1. The Science of Risk: Overview of Risk Analysis David Moser, Charles Yoe, Office of the Chief Economist cyoe1@verizon.net Institute for Water Resources 2009

2. 2 Objectives By the end of this training module you will be able to: –Identify and describe tasks of risk analysis –List some elements of a risk manager’s job –Identify several risk assessment tools –Describe what drives risk communication –Identify the 3 Ms of risk communication

3. 3 Language and Models of Risk Analysis

4. 4 Characteristics of Risk Risk is everywhere Some risks are more serious than others Zero risk is not an option Risk is unavoidable We need to... –describe them (risk assessment) –talk about them (risk communication) –do something about them (risk management)

5. Risk Risk is a measure of the probability and consequence of uncertain future events Risk includes –Potential for gain (opportunities) –Exposure to losses (hazards) 5

6. We have been doing risk assessment for flood for a long time –EAD is a risk assessment metric Major rehab program requiring reliability analysis developed in 1992 These focused on economic risks and expected values and deemphasize uncertainty Risk Is Not New To Corps

7. Why Use Risk Analysis? Traditional standards based approaches are no longer enough—problems persist Identify uncertainties to be monitored and managed Science-based approaches have helped Risk analysis is a new way of approaching problems that integrates science and social values The global community is embracing risk analysis 7

8. Selected Corps Concerns Residual flood risk Risk of infrastructure malfunction Risk to life, health and safety Marine casualties Navigation channel sedimentation Ice cover Small boat harbor damages Commercial fishery losses Coastal Erosion Ecosystem restoration Energy and power reliability Dam safety Loss of pool Operation and maintenance –Facility maintenance Major rehabilitation Risks to environment Cost estimation Project management Budgeting Priorities MilCon support 8

9. Science-Based Water Resource Analysis Effective Modern Water Resource Analysis Water Resource Problems Traditional Water Resource Analysis Public Safety, EQ, NED and Other Benefits Science Infrastructure Risk Managing Orientation Risk Analysis 9

10. Risk Analysis Risk analysis is a decision-making framework that comprises three tasks: risk assessment, risk management, and risk communication.

11. Risk Management Policy and preference based Risk Assessment Analytically based Risk Communication Interactive exchange of information, opinions, and preferences concerning risks

12. Risk Analysis Is a Paradigm It is a way of thinking about things and organizing to solve problems –It is not an activity It is science based but not science It is the interface between science and values It is used for making decisions under uncertainty 12

13. Examples of Risk Analysis: Water Resources Expected annual damages Establishment of design levels Risk-informed cost estimation Dam safety program Levee safety program Establishment of product safety standards, performance standards, and specifications Scientific sampling protocols 13

14. Why Do Risk Analysis? It improves the quality of our thinking before a decision is made—uncertainty is widespread It helps ensure a safe water resource infrastructure It protects human, animal, and plant life and health It provides a more reliable flow of outputs It is better than the alternative Because we have to-ERs, ECs, OMB, GAO 14

15. Context of Risk Analysis Risk analysis takes place within an organizational culture –COE structures and decision processes already exist –Goals, objectives and constraints are the organization’s reality There are decisions to be made Risk analysis is a process and a paradigm, a way of approaching problems and decisions that will look different in every organization that uses it 15

16. When To Do Risk Analysis Extensive Risk Analysis W/ Adaptive Management Routine Risk Analysis Modest Level of Risk Analysis No Risk Analysis Required Consequence of Being Wrong Uncertainty Much Grave Little Minor

17. Risk Management-Informally What is the problem? What questions do we want risk assessment to answer? What can be done to reduce the impact of the risk described? What can be done to reduce the likelihood of the risk described? What are the trade- offs of available options? What is the best way to address the described risk? Is it working? 17

18. Working Definition Risk management is the process of problem finding and initiating action to identify, evaluate, select, implement, monitor and modify actions taken to alter levels of risk, as compared to taking no action. 18

19. Risk Management 19 Establish Decision Context Identify Risks Analyze Risks Evaluate Risks Risk Management Decision Monitor, Evaluate, Modify Communicate and Consult Risk Assessment

20. Risk Assessment—Informally What can go wrong? How can it happen? How likely is it? What are the consequences? 20

21. Working Definition Risk assessment is a systematic, evidence based approach for quantifying and describing the nature, likelihood, and magnitude of risk associated with the current condition and the same values resulting from a changed condition due to some action. 21

22. Risk Assessment Steps Look for the Hazard or Opportunity Identify the hazards that can cause harm or the opportunities for gain that are uncertain. Likelihood Assessment Assess the likelihood of the various adverse and beneficial consequences. Characterize these likelihoods and their uncertainty qualitatively or quantitatively. Consequence Assessment Decide who or what may be harmed or benefited and in what ways. Gather and analyze the relevant data. Characterize the consequences and their uncertainty qualitatively or quantitatively. Risk Characterization Estimate the probability of occurrence, the severity of adverse consequences, and the magnitude of potential gains, including attendant uncertainties, of the hazards and opportunities identified based on the evidence in the preceding steps. Characterize the risk qualitatively or quantitatively with appropriate attention to baseline and residual risks, risk reductions, transformations and transfers. 22

23. Good Risk Assessment Is science-based Gets the right science and gets the science right Science provides basis for answer to risk question(s) Separates what we know from what we do not know –Keeps track of uncertainties Assumptions and uncertainties are made clear 23

24. Risk Communication-Informally Why are we communicating? Who is our audience? What do our audiences want to know? What do we want to get across? How will we communicate? How will we listen? How will we respond? 24

25. Working Definition Risk communication is the open, two-way exchange of information and opinion about hazards and risks leading to a better understanding of the risks and better risk management decisions. Risk communication ensures that the decision makers, other stakeholders and affected parties understand and appreciate the process of risk assessment and in so doing can be fully engaged in and responsible for risk management. 25

26. Who Is Using Risk Analysis? DOD EPA FDA USCG USDA (APHIS, FSIS) DOT DOE OMB GAO WTO Engineering profession Industry International organizations 26

27. Risk Management Overview 27

28. Risk Management Policy and preference based Risk Assessment Analytically based Risk Communication Interactive exchange of information, opinions, and preferences concerning risks

29. The Job! Risk managers are responsible for risk analysis; they identify or validate problems Risk managers need scientific information to make decisions –They ask questions that, when answered, will give them the information they need to make decisions Risk assessors answer the questions and characterize the uncertainty in their answers Risk managers mitigate risks that are not acceptable Risk managers make sure that risk communication takes place 29

30. Test Which is the greater risk to human life in the U.S.? –Hazardous waste sites –Smoking Which is the U.S. spending about $30 billion on annually? –Cleaning hazardous waste sites –Programs to reduce smoking Which is the U.S. spending about $500 million on annually? –Cleaning hazardous waste sites –Programs to reduce smoking 30

31. Test Consider this scenario. A chemical solvent from a nearby plant is found in the air of one room in an elementary school. It is present at levels beneath 10 parts per billion. An advocate for the children says a fan in the window would make the school safe. Which risk management actions would you recommend? –Put a fan in the window –Require children who used to walk to school to take the bus across snow-covered streets in rush hour to the high school 31

32. Test True or false. We could make decisions that are more rational and informed. True or false. We sometimes make policy based more on fear than fact. True or false. If we overspend on risks like pesticides or asbestos, which are real but relatively low-magnitude risks, we have less to spend on the prevention of foodborne illness, smoking, and crime. True or false. We often fear before we think. True or false. Putting resources where the risks are makes sense. 32

33. Can We Do Better? If we can improve our thinking before we make a decision under uncertainty, perhaps we can do better Risk analysis is designed for making decisions under uncertainty It all starts with risk management 33

34. Who Are the Risk Managers? In the Corps? Elsewhere? 34

35. COE Risk Management Establish Decision Context Identify Risks Analyze Risks Evaluate Risks Risk Management Decision Monitor, Evaluate, Modify Communicate and Consult Risk Assessment

36. Risk Management Strategies Acceptance/Retention Avoidance Reduction Transfer Transformation Containment Constant monitoring Continuous research Development of substitutes Increasing resilience– surprises do less harm Precautionary principle Adaptive management Build confidence and trustworthiness Reduce uncertainties Clarify facts Involve affected people Deliberation Accountability 36

37. Principles for Choosing Risk Mitigation P&G –NED, PS, EQ Zero risk Weight-of-evidence Precautionary principle Sound science As low as reasonably achievable (ALARA) principle Appropriate level of protection (ALOP) principle Reasonable relationship Safety standards 37

38. Final Management Decision: The Best Option? Some possible criteria –Prevent rather than control risk –Offer stakeholders choice of options –Based on best available scientific, economic, and technical information –Economic feasibility –Enforceable –Consider tolerable level of risk (TLR) 38

39. Tolerable Risk Increasing Individual risks and societal concerns Unacceptable Region Tolerable Region Broadly acceptable Region Risk cannot be justified except in extraordinary circumstances People and society are prepared to accept risk in order to secure benefits Risk regarded as insignificant, further effort to reduce risk not required

40. Monitor/Evaluate/Modify Actively measure and evaluate success of decision, its implementation, and outcome to determine if changes are needed –See if desired risk reductions have been achieved –Determine if new information is available Resources are required for these tasks 40

41. 41 Historical Response to Risk Risk presumed to be “managed” by engineering design –Freeboard on levees and dams –Cost contingencies –Underkeel clearance design criteria –Channel width design criteria –Probable maximum flood spillways Or policy –Choose NED plan –Obligations and expenditures

42. Risk Assessment Tool Box 42

43. Risk Management Policy and preference based Risk Assessment Analytically based Risk Communication Interactive exchange of information, opinions, and preferences concerning risks

44. The Risk Assessment Model A scientifically based process consisting of the following steps: 1.Look for the hazard 2.Consequence assessment 3.Likelihood assessment 4.Risk characterization The definition includes quantitative risk assessment, which emphasizes reliance on numerical expressions of risk, and also qualitative expressions of risk, as well as an indication of the attendant uncertainties. 44

45. Look for the Hazard or Opportunity Identify the hazards that can cause harm or the opportunities for gain that are uncertain. Likelihood Assessment Assess the likelihood of the various adverse and beneficial consequences. Characterize these likelihoods and their uncertainty qualitatively or quantitatively. Consequence Assessment Decide who or what may be harmed or benefited and in what ways. Gather and analyze the relevant data. Characterize the consequences and their uncertainty qualitatively or quantitatively. Risk Characterization Estimate the probability of occurrence, the severity of adverse consequences, and the magnitude of potential gains, including attendant uncertainties, of the hazards and opportunities identified based on the evidence in the preceding steps. Characterize the risk qualitatively or quantitatively with appropriate attention to baseline and residual risks, risk reductions, transformations and transfers.

46. Risk Characterizations Informal No set structure, minimal science (low end) Screening Separating elements into categories of interest, (e.g. significant vs. insignificant) Ranking Put hazards and opportunities in ordinal sequence Qualitative Usually categorical or an ordinal scoring system Quantitative Deterministic Probabilistic (high end) 46

47. Alternatives to Risk Assessment Ignorance Trial and error Professional judgment Expert opinion Precautionary principle Policy 47

48. Many Techniques These risk assessment models use many tools and techniques –Qualitative –Quantitative Science –Essential for all risk assessments Specific techniques, for example –Probability sampling –Monte Carlo process 48

49. Qualitative Methods Toolbox Increase or Decrease Risk Risk Narratives Evidence Mapping Screening Ratings Rankings Enhanced Criteria Ranking Operational Risk Management (Risk Matrix) Develop a Generic Process Qualitative Assessment Models Multi-Criteria Decision Analysis

50. Evidence Maps Evidence base or data Pro and con arguments, the warrants –Includes respective supporting or attenuating arguments Conclusions of claim about existence of a hazard with remaining uncertainties

51. Enhanced Criteria Based Ranking Criteria Ratings All Possible Combinations of Ratings Ranking Evaluate Reasonableness of Ranking Add Criteria New Combinations of Ratings New Ranking

52. ORM Risk Assessment Values Each risk you assess is placed in a cell and managed accordingly

53. Risk Levels

54. Risk Matrix

55. Quantitative Risk Assessment Safety Assessment Scenario Analysis –Deterministic Scenario Analysis –Probabilistic Scenario Analysis Sensitivity Analysis Uncertainty Analysis Modeling Vulnerability Assessment

56. Safety Assessment Identify Acceptable Risk (AR) Establish design standards to meet that risk –Uncertainty factors Estimate Existing Risk (ER) ER/AR < 1 safety 56 ER/AR1.0 SafeLess Safe

57. Variability and Uncertainty 57 Model Structure Model Detail Model Boundaries Model Precision and Accuracy Calibration Validation Extrapolation Model Resolution Stressor Pathways Exposed Populations Sources Activity Patterns Boundaries Spatial considerations Temporal considerations SCENARIOMODEL INPUTS VariabilityUncertainty

58. Monte Carlo Simulation X = 20 10

59. Probabilistic Scenario Analysis

60. Sensitivity Analysis Systematic investigation of uncertainties of key importance and/or concern to risk managers Creating scenarios to explore the range of possible outcomes 60

61. 61 ESTIMATION LOADING PROB (E) RESPONSE PROB (R|E) OUTCOME PROB (O|R,E) EXPOSURE PROB (L|O,R,E) EXPECTED LOSSES MEASURES U/S WATERSHED CHANGES U/S DAM IMPROVEMENTS STRUCTURAL MODIFICATIONS SAFETY INSPECTIONS INSTRUMENTATION OPERATING RESTRICTIONS FORMULATE MEASURES STRUCTURAL MODIFICATIONS WARNING SYSTEMS FLOOD PROOFING EMERGENCY PREPAREDNESS RELOCATIONS LAND USE ZONING FRAMEWORK FOR RISK ASSESSMENT Compare residual risk to risk guidelines

62. Vulnerability Assessment CARVER is a DoD tool to assist in identifying vulnerable offensive enemy targets. Criticality—measure of public health and economic impacts of an attack Accessibility—ability to physically access and egress from target Recuperability—ability of system to recover from an attack Vulnerability—ease of accomplishing attack Effect—amount of direct loss from an attack as measured by loss in production Recognizability—ease of identifying target 62

63. Select a Process Identify a critical process or infrastructure and assess vulnerability across nation, or Assess vulnerability of components of a single process

64. Risk Communication Overview 64

65. Risk Management Policy and preference based Risk Assessment Analytically based Risk Communication Interactive exchange of information, opinions, and preferences concerning risks

66. 66 Risk Communication Goals  Tailor communication so it takes into account the emotional response to an event.  Empowers stakeholders and public to make informed decisions.  Prevent negative behavior and/or encourage constructive responses to crisis or danger.

67. National Weather Service Hurricane Ike Warning for Galveston September, 2008 " PERSONS NOT HEEDING EVACUATION ORDERS IN SINGLE FAMILY, ONE OR TWO STORY HOMES WILL FACE CERTAIN DEATH.."

68. 68 Communication Models Basic Communication Model Uni-directional or we tell “them” approach Who says - what - when - to whom - through what channel - with what effect Risk Communication Model Multi-directional Actively involves the audience as an information source

69. 69 Risk Communication Outcomes Decrease illness, injury & deaths Reduce property and economic losses Build support for response plan Assist in executing response plan Prevent misallocation & wasting of resources Keep decision-makers well informed Counter or correct rumors Foster informed decision-making concerning risk

70. What Risk Communication is Not Spin Public relations Damage control Crisis management How to write a press release How to give a media interview Always intended to make people “feel better” or reduce their fear

71. What Risk Communication IS Considers human perceptions of risk Multi-directional communication among communicators, publics and stakeholders Activities before, during and after an event An integral part of an emergency response plan Empowers people to make their own informed decisions

72. It’s Risk Not Protection 10-year floodplain occupant

73. 73 Interpreting Risk Communicating about risk is difficult because of the way people interpret risk Involves competing perspectives: objective vs subjective

74. 74 What Shapes Perceptions of Risk? Hazard – something that can go wrong Probability – likelihood of it happening Consequences – implications of hazard Value – subjective evaluation of the relative importance of what might be lost FEELING THINKING

75. 75 Scientist - Consumer Disconnect SCIENTIST EXPERT knows thinks CONSUMER PUBLIC feels believes Fact-based: hazard, probability Value-based: consequences, value

76. What Drives Risk Communication? Hazard—“the hazard,” the science –Experts’ concerns –Less concern to public Outrage—the broad context of the hazard –Public’s concern –Less concern to experts –Often cultivated by media on purpose and by industry and government by ignorance 76

77. Outrage Factors Affecting Acceptability Catastrophic potential Familiarity Understanding Controllability Voluntary exposure Effects on children Manifestation of effects Victim identity Dread Trust in institutions Media attention Accident history Equity Benefits Reversibility Origin

78. The Point Objective risk and perception of risk often diverge We are often managing fear more than we are risks Fear management can be found in the risk manager’s job description under “other duties as assigned” 78

79. 79 A variety of risk comm approaches Hazard (danger) High Low High Outrage Management Crisis / Emergency Communication Public Relations Precaution Advocacy Outrage (fear, anger)

80. 80 Goal: Reduce outrage so people don’t take unnecessary precautions Hazard (danger) High Low High Crisis / Emergency Communication Public Relations Precaution Advocacy Outrage Management Outrage (fear,anger)

81. 81 Goal: Increase concern for a real hazard to motivate preventive action Hazard (danger) High Low High Outrage Management Crisis / Emergency Communication Public Relations Precaution Advocacy Outrage (fear,anger)

82. 82 Hazard (danger) High Outrage (fear,anger) Low High Outrage Management Public Relations Precaution Advocacy Crisis / Emergency Communication Goal: Acknowledge hazard, validate concern, give people ways to act

83. 3Ms of Risk Communication Message—what to say Messenger—who says it Media—how it should be presented 83

84. Message Development What are the three most important things for audience to know? What three things would audience most like to know? What three points is the audience most likely to get wrong unless we emphasize and explain them? 84

85. Subtle Changes Subtle changes in the way things are described can make a big difference. Imagine the U.S. is preparing for the outbreak of an unusual Mexican disease that is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume treatment programs with the following outcomes. 85

86. Choice One Program Options –Program A: will save 200 people –Program B: 1/3 probability of saving 600 people and 2/3 probability of saving no one Which do you prefer? 86

87. Choice Two Program Options –Program C: 400 people will die –Program D: 1/3 probability no one will die and 2/3 probability 600 people will die Which do you prefer? 87

88. Messenger Select messenger with real connection to audience (I would not live in this floodplain with my family) Use opening remarks that indicate active listening about people’s concerns (I have heard some concerns, would like to hear directly from you) Someone with calming voice who will not rush 88

89. Media Agency magazines Fact sheets Press releases Facility tours Small group meetings 1-on-1 with influential people Web sites  Information exchange forums  Town hall public meeting  Paid advertising  Public Service Announcements (PSAs)  Toll-free phone numbers  Wikis, videos, interactive CDs 89

90. Principles of Risk Communication Know the audience Involve the scientific experts Establish expertise in communication Use a credible source to deliver information Share responsibility Differentiate between science and value judgment Assure transparency Put the risk in perspective We are all risk communicators 90

91. Take Away Points Risk analysis is a paradigm shift Risk analysis comprises three tasks— risk assessment, risk management, and risk communication Risk management is decision making that depends on –Science –Values important to stakeholders 91

92. Take Away Points (continued) Science is provided by risk assessment Risk assessment has four steps: –Identify the hazard –Consequence assessment –Likelihood assessment –Risk characterization 92

93. Take Away Points (continued) Risk communication is driven by hazard and outrage We need to communicate risk in ways people can understand and respond to effectively 93

94. To learn more about Actions for Change visit us on the web at https://maps.crrel.usace.army.mil/AFC/ Questions?