Presentation of Risk

Abstract calculations of risk have meaning only when their meaning is understood by people. Their significance may be communicated quantitatively and qualitatively. 

This ordering by singles, doubles and triples takes added meaning when the failure rates of the active and passive components (Table 1.4.3-1) are included. A doublet has a failure frequency that is the product of the two failure rates a triplet is the product of three 

The uncertainties in the data should be carried through the analysis and sensitivi performed. It is important to recognize that results can be useful despite large uncertaintie the ler of importance may not be strongly affected by the uncertainties. 

An important product of the analysis is the framework of engineering logic generated in constructing the models. The numerical estimates of frequencies need only be sufficiently accurate to --------risk-significant plant features. 

The patterns, ranges, and relative behavior -obtained can be used to develop insights into design and operation - insights that can be gained only from an integrated, consistent approach such as PSA. 

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Figure 4.1 Presentation of risk tolerance levels and ALARP region (Ref. 46).

Note that some of the risk information is actuarial (based on statistical data, typically collected and organized by insurance companies), and some of it has been derived from the type of risk assessment discussed in this book (chloroform in chlorinated drinking water, afla-toxin in peanut products). While the uncertainties associated with the figures in Table 11.2 are much greater for some risks than for others (not a trivial problem in presentation of risk data), such a presentation, it would seem, is helpful to people who are trying to acquire some understanding of extremely low probability events, of the order of one-in-one million. 

For those readers desiring more details on risk assessment and risk management, Appendix A of the National Research Council (NRC) report Risk Assessment and Management at Deseret Chemical Depot and the Tooele Chemical Agent Disposal Facility (NRC, 1997) develops the bases for the presentations of risk (risk profiles and expected fatalities), explains how to interpret the results, and discusses various measures according to which risks can be compared. 

K.R. Foster, D.E. Bernstein, P.W. Huber, eds. Phantom Risk. Scientific Inference and the Law. Cambridge, MA The MIT Press, 1993. (See legal discussions on toxic anxiety on pages 33 and 343 to 345. Note I would strongly recommend this book for a more technical presentation of risk assessment that the authors say occur at the interface of science and law. )... 

When ethanoi is present, the risk of separation is much less than with methanol. Nevertheless, the ethanol should be relatively anhydrous (less than 3000 ppm water) moreover, if a fuel containing ethanol comes in contact with a water layer, a migration of ethanol toward the water is observed creating a fuel quality problem manifested by lower octane number and an environmental quality problem in that the water will need to be treated. Distribution of ethanol-based fuels requires extra precaution to ensure dryness in distribution systems. 

Cases 3 and 4 are both exploration prospects, since the volumes of potential oil present are multiplied by a chance factor which represents the probability of there being oil there at all. For example, case 3 has an estimated probability of oil present of 65%, i.e. low risk of failure fo find oil (35%). However, even if there is oil present, the volume is small no greater than 130 MMstb. This would be a low risk, low reward prospect. 

A Monte Carlo simulation is fast to perform on a computer, and the presentation of the results is attractive. However, one cannot guarantee that the outcome of a Monte Carlo simulation run twice with the same input variables will yield exactly the same output, making the result less auditable. The more simulation runs performed, the less of a problem this becomes. The simulation as described does not indicate which of the input variables the result is most sensitive to, but one of the routines in Crystal Ball and Risk does allow a sensitivity analysis to be performed as the simulation is run.This is done by calculating the correlation coefficient of each input variable with the outcome (for example between area and UR). The higher the coefficient, the stronger the dependence between the input variable and the outcome. 

The example just shown assumed one discount rate and one oil price. Since the oil price is notoriously unpredictable, and the discount rate is subjective, it is useful to calculate the NPV at a range of oil prices and discount rates. One presentation of this data would be in the form of a matrix. The appropriate discount rates would be 0% (undiscounted),.say 10% (the cost of capital), and say 20% (the cost of capital plus an allowance for risk). The range of oil prices is again a subjective judgement. 

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. 

The same questions may then be asked for different values of the probabilities p and po. The answers to these questions can give an indication of the importance to the company of P at various levels of risk and are used to plot the utility curve in Fig. 9-25. Positive values are the amounts of money that the company would accept in order to forgo participation. Negative values are the amounts the company woiild pay in order to avoid participation. Only when the utihty value and the expected value (i.e., the straight line in Fig. 9-25) are the same can net present value (NPV) and discounted-cash-flow rate of return (DCFRR) be justified as investment criteria. 

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... 

Type 2 On the other hand. Type 2 degree of protection limits the extent of damage in the case of a short-circuit. Now under short-circuit conditions, the contactor or the starter will present no risk to the operator or the installation and will remain suitable for further service. In other words, no damage to the contactor or the OCR is permitted. It may, however, be interpreted that contact welding may be permissible to the extent that the contactor can be put to service once again after a brief period by separating the contacts with the help... 

The aim of a risk assessment is to develop a product which is safe for the proposed market. A safe product is any product which, under normal or reasonably foreseeable conditions of use, including duration, presents no risk or only the minimum risk compatible with the product s use and which is consistent with a high level of protection for consumers (DTI, 1994). In attempting to protect products against failure in service and, therefore, the user or environment, difficulty exists in ascertaining the... 

In view of the above adverse effects a safety factor should be applied where flammability is assessed using flash point. For pure liquids in containers the vapor should be considered potentially flammable if the liquid temperature is upward of at least 5°C below the reported flash point. For mixtures whose composition is less certain, such as petroleum mixtures, the safety factor should be about 15°C relative to the flash point [55]. Where combinations of adverse effects are identified the safety factors should be increased accordingly. A simple but very conservative approach is to assume that all liquids having a flash point <141°F may produce a flammable atmosphere under some ambient conditions, even where no mist or froth production is involved. A more practical approach is to assume that liquids handled in air at least 5-15°C below their closed cup flash points will not present ignition risks unless... 

At this point, following the chapters, the objectives have been defined, the effect of government regulations and standards are known, accidents have been identified and analyzed by various methods to determine the probability of an accident, and the accident consequences have been calculated. These parts must be assembled to present the risk and the analysis of the risk according to its various contributors. 

If the containment holds, nuclear power plants present no risk to the public. Overpressurization of the containment is the failure mode that could allow direct release of radioactivity to the public. Design a risk reduction investigation of the benefits of releasing the gas pressure through an offgas processing system that removes the particulates. 

The materials used in manufacture of the product have to present minimum risk to the environment during use and disposal. 

Altliough the technical conununity has come a long way in understanding how to do a better job in luizard identification, dose-response assessment, and exposure assessment portions of risk assessment, it lias only begun to understand how to best cluiractcrize hcaltli risks and how to present tliese risks most appropriately to both the public and decision makers. Tlie next tliree sections specifically address tlicse issues. Tliis section deals witli qualitative risk assessment while tlie next two sections deal witli quantitative risk assessment. 

Table 18.4.1 smiinuuizes another inetliod of risk assessment tliat can be applied to an accident system failure. Both probability and consequence have been ranked on a scale of 0 to 1 witli table entries being the sum of probability and consequence. The acceptability of risk is a major decision and can be described by dividing tlie situations presented in Table 18.4.1 into unacceptable, marginally acceptable, and acceptable regions. Figiue 18.4.2 graphically represents tliis risk data. ... 

Another problem with risk estimates is that they are usually based on very conservati C assumptions. Thus, the aiuilyses may result in a calculation tliat presents too high a risk. Umicccsstiry equipment or procedures tnay have to be installcd/instituted at a facility to reduce tlie calculated risk. In an effort to better understand tlie significance of risk analyses, it is often helpful to place tlie estimated risks in perspective with otlicr risks. 

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