Eirik Bjorheim Abrahamsen

On the consistency of risk acceptance criteria with normative theories for decision-making

In evaluation of safety in projects it is common to use risk acceptance criteria to support decision-making. In this paper, we discuss to what extent the risk acceptance criteria is in accordance with the normative theoretical framework of the expected utility theory and the rank-dependent utility theory. We show that the use of risk acceptance criteria may violate the independence axiom of the expected utility theory and the comonotonic independence axiom of the rank-dependent utility theory. Hence the use of risk acceptance criteria is not in general consistent with these theories. The level of inconsistency is highest for the expected utility theory.

Safety management and the use of expected values

In this article we discuss a fundamental principle of decision-making under uncertainty; the use of expected values to support decision-making is the fundamental principle of decision-making under uncertainty. This principle is supported by the portfolio theory and is a ruling principle among economists. Also among some safety experts it is seen as a rational framework for decision-making. In this article we discuss the appropriateness of this thinking for the safety area. To what extent is the portfolio theory applicable for decision situations related to safety? The issue is important as it relates to the value of safety. Are investments in safety on the basis of application of principles such as robustness, precautionary, and risk aversion in conflict with the economic theory? Our starting point is the offshore oil and gas industry, but our discussion is to large extent general and could also be applied in other areas.

Why risk acceptance criteria need to be defined by the authorities and not the industry

In various industries it is common to use risk acceptance criteria to support decision-making. The criteria are seen as absolute in the sense that measures need to be implemented if the criteria are not met. In Norway the petroleum regulations state that the operator has a duty to formulate risk acceptance criteria relating to major accidents and to the environment. This practice is in line with the internal control principle, which states that the operator has the full responsibility for identifying the hazards and seeing that they are controlled. In this paper we discuss the rationale for this practice. The expected utility theory, which is the backbone for all economic thinking, is used as a basis for the discussion. We show that if risk acceptance criteria are to be introduced as a risk management tool, they should be formulated by the authorities, as is the common scheme seen in many countries and industries, for example in the UK. Risk acceptance criteria formulated by the industry would not in general serve the interest of the society as a whole.

A framework for selection of strategy for management of security measures

In this paper, we present and discuss a framework for security risk management, focusing on the selection of a management strategy for decision-making on security measures in particular. The framework provides guidance on the selection of a suitable type of management strategy for various types of decision-making contexts. An Information and Communication Technology case study is used to illustrate the practical implications of the framework.

On the need for revising healthcare failure mode and effect analysis for assessing potential for patient harm in healthcare processes

Healthcare Failure Mode and Effect Analysis is a proactive, systematic method adapted from safety-critical industries increasingly used to assess the potential for patient harm in high-risk healthcare processes. In this paper we review and discuss this method. We point to some weaknesses and finally argue for two adjustments. One adjustment is regarding the way in which risk is evaluated, and the other is to adopt a broader evaluation of barrier performance. Examples are given from prehospital critical care and from the operating room environment within hospitals to illustrate these ideas.

Safety oriented bubble diagrams vs. risk plots based on prediction intervals and strength-of-knowledge assessments. Which one to use as an alternative to risk matrices?

The use of risk matrices for visualising risks has been discussed in the literature. It is argued that risk matrices are not appropriate as the uncertainty is not properly taken into account. As an alternative to risk matrices, the use of bubble diagrams has been suggested. Risk plots based on prediction (uncertainty) intervals and strength-of-knowledge assessments have also been recommended. In this paper, we discuss which of these two alternatives to traditional risk matrices is considered most appropriate for visualising risks. We show that risk plots are more precise in reflecting important aspects of risks than bubble diagrams, while bubble diagrams are considered to give a better basis for ranking between risks. In this paper, a new visualisation tool closely related to the risk plots and the bubble diagrams is suggested.

A practical approach for the evaluation of acceptable risk in road tunnels

In many European countries it is common to adopt quantitative criteria in evaluation of acceptable risk in road tunnels. Such criteria, usually expressed by FN-criteria and IR-values, will easily lead to a regime that is difficult to adopt in practice, as the use of such criteria requires extensive analyses and documentation for all types of tunnels. In this paper, a more practical approach for the evaluation of acceptable risk in road tunnels is presented, in which quantitative risk acceptance criteria are used for some road tunnels, while qualitative criteria are used for others. This means that varying degrees of effort and documentation are necessary for the evaluation of acceptable risk in road tunnels. The approach suggested is inspired by challenges in Norway.

On how access to an insurance market affects investments in safety measures, based on the expected utility theory

(c) 2010 Elsevier Ltd. All rights reserved. The author accepted manuscrip is posted here with permission. See http://dx.doi.org/10.1016/j.ress.2010.10.004 and www.sciencedirect.com/science/journal/09518320.

On the rationality of using risk acceptance criteria based on the expected utility theory

Risk acceptance criteria, as upper limits of acceptable risk, are often used to control accident risk. In the literature, there is a discussion about the suitability of using such criteria. The purpose of this paper is to contribute to this discussion by questioning the rationale of using risk acceptance criteria in accordance with the ruling paradigm for decision-making under uncertainty – the expected utility theory. Attention is given to the rationality of using risk acceptance criteria from both a firms and a societal point of view.

Using the ALARP principle for safety management in the energy production sector of chemical industry

Abstract In the context of chemical industry, in particular in high hazard industries, the adoption of safety measures is essential to reduce risks and environmental impacts, due to the release of dangerous substances, at level that is reasonably practicable. The ALARP (As Low As Reasonably Practicable) principle is broadly used for decision-making in safety management, supported by cost-benefit analyses and the grossly disproportionate criterion, but without paying the proper attention to the decision frame (defined by the level of uncertainty and knowledge of the chemical phenomena, the use of best available technologies, the potential of major losses due to the release of hazardous materials and other items). In this paper, by examining the energy production sector of chemical industry, it will be argued that the decision context makes the application of the ALARP principle not always proper, whereas a dynamic interpretation, in which decisions are made oscillating between two borderlines, where in one case reference is made to expected values and in the other one to the precautionary principle, is more appropriate.