1. 1 So much for safety Rolf Skjong and Knut Ronold Det Norske Veritas Rolf.Skjong @dnv.com & Knut.Ronold@dnv.com OMAE, Oslo, June 24-28, 2002

2. 2 Background  Work with introducing risk assessment as basis for the decision making process  Formal Safety Assessment at International Maritime Organisation  Risk based rules & regulations  Not initially intended to be used for individual design  IMO is a UN organisation: Globally accepted criteria for shipping

3. 3 Background

4. 4 Status of criteria  Industrial Self Regulation Regime –Criteria Defined by Operator  Safety Case Regime –Criteria Defined by Regulator  FSA: For use by the regulator in own decisions –With acceptance criteria given, IMO may still decide not to adhere strictly to criteria (will lead to “inconsistency”)

5. 5 Individual Risk

6. 6 Societal Risk - FN Diagrams

7. 7

8. 8 Individual and Societal Risk  Individual and Societal risks are in ALARP area  Individual and societal risks are not ALARP  Cost Effectiveness Assessment (CEA) must be carried out to arrive at recommendations  Societal risks for Bulk Carriers were recently close to intolerable or intolerable  Note: Not all ship types included

9. 9 Format in FSA Guidelines Low Risk High Risk Intolerable ALARP Negligible Not acceptable Acceptable Acceptable if made ALARP

10. 10 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

11. 11 Cost Effectiveness Criteria

12. 12 Cost Effectiveness

13. 13 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 principle has resulted in a ban on research on human stem-cells by many governments

14. 14 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.

15. 15 Previous decision By reallocation 40.000 lives could be saved annually in the US $ 42.000 35 = $ 1.5 million

16. 16 Societal Indicators  Societal Indicators used to rate “quality of life” in countries  Published by e.g. UN (UNDP)  Many different indictors exist  Include such parameters as: GDP/Capita, Life Expectancy at Birth, literacy etc.

17. 17 Social Indicators

18. 18 Societal Indicators

19. 19 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”  Effect demonstrated in the US (Keeney, Lutter, see references)

20. 20 Individual Decisions

21. 21 Societal Indicators

22. 22 Societal Indicators

23. 23 The new Format Low Risk High Risk Intolerable ALARP Negligible Not acceptable Acceptable Acceptable if made ALARP $ value of Life Life/Life Life for $

24. 24 Conclusion  An upper limit on investing in safety exists, where self protective measures are more effective  No regulator should implement less effective measures –New meaning to “Born free, taxed to death”  Different methods for defining criteria give similar results  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 Assumptions used in derivation

25. 25 Conclusion  Human Capital Approach ~ ge/2  Life Quality Index/Human Capital Approach ~ 10/3  Self Protective Measures/Life Quality Index ~ 10/3  This is a narrow band!  Published criteria are in the range between the Human Capital and Life Quality Index approaches  A measure that should be implemented in a wealthy country, may be a “net killer” in a less developed country, as self protective measures give better effects