in a nonaccident. The Retrospective Fallacy Engineering projects sometimes fail. If the failure involves enough money or injuries to innocent people, then investigators may be brought in to determine the causes of the failure and 6 identify wrongdoers. The investigators then weave a story explaining how decision-makers
  • 91. failed to assess risks properly, failed to heed warning signs, used out-of-date information, ignored quality-control, took large risks for personal gain, etc. But there is a danger here: the story is constructed by selectively focusing on those events that are known to be important in retrospect, that is, after the failure has occurred and observers look back at them. At the time that the engineers were working on the project, these events may not have stood out from dozens or even hundreds of other events. “Important” events do not come labeled “PARTICULARLY IMPORTANT: PAY ATTENTION”; they may appear important only in retrospect. To the extent that we retrospectively identify events as particularly important—even though they may
  • 92. not have been thought particularly important by diligent and competent people working at the time—we are committing the “retrospective fallacy.” (Vaughan 1996, p. 68-70) In any discussion of the Challenger disaster, the tendency to commit the retrospective fallacy exists, because we all know the horrendous results of the decisions that were made—and our first reaction is to say, “How could they have ignored this?” or, “Why didn’t they study that more carefully?” But to understand what happened, it is crucial to put yourself in the place of the engineers and to focus on what they knew and what they thought to be important at the time. For example, NASA classified 745 components on the Shuttle as “Criticality 1”, meaning failure of
  • 93. the component would cause the loss of the crew, mission, and vehicle (NASA’s Response to the Committee’s Investigation of the “Challenger” Accident 1987). With the advantage of 20-20 hindsight, we now know that the engineers made a tragic error in judging the possibility of failure of a particular one of those 745 components—the seals— an “acceptable risk.” But at the time, another issue—problems with the Shuttle main engines— attracted more concern (McDonald 2009, pp. 64-65). Similarly, probably most of the decisions made by the Shuttle engineers and managers were influenced to some extent by considerations of cost. As a result, after the disaster it was a straightforward matter to pick out specific decisions and claim that the decision-makers had sacrificed safety for budgetary reasons.
  • 94. But our 20-20 hindsight was not available to the people involved in the Challenger project, and as we read the history we should continually ask questions such as “What did they know at the time?,” “Is it reasonable to expect that they should have seen the significance of this or that fact?,” and “If I were in their position and knew only what they knew, what would I have done?” Only through such questions can we hope to understand why the Challenger disaster occurred and to evaluate its ethical dimensions. 2. Configuration of Shuttle. NASA had enjoyed widespread public support and generous funding for the Apollo program to put a man on the moon. But as Apollo neared completion and concerns about the cost of the
  • 95. Vietnam War arose, continued congressional appropriations for NASA were in jeopardy. A new mission for NASA was needed, and so the Space Shuttle program was proposed. The idea was to development an inexpensive (compared to Apollo) system for placing human beings and hardware in orbit. The expected users of the system would be commercial and academic experimenters, the military, and NASA itself. On January 5, 1972, President Nixon announced the government’s approval of the Shuttle program. 7 Fig. 1 Configuration of the Shuttle
  • 96. Because a prime goal was to keep costs down, reusable space vehicles were to be developed. After many design proposals and compromises—for example, the Air Force agreed not to develop any launch vehicles of its own, provided that the Shuttle was designed to accommodate military needs—NASA came up with the piggyback design shown in Figure 1. The airplane-like craft (with the tail fin) shown in side view on the right side of the figure is the “Orbiter.” The Orbiter contains the flight crew and a 60 feet long and 15 feet wide payload bay designed to hold cargo such as communications satellites to be launched into orbit, an autonomous Spacelab to be used for experiments in space, or satellites already orbiting that have been retrieved for repairs.
  • 97. Before launch, the Orbiter is attached to the large (154 feet long and 27 1/2 feet in diameter) External Tank—the middle cylinder with the sharp-pointed end shown in the figure; the External 8 Tank contains 143,000 gallons of liquid oxygen and 383,000 gallons of liquid hydrogen for the Orbiter's engines. The two smaller cylinders on the sides of the External Tank are the Solid Rocket Boosters (SRBs). The SRBs play a key role in the Challenger accident and accordingly will be described
  • 98. here in some detail. The SRBs contain solid fuel, rather than the liquid fuel contained by the External Tank. The SRBs provide about 80 percent of the total thrust at liftoff; the remainder of the thrust is provided by the Orbiter's three main engines. Morton-Thiokol Inc. held the contract for the development of the SRBs. The SRBs fire for about two minutes after liftoff, and then, their fuel exhausted, are separated from the External Tank. A key goal of the Shuttle design was to save costs by re-using the SRBs and the Orbiter. The conical ends of the SRBs contain parachutes that are deployed, after the SRBs have been separated from the External Tank, and allow
  • 99. the SRBs to descend slowly to the ocean below. The SRBs are then picked out of the water by recovery ships and taken to repair facilities, where preparations are made for the next flight. After the SRBs are detached, the Orbiter’s main engines continue firing until it achieves low earth orbit. Then the External Tank is jettisoned towards earth where it burns up in the atmosphere—the External Tank is not re- used. Once the crew has completed its mission in orbit, the Orbiter returns to earth where it glides (No propulsion is used.) to a landing on a conventional airstrip. The Orbiter can then be refurbished for its next launch. More Details about the SRBs
  • 100. Fig. 2 Solid Rocket Booster with Exploded View Showing Segments and Joints 9 Figure 2 shows the subassemblies that make up the SRB. Because the total length of the SRB was almost 150 feet, it was too large to ship as a single unit by rail from Thiokol’s manufacturing facility in Utah to the Kennedy Space Center launch site in Florida. Furthermore, shipping the SRB as a single unit would mean that a large amount of rocket fuel would be concentrated in a single container—creating the potential for an
  • 101. enormous explosion. For these reasons, Thiokol manufactured the SRB from individual cylindrical segments each approximately 12 feet in diameter. At Thiokol’s plant in Utah, individual segments were welded together to form four “casting” segments, into which propellant was poured (cast). The welded joints within a casting segment were called “factory joints.” The four casting segments were then shipped individually by rail to Kennedy, where they were assembled—by stacking, not welding—to form the solid rocket motor (SRM) of the SRB. The joints created by the assembly process at Kennedy were called “field joints.” The sealing problem that led to the Challenger’s destruction occurred in the field joint at the right end of the AFT MID SEGMENT in Figure 2.
  • 102. Hot combustion gases from the SRM leaked through the joint and either weakened or burned a hole in the External Tank, igniting the contents of the Tank and producing a catastrophic fireball. 3. Function of O-rings The cutaway view of the SRB in Figure 3 shows the aft field joint location in the assembled SRB. Fig. 3. Location of the Problematic Aft Field Joint 10
  • 103. Fig. 4. Cross Section of Field Joint Figure 4 shows how the upper SRM segment in a field joint is connected to the lower segment by a pin passing through the “tang” (the tongue on the upper segment) and the “clevis” (the U- shaped receptacle cut in the lower segment); 177 such steel pins are inserted around the circumference of each joint. When the propellant is burning and generating hot combustion gases under the enormous pressure necessary to accelerate the SRB, the joint must be sealed to prevent the gases from leaking and possibly damaging exterior parts of the Shuttle. This sealing is accomplished by a primary O-ring backed up by a secondary O-ring (O-rings are widely used
  • 104. in machine design and, when functioning properly, can seal pressures in the range of thousands of psi). An SRM O-ring has been compared to “a huge length of licorice—same color, same diameter (only 0.28”)—joined at the ends so it forms a circle 12’ across” (Vaughan 1996, p. 40). SRM O-rings were made of a rubberlike synthetic material called Viton. To prevent the hot combustion gases from contacting and thus degrading the Viton when the propellant was ignited, zinc chromate putty was applied in the region shown in Figure 4 prior to assembly of the SRM segments.
  • 105. 11 Fig. 5. Effect of Compression of the O-ring in Inhibiting Pressure Actuation Pressure Actuation of the O-ring Seal Besides protecting the O-rings from the corrosive effects of the hot combustion gases, the putty is intended to be pushed outward from the combustion chamber during ignition, compress the air ahead of the primary O-ring, and thus force the O-ring into the tang-clevis gap, thereby sealing the gap. This process is referred to as “pressure-actuated sealing.” Experiments show that pressure actuation is most effective when the high-pressure air acts over the largest possible
  • 106. portion of the high-pressure side of the O-ring. In the leftmost sketch in Figure 5, for example, the high-pressure side extends from the “Response Node” at the top to the point of tangency at the bottom of the groove. If, however, the O-ring is initially compressed during assembly, then the O-ring may deform sufficiently to cause contact with the left-hand side of the groove, as shown in the rightmost sketch in Figure 5. In that case, the high-pressure air acts over only the surface of the upper left-hand side of the O-ring, and pressure actuation of the seal is impaired. This problem is lessened if, upon ignition, the joint gap opens, and the O-ring is able to spring back elastically and lose contact with sides of the groove, as in the middle sketch in Figure 5.
  • 107. However, when the temperature is low, the O-ring loses much of its elasticity and as a result may retain its compressed shape, as in the right-hand sketch of Figure 5. This retention of the compressed shape has three unfortunate consequences: 1) pressure actuation is delayed or impaired because the high-pressure air cannot get to the lower left-hand side of the O-ring, 2) pressure actuation is delayed or impaired because the O-ring does not seal the opened gap, and the actuation pressure on the O-ring decreases as the fluid is able to pass by the O-ring, and 3) because of the lack of sealing, compressed air, putty, and then hot combustion gas may blow by through the gap, and in the process, damage or even destroy the O-ring. In general, pressure actuation was also affected negatively by
  • 108. several other factors, such as the behavior of the putty and the increase in gap size caused by re- use of the SRM. From consideration of all these factors and from observation of the explosion, the Presidential Commission concluded ”that the cause of the Challenger accident was the failure of the pressure seal in the aft field joint of the right Solid Rocket Motor [Italics in the original]. The failure was due to a faulty design unacceptably sensitive to a number of factors. These factors were the 12 effects of temperature, physical dimensions, the character of materials, the effects of reusability,
  • 109. processing, and the reaction of the joint to dynamic loading.” (Report to the President 1986, vol. 1, p. 69) 4. History of Problems with Joint Seals From the very beginning, in 1973, of Thiokol’s contract to develop the SRM, problems arose with the joints. The Thiokol design for the SRM was based on the Air Force’s Titan III, one of the most reliable solid-fuel rockets produced up to that time. But Thiokol engineers could not simply copy the Titan design—the SRM was larger than the Titan’s motor and had to be designed for refurbishment and repeated use. One particular area in which the two motors differed was the field joints, and Thiokol’s initial design for the SRM field joints worried
  • 110. engineers at the Marshall Space Flight Center, who were responsible for monitoring Thiokol’s contract. Many modifications and reviews of the design ensued, and Thiokol and Marshall finally began various load tests in 1976. Early tests were successful and gave engineers confidence. In an important test in 1977, however, the joint seals surprised the engineers by exhibiting “joint rotation,” illustrated in Fig. 6. Of particular concern is the loss of redundancy in the design because not just the primary but also the secondary O-ring is rendered ineffective if the gap opens sufficiently. (It is important to realize the scale of the events being described: the gap between the tang and clevis in the unpressurized joint is tiny: 0.004”, in the pressurized joint
  • 111. the gap was estimated to lie between 0.042” and 0.06,”—caused by a joint rotation that occurs in the first 0.6 seconds of ignition.) 13 Fig. 6 Joint Rotation Other sealing problems—some but not all related to joint rotation—such as blow-by, ring charring, ring erosion, loss of resilience of the O-ring material at low temperature, and performance of the putty were observed later in various static
  • 112. tests and launches. Engineers both at Thiokol and at the Marshall were aware of these problems. On July 31, 1985, Roger Boisjoly, a Thiokol engineer specializing in O-rings, wrote a memo to Thiokol vice president Robert Lund with the subject line, "O-ring Erosion/Potential Failure Criticality", after nozzle joint erosion was detected in an SRB: “This letter is written to insure that management is fully aware of the seriousness of the current O-ring erosion problem in the SRM joints from an engineering standpoint. “ "The mistakenly accepted position on the joint problem was to fly without fear of failure and to run a series of design evaluations which would ultimately lead to a solution or at
  • 113. least a significant reduction of the erosion problem. This position is now changed as a result of the [51-B] nozzle joint erosion which eroded a secondary O-ring with the primary O-ring never sealing. If the same scenario should occur in a field joint (and it could), then it is a jump ball whether as to the success or failure of the joint because the secondary O-ring cannot respond to the clevis opening rate and may not be capable of pressurization. The result would be a catastrophe of the highest order-loss of human life… 14
  • 114. Boisjoly urged that a team be set up to work on the O-ring problem, and ended by saying "It is my honest and very real fear that if we do not take immediate action to dedicate a team to solve the problem, with the field joint having the number one priority, then we stand in jeopardy of losing a flight along with all the launch pad facilities." [quoted in Vaughan 1996, p. 447] Boisjoly later charged that Thiokol management failed to provide adequate follow-up and support to correct the problem described in his memo. Readers tempted to commit the retrospective fallacy after
  • 115. reading Boisjoly’s memo should note that the memo does not mention temperature effects on the seal. The years of concern about the sealing problems eventually led to a briefing at NASA Headquarters in Washington on August 19 th , 1985, by Marshall and Thiokol, in which they presented both an engineering evaluation and a redesign plan. They noted that only 5 of 111 primary O-rings in field joints and 12 of 47 primary O-rings in nozzle joints had shown erosion in various tests and flights. Thiokol argued that various experimental and flight data verified the safety of the design. They said, however, that the field joint was the “highest concern” and
  • 116. presented plans for improving the joints both with short-term fixes and longer-term fixes that would take over two years to implement. Data from studies by Arnie Thompson (Boisjoly’s boss) of the effect of temperature on ring resiliency were presented, but imposing a temperature launch constraint was not mentioned. The review judged that leak checks and careful assembly made it “safe to continue flying [the] existing design.” Nevertheless NASA needed “to continue at an accelerated pace to eliminate SRM seal erosion.” In the meantime, the risks were considered acceptable. [Dunnar and Waring, p. 363]. 5. Teleconference After several delays, the Challenger launch was scheduled for January 28, 1986, at 9:38 AM
  • 117. EST. At about 1 PM on the 27 th , however, NASA personnel became concerned about the unusually low temperatures—in the low 20’s—predicted for early morning of the next day. A Marshall manager asked Thiokol engineers to review the effect the low temperatures might have on the SRM. Accordingly, a meeting was held at Thiokol’s Utah facility. Engineers there stated their concern that the extreme cold would greatly reduce O-ring resiliency and ability to seal the joints. A teleconference among Thiokol, Marshall, and Kennedy personnel was set for 5:45 PM EST to discuss the situation. At the teleconference, Thiokol engineers made no official
  • 118. recommendation about delaying the launch. The discussion centered on their concerns about the effect of the low temperatures on the O-rings. However, some of the teleconference participants were unable to hear well, because of a poor telephone connection, and some key personnel had not been located in time to be included in the teleconference, so the teleconference was ended, and a second one scheduled for 8:15 PM EST. In the interim, Thiokol engineers had time to organize their data in charts and fax them to Marshall and Kennedy. 15
  • 119. A total of thirty-four managers and engineers from Thiokol, Marshall, and Kennedy took part in the second teleconference. Thiokol engineers began the teleconference by discussing the charts that they had faxed to the other teleconference participants. The Thiokol position was that because significant O-ring blow-by and damage had been observed in the coldest previous launch—53°F—the O-ring material would lose much of its resilience and the joint could fail, were the launch to be conducted at a temperature in the 20’s or low 30’s. When directly asked by Larry Mulloy, Manager of the SRB project at Marshall, Thiokol Vice President Joe Kilminster …