Risk acceptance

Management has to decide if the calculated level of risk is acceptable, and, if it is not, what actions need to be taken to reduce it. Some Safety Management Systems—in particular many Safety Cases—are built around the concept of a numerical value for an ALARP (As Low as Reasonably Practicable) value, as already discussed. If the risk lies above or below the predetermined ALARP value then corrective actions must be taken. 

Other Safety Management Systems (including SEMP and SEMS) do not discuss acceptable risk per se, nor do they provide numerical values for acceptable risk. Instead they are largely driven by the acceptable levels of risk that are implicit in industry standards from bodies such as the API (American Petroleum Institute) and the ASME (American Society of Mechanical Engineers). 

For example, the following text from API s Recommended Practice for Analysis, Design, Installation, and Testing of Basic Surface Safety Systems for Offshore Production Platforms (RP 14C) states  

The safety system should provide two levels of protection to prevent or minimize the effects of an equipment failure. 

In this example, an expert committee has decided that two levels of protection provide an acceptable level of risk control. In effect, the determination as to what level of risk is acceptable has been transferred from the facility s engineers and managers to an expert committee that has then developed a consensus standard. 

Safety is only as important as management wants to make it. At this point in the safety process, this becomes obvious. After the system has been studied and hazards have been identified, analyzed, and evaluated with controls in place, management must make the formal decisions of which risks they are willing to accept and which 

System Safety Engineering and Risk Assessment A Practical Approach 

Part of the risk acceptance process is a methodical decision-making approach. If the risks are not acceptable, then the system must be modified and the hazard identification process must be followed once again. If the risks are acceptable, then good documentation with written rationale is imperative to protect against liability claims. Chapters 13 and 14 address these issues in depth. Some people will use the term risk appetite to describe this process. The very first step—define objectives— should clearly define what is an acceptable risk (risk tolerance or risk appetite) that the company is willing to accept. 

Modify the system If the risk is unacceptable, then the system must be modified to reduce the risk, and the process of hazard identification starts again to make sure that the modifications don t obviate any safety controls and that they truly reduce the risk to an acceptable level. 

Risk acceptance and rationale documented Many times companies will not adequately document how and why a particular risk was accepted. The risk acceptance becomes too informal. This can be devastating if you are responding to a lawsuit or formal inquiry or accident investigation. Also, when you want to update a system and make changes, it becomes very important to understand how and why certain risks were accepted. 

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The remaining step in the hazard identification and risk assessment procedure shown in Figure 1 is to decide on risk acceptance. For this step, few resources are available and analysts are left basically by themselves. Some companies have formal risk acceptance criteria. Most companies, however, use the results on a relative basis. That is, the results are compared to another process or processes where hazards and risks are weU-characterized. 

Time Value of Money A large part of business activity is based on money that can be loaned or Borrowed. When money is loaned, there is always a risk that it may not be returned. A sum of money called interest is the inducement offered to make the risk acceptable. When money is borrowed, interest is paid for the use of the money over a period of time. Conversely, when money is loaned, interest is received. 

Starr, 1969 approached this by investigating the "revealed preferences exhibited in society ls the result of trial and error. (Similar to the "efficient market theory" in the stock market.) Stan-conjectured that the risk of death from disease appears to determine a level of acceptable voluntary risk but that society requires a much lower level for involuntary risk. He noted that individuals seem to accept a much higher risk (by about 1000 times) if it is voluntary, e.g., sky-diving or mountain climbing, than if it is imposed, such as electric power or commercial air travel, by a correlating with the perceived benefit. From this study, a "law" of acceptable risk was found concluding that risk acceptability is proportional cube of the benefits. Figure 1.4.4-1 from Starr, 1972 shows these relationships. One aspect of revealed preferences is that these preferences do not necessarily remain constant (Starr et al., 1976). In Starr et al., 1976, it is shown that while nuclear power has the least risk of those activities compared, it also has the least perceived benefit. Clearly the public thinks that... 

Miller, B. and R. E. Hall, Index of Risk Exposure and Risk Acceptance Criteria, February... 

The somewhat controversial theory of risk homeostasis is relevant to a discussion of risk taking. RHT was developed initially in the area of driving behavior (Wilde, 1984). The theory states that accident rates are not determined by actual levels of intrinsic risk but by the levels of risk acceptable to individuals in the situation. The theory implies that people adjust their risk-taking behavior to maintain a constant level of perceived risk. Thus, if improved safety measures are introduced (e.g., better guarding, improved protection systems then individuals will behave in a more risky fashion in order to maintain their accustomed levels of risk. 

An important part of the hazard identification procedure shown in Figure 10-1 is the risk acceptance step. Each organization using these procedures must have suitable criteria. 

Once the risk is determined, a decision must be made on risk acceptance. This can be done by comparison to a relative or absolute standard. If the risk is acceptable, then the decision is made to build and/or operate the process. If the risk is not acceptable, then something must be changed. This could include the process design, the operation, or maintenance, or additional layers of protection might be added. 

Risk insurance is the method chosen when the possible losses are financially too great to retain internally by risk acceptance and in some cases too expensive to prevent or avoid. However even the risk insurers will want to satisfy themselves that adequate precautions are being taken at facilities they are underwriting. Thus, they will look very carefully at risks they feel are above the industry norm or have high loss histories. 

Review Against Risk Acceptance Criteria - The comparison of an incident risk which is supplemented by the selected safety measures to achieve the requirements for company safety levels. 

A numerical level of risk acceptance is specified where quantitative evaluation of the probabilities and consequences of an accidental event have been performed. The documentation may also be used by senior management as a justification for budgetary decisions. The values of risk for many industries and daily personal activities have published and are readily available for comparison. This comparison has formed the basis of risk acceptance levels that have been applied to the hydrocarbon industry in various projects. 

Decision-makers have sometimes found presentations of comparative risk information a useful aid to the public discourse on risk acceptance. We referred in an earlier section, for example, to the OSHA s use of statistics on the risks of job-related accidents to support decisions... 

Risk control starts with risk reduction, which includes any actions taken to eliminate or reduce the risk. Actions taken should be commensurate with the significance of the risk. If the risk has been reduced to an acceptable level, an affirmative decision can be made to accept the risk (risk acceptance). One question to ask is if new risks have been introduced as a result of the identified risks being controlled. Risk control measures should generally be conducted in accordance with change control procedures and documented. 

In comparison with most other industrialized nations, Sweden has relatively few serious environmental problems, but I believe, as do many others,9 that the level of risk acceptance is particularly low in large sectors of the Swedish population. Indeed, many pampered Swedish citizens, who have not experienced major natural disasters or war since Napoleonic times, appear to carry around their own personal worry box described by the American humorist Patrick F. McManus It s as though a person has a little psychic box that he feels compelled to keep filled with worries. When one worry disappears from the box, he immediately replaces it with another worry, so the box is always full. He is never short of worries. 10... 

The accepted risk is a risk inferior to a level defined in advance either by law, technical, economical, or ethical considerations. The risk analysis, as it will be described in the following sections, has essentially a technical orientation. The minimal requirement is that the process fulfils requirements by the local laws and that the risk analysis is carried out by an experienced team using recognized methods and risk-reducing measures that conform to the state of the art It is obvious that non-technical aspects may also be involved in the risk acceptation criteria. These aspects should also cover societal aspects, that is, a risk-benefit analysis should be performed... 

Stoessel, F. (2002) On risk acceptance in the industrial society. Chimia, 56, 132-6. 

Johnson, B.B. 2004b. Risk comparisons, conflict, and risk acceptability claims. Risk Anal. 24(1) 131-145. 

Chemical USEPA Cancer Classification21 Dietary Inhalation Total Excess Lifetime Cancer Risk Acceptable Range of Excess Lifetime Cancer Risk (USEPA)... 

Chemical USEPA Cancer Classification15 LADD (total, mg kg-1 bw d 1)d Slope factor6 Excess lifetime cancer risk Acceptable range of excess lifetime cancer risk (USEPA) ... 

Are the deployment and operational risks acceptable in today s business climate ... 

The design of safety systems supported by PSA provides efficient designs at a lower cost than those based solely on engineering criteria, guaranteeing a priori an adequate level of safety with a predetermined risk acceptance. It is also a useful tool for appropriate location of isolation valves. 

If regulatory-based risk acceptability exists, the risk management process becomes easier and the focus is then on regulatory compliance. However, for allergen cross-contamination, no regulatory or policy guidelines exist (see Section 15.4). 

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. 

Ultimately, the credibility—for scientists, stakeholders and society in general—of the data and assessments on which critical risk management decisions are based owes much to the underlying tenets of data quality discussed in this document. Credibility is a basic element of risk communication and social trust and, in turn, is a determining factor in risk acceptance and risk management. 

Definition of design risk (acceptable degree of failure, e.g., 1 year in 20)... 

To classify risks, a system or framework for classification must be agreed upon. In a perfect world, a societal consensus on levels of "risk acceptability" would be at hand and be straightforward in how it would be applied in each situation being evaluated. However, in the real world there is no consensus, and we can only evaluate and then define the ranges of risks posed in actual situations and then judge them for their acceptability to society. 

An NDA is an application submitted to the United States FDA for permission to market a new drug product in the United States. The content of an NDA is designed to answer several questions Does the new product provide a proven medical benefit Are the associated risks acceptable compared to the benefits Can the product be manufactured reproducibly and reliably Are the data in the NDA reliable ... 

If risks are classified as tolerable, or if there is dispute as to whether they are tolerable or acceptable, risk management needs to design and implement actions that make these risks acceptable over time. Should this not be feasible then risk management, assisted by communication, needs at least to credibly convey the message that major effort is undertaken to bring these risks closer to being acceptable. This task can be described in terms of classic decision theory (Morgan 1990 Hammond et al. 1999). 

For a summary of these efforts, see Philipson, Lloyd L (1983) Risk Acceptance Criteria and Their Development. Journal of Medical Systems 7(5) 437—456. 

Confirm the companies philosophy to risk acceptance and protection methodology. 

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