Measures of risk

2 Other loss-based SHE performance indicators 17.2.1 Measures of risk 

The shortcomings of the LTI-rate have generated work to develop alternative SHE performance indicators. There is also a need for SHE performance indicators in areas other than occupational accidents. The LTI-rate belongs to the important category of loss-based SHE performance indicators. They all represent measures of the risk of accidents. This risk is related to an identified activity. We use SHE performance indicators to calculate the historical risk associated with activities that have taken place in the past. In Part V we will present methods to estimate the expected risk associated with future activities by applications of risk analysis. 

We define the risk of accidents as a combination of the probabiHty or frequency of accidents involving losses in a specified activity, and the extent of the losses (consequences). The measure of risk has three components  

1 A measure of the exposure to the activity involving accident risks. Example In the LTI-rate, the exposure is measured in terms of the number of man-hours in the activity in question. 

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Numerical Measures of Risk Without risk and the reward for successfully accepting risk, there would be no business activity. In estimating the probabilities of attaining various levels of net present value (NPV) and discounted-cash-flow rate of return (DCFRR), there was a spread in the possible values of (NPV) and (DCFRR). A number of methods have been suggested for assessing risks and rewards to be expected from projects. 

Cost of Capital The value of the interest rate of return used in calculating the net present value (NPV) of a project is usually referred to as the cost of capital. It is not a constant value since it depends on the financial structure of the company, the policy of the company toward a particular project, the local method of assessing taxation, and, in some cases, the measure of risk associated with the particular projec t. The last-named fac tor is best dealt with by calculating the entrepreneurs risk allowance inherent in the project i from Eq. (9-108), written in the form... 

The acronym for chemical process quantitative risk analysis. It is the process of hazard identification followed by numerical evaluation of incident consequences and frequencies, and their combination into an overall measure of risk when applied to the chemical process industry. It is particularly applied to episodic events. It differs from, but is related to, a probabilistic risk analysis (PRA), a quantitative tool used in the nuclear industry... 

Combining the estimated consequences and likelihood of all incident outcomes from all selected incidents to provide a measure of risk... 

A measure of risk to a group of people. It is most often expressed in terms of the frequency distribution of multiple casualty events... 

Provides a qualitative measure of risk Provides a coarse quantitative measure of risk Provides an absolute quantifalnc measure of risk... 

Vesely, W. E. et al., 1983, Measures of Risk Importance and Their Applications, NUREG/CR-3385, July. 

Chemical Process Quantitative Risk Analysis(CPQRA) The numerical evaluation of both incident consequences and probabilities or frequencies and their combination into an overall measure of risk. 

Societal Risk measures the potential for incidents to affect many people. It has historically been applied as a measure of risk to the general public exposed to the same event or events. Societal risk is often presented as a frequency distribution of multiple-casualty events, called an F-N curve, showing the frequency of events F) leading to N or more fatalities. 

The standard deviation can be used as a measure of risk. For example, if we pool the risk of random demands by several customers in one warehouse, the above formula indicates that the risk increases slower than the mean demand. It is therefore generally a good idea to pool risks. 

Societal risks are single number measures, tabular sets of numbers, or graphical summaries that estimate risk to a group of people located in the effected zone of an incident. Since major incidents have the potential to affect many people, societal risk is a measure of risk to a group of people. It is most often expressed in terms of the frequency distribution of multiple casualty events, such as the F-N curve shown in Figure 6-5. The calculation of societal risk requires the same frequency and consequence information as individual risk. Additionally,... 

The quantitative evaluation of expected risk from potential incident scenarios. It examines both consequences and frequencies, and how they combine into an overall measure of risk. The CPQRA process is always preceded by a qualitative systematic identification of process hazards. The CPQRA results may be used to make decisions, particularly when mitigation of risk is considered. 

It should be noted that MOS ratios are no absolute measure of risks. Nobody knows the real risks of chemicals where the exposure exceeds the derived no-effect level (DNEL). The risk assessor only knows that the likelihood of adverse effects increases when the DNEL/E ratios decrease or the E/DNEL ratios increase. Thus, such ratios are internationally accepted only as substitutes for risks. 

Konno and Yamazaki (1991) proposed a large-scale portfolio optimization model based on mean-absolute deviation (MAD). This serves as an alternative measure of risk to the standard Markowitz s MV approach, which models risk by the variance of the rate of return of a portfolio, leading to a nonlinear convex quadratic programming (QP) problem. Although both measures are almost equivalent from a mathematical point-of-view, they are substantially different computationally in a few perspectives, as highlighted by Konno and Wijayanayake (2002) and Konno and Koshizuka (2005). In practice, MAD is used due to its computationally-attractive linear property. 

In stochastic optimization, Cv can be purposefully employed to investigate, denote, and compare the relative uncertainty in models being studied. In a risk minimization model, as the expected value is reduced, the variability in the expected value (for example, as measured by variance or standard deviation) is reduced. The ratio of this change can be captured and described by Cv. Consequently, a comparison of the relative merit of models in terms of their robustness can be represented by their respective values of Cv, in the sense that a model with a lower Cv is favored since there is less uncertainty associated with it. In fact, Markowitz (1952) advocates that the use of Cy as a measure of risk would equally ensure that the outcome of a decisionmaking process still lies in the set of efficient portfolios for the case of operational investments. 

Although the literature indicates that seizures and arrhythmias are associated with TCA plasma levels greater than 1,000 ng/mL, the QRS duration might be a better early predictor than plasma levels in overdose cases. For example, in a series of 49 TCA overdoses, seizures occurred only in cases with a QRS duration above 0.10 second, and ventricular arrhythmia was seen with a QRS greater than 0.16 second (430). Thus, for acute overdose, the ECG may provide a reliable and quick measure of risk with TCA drugs however, how well a QRS of less than 0.10 second predicts ultimate safety or how long after ingestion the ECG must be followed, is uncertain (431). 

This portion of the discussion is limited to a general overview. Significant literature exists on this subject however, most gas purification processes have not been extensively tested on coal- or oil shale-derived gases the engineering transfer of technology from other systems entails a measure of risk. 

Swedish politicians more or less openly admit that the concerns of the most risk-adverse people, rather than objective measures of risk, guide their policies directed at chemicals. Such pol-... 

The measure of risk (health-effect endpoint) calculated in risk assessments often differs for radionuclides and chemical carcinogens. Fatalities is the measure of risk most often used for radionuclides, but cancer incidence is generally used for chemical carcinogens. 

The risk index for any hazardous substance in Equation 1.1 or 1.2 (see Section 1.5.1) is calculated based on assumed exposure scenarios for hypothetical inadvertent intruders at near-surface waste disposal sites and a specified negligible risk or dose in the case of exempt waste or acceptable (barely tolerable) risk or dose in the case of low-hazard waste. Calculation of the risk index also requires consideration of the appropriate measure of risk (health-effect endpoint), especially for carcinogens, and the appropriate approaches to estimating the probability of a stochastic response per unit dose for carcinogens and the thresholds for deterministic responses for noncarcinogens. Given a calculated risk index for each hazardous substance in a particular waste, the waste then would be classified using Equation 1.3. 

A monitoring system based on excretion of metabolites is likely to be useful only when the mutagenic agent is known, as in occupational esqposures and the effect will persist only as long as the exposure. Nevertheless, such an approach may have value in special situations. There is no way to translate such observations into a measure of risk. 

The estimated impact is then compared to hazard acceptance criteria to determine whether the consequences are tolerable without additional loss prevention and mitigation measures. If the identified consequences are not tolerable, the next step is to estimate the ffequency/probability of occurrence of the identified failure modes leading to loss of containment. For simple cases, frequency estimates are combined with consequences to yield a qualitative estimate of risk. For complex cases, fault tree analysis is used to estimate the frequency of the event leading to the hazard. These estimates are then combined with the consequences to yield a measure of risk. The calculated risk level is compared to a risk acceptance criterion to determine if mitigation is required for further risk reduction. 

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