1. FINK AND RISK A qualitative method of displaying risk for decision making Walter G. Green III, Ph.D., FACCP Disaster Theory Series No. 10 Copyright 2008 by Walter G. Green III

2. FIVE BASIC QUESTIONS  1. How intense will it be and how quickly will it develop?  2. Will there be media or regulatory scrutiny?  3. Will it interfere with the ability to do business  4. Are you culpable and are you liable?  5. How will the bottom line be damaged?

3. A POSSIBLE MODIFIED SET OF QUESTIONS FOR GOVERNMENT  1. How intense will it be and how quickly will it develop?  2. How prepared are you for the event?  3. What will be the damage – lives lost, injuries, economic impact, disruption?  4. What are the political impacts? How will the media treat us?  5. What will recovery be like?

4. FIVE BASIC QUESTIONS  Each question is rated from 0 to 10, with 0 being minimal to no impact and 10 being catastrophic impact.  Ratings are qualitative and subjective, but can be increased in objectivity by using your company’s experience and the similar experiences of other businesses.

5. QUESTION 1 - ISSUES  What level of intensity can you stand for how long?  What is your definition of intense?

6. QUESTION 2 - ISSUES  News media interest and coverage of your role – front page versus back page versus none?  Will state and/or federal regulators be involved?

7. QUESTION 3 - ISSUES  Ability to ship product or provide services?  Supply chain and inventory impacts?  Ability to pay creditors?  Diverts attention from routine, must- do items?  Personal impact on decision makers?

8. QUESTION 4 - ISSUES  Are you the victim or the cause?  Have you a history of careless operations or violations that could have caused this?  Have you shown due diligence?  Do you have positive credit in the image bank?

9. QUESTION 5 - ISSUES  Direct impact on the financial numbers?  Indirect losses – productivity, staff, workers claims, absenteeism, etc.  Reputational loss

10. IMPACT VALUE  Add the scores for the 5 questions and divide by 5.  This average is plotted on a vertical scale from 0 (low) to 10 (high) with 5 as the mid-point.

11. PROBABILITY  Probability is computed on a percentage basis.  Use all available data on incident frequency, related to a time line. For example, a 100 year flood does not happen every 100 years – it is a flood that on average happens once every 100 years – a 1% probability each year

12. PROBABILITY  If you lack your own data for hazards, look at: the community’s hazard and vulnerability analysis National Weather Service or Geological Survey data local historical data experience of others in similar industries

13. PROBABILITY  And be sure to adjust for: your location may have a greater probability of a particular event – it is hard to have a train wreck in your front yard if you are 2 miles from the tracks changes in the environment since the data was gathered

14. HORIZONS  Defining your planning horizon is critical. for regular events, if your planning horizon is inside event recurrence, probability approaches 0 if recurrence is inside the horizon, probability approaches certainty For irregular events with data to support analysis, apply forecasting and trend analysis techniques to determine probability

15. PROBABILITY  Divide the percentage by 10 and plot the resulting number on a horizontal scale of from 0 (no probability) to 10 (certainty).  The horizontal probability scale intersects with the vertical impact scale at 5.

16. DATA PERFECTION  More accurate data for impact and probability = more exact grid location  … but, given the variability in events, best estimates are good enough …  … too much “accuracy” may not be a good thing - it imparts an exactness that may not be there.

17. THE SCALES impact probability

18. CONVERTING TO A MATRIX  The scales are contained in a square.  Upper right – high impact, high probability – RED  Upper left – high impact, low probability – YELLOW  Lower left – low impact, low probability – GREEN  Lower right – low impact, high probability - GREY

19. FINK’S MATRIX HIGH IMPACT LOW PROBABILITY HIGH IMPACT HIGH PROBABILITY LOW IMPACT LOW PROBABILITY LOW IMPACT HIGH PROBABILITY

20. A SPECIFIC EVENT  Fujita F3 tornado in Fort Morgan, Colorado: X

21. THOUGHTS  Identifies hazards.  Combines hazards and vulnerabilities as impact.  Tool that directly reflects the formula: impact X probability = risk  Visual tool displays outcome of risk computations in a simple form  Multiple events shown on one matrix.