Integrated Risk Management Charles Yoe, PhD [email protected] Institute for Water Resources 2009.

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Integrated Risk Management Charles Yoe, PhD [email protected] Institute for Water Resources 2009

Transcript of Integrated Risk Management Charles Yoe, PhD [email protected] Institute for Water Resources 2009.

Page 1: Integrated Risk Management Charles Yoe, PhD cyoe1@verizon.net Institute for Water Resources 2009.

Integrated Risk Management

Charles Yoe, [email protected]

Institute for Water Resources2009

Page 2: Integrated Risk Management Charles Yoe, PhD cyoe1@verizon.net Institute for Water Resources 2009.

Learning Objectives

• At the end of this session participants will be able to:– Define and discuss risk– Discuss risk management– Identify and discuss the elements of the risk

management model proposed for the Corps

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Risk Explained

o Risk –chance of something happening that will effect National or Corps’ objectives

o Measured in terms of consequences and likelihoodsoConsequence can be negative (loss) or

positive (potential gain)oUncertainty can produce results better or

worse than expected

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Risk Management

• Essentially, making decisions under uncertainty

• Planning, analyzing, organizing, implementing and monitoring efforts to control the effects of uncertainty on the Corps’ Civil Works Program

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Characteristics of Integrated Risk Management

• Universal Applicability

• Analytically-based and judgment-driven

• Simple and Flexible

• Systematic and Scalable

• Iterative

• Transparent and Open

• Dcoumented

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Establish Decision ContextEstablish Decision Context

Identify RisksIdentify Risks

Analyze RisksAnalyze Risks

Evaluate RisksEvaluate Risks

Risk MitigationRisk Mitigation Mo

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Establish Decision Context

Description• This task establishes the decision

context in which a risk management decision will be made. It includes defining the management problem, and establishing the measurable objectives of the activity to which the risk management process is being applied. Decision making criteria, evident uncertainties, and the questions to be answered in subsequent analytical steps are identified in this step.

Outputs• A written problem statement

• A written statement of the activity’s objectives

• A written list of management information questions

• A written list of the decision criteria

• A written list of the key uncertainties

Page 8: Integrated Risk Management Charles Yoe, PhD cyoe1@verizon.net Institute for Water Resources 2009.

Establish Decision Context

• Something triggers RM activity

• Decision problem is defined

• Goals, objectives, and strategies of RM identified and articulated

• Decision criteria explicitly considered so appropriate information is gathered

• Stakeholder and public involvement begins

Establish Decision ContextEstablish Decision Context

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Defining a Problem

• Problem identification-recognizing a problem exists

• Problem acceptance-deciding to focus attention and resources on it

• Problem representation-articulating the problem for the Corps and others and linking it to possible solutions

Establish Decision ContextEstablish Decision Context

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Identify Risks

Description• Identify the risks relevant to

the decision context. This means identifying but not yet quantifying the consequences (positive or negative) and likelihoods and how they will be expressed. It includes asking and answering “what can go wrong” and “how can it happen” about the problem setting.

Outputs

• A narrative description of the risks or significant uncertainties of concern to this risk management activity.

• A decision whether or not to pursue a risk assessment.

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Tasks

• Start of risk assessment when one is done

• Identify – Presenting/existing

risks– Risk reductions– Residual risks– Risk transformations– Risk transfers

• Ask and answer (scenarios)– What can go wrong?– How can it happen?

•  Methods depend on nature of activity, process, or asset

• Stakeholder and public involvement

Identify RisksIdentify Risks

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Analyze Risks

Description• Estimate the consequences and

likelihoods of the risks identified in the previous step. At the same time recognize and report decision critical  uncertainties and incorporate them as a source of risk. The consequence and likelihood for each risk may be combined to produce an estimated level of risk. Alternative management strategies are analyzed in this step. This is often the principle analytical step in the risk management process.

Outputs

• Written answers to the risk managers’ questions with a focus on relevant uncertainties

• Descriptions of formulated alternative risk mitigation strategies

• Risk characterization of each significant risk with a focus on relevant uncertainties

• Formal risk assessment if required

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Analyze Risks

• Remainder of risk assessment

• Each individually identified risk is analyzed– Gather information – Identify and assess significant sources of

uncertainty– Identify options for achieving RM objectives

and solving the problems– Evaluate and compare risk management

options while accounting for uncertainty

Analyze RisksAnalyze Risks

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Evaluate Risks

Description• Risk management alternatives

are evaluated and compared to identify the best solution. This evaluation includes consideration of the risk and other values important to the decision. The evaluation will consider the cost to reduce increments of risk; who bears the risk; what risks are managed, reduced, borne, transferred, and so on.

Outputs• An effective summary or

display of the uncertainties most relevant to the risk manager’s decision

• Display of the varying contributions of the risk management options to the risk management objectives and other social values considered in the decision process

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Evaluate Risks

• Separates minor/acceptable risks from major/unacceptable risks

• With stakeholder and public input determine if risk is tolerable or not

• Tolerance is based on trade-off among residual risk, cost of risk reduction and other factors

Evaluate RisksEvaluate Risks

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Risk Management Decision

Description• A decision is made to accept or take

action to manage the identified risks. If action is taken, a risk management strategy is developed and implemented. Desired and measurable outcomes of the management strategy are identified at this step so the success of the plan can be monitored and evaluated. To the extent there is significant analytical uncertainty, the risk management strategy will include an adaptive management plan to reduce such uncertainties over time and as needed modify the execution of the actions taken.

Outputs• Determination of a tolerable

level of risk for this risk management issue

• Selection of the best risk management option

• Identification of measurable desired outcomes to monitor the options success

• When appropriate, an adaptive management plan

• An implementation plan• An implemented plan

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Risk Mitigation

• Reduce unacceptable risks to TLR– Combinations of options may be needed

• RM plan should identify mitigation measures, responsibilities, schedules, expected outcomes, and measurements associated with mitigation strategy

• It’s critically important to identify desired outcomes of RM strategy prior to implementation

Risk MitigationRisk Mitigation

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Mitigation Strategies

• Acceptance/retention• Avoidance• Reduction• Transfer or risk sharing • Containment • Constant monitoring • Continuous research • Development of

substitutes • Precautionary principle

• Increasing resilience-resistance and robustness to surprises

• Treatment of risk • Build confidence and

trustworthiness • Reduce uncertainties • Clarify facts • Involve affected people • Deliberation • Accountability

Risk MitigationRisk Mitigation

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Communicate and Consult

Description• Active communication is an

essential part of risk analysis. Communicate and consult with internal and external stakeholders as appropriate at each stage of the process. If there are shared risk management decisions, they should be identified, the decision participants recorded and a formal agreement documenting the shared responsibility for the decision prepared and signed by all responsible participants.

Outputs

• Preparing and executing a public involvement plan including provisions for risk communication.

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Communicate and Consult

• Keep all stakeholders informed about – Process– Findings of risk

assessment steps– Nature of risk and its

associated benefits – Deliberations that lead to

risk management decision – Their role in implementing

the solution 

• Continual communication among participants to minimize misunderstandings and surprises at the end of the process

Communicate and ConsultCommunicate and Consult

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Monitor, Evaluate, Modify

Description• There are several purposes of post

implementation monitoring. One is to assure that there is progress toward achieving the outcomes of the implemented risk management strategy. If there is an adaptive management process there will be data collection targeted to testing hypotheses required to reduce analytical uncertainties identified in the initial planning process. This task also scans the overall setting for the activity to identify hazards or changes in socioeconomic preference or conditions that may not have been recognized during the initial risk analysis process, or that may have changed in their significance. In all cases, the risk mitigation strategy may be modified in accordance with what is learned.

Outputs

• A plan for monitoring, reviewing and modifying the implemented solution

• Implementation of that plan

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Monitor, Evaluate, Modify

• Implication of uncertainty is RM is evolutionary decision making

• Assure decision is having desired outcome

• Monitoring-gather information that measures progress toward desired outcome(s)

• Information is evaluated to determine if adequate progress is being made toward outcomes

• If outcomes are not satisfactory changes are needed

• A mechanism for change, e.g. adaptive management plan, is part of best practice

Monitor, Evaluate, ModifyMonitor, Evaluate, Modify

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