Risk management
ENGR 403 – Fire Engineering
Module 24
Risk management
Suggested reading
z FEDG – Chapter 3, Fire Risk
2
Risk management
Introduction
z Risk assessment involves not only the ‘hard’
sciences of maths and engineering but also aspects
of sociology, psychology etc.
z We live in a complex technological society in which
‘risk’ is part of life
z All human activities involve some risk. It can be
reduced but not eliminated completely
z If we only have a limited amount of resources, how
do we decide how to allocate those resources to
reduce or eliminate the risks?
z Although in fire safety we usually think of negative
risks there may be other situations where a risk has
a positive impact
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Risk management
Introduction
z Consider the following scenarios for a building
Two drunk teenagers break in after hours and one gets
killed by falling off some rack storage
Each year 10 workers injure themselves during normal
operation of the building
Some of the chemicals stored in the building spill into a
nearby river killing 10,000 fish
z Which is ‘worst’?
z Are any acceptable?
z What should be done?
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Risk management
Introduction
z Provide a measure of risk
z Decide whether a risk is ‘acceptable’
Compare different risks
Set tolerability criteria
z Identify in what order ‘unacceptable’ risks should be
reduced or avoided
z Provide tools that can be used to reduce a risk
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Risk management
Introduction
z Risk needs to be balanced by costs
Cost ($)
Risk
Minimum level of risk defined by
technological ability
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Risk management
Introduction
z Areas where risk management is used
Fire safety
Civil engineering (e.g. earthquake design)
Process engineering (e.g. petrochemical industry)
Nuclear power generation
Environmental impact
Transportation
Food & drug industry
Insurance
Financial markets (?)
Etc…
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Risk management
Risk calculation
Risk = fn(likelihood, consequence)
or
Risk = likelihood x consequence
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Risk management
Risk calculation
z Five stage process
1. Identification – identification of risks
and hazards that are apparent, the
ways in which they occur and the
likely consequences of their
occurrence
2. Estimation of likelihoods – how
often the hazards occur
3. Estimation of consequences – the
consequence of an event if it
should occur
4. Risk calculation
5. Risk acceptability – are the risks
acceptable and if not what can be
done to reduce them
FEDG, Fig. 3.2 – from Risk Management
Handbook HB4525 also see NZS 4360 –
9 Risk Management
Risk management
Risk calculation
z Some potential building fire risks and hazards
Life safety - Someone getting killed in a fire in an office as
the result of an arson attack
Business disruption – An accidental waste paper fire in the
computer room destroys the disk storage and shuts the
business down for a month
Property loss - The building burning down after a lightning
strike
And so on…
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Risk management
Risk calculation
z We can estimate likelihoods in different ways, for
example
Probability (%)
Scale (high, medium, low)
z We can measure consequences in different ways,
for example
Monetary value
Number of deaths
The amount of bad publicity
We might try to combine the above into a scale (high,
medium, low)
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Risk management
Risk calculation
z There are a number of descriptive / numerical tools
available to identify likelihoods and consequences
Fault trees Event trees
FR upholstered Flaming (or Smoke alarms? N FPA 72 system (or
furniture? smouldering) fire? m inim al system )?
Y
1
Y
Y N
2
N
3
Y Y
4
Y
N
N 5
N
6
Y
7
Y
Y N
8
N
9
N Y
10
Y
N
N 11
N
12
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Risk management
Risk calculation
z We could examine a range of risks and then rank the
risks in order
z Ranking risks may need to be considered if there are
limited resources
z Putting costs onto people, the environment etc. can
be very difficult
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Risk management
Risk acceptance
z Once we have determined the
risks (and possibly ranked them)
we might want to decide whether
they are acceptable
z Risks should be reduced until
they are as low as reasonably
practicable or ‘ALARP’
FEDG, Fig. 3.1
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Risk management
Risk acceptance
z Acceptability is difficult to determine and may be influenced by the
perception surrounding the risk
Public perception of risk may be clouded by political and social issues
and is directly influenced by public awareness
A risk may be more acceptable if it is familiar (e.g. driving, commercial
flying)
A risk may be more acceptable if the risk taker feels in control (e.g. as
the driver of a car compared to being a passenger)
The ‘dread’ element (such as in the nuclear or chemical industry) may be
a factor
A risk depends on benefits derived from the product
or activity
Voluntary risk acceptance is about 1000 times
greater than for involuntary risks
Risk of death by disease is the
psychological yardstick
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Risk management
Risk reduction
z If we decide that the risk is unacceptable there are a
number of options to consider
z Stop doing the activity
z Reduce the likelihood of an event occurring
z Reduce the consequences
e.g. Deaths become injuries
z Transfer the risk
Take out insurance so that someone else takes the risk for
you
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