Risk Analysis

A practical guide to the varied challenges presented in the ever-growing field of risk analysis. Risk Analysis presents an accessible and concise guide to performing risk analysis, in a wide variety of field, with minimal prior knowledge required. Forming an ideal companion volume to Aven's previous Wiley text Foundations of Risk Analysis, it provides clear recommendations and guidance in the planning, execution anduse of risk analysis. This new edition presents recent developments related to risk conceptualization, focusing on related issues on risk assessment and their application. New examples are also featured to clarify the reader's understanding in the application of risk analysis and the risk analysis process. Key features: Fully updated to include recent developments related to risk conceptualization and related issues on risk assessments and their applications. Emphasizes the decision making context of risk analysis rather than just computing probabilities Demonstrates how to carry out predictive risk analysis using a variety of case studies and examples. Written by an experienced expert in the field, in a style suitable for both industrial and academic audiences. This book is ideal for advanced undergraduates, graduates, analysts and researchers from statistics, engineering, finance, medicine and physical sciences. Managers facing decision making problems involving risk and uncertainty will also benefit from this book.

Table of Contents:
Preface ix 1 What is a risk analysis? 1 1.1 Why risk analysis? 3 1.2 Risk management 4 1.2.1 Decision-making under uncertainty 6 1.3 Examples: decision situations 11 1.3.1 Risk analysis for a tunnel 11 1.3.2 Risk analysis for an offshore installation 11 1.3.3 Risk analysis related to a cash depot 12 2 What is risk? 13 2.1 The risk concept and its description 13 2.2 Vulnerability 19 2.3 How to describe risk quantitatively 19 2.3.1 Description of risk in a financial context 21 2.3.2 Description of risk in a safety context 22 2.4 Qualitative judgements 24 3 The risk analysis process: planning 28 3.1 Problem definition 28 3.2 Selection of analysis method 33 3.2.1 Checklist-based approach 35 3.2.2 Risk-based approach 36 4 The risk analysis process: risk assessment 38 4.1 Identification of initiating events 38 4.2 Cause analysis 39 4.3 Consequence analysis 40 4.4 Probabilities and uncertainties 42 4.5 Risk picture: risk presentation 43 4.5.1 Handling the background knowledge 46 4.5.2 Risk evaluation 47 5 The risk analysis process: risk treatment 49 5.1 Comparisons of alternatives 49 5.1.1 How to assess measures? 51 5.2 Management review and judgement 53 6 Risk analysis methods 55 6.1 Coarse risk analysis 55 6.2 Job safety analysis 60 6.3 Failure modes and effects analysis 62 6.3.1 Strengths and weaknesses of an FMEA 68 6.4 Hazard and operability studies 69 6.5 SWIFT 70 6.6 Fault tree analysis 70 6.6.1 Qualitative analysis 73 6.6.2 Quantitative analysis 75 6.7 Event tree analysis 77 6.7.1 Barrier block diagrams 79 6.8 Bayesian networks 79 6.9 Monte Carlo simulation 82 7 Safety measures for a road tunnel 84 7.1 Planning 84 7.1.1 Problem definition 84 7.1.2 Selection of analysis method 85 7.2 Risk assessment 86 7.2.1 Identification of initiating events 86 7.2.2 Cause analysis 88 7.2.3 Consequence analysis 88 7.2.4 Risk picture 91 7.3 Risk treatment 93 7.3.1 Comparison of alternatives 93 7.3.2 Management review and decision 93 8 Risk analysis process for an offshore installation 95 8.1 Planning 95 8.1.1 Problem definition 95 8.1.2 Selection of analysis method 96 8.2 Risk analysis 96 8.2.1 Hazard identification 96 8.2.2 Cause analysis 96 8.2.3 Consequence analysis 99 8.3 Risk picture and comparison of alternatives 101 8.4 Management review and judgement 102 9 Production assurance 103 9.1 Planning 103 9.2 Risk analysis 103 9.2.1 Identification of failures 103 9.2.2 Cause analysis 104 9.2.3 Consequence analysis 104 9.3 Risk picture and comparison of alternatives 106 9.4 Management review and judgement. Decision 107 10 Risk analysis process for a cash depot 108 10.1 Planning 108 10.1.1 Problem definition 108 10.1.2 Selection of analysis method 109 10.2 Risk analysis 110 10.2.1 Identification of hazards and threats 110 10.2.2 Cause analysis 110 10.2.3 Consequence analysis 113 10.3 Risk picture 115 10.4 Risk-reducing measures 117 10.4.1 Relocation of the NOKAS facility 118 10.4.2 Erection of a wall 118 10.5 Management review and judgement. Decision 119 10.6 Discussion 119 11 Risk analysis process for municipalities 121 11.1 Planning 121 11.1.1 Problem definition 121 11.1.2 Selection of analysis method 122 11.2 Risk assessment 122 11.2.1 Hazard and threat identification 122 11.2.2 Cause and consequence analysis. Risk picture 125 11.3 Risk treatment 126 12 Risk analysis process for the entire enterprise 128 12.1 Planning 128 12.1.1 Problem definition 128 12.1.2 Selection of analysis method 129 12.2 Risk analysis 129 12.2.1 Price risk 129 12.2.2 Operational risk 132 12.2.3 Health, environment and safety (HES) 134 12.2.4 Reputation risk 135 12.3 Overall risk picture 137 12.4 Risk treatment 138 13 Discussion 139 13.1 Risk analysis as a decision support tool 139 13.2 Risk is more than the calculated probabilities and expected values 140 13.3 Risk analysis has both strengths and weaknesses 141 13.3.1 Precision of a risk analysis: uncertainty and sensitivity analysis 141 13.3.2 Terminology 143 13.3.3 Risk acceptance criteria (tolerability limits) 145 13.4 Reflection on approaches, methods and results 148 13.5 Limitations of the causal chain approach 148 13.6 Risk perspectives 150 13.7 Scientific basis 153 13.8 The implications of the limitations of risk assessment 155 13.9 Critical systems and activities 157 13.10 On the difference between risk as seen from the perspectives of the analysts and management 162 13.11 Conclusions 165 A Probability calculus and statistics 167 A.1 The meaning of a probability 167 A.2 Probability calculus 168 A.3 Probability distributions: expected value 170 A.3.1 Binomial distribution 171 A.4 Statistics (Bayesian statistics) 172 B Introduction to reliability analysis 174 B.1 Reliability of systems composed of components 174 B.2 Production system 176 B.3 Safety system 176 C Approach for selecting risk analysis methods 178 C.1 Expected consequences 178 C.2 Uncertainty factors 179 C.3 Frame conditions 182 C.4 Selection of a specific method 182 D Terminology 184 D.1 Risk management: Relationships between key terms 186 Bibliography 188 Index 195

About the Author :
Terje Aven, University of Stavanger, Norway.