Mining 012 riskope is it true that pi_gs

Optimum Risk Estimates (ORE) will help you steering your organization.Optimum Risk Estimates (ORE) will help you steering your organization.

(c)Oboni Riskope Associates Inc. (c)Oboni Riskope Associates Inc. www.riskope.comwww.riskope.com foboni(a)riskope.com Page foboni(a)riskope.com 1 of of 2727 12/10/2012 12/10/2012

Is it True that PIGs Fly when Is it True that PIGs Fly when Evaluating Risks of Tailings Evaluating Risks of Tailings

Management Systems?Management Systems?

Franco OboniFranco OboniOboni Riskope Associates Inc., Oboni Riskope Associates Inc.,

Vancouver, British Columbia, CanadaVancouver, British Columbia, Canada

Cesar OboniCesar OboniOboni Riskope Associates Inc., Oboni Riskope Associates Inc.,

Vancouver, British Columbia, CanadaVancouver, British Columbia, Canada

http://www.riskope.com/



Companies interpreted the Companies interpreted the results of Risk Assessments results of Risk Assessments with Probabilities Impact with Probabilities Impact Graphs (PIGs).Graphs (PIGs).

Risk Management used to be a “Compliance” Risk Management used to be a “Compliance” or “Loss Minimization” afterthought.or “Loss Minimization” afterthought.

PIGs became ubiquitous, despite intrinsic PIGs became ubiquitous, despite intrinsic conceptual errors, with potential dramatic conceptual errors, with potential dramatic negative consequences on their users.negative consequences on their users.




Our clients then started asking for real Our clients then started asking for real MEASUREMENT OF RISK.MEASUREMENT OF RISK.

They understood that bringing risk They understood that bringing risk management in at (Pre) Feasibility Stage management in at (Pre) Feasibility Stage would would CREATE VALUECREATE VALUE. .

They are starting now to look at They are starting now to look at STRATEGIC INTEGRATION OF RISK.STRATEGIC INTEGRATION OF RISK.

There was There was no chance that a flawed, no chance that a flawed, simplistic PIG would bring satisfying simplistic PIG would bring satisfying repliesreplies...so we started anew....so we started anew.




Lets' first start looking at PIGs flaws:Lets' first start looking at PIGs flaws:

●ArbitraryArbitrary selection of cell limits selection of cell limits●ArbitraryArbitrary selection of “coloring” frontiers selection of “coloring” frontiers●Simplistic Simplistic definition of consequencesdefinition of consequences●Lack of “resolution”Lack of “resolution” between risks between risks●Fuzzy Fuzzy resultsresults●Etc.Etc.




This is a real PIG from a large project This is a real PIG from a large project Risk Assessment.Risk Assessment.




If we look at historic and recent set of If we look at historic and recent set of tolerability criteria...tolerability criteria...




We can We can foresee foresee that cases that cases will be will be challenged challenged in Courts in Courts of Law of Law against against companies companies using PIGs using PIGs for their for their risk risk assessments assessments and the and the resulting resulting decisions.decisions.

...and plot the PIG on top, the discrepancy ...and plot the PIG on top, the discrepancy becomes evident!becomes evident!




To steer away from the To steer away from the PIGs generated hazards PIGs generated hazards and risks you need a and risks you need a “Savior”.“Savior”.

One that is in tune with One that is in tune with our “modern” world and our “modern” world and the numerous (and “new”) the numerous (and “new”) challenges we have to challenges we have to face.face.

Optimum Risk Estimates Optimum Risk Estimates (ORE) will help you from (ORE) will help you from pre-feasibiity stage to pre-feasibiity stage to operations and closure.operations and closure.




Case Study 1Case Study 1

We will use, for this first Case Study, Operation We will use, for this first Case Study, Operation Ten (OT) belonging to our client AAA Inc. (AAA) Ten (OT) belonging to our client AAA Inc. (AAA) (names, locations and risk names have been (names, locations and risk names have been altered to respect client's confidentiality), a altered to respect client's confidentiality), a medium sized mining operation. Geographic medium sized mining operation. Geographic location, mining type and product do not matter location, mining type and product do not matter for this discussion.for this discussion.

They had done a PIGThey had done a PIG........




Using common procedures and Using common procedures and instructions for the definition of instructions for the definition of probabilitiesprobabilitiesClass Class Frequency of Failure Frequency of Failure

11 1 in over 100 years1 in over 100 years22 1 between10 to 100 years1 between10 to 100 years33 1 between 5 to 10 years1 between 5 to 10 years44 1 between 1 to 5 years1 between 1 to 5 years55 more than 1 failure per yearmore than 1 failure per year

ClassClass Severity Severity11 $0 to $1,000,000 in costs$0 to $1,000,000 in costs22 $1,000,000 to $5,000,000 in costs$1,000,000 to $5,000,000 in costs33 $5,000,000 to $15,000,000 in costs$5,000,000 to $15,000,000 in costs44 $15,000,000 to $50,000,000 in costs$15,000,000 to $50,000,000 in costs55 more than $50,000,000 in costsmore than $50,000,000 in costs




50 risks which split into:50 risks which split into: -0 Severe-0 Severe-14 High-14 High-25 Medium -25 Medium -11 Low risks-11 Low risks

They called us in because they did not They called us in because they did not know how to tackle 14 high, 25 know how to tackle 14 high, 25 medium...too fuzzy, too costly!!! medium...too fuzzy, too costly!!!




We deployed OREWe deployed ORE (Optimum Risk (Optimum Risk Estimates) as I have detailed in the short Estimates) as I have detailed in the short course last Sunday at this conference.course last Sunday at this conference.

ORE is the result of twenty years experience ORE is the result of twenty years experience world-wide and has been deployed for world-wide and has been deployed for various clients, including Fortune 500 at various clients, including Fortune 500 at various stages including acquisitions, pre-various stages including acquisitions, pre-feasibility, operations, closure.feasibility, operations, closure.

Let's see how focus can be increased with Let's see how focus can be increased with ORE so theORE so the client gets a clearer roadmap for client gets a clearer roadmap for managing risks, decision makingmanaging risks, decision making, etc..., etc...




Let's build a Tolerability Curve: we display it Let's build a Tolerability Curve: we display it here on top of the original PIG's cells, for here on top of the original PIG's cells, for comparisoncomparison

A specific Tolerability Curve A specific Tolerability Curve exists for any project, exists for any project, operation, company. operation, company.

NB: if uncertainties are NB: if uncertainties are included then you'd see a included then you'd see a band instead of a line, and band instead of a line, and risks would be plotted as risks would be plotted as “bubbles”, on this p-C “bubbles”, on this p-C diagram.diagram.




For each risk let's evaluate the intolerable For each risk let's evaluate the intolerable part (orange) v.s. tolerable part (blue).part (orange) v.s. tolerable part (blue).




Top 20 Total Risks prioritization. However, Top 20 Total Risks prioritization. However, we can do better than that! we can do better than that!




Risks prioritization with the intolerable part as Risks prioritization with the intolerable part as discriminant constitute the core of ORE discriminant constitute the core of ORE because...because...

...the only risks that ...the only risks that actually matter are the actually matter are the ones that extend above ones that extend above the Tolerability Criteria the Tolerability Criteria created for your specific created for your specific project/operation/project/operation/company.company.




ORE show that only 5 ORE show that only 5 scenarios count for 83% scenarios count for 83% of the total intolerable of the total intolerable risks. Concentrating on risks. Concentrating on them will greatly improve them will greatly improve the situation.the situation. Five instead of 14 (+25) Five instead of 14 (+25) suggested by PIG!suggested by PIG!

Now it is possible to take rational decisions in Now it is possible to take rational decisions in allotting mitigative funds, planning ahead!allotting mitigative funds, planning ahead!




ORE benefits brought to this operation can be ORE benefits brought to this operation can be summarized as follows:summarized as follows:

-The prevalent critical risks are brought forward -The prevalent critical risks are brought forward in a clear, rational and defensible way.in a clear, rational and defensible way.

-The number of critical issues is-The number of critical issues is smaller than smaller than originally evaluated.originally evaluated.

-The insurance portfolio was shown to be poorly -The insurance portfolio was shown to be poorly balanced and adjustments were proposed.balanced and adjustments were proposed.

-The new priority list ensures better mitigative -The new priority list ensures better mitigative investments' allotments and frees moneys for investments' allotments and frees moneys for other allocations.other allocations.




Case Study 2Case Study 2

This case study bears on a complex tailings pond This case study bears on a complex tailings pond system, as described in the next slidesystem, as described in the next slide




Map of Acme Mine TSF with Map of Acme Mine TSF with Cascading ponds...Cascading ponds...




Each “Appendix” correponds to the risk assessment of Each “Appendix” correponds to the risk assessment of elements 1 to 17. Left Total Risk, Right ORE Ranking elements 1 to 17. Left Total Risk, Right ORE Ranking with Intolerable Risk as discriminant.with Intolerable Risk as discriminant.




Same results in the pie-diagram format. Total Risk Same results in the pie-diagram format. Total Risk left, ORE Intolerable Risk right.left, ORE Intolerable Risk right.

The total risk prioritization lacks definition, leads to poor The total risk prioritization lacks definition, leads to poor allocation of funds and causes managers to be overwhelmed by allocation of funds and causes managers to be overwhelmed by the number risks that appear “on the radar screen” for possible the number risks that appear “on the radar screen” for possible mitigation. ORE offers a clearer roadmap.mitigation. ORE offers a clearer roadmap.




-ORE ranked risks bring in clarity, not fuzzyness; -ORE ranked risks bring in clarity, not fuzzyness; ORE does not need scenarios censoring.ORE does not need scenarios censoring.

-Probabilities are defined by selecting the most -Probabilities are defined by selecting the most appropriate methodology for each scenario. appropriate methodology for each scenario. Inevitable uncertainties are given due consideration.Inevitable uncertainties are given due consideration.

-ORE does not require “classes”; does not ask to -ORE does not require “classes”; does not ask to arbitrarily select “the worse” between physical, arbitrarily select “the worse” between physical, human, environmental losses.human, environmental losses.

-The Tolerability Criteria is established using -The Tolerability Criteria is established using repeatable methods specifically for the client's repeatable methods specifically for the client's operation(s) under consideration (and corporately).operation(s) under consideration (and corporately).




Let me guess, your car has a Let me guess, your car has a better cockpit than this old better cockpit than this old clunker!clunker!Modern cars have more Modern cars have more sophisticated instruments, sophisticated instruments, right?right?

However, in your company you However, in your company you probably use this matrix as a probably use this matrix as a RM/ERM cockpit.RM/ERM cockpit.

Your tailings deserve better than this rudimentary, Your tailings deserve better than this rudimentary, obsolete tool! Manage your tailings and your obsolete tool! Manage your tailings and your company using all available information...company using all available information...




Tailings/Corporate ORE Cockpit. Tailings/Corporate ORE Cockpit. Acme Inc.4 Divisions: A,B,C,D;Diversified3 countries;International Exports.

Sources of Threats Sources of Threats

Media VulnerabilityMedia Vulnerability

Potential Losses per ProductPotential Losses per Product

Hazardous SectorsHazardous SectorsLogistic Risks Logistic Risks




CONTACT: Franco Oboni CONTACT: Franco Oboni foboni(a)riskope.comfoboni(a)riskope.com

ORE are the key ORE are the key to your business to your business prosperity, prosperity, survival and survival and sustainability.sustainability.

Now you can Now you can drive safely.drive safely.


Mining 012 riskope is it true that pi_gs

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