PREVIOUS | TABLE OF CONTENTS | NEXT

2. RISK ASSESSMENT MODULE

Figure 5 - Risk Assessment Module
Enlarge table Image

Figure 6 - Risk Assessment Module: Risk Scenarios
Enlarge table Image

A risk scenario can be defined as a sequence of events, with an associated frequency, potentially leading to an adverse consequence. This sequence of events must include the hazard, the item(s) of value exposed to the hazard and the potential severity of the adverse consequences that may be generated.

Purpose: To develop risk scenarios with respect to identified hazards.

This component requires:

1.  an inventory and description of the relevant hazards;

2.  development of scenarios leading to potential adverse consequences;

3.  description of potential adverse consequences;

4.  collection of data to provide an estimate of probability; and

5.  a diagram of the sequence of events (if needed).

•  A list and description of hazards;
•  A set of risk scenarios and of the adverse consequences they can produce; and
•  For each scenario developed, an Events Diagram.

Some situations can be quite complex and it is therefore possible that not all risk scenarios can be identified.

In many situations, there can be many minor variations to the scenarios and it may not be necessary or practical to develop them all.

In many situations, there can be many minor variations to the scenarios and it may not be necessary or practical to develop them all.

The development of risk scenarios may result in new stakeholders being identified.

There are many approaches for the development of risk scenarios. For the PRMM, it is suggested that the development of scenarios start with the identification and description of known hazards. These inventories of hazards can be reused in future applications of the PRMM.

There are generally four types of hazards that can generate adverse consequences. Only the first three listed below will normally be relevant in the PRMM.

•  natural hazards such as strong currents, storms, shallow waters and other natural phenomena;
•  human hazards such as errors or omissions by the master, pilots, or crew, or acts of sabotage or terrorism;
•  technical hazards such as loss of navigation aids, loss of power or equipment failures and obsolescence of equipment; and  economic hazards such as inflation or business cycles.
• Hazard identification can be performed by using the following approaches:
•  reviewing past accident history from other areas where situations are similar;
•  brainstorming by a team of experts that understand all aspects of the situation under consideration; and
•  consultation with stakeholders, many of whom may have relevant knowledge or expertise.

Worksheet

2.1.2 DESCRIPTION OF RISK SCENARIOS ^

In developing risk scenarios, the most obvious hazards and the most realistic events that could lead to adverse consequences should be the initial focus. Scenarios should be kept simple, concise and understandable.

The risk scenarios should embody a hazard or hazards which have the potential to generate adverse consequences. They should include the condition that exposed something of value to the hazard and its consequences. If possible, a single phrase or sentence should be used to briefly describe the key circumstances or situation, etc., that could cause concern, doubt, anxiety, or uncertainty. This is followed by a single phrase or sentence describing the key, possibly negative outcome(s). In order to capture the statement of risk and identify the condition, the questions "what if?", or "given that a situation exists" can be used. Then the question "so what?" is used to identify the consequences.

Risk scenarios may be identified using a variety of means including:

•  failure modes and effect analysis;
•  review of historical data;
•  using the experience of experts;
•  fault tree analysis; or
•  professional judgment (both internal and external).

Once the pathway from a hazard to an adverse consequence is developed as a risk scenario, the data required to support the frequency or severity estimations can be identified. After this is completed, the set of risk scenarios and their adverse consequences provides an accounting type of framework for the remainder of the risk assessment module as you progress through the PRMM; summed together, these items define the total risk.

Worksheet

This step in the process is intended to assist in determining the severity of the adverse consequences.

This involves estimating the potential impact of the adverse consequence on people, property, the environment and, often, commercial operations.

Generally, the four types of hazards listed in 2.1.1, can generate several different types of adverse consequences:

•  health problems or death and injury, sometimes referred to as mortality (death) and morbidity (injury);
  
•  property losses including losses of real or tangible property (buildings, vessels etc.) and intangible property (trade name);
  
•  net income losses are any losses that lead to an increase in costs or a reduction in revenues;
  
•  a liability loss results when an individual or organization is sued for an alleged breach of legal duty, regardless of the merit of the suit. The party sued must defend itself, even if it has done no wrong;
  
•  a personnel loss results when an organization loses the services of a key employee. It may need to hire new staff, at higher wages, or the loss may simply result from lost productivity until the new employee is properly trained;
  
•  environmental losses (negative impact on water, flora or fauna caused by pollution); or
  
•  a loss of reputation or status.

Construction of the diagram can start as the scenario is being developed. Then, as more data is

collected, it can serve as a guide as to what areas may need to be developed further. Conversely, looking into these areas can reveal the need for more data.

Since the diagram will start out as a living document, one technique to begin construction of the diagram is to use "post-it notes" or "stickies", to record each event in the sequence. These can then easily be adjusted as more data becomes available and as the sequence of events is refined.

2.1.4 PROBABILITY OF ADVERSE CONSEQUENCE ^

Once a risk scenario has been developed and the potential adverse consequence(s) are identified, data will be required in order to estimate the probability of the adverse consequence happening.

Often, some scenarios will be based on the experience and background of the experts as "hunches".

Although these may not be substantiated with empirical data, they are still relevant risk scenarios that can contribute to the overall evaluation of risk. These can involve the following:

•  an assessment of the operational factors;
•  an assessment of the technical factors; and
•  an assessment of the human factors.

For those scenarios that are based on historical events, empirical data from a review of databases (accident data, insurance data, and company operational data) can provide the basis for estimating probability. Frequently, these databases can also be used to estimate the severity of the adverse consequences, particularly where no loss of life has occurred. For example, useful external data can be obtained by using tools such as the "Risk-based Design Method for Aids to Navigation in the St. Lawrence River" available from the Transportation Development Center (see bibliography).

Frequency estimation relies heavily on data. Data collection is not a single stage or phase; it is required to support decision-making throughout the PRMM process.

Displaying scenario events and factors in a systematic and orderly diagram is a useful technique.

Such diagrams depict, in a logical sequence, the events and conditions of the scenario. They should be used to help track and control the development of more complex scenarios.

Constructing a diagram facilitates the documentation of the scenario events and can assist in identifying hazards and underlying conditions leading to the development of the adverse conditions.

The diagram can:

•  guide the team in the development of the scenario;
•  illustrate the events chronologically;
•  aid in detecting hazards, gaps and adverse consequences;
•  clarify reasoning;
•  visually portray the interactions and relationships of various stakeholders;
•  link certain events to hazards and to various stakeholders; and
•  illustrate the scenario events for presentation.

Additionally, the diagram can assist in formatting and writing the concluding documents and decision by assisting in the logical structuring of the scenario.

The diagram should contain only the level of detail required to adequately describe the sequence of events, the hazard, and the adverse consequences. Decisions about what to include in the diagram should be made on an event-by-event basis. The purpose of the diagram is to identify the hazards and how they will lead to adverse consequences.

Construction of the diagram can start as the scenario is being developed. Then, as more data is collected, it can serve as a guide as to what areas may need to be developed further. Conversely, looking into these areas can reveal the need for more data.

Since the diagram will start out as a living document, one technique to begin construction of the diagram is to use "post-it notes" or "stickies", to record each event in the sequence. These can then easily be adjusted as more data becomes available and as the sequence of events is refined.

These diagrams should be treated as working documents that will evolve as the scenarios are developed. Thus, the initial diagram may be only a skeleton of the final team document.

Once the data are collected for each scenario, an estimation of probability and severity associated with each adverse consequence can be performed and a level of risk can be assigned to help determine what the next steps should be.

Purpose: To assign a level of risk to each adverse consequence.

This component requires:

1.  an analysis of the data regarding the probability and severity of each adverse consequence; and

2.  an assignment of a level of risk to each adverse consequence.

•  an estimate of the probability of the adverse consequence occurring;
•  an estimate of the severity of the adverse consequence; and,
•  completion of the risk assessment matrix.

As more information becomes available, the risk matrix may need to be revised.

2.2.1 PROBABILITY AND SEVERITY OF ADVERSE CONSEQUENCES ^

Using the available data from each selected risk scenario, an evaluation and estimation of probability and severity must be performed, supported by judgments and any empirical data on the potential adverse consequences. Tables like those shown below are used to select the appropriate category for both probability and severity to complete a risk matrix.

Examples for definitions of probabilities of adverse consequences over time:

By inserting the probability and severity estimated above into a risk matrix, a risk level can be derived for each adverse consequence identified in the risk scenarios, and the next steps can be determined. The rating derived from the matrix may also be used to prioritize the scenarios according to risk level.

The appropriate next steps will depend on the risk level assigned to each adverse consequence.

For example:

•  Extreme - Risk level unacceptable. Proceed with PRMM steps.

•  High - Undesirable. Proceed with PRMM steps.

•  Medium - May be acceptable. Proceed with PRMM steps.

•  Low - May be acceptable. Proceed with assessment of impact in relation to stakeholder NICs (step 4.3.3).

Worksheet

In this step, the risk level associated with the projected adverse consequences will be addressed by first evaluating the current level of protection provided by the defences already in place, if any.

This is followed by an evaluation of the risk based on the stakeholder’s NICs in relation to the level of risk.

Purpose: To evaluate current defences and their ability to reduce the risk to an acceptable level. This component requires:

1.  identification of current defences in two categories;

2.  evaluation of the effectiveness of current defences;

3.  evaluation of the acceptability of the risk levels; and

4.  decision as to whether further action is required.

•  an analysis of the current defences;

•  completion of the defence analysis worksheet;

•  a comparative evaluation the stakeholders NICs vs. risk level; and

•  a decision as to whether or not further action is required .

In this step, actual defences are identified in each scenario. Defences are barriers/guards that isolate and protect things of value from hazards. Defences can be divided into two categories, physical and administrative, as illustrated below:

Defences limit or eliminate the likelihood that the identified

hazard. Defences can be placed:

•  on the source or hazard;
•  on the target or thing of value; or
•  between the source or target.

Worksheet

Once the defences have been identified, the level of effectiveness expected from each defence must be determined. Evaluating the adequacy of the current defences is done by answering the question, "What percentage of effectiveness does it provide if:"

•  the defence is provided to prevent exposure to the hazard or to make its consequences less severe;
•  the defence is currently used;
•  the defence is practical; and
•  the defence functions as intended?

Where the defences do not meet the targeted requirements, the scenario will be carried through to the next step in the PRMM.

Worksheet. A defence worksheet has been developed to help with the defence analysis. The worksheet serves as a reminder of the kinds of defences likely to be present in each of the two categories and provides a check list to record the effectiveness of each defence identified.

If the current defences reduce the risk level to low, proceed directly with an assessment of the impact relative to the stakeholders NICs (step 4.3.3).

In evaluating "acceptability", adequate consideration should be given to the NICs of all relevant stakeholders.

 

2.3.3 ACCEPTABILITY TO STAKEHOLDERS ^

In most instances, those who are familiar with a given activity or business tend to view risks associated with their activity or business differently from those who are not. In particular, experts

emphasize technical factors such as the probability or severity of an adverse consequence (i.e., risk level), but many stakeholders, including the public, might emphasize factors such as:

•  the degree of personal control that can be exercised over the activity; some are less accepting of risks over which they have no control;
  
•  the potential of a hazard resulting in a severe consequence, (one death vs. many deaths); or
  
•  the degree to which exposure to the risk is voluntary. When evaluating perceptions, it should be kept in mind that an activity that is estimated as extremely low level of residual risk may be disregarded by experts. However, it may be a major source of concern for some stakeholders, which may require that the communication plan specifically address the concerns of those stakeholders if the decision is to be sustainable.

Prior to making any final judgment on the acceptability of the level of risk, the costs and benefits of the activity must be compared to the stakeholder NICs. Both the obvious or hard benefits and costs of the activity along with the less obvious soft benefits and costs must be considered. For example, the assurance people derive from knowing that a pilot is on board a vessel makes them less fearful of the risks associated with docking a large vessel. The reduced anxiety should be considered as a relevant benefit.

Worksheet

2.3.4 DECIDE IF FURTHER ACTION REQUIRED ^

At this point, sufficient information should be available to determine that:

•  if the defences are adequate and/or stakeholder NICs have been addressed, no further action is required;
  
•  if the defences are less than adequate, strategies are required to reduce the risk level; or
  
•  if stakeholder NICs have not been adequately addressed, further action may be required to improve stakeholder acceptance or tolerance of the risk.

If the decision is that the level of risk is unacceptable, then risk control strategies must be developed

to reduce the risk to an acceptable level, and these options must then be weighed against the stakeholder NICs.

Purpose: To identify the best risk control option.

This component requires:

1.  identification of feasible risk control options;

2.  assessment of options in view of the probability and severity of the adverse consequences;

3.  assessment of options and any residual risk in light of known stakeholder NICs and project objectives; and

4.  selection of the best option.

•  a list of feasible risk control options;
•  completion of the risk control option worksheet;
•  assessment of risk control options against stakeholder NICs and project objectives; and,
•  select the best option.

The best risk control option must fit within the mandate and objectives of the PA and the project.

Also, the list of stakeholders should be reviewed in light of the selected option as this may have an impact on the implementation schedule. For example, if one of the options selected to assist pilots while navigating a large vessel in confined waters is the use of an additional tug boat, this may put too much strain on the current fleet of tug boats and additional boats may be needed.

Obviously, this could result in an implementation delay and temporary solutions such as making arrangements with a neighboring port to assist in carrying the increased workload may be needed.

This could increase the number of stakeholders on your list.

At this point, the control options must be assessed against the project objectives in order to ensure that the chosen risk control options fall within the scope of the project.

Identifying the available and feasible options to reduce the risks associated with an adverse consequence is sometimes easier by following the Risk Control Options worksheet. As in the risk evaluation step, defences are divided into two categories: physical and administrative. Using the worksheet to pose questions will reveal risk reduction or mitigation options under the two types of defences. For example, from an administrative perspective, while reviewing the operational readiness of the Masters of a vessel, the level of training and experience may need to be increased so that the Masters are better able to respond appropriately in certain situations. From a physical perspective, a requirement that certain sized vessels be equipped with bow thrusters may need to be considered at certain ports with limited room for maneuvering.

Feasible risk control options should reduce either the probability of exposure to risk or the severity of the adverse consequence, or both. For example, fenders reduce the amount of ship and dock damage when the two collide, thereby reducing the consequences without reducing the probability.

However, building a sea-wall may reduce the number of ship-to-dock collisions, thereby reducing the probability. 

Worksheet

Using data collected from the risk estimation, another probability and consequence analysis must be performed, only this time, the identified risk control options must be factored in. Obviously, until an option has been implemented and actual results observed, its effect can only be estimated.

However, with the involvement of knowledgeable experts, a reasonable estimate of the residual risk level can be established. Any residual risk must be evaluated by returning to the risk evaluation step to determine whether or not it will be acceptable. If unacceptable, from the perspective of not adequately reducing the risk level, another option must be selected or found, or additional risk control measures devised.

2.4.3 ASSESS THE IMPACT ON IDENTIFIED NICs ^

At this point, the control options must be assessed against the identified stakeholder NICs. Even though one of the options may result in the lowest cost, it may be unacceptable to one or more stakeholders for other reasons. For example, discontinuing pilotage services too early for the winter might cause a steel plant in Hamilton to deplete its stockpile of raw materials, whereas remaining open for one more week may allow the plant to remain open through the winter.

Once the risk estimation and risk evaluation steps have been weighed against the stakeholder NICs and revised accordingly, the best option can be selected. It is necessary during this step to consult with the stakeholders and keep them informed of any residual risk so that their concerns can be addressed. Often, this is best done by providing as much information as possible. For example, include information on projected costs and benefits and on any new consequence that could impact on the level of stakeholder acceptance.

Once all steps have been completed and the residual risk evaluated at an acceptable level, the best option is selected. If, however, the residual risk cannot be reduced to an acceptable level, the activity may need to be modified or discontinued altogether.

PREVIOUS | TABLE OF CONTENTS | NEXT