Thinking about risk

We are all aware of what is in the news this week.  Most of us can also remember previous industrial or technological disasters.  On top of that I’ve been listening to podcasts and webinars related to risk assessment and risk management.  Seems like a good topic for today.

I will not go into the current events and the rumors that are circulating in the media because part of their business model is based on sensationalism and because I am not an expert in the nuclear industry or in risk assessment and management.  In fact, in my line of work, redundant systems are few and far between.  Risk assessment revolves around business continuity and regulatory compliance and most of the risk management is procedural. 

This is very different from what takes place in large industrial systems or complex technologies.  Some examples of incidents from the past:

• The crash of a jetliner potentially caused by the failure of multiple speed sensors.  This would have sent wrong  information to the pilots and to the auto-pilot system
• The crash of a jetliner caused by the failure of multiple attitude (artificial horizon) sensors.  This caused both pilot to fight each other while trying to level the airplane.
• Shutdown of a large scale data center following loss of main power, depletion of the primary backup (UPS batteries),  and failure of the secondary backup (water in the generator’s fuel)

In all these case we are talking about failure of the primary system, its backup, and of the secondary backup.  Another aspect that gets factored in is experience (hindsight); this was very nicely presented by a NASA risk management expert that was discussing the safety history of the space shuttle program.  What she stated was that it is now clear that the risk had been underestimated.  Note that she did not state that risk assessment and management had been shoddy but that, knowing what they know now, they had underestimated risk.

The people who determine how many backup systems are needed and of what type do so based on their years of experience and on best practices derived from previous incidents.  Typically incidents do not repeat themselves exactly and future problems hit another part of the system. 

If any of the readers of this post care to explain the thought process that guides those in charge of risk assessment and management of complex industrial or technological system I would be grateful to them.  I would also like if someone could point out reference material (books, articles, websites) on the subject.

What do you think?  As always comments are welcome.

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Comments

[Bill Nichols]

Patrick,

I happened across a posting from Statistics Forum on the Fukushima situation. http://statisticsforum.wordpress.com/2011/03/23/quantifying-uncertainty-is-never-easy/ and added a few thoughts

http://billnichols.wordpress.com/2011/03/25/quantifying-risk-consider-fukushima-earthquake-predictions/

Interesting that they had a theory and 300 years of data suggesting a low probability of an 8.0 quake. However, undiscovered faults and surprising quakes are, well, no surprise. Overconfidence bias perhaps.

[Patrick Richard]

Bill,

Sorry for the delayed answer; life is kind of busy…

The jury is not out yet but, although it is possible that hubris may have a place in the current events, I kind of remember hearing that the Japanese knew that the fault that released was “stuck” and accumulating energy.

That being said they are known for being very good at planning for seismic events and the actual difference between 8.3 and 9.0 is about 2:1 given the logarithmic Richter scale. It is 2.7:1 when you consider what they expected.

What is really amazing to me is the compounding of events that, although factored in, had a much worse impact than expected. My take is that they did their homework but still got walloped.