1. 1 Setting Target Reliabilities by Marginal Safety Returns Rolf Skjong Strategic Research Det Norske Veritas Rolf.Skjong @dnv.com JCSS Workshop on Code Calibration, March 21-22 2002

2. 2 Traditional Approach - SRA  Typical Example:DNV Classification Note 30.6 (1992) on Structural Reliability Analysis of Maritime Structures  Explains why SRA does not produce Probabilities with a frequency interpretation –No gross error –Epistemic uncertainty & model uncertainties included –SRA talk of “notional” reliabilities

3. 3 Traditional Approach - SRA  Target should depend on consequence  Calibration against known cases (that are acceptable good/best practices in the industry)  Calibration against similar cases with similar consequences  Based on accepted decision analysis techniques  Based on tabular values (presented as a last resort)

4. 4 Traditional Approach - SRA  Target should depend on consequence  Calibration against known cases (that are acceptable good/best practices in the industry)  Calibration against similar cases with similar consequences  Based on accepted decision analysis techniques  Based on tabular values (presented as a last resort)

5. 5 Traditional Approach - SRA  Based on tabular values (presented as a last resort)

6. 6 Traditional Approach - QRA  Quantitative risk assessment is the basis for regulations in many industries –PSA/PRA - Nuclear –Hazardous Industries (Seveso I/II) –Offshore (Safety Case) –Shipping (FSA) –Etc.

7. 7 Quantitative Risk Assessment  Two uses of Risk assessment  Use as a basis for receiving and maintaining a licence to operate (the plant, platform etc.) –Safety Case  Use as a basis for implementing risk reducing measures for “populations (all cars, all ships, all planes etc.) –Formal Safety Assessment

8. 8 Traditional Approach - QRA  Present Risk Results in terms of –Individual risk (fatalities) –Individual risk (Health and Injuries) –Societal Risk (group Risk) –Environmental risk –Economic risk (not necessarily a regulatory issue)

9. 9 Traditional Approach - QRA  Example Individual risk

10. 10 Traditional Approach - QRA  Example Health Risk

11. 11 Traditional Approach - QRA  Example Societal Risk

12. 12 Traditional Approach - QRA Low Risk High Risk Intolerable ALARP Negligible Not acceptable Acceptable Acceptable if made ALARP

13. 13 Traditional Approach - QRA  The As Low As Reasonably Practicable Area implies that cost effectiveness assessment may be used  Risk is made As Low As Reasonably Practicable, when all cost effective safety measures have been implemented  Implies that a decision criteria for cost effectiveness will be required

14. 14 Methods for deriving criteria  Human capital approach  Willingness to pay  Comparing to well informed (risk informed) decisions in democratic forum (a willingness to pay)  Comparing to previous decision (a willingness to pay)  Societal Indicators (a willingness to pay)  Individual decisions

15. 15 Human capital approach  Value of man as a resource in economic production  Has discredited cost effectiveness & cost benefit assessment  Contradicts ethical principle (Protagoras: “Homo mensura” and later formulations, e.g. Kant)  Same reason as many governments ban research on human stem-cells

16. 16 Willingness to pay  Many forms of willingness to pay studies –Questionnaires –Observed behaviour (e.g. insurance) –Implicit in previous decisions –Implicit in existing regulations –Etc.

17. 17 Comparing to well informed decisions  Example from IMO: UN Organisation for maritime safety and environmental protection regulations

18. 18 Comparing to previous decision By reallocation 40.000 lives could be saved annually in the US $ 42.000 35 = $ 1.5 million

19. 19 Societal Indicators  Societal Indicators used to rate “quality of life” in countries  Published by UN (UNDP)  Many different indictors exist  Include such parameters as: GDP/Capita, Life Expectancy at Birth, literacy etc.

20. 20 Social Indicators

21. 21 Societal Indicators

22. 22 Individual Decisions  Also individuals take decision that increase life expectancy and reduces accident frequencies  For example: –Buy safer cars –Buy more healthy food –Go to the doctor more frequently –Etc.  How much increase in purchasing power is necessary to increase the life expectancy in a population by “e”

23. 23 Individual Decisions

24. 24 Societal Indicators

25. 25 Published Numbers

26. 26 Criterion?  For an OECD member country (excluding the newest members) the criteria is somewhere in the range $ 1.5 -3.0 million  Some uncertainties relates to:  Fatalities as indicator or actual fatalities  NCAF or GCAF  Despite uncertainty different methods give surprisingly consistent results  In a QRA a factor of 2 is not much compared to the uncertainty in the analysis  In SRA the design variables are continuos, and we do not know how sensitive the resulting dimensions are to the criterion

27. 27 Advantages in SRA  Consistency with QRA  The decision is based on the derivative of P F with respect to design variables only  Not reliant on probability (the absolute number)  Example: Mid ship bending moment