Value of risk reduction

The direct approach to the estimation of WTP is to ask individuals how much they are willing to pay for a risk reduction. This method to assess WT P is usually referred to as the contingent valuation (CV) method. The first attempt to use the CV method to value risk reductions was by Acton (1973), who investigated the WTP for mobile coronary care units that would decrease the risk of dying after a heart attack. lones-Lee (1976) carried out an early study of the value of airline safety. Both these early studies were explorative in nature and used very small samples. Two later and much larger studies investigating the value of risk reductions are those of lones-Lee etal. (1985) and Smith and Desvousges (1987). 

For a review of recent estimates of values of risk reduction see Glenn Blomquist Estimating the Value of Life and Safety Recent Developments in M. W. Jones-Lee, ed., The Value of Life and Safety (New York North Holland, 1982). 

Annual traffic fatalities prevented range in steady state from 2,050 if belt use is 23 percent to 8,750 if belt use is 60 percent. The higher estimate is quite close to that of Arnould and Grabowski for NHTSA s estimate of effectiveness. The valuation of the safety benefits is based on a foregone earnings approach instead of the willingness to pay, and the values of risk reduction are lower than in other studies. ... 

In his testimony on the rescission of the Adams Rule William Nordhaus gave a critique of NHTSA s benefit-cost analysis and offered an alternative study. His critique covers munerous topics including the estimated cost of passive belts and the value of risk reductions employed. The central issue, however is the projected increase in usage which would accompany passive safety belts. 

It is important to distinguish between assessment and measurement endpoints (Gaudet 1994). An assessment endpoint is an environmental value that has to be protected. If the risk assessment process results in an unacceptable risk for the defined environmental value, then risk reduction measures (e.g. remediation of site) are required. A measurement endpoint is a measurable environmental characteristic, such as the quantitative summary of the results of a toxicity test or a biological survey (Suter 1993). If assessment and measurement endpoints are not the same, it is necessary to constitute a quantitative relationship between these to enable the extrapolation of measured effects to the threatened environmental characteristic. 

Smith and Desvousges (1987) asked a stratified random sample their willingness to pay for reductions in the risk posed by hazardous waste facilities. To explore the relationship between these values and the dimensions of risk involved, they repeated this question varying the amoimt of risk reduction and the baseline risk from which the reduction would occur. Their results were consistent with conventional expectations in some respects but not in others. There was a widespread willingness to pay for risk reduction, but, rather than increasing as... 

Risk reduction actions need to be cost effective. To assess whether this is the case, the risk reduction leverage can be calculated as (REbefore — REafterV(cost of risk reduction), where REbefore is the risk exposure before the risk reduction action and REafter is the risk exposure that will remain after the risk reduction. Both risk exposures are expressed in terms of money. A risk reduction leverage greater than 1.00 indicates that the avoidance/reduction activity is financially worthwhile. Risk reduction activities with values above but still close to 1.00 would need to be considered very carefully. 

By making assumptions about the numerical value of the above scores, it is possible to construct a spreadsheet that calculates a global risk score for both the baseline and ATM versions of the motorway. This spreadsheet can also be used to test the sensitivity to other uncertainties, e.g. the effect of changing the scores for individual hazards, the effect of assumptions made about the relative value of event and state hazards, or the effect of risk reduction effort on the large scoring hazards. 

Connect the risk value found in Fig. A4.1 to the degree of risk reduction desired and extend to the tie line. Connect this to correction cost and extend to the justification factor line. This will establish how worthwhile the control measure is. Obviously you may need to adjust the cash values of the third line to reflect local conditions. 

Although some countries legislation does not recognize the term acceptable risk (which is seen as an imperfection), on many occasions the term residual hazard is used, supplemented by directives that instruct on measures for the elimination and reduction of the hazard. In practical life, it is possible to eliminate the hazard (risk) only in a limited number of specific cases (e.g. cranes excluded from the technological cycle, load oscillation eliminated by fixed suspension). From a practical point of view, it is useful to apply reduction or minimization of hazards (risk) and the final value of the reduction or minimization must be defined by acceptable hazard (risk). The level of the risk is determined by the equipment (travelling crane) user based on the levels of risk he wishes to achieve. 

Hence, it becomes possible to prevent electronic instrumentation from becoming a source of ignition in the plant areas if its temperature and stored energy levels can be limited by design, to values below the thresholds for the categories of gases on the plant. We know this from of protection as INTRINSIC SAFETY. This is a form of hazard prevention. It must not be confused with a safety instrumented system but it does feature in the list of risk reduction measures. 

Benefits should reflect any reduction in fatalities and injuries and the values of the reductions. Any reductions should reflect changes in chances of sur nval in acddents compared to existing usage of manual safety belts and any changes in the chances of an accident. The value of any reductions in risks should reflect people s willingness to pay. 

It is then required to determine the possible RCOs for the genetic vessel considered. As data to quantify each RCO is difficult to obtain, hypothetical RCOs are considered for the demonstration of this method. The cost and benefit columns represent the cumulative values for all the stakeholders involved in the study. The views presented by each stakeholder, will considerably affect the outcome of the CU. Considering the four RCOs given in Table 5.11 and the associated cost, benefit and risk reduction, a CURR for each RCO can be obtained. Note that the value for risk reduction represents the total number of equivalent deaths for the system under consideration. 

In the first step, a screening process will be applied to separate the major potential hazards these will be addressed in more detail. QRA techniques are used to evaluate the extent of the risk arising from hazards with the potential to cause major accidents, based on the prediction of the likelihood and magnitude of the event. This assessment will be based on engineering judgement and statistics of previous performance. Where necessary, risk reduction measures will be applied until the level of risk is acceptable. This of course is an emotive subject, since it implies placing a value on human life. 

The book does not focus on occupational safety and health issues, although improved process safety can benefit each area. Detailed engineering designs are outside the scope of the book. This book intends to identify issues and concerns in batch reaction systems and provides potential solutions to address these concerns. This should be of value to process design engineers, operators, maintenance personnel, as well as members of process hazards analysis teams. While the book offers potential solutions to specific issues/concerns, ultimately the user needs to make the case for the solutions that best satisfy their company s requirements for a balance between risk reduction and cost. In many instances the book provides one or more sources of additional information on the subject which could be of value to the reader. 

If both frequency and consequence values are calculated and reported on an absolute basis, then they may be reported graphically in combination with one another (Chapter 3), or simply as the product of frequency and consequence. Table 5 contains some examples of typical risk estimates (frequency and consequence products). Based on absolute risk estimates, you can decide whether the risk of a specific activity exceeds your threshold of risk tolerance (risk goal). If so, analysts can estimate the reduction in risk, given that certain improvements are made, assumptions changed, or operating circumstances eliminated. 

The fraction 0.1% is chosen to be so low that individuals living near a nuclear plant should have no special concern because of the closeness. Uncertainties in the analysis of risk are not caused by the "quantitative methodology" but are highlighted by it. Uncertainty reduction will be achieved by methodological improvements mean values should be calculated. As a guideline for rcinilatory implementation, the following is recommended ... 

This chapter has provided an overview of a recommended framework for the assessment of human error in chemical process risk assessments. The main emphasis has been on the importance of a systematic approach to the qualitative modeling of human error. This leads to the identification and possible reduction of the human sources of risk. This process is of considerable value in its own right, and does not necessarily have to be accompanied by the quantification of error probabilities. 

Determining the value of potential benefits from risk reduction is relatively straightforward for tangible losses such as property damage, business interruption, and increased insurance costs. However, intangibles such as loss of reputation are difficult to estimate and must be considered on a case-by-case basis. In addition to increased staff costs associated with public relations, items such as possible employee attrition due to low morale and possible loss of market share must be considered. 

Once values have been assigned for the costs and benefits of each proposed risk-reduction modification, a variety of economic evaluation techniques may be used to choose the most attractive option. These techniques include net present value, discounted cash flow rate of return and cost-benefit ratio analyses. Most companies have a preferred method for evaluating project economics, which can be used with little or no modification. Chapter 8 of... 

VSL is derived based on the monetary sum people are willing to pay for reducing the risk of fatality. An example of a suitable monetary sum is the price premium for a safe car, which together with risk reduction estimates for the safe car is sufficient to calculate a VSL. The WTP for As (the change in the risk to die) leads to the value of statistical life such as ... 

By definition, a nutraceutical (derived from the term nutritional pharmaceutical ) is a foodstuff (fortified food or dietary supplement) that is held to provide health or medical benefits in addition to its basic nutritional value [1], Nutraceuticals derived from botanicals deliver a concentrated form of presumed bioactive agents from plants that are not generally part of the food supply. The term nutraceutical has no regulatory definition. Similarly, functional foods, as defined by the International Life Sciences Institute (ILSI), are foods that by virtue of physiologically active food components, provide health benefits beyond basic nutrition [2], For the purposes of this review, these two terms will be differentiated by the form in which they are consumed. Nutraceuticals refers to dietary supplements most often found in pill or capsule form functional foods are ingested as part of a normal food pattern. Both are intended to provide beneficial effects beyond their nutritional value, and contribute to an improved state of health and/or reduction of risk of disease. 

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