Risk analysis costs

Establishing and implementing techniques that involve risk analysis, cost, cost-benefit analysis, work sampling, loss rate, and similar methodologies, for periodic and systematic evaluation of hazard control and hazard control program effectiveness. 

Risk-Based Inspection. Inspection programs developed using risk analysis methods are becoming increasingly popular (15,16) (see Hazard ANALYSIS AND RISK ASSESSMENT). In this approach, the frequency and type of in-service inspection (IS I) is determined by the probabiUstic risk assessment (PRA) of the inspection results. Here, the results might be a false acceptance of a part that will fail as well as the false rejection of a part that will not fail. Whether a plant or a consumer product, false acceptance of a defective part could lead to catastrophic failure and considerable cost. Also, the false rejection of parts may lead to unjustified, and sometimes exorbitant, costs of operation (2). Risk is defined as follows ... 

In the simplest terms, a fault-tree for risk analysis requires the following information probabiUty of detection of a particular anomaly for an NDE system, repair or replacement decision for an item judged defective, probabiUty of failure of the anomaly, cost of failure, cost of inspection, and cost of repair. Implementation of a risk-based inspection system should lead to an overall improvement in the inspection costs as well as in the safety in operation for a plant, component, or a system. Unless the database is well estabUshed, however, costs may fluctuate considerably. 

Covernment and regulatoi y decisions. Sometimes these decisions are based on some type of quantitative risk analysis, and they provide some guidance on society s expectations with regard to risk management. In some cases these decisions will also include some kind of cost-benefit analysis. The current political climate in the United States may encourage more extensive use of risk analysis in the establishment of future regulations. 

Qualitative answers to one or more of these questions are often sufficient for making good decisions about the allocation of resources for safety improvements. But, as managers seek quantitative cost/benefit information upon which to base their decisions, they increasingly turn their attention to the use of quantitative risk analysis (QRA). 

In the next chapter, we introduce the concepts of component manufacturing capability and the relationships between tolerance, variability and cost. The Component Manufacturing Variability Risks Analysis is then introduced, the first stage of the CA methodology, from which process capability estimates can be determined at the design stage. The development of the knowledge and indices used in the analysis... 

The Chemical Process Industry (CPI) uses various quantitative and qualitative techniques to assess the reliability and risk of process equipment, process systems, and chemical manufacturing operations. These techniques identify the interactions of equipment, systems, and persons that have potentially undesirable consequences. In the case of reliability analyses, the undesirable consequences (e.g., plant shutdown, excessive downtime, or production of off-specification product) are those incidents which reduce system profitability through loss of production and increased maintenance costs. In the case of risk analyses, the primary concerns are human injuries, environmental impacts, and system damage caused by occurrence of fires, explosions, toxic material releases, and related hazards. Quantification of risk in terms of the severity of the consequences and the likelihood of occurrence provides the manager of the system with an important decisionmaking tool. By using the results of a quantitative risk analysis, we are better able to answer such questions as, Which of several candidate systems poses the least risk Are risk reduction modifications necessary and What modifications would be most effective in reducing risk ... 

Scott, R. (1994). The History of the International Energy Agency 1974-1994, Vol. 1 Origins and Structure, Vol. 2 Major Policies and Actions. Paris, France OECDAEA. Tengs, R. O., et al. (1995). Five-Hundred Life-Saving Interventions and Their Cost-Ellectiveness. Risk Analysis 15(3) 369—389. 

Deciding which risk-reduction method to use maybe difficult. In many instances, appropriate decisions can be made without resorting to quantitative techniques. However, in some cases, particularly when the options are costly, quantitative risk analysis (QRA) and risk-based decision-making approaches may be an effective basis for measuring the improvement in safety arising from the proposed options. These approaches can also be used in prioritizing safety improvements and balancing cost and production issues. 

Our assignment for EPA was to apply quantitative risk analysis methods to the determination of risk for a particular chemical. The health risks for perchloroethylene turned out to be highly uncertain, but by using decision analysis concepts we were able to display this uncertainty in terms of alternative assumptions about the dose response relationship. Similar methods might be used to characterize uncertainties about human exposure to a chemical agent or about the costs to producers and consumers of a restriction on chemical use. 

These cost considerations have to rely on some risk analysis if the risks of producing smaller series for stationary markets, which can absorb fuel-cell systems at a specific cost of some 500/kWel are smaller, it seems likely that stationary fuel cells will enter the market earlier than mobile fuel cells in cars at a specific cost of 50 to 80/kWel, but with much larger production series. 

One useful tool of risk assessment is to compare the risk before and after prevention or mitigation to determine the difference in risk. A cost benefit analysis can be completed that determines the cost of the mitigation versus the amount of risk reduction. All costs need to be calculated to determine a cost per year. These costs would include fire damage, injury or fatality, insurance cost increases, loss of profits, etc. The cost of the mitigation, including capital and maintenance costs, needs to be determined. 

Methodically devised and established methods (and criteria) of substance and process assessment and evaluation like risk analysis, toxicological and ecotoxi-cological analyses, life-cycle-analysis and cost-benefit analysis . But also much simpler approaches, which in practice play an important role for assessing formulations and snbstance properties (e.g. the nse of negative and/or positive lists). 

Some scholars, like Gillette and Krier (1990) and Hornstein (1992), argue that scientific risk analysis fails to recognize important distributional issues. Under some circumstances, for example, it is better to save 2 lives (at a cost of 25 million each) than 1,000 lives (at a cost of 50,000 each). 

FIGURE 7 The process failure risk analysis (PFRA) tool is an analytical and computational tool using rule bases for evaluating process risks. It is an ideal method and tool for reducing costly failures. (For more about this software tool, see http //www.cimwareukandusa.com. 

In ethical committees and public debates the emphasis is on the so-called extrinsic concerns the risks for human health, for animals and for the environment. Most methods of risk analysis look only at the consequences and the effects of genetic engineering within the framework of a utilitarian ethics (weighing costs and benefits). 

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