The presentation displays two examples of Phase I Risk Based Decision Making. Phase I means that a preliminary decision is made based on Risk Prioritization alone, without financial comparative evaluations of the alternatives using CDA-ESM (i.e. evaluating the long term cost of the alternatives including upside and downside risks). The first example relates to selecting a different transportation mode (or altering a status quo) for the personnel of a remote operation in a country where traffic accidents represent a very high and well known risk. As you will see in the presentation, none of the considered alternatives actually solves the problem (mitigates the risks below an Acceptability societal risk and/or Client's specific Tolerability threshold. The second example examines a rather complex process (over twenty elements) and defines a prioritized list of mitigative needs. By applying a Tolerability criteria it is possible to rationally, transparently and defensibly focus the attention on the most critical elements of the system. The result? Allotting mitigative funds in the most appropriate and efficient manner.

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By F.+C. Oboni
Examples of Tolerability and Risk
Based Decision Making Applications in
Businesses

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Risk Based Decision Making
Showcase 1:
Selecting a Better Personnel
Transportation System for a Remote
Production Centre

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After 15 years of flawless service, an
employees' shuttle bus had an
accident with 2 casualties in a country
known for high traffic hazards.
Management decided to study
alternatives to bus shuttling before
facing internal and/or external
scrutiny, media exposure etc.

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Selecting the best alternative in a clear
and transparent way was considered
of paramount importance.
The penalty: loss of confidence, major
strike(s), societal and governmental
pressure, etc., unsustainable
mitigating costs...

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The following Alternatives were selected
for comparison:
Alternative 1 Alternative 2 Alternative 3
Bla bla Bla Bla Bla Bla
# 1 # 2 # 3
Maintain Status
Quo, i.e the bus
shuttling on existing
roads
Build an Airport halfway
to the location (only
possible location) and
then bus shuttle
Increase the safety
along the road, i.e. an
enhanced Status Quo

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A Status Quo Risk Assessment revealed
risks were unacceptable (from a societal
standpoint).
These two lines can be interpreted as
the “optimistic” and “pessimistic”
acceptability criteria as defined by
third parties

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Then, as 2 out of 3 options were only
planned (not built yet) we had to
estimate probabilities and
consequences ranges from literature
and experts' opinions.
There is no other way to help in this
decision making process than going
quantitative. Any qualitative approach
would only blur the issues...

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* A mathematical model is used
Working with ranges, it was
possible to generate maximum
and minimum scenarios of each
risk, for each alternative.
A stacked bar graph of Risks can
then be build leading for each
alternative to...

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* A mathematical model is used
...a very simple, and transparent
preliminary risk based selection !

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Comparing the results with the societal
acceptability curves came next...
Alternative B Alternative C

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NO Alternative actually “solves” the
problem (mitigates to acceptability).
Furthermore the implementation costs
and life time costs will be very different:
Costs and Risks have to be integrated...
CDA/ESM will be the next step!

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Risk Based Decision Making
Showcase 2:
Prioritization of Risks related to
Process System, its infrastructure and
the environment.

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This system of elements is quite
complex. Domino effects are
possible in certain case of failures,
many of the infrastructure
elements could be the target of
malevolence (arson, sabotage etc.).

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Schematic of the System
In yellow all the different elements are identified

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Results of the Quantitative Maximum
Risk Assessment for each element, with
some scenarios (ranges).

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To deliver a clear prioritization, Risks
were compared to Acceptability and
Tolerability curves, as consequences
could be financial and/or casualties.

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We defined the Client's Tolerability curve,
checked it was compliant with the envelope we
created over the years...and plotted the risks...

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Then we also compared the prior results with a
societal acceptability criteria to make sure we
would properly characterize all relevant
scenarios.

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We computed the portion of Risks above
Tolerability to have a clear Prioritization.

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The results:
Only 8 elements out of the 20 are above
Tolerability and only 2 of them require
immediate attention!

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What was accomplished ?
By using a transparent and sound quantitative approach we
were able to:
Scientifically select the most significant risks,
Draw attention to the objective highest exposures (filtering emotional
perceptions), and
Prioritize them to allow reasonable mitigation in a very focused way.
We clearly enhanced the ability to prioritize risks for a
rational and sustainable development.

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BUT, more
importantly
Create the basis to avoid
a slide into a crisis, by
proactively controlling
the situation.
NB: Long term comparison of Alternatives
requires the use of more sophisticated tools,
such as CDA (Comparative Decision Analysis in
replacement to classic NPV