Loss Aversion Individual Psychological background:

Loss aversion and prevention investments

Translating this psychological principle into safety terminology, it is clear
that company management would be more inclined to invest in
production (‘certain gains’) than to invest in prevention (‘uncertain
gains’).
Also, management is more inclined to risk highly improbable
accidents (‘uncertain losses’) than to make large investments
(‘certain losses’) in dealing with such accidents.

We do not gamble with gains,

while we tend to gamble with losses (because we really hate to lose)!

15 16

The brain of the manager and the position of

Balance between safety and production
operational safety – how it should be

17 18
What operational safety economics can do, is
Prediction
help to find the balance
Operational safety and prevention economics =
emerging field of interest to academia and industry

àWill be much more important in future academic

research AND industrial decision-making

Let us now see current theories, R&D and industrial

practices of the field of interest!

19 20

Costs and benefits w.r.t. prevention:

3. How?
how should we interprete them?
• Conceptual models and theoretical info • “Costs” = costs of prevention measures (‘control costs’)

OR: Costs = costs of accidents that happened (‘failure costs’)

• “Benefits” = averted costs

Thus: hypothetical benefits of losses that never occurred (accidents that
never happened) due to the taking of prevention measures

OR: Benefits = cost savings through prevention of disruptions + added

value generated by prevention

21 22
Costs of prevention measures (‘control
costs’)
• - Staffing costs of company HSE department
• - Staffing costs for the rest of the personnel (time needed to implement safety
measures, time required to read working procedures and safety procedures, etc.)
• - Procurement and maintenance costs of safety equipment (e.g., fire hoses, fire
extinguishers, emergency lighting, cardiac defibrillators, pharmacy equipment,
etc.)
• - Costs related to training and education w.r.t. working safe
• - Costs related to preventive audits and inspections
• - Costs related to exercises, drills, simulations w.r.t. safety (e.g., evacuation
exercises, etc.)
• - A variety of administrative costs
• - Prevention-related costs for early replacements of installation parts, etc.
• - Investigation of near-misses and incidents
• - Maintenance of machine park, tools, etc.
• - Good housekeeping
• …
Insured and Uninsured costs of
accidents
Insured costs:
• Insurance premiums
• Medical bills
• Indemnity payments
• Temporary disability payments
• Employers liability
• Public liability
• Product liability
• …
Costs of accidents (non-exhaustive)
Interested Non-quantifiable consequences of Quantifiable consequences of
parties accidents accidents
Victim(s) -Pain and suffering -Loss of salary and bonuses
-Moral and psychic suffering -Limitation of professional skills
-Loss of physical functioning
-Loss of quality of life
-Time loss (medical treatment)
-Financial loss
-Health and domestic problems
-Reduced desire to work
-Extra costs
-Anxiety
-Stress
Colleagues -Bad feeling -Time loss
-Anxiety or panic attacks
-Reduced desire to work
-Potential loss of bonuses
-Heavier work load
-Anxiety
-Stress
-Training and guidance of temporary
employees
Organisation -Deterioration of social climate
-Poor image, bad reputation
-Internal investigation
-transport costs
-medical costs
-lost time (informing authorities,
insurance company, etc.)
-Damage to property and material
-Reduction in productivity
-Reduction in quality
-personnel replacement
-New training for staff
-Technical interference
-Organisational costs
-Higher production costs
-Higher insurance premiums
-Administrative costs
-Sanctions imposed by parent
company
-Sanctions imposed by the
government
-modernization costs (ventilation,
lighting, etc.) after inspection
-new accident indirectly caused by
accident (due to personnel being
tired, inattentive, etc.)
-loss of certification
-loss of customers or suppliers as a
direct consequence of the accident
-variety of administrative costs
-loss of bonuses
-loss of interest on lost cash/profits
-loss of shareholder value
23 24
Hypothetical benefits
Uninsured costs: Take accident costs for a variety of scenarios:
these are all ‘avoided accident costs’ if certain
• Product and material damage
• Lost production time prevention investments (related to the scenarios
• Legal costs considered) are made !
• Overtime & temporary labour
• Investigation time/Administration
• Supervisors time
• Fines Other hypothetical benefits (difficult to calculate):
• Loss of expertise/experience Added value generated by:
• Loss of morale
• Bad publicity – Increased employee motivation and satisfaction
• … – Sustained focus on quality and better quality of
products
– Product innovations
– Better corporate image
– …
25 26
Hypothetical benefits Hypothetical benefits
Costs of incidents and accidents that happened (‘failure Hypothetical benefits are all costs related
costs’) and costs of
incidents and accidents that were avoided and that never
with accidents which have never occurred.
happened (‘hypothetical benefits’) are different in their nature,
due to the number of scenarios of possible accidents.

Nonetheless, their analogy is clear and therefore they can

easily be confused when making economic considerations.

However, less failure costs does not imply an equivalent of

higher hypothetical benefits; there are much more
hypothetical benefits when prevention investments go up !

27 28

Minimum total cost point

Two kinds of hypothetical benefits (‘prevention costs’ = control costs;
‘accident costs’ = failure costs)

• The hypothetical benefit of the risk treatment option can be regarded in two
ways:
•
• Definition (i): as the difference between the highest possible costs of an
accident in the current situation and those of an accident after applying the
treatment measure. Hence:
•
• Maxmax Hypothetical Benefit = Maximum possible accident cost
without any
• treatment – Maximum possible accident cost after the risk
treatment
•
• Definition (ii): as the difference between the costs of retention when doing
nothing (taking no action) and those of the possible accident after applying
the treatment measure. Hence:
• • For each company the break-even point is different
• Expected Hypothetical Benefit = Cost of retention – Expected possible cost • No hypothetical benefits are taken into consideration in this figure
of • Only re-active way of economic analysis (based on accident/failure
• accident after the risk treatment
statistics over time, linked with prevention efforts)! (à not usable for disasters)
• Nonetheless, all accidents are treated similar

29 30
Accident Typology Risk typology
• Accidents where a satisfactory amount of
information is available (Type I accidents or
non-major accidents)

• Accidents where very scarce information is

available (Type II accidents or major
accidents)

• Accidents where no information is available

(Type III accidents or black swan accidents)
= extremum of type II accident

31 32

Type I accidents: Type I and II accidents:

the Egyptian pyramid model the Mayan pyramid model

33 34
Hence: different types of risk, also for decision-
making and operational economics!
Risks possibly leading to minor occupational
accidents (“Type I”) are not to be confused with
risks possibly leading to disasters and major
accidents (“Type II and Type III”) when making
prevention investment decisions.
Statistical cost-benefit methods may yield reliable
results for Type I risks, whereas the (maxmax)
hypothetical benefits of Type II risks almost always
outweigh the prevention costs for these types of
risks.
35
Some considerations on economic approaches
in prevention decision making
Choices between safety and prevention measures,
constrained with the available H&S budget
Example: (low probab, high conseq.) or
(higher prob., lower conseq.) accident reduction?
à Evaluative best value-for-money risk reduction
measures
37
Some further considerations on economic prevention
analyses
• Economic analyses can support normative risk
control decisions but can not be used to determine
the efficiency and effectivity of prevention measures.
• Economic analyses require debatable information,
e.g. the price of a fatality, the price of a finger cut-off,
the question of who pays which costs, the question
of who receives which benefits, etc.
36
Economic approaches in safety decision-making
• Many critiques can be formulated on the concept of ‘economic approaches
for safety decisions’ , e.g.:
– Economic approach for safety decisions gives the industry the aura of
being more scientific about prevention measures taken
– Economic approaches and processes allow governments and
organisations to hide behind ‘rationality’ and ‘objectivity’
– Analysts know that the economic assessments are often based on
selective information, arbitrary assumptions, and enormous uncertainties.
Nonetheless they accept that the assessments are used to conclude on
risk acceptability.
• HOWEVER: THERE IS NO ALTERNATIVE (!): to support and continuously
improve the decision-making about prevention and safety measures, we
need to make economic assessments. The right way forward is not to reject
the economic approach in safety decision-making, but to improve the tools
and their use!
38
 Economic approaches in safety decision-
making
• Two fundamental scientific requirements should
be met:
1. Reliability requirements of the economic assessment:
• The degree to which the economic analysis methods
produce the same results at reruns of these methods
Economic approaches in safety decision-
making
• Two fundamental scientific requirements should be
met:
2. Validity requirements of the economic assessment:
• The degree to which the produced economic/financial
numbers are accurate compared to the underlying
true number

• The degree to which the economic analysis produces • The degree to which the assigned probabilities
identical results when conducted by different analysis adequately describe the assessor’s uncertainties of
teams, but using the same methods and data the unknown quantities considered

• The degree to which the economic analysis produces
identical results when conducted by different analysis
teams with the same analysis scope and objectives,
but no restrictions on methods and data
• The degree to which the epistemic uncertainty
assessments are complete
• The degree to which the economic analysis
addresses the right quantities

39 40

Strengths and weaknesses of economic analyses w.r.t.

safety 4. With?
Things to consider when using an economic analysis • Practical models/tools and concrete
for safety decisions:
data/examples
• - An economic analysis is as accurate as its input information
• - It is also often easier to obtain data on costs than on potential
benefits
• - Indirect, invisible costs and benefits might play an
important role in the (lack of) accuracy of an economic analysis
• - Perceptions of people carrying out the analysis should be
as objective as possible
• - An analysis creates an image of precision, but it is not
• - Net present values can not be certain to be realistic
• - Philosophical difficulties: valuation of ill-health, life, etc.

41 42
Helping decision makers to take prevention
investment decisions: Current decision models Five-step approach
and Decision Support Systems

• - “Quick and dirty” calculations 1. Preparation (scope, goals, suitable technique, parties to
be involved)

• - Calculations for costs and prevention
investments regarding Type I accidents
• - Calculations for costs and prevention
investments regarding Type II accidents
2. Selecting variables and indicators (smart choice : in line
with goals etc., data available, agree upon)
3. Finding data (available, extrapolation, new)
4. Valuations and calculations (attach money values to
quantified variables and indicators; understandable
presentation of results)

5. Interpretation of results and refinement

43 44

Helping decision makers to take prevention

investment decisions: Current Decision models
and Decision Support Systems C/B analyses for accidents: basic
• Cost-benefit analysis: incorporates valuations of costs idea/approach
and benefits into the calculations, to make decisions.

• Cost-effectiveness analysis: is used to compare the

costs associated with a range of risk control measures that
achieve similar benefits in order to identify the least cost
option and maximize the return from a given budget.

(both approaches can be used for Type I and Type II

prevention investments, but in a different way for the two
types !)

45 46
“Quick and dirty” accident cost calculations:
only possible for Type I accidents
Quick-calculation example

• Use e.g. the type I pyramid: • Use e.g. the Bird pyramid:

Sort of Bird pyramid Number of Cost per sort of Cost

incident/accident incidents/accidents incident/accident

Serious 1 N x N.x

Minor injury 10 10.N y 10.N.y

Property damage 30 30.N z+t 30.N.(z + t)

incident 600 600.N s 600.N.s

Total cost : N.(x + 10.y + 30.(z +

t) + 600.s

47 48

Quick and dirty CB-analysis of safety

measures for type I risks
{(Cwithout × Fwithout ) - (Cwith × Fwith )}× Prcontrol > Safety measure cost
Type I models/tools?
Or, if not sufficient information regarding the initiating events’ frequencies is available for
using the previous equation: • A practical tool for the estimation of the
(Cwithout - Cwith ) × Faccident × Prcontrol > Safety measure cost
direct and indirect costs and prevention
investments of non-major accidents.
With:
ìCwithout = cost of accident without safety measure
ïC = cost of accident with safety measure
ï with
ïï Fwithout = statistical frequency of initiating event if the safety measure is not implemented
í
ï Fwith = statistical frequency of initiating event if the safety measure is implemented
ï Faccident = statistical frequency of the accident
ï
ïîPrcontrol = Probability that the safety measure will perform as required

49 50
 Safety and prevention econ. calculations:
More rigourous calculations for costs and prevention Number of existing models/tools exist
investments
regarding Type I accidents Models are often quite simplistic, providing
only a very rough idea of for example
1

• Definitions -during execution work 29

– The costs of incidents/accidents
-due to execution work
– Occupational accidents -lesion 300
– The possible benefits of a prevention
-sudden event
– Incidents -external source measure
Author Fixed ratio
– The different cost categories and their
• Ratios direct and indirect costs: Heinrich 1/4
importance
Bird 1/6
Rikhardsson 1/1,5 – Annual cost savings due to prevention
RIVM 1/5
E&P FORUM 1/4 –…
France 1/3

51 52

Three types of available tools Investment analysis parameters

• - Analyze occupational accidents and assess • NPV

their economic impact (only costs)
• IRR NPV(r)=0

• - Develop and evaluate prevention

measures and their costs and benefits (= • Profitability Index or Benefit Cost Ratio
averted accident costs), eventually linked NPV / C0
with an investment analysis
• PBP

• - Carry out investment analysis (compare

P
y(P) = ò x(t).dt = 0
0

different investment alternatives)

53 54
 The model
An example of a Type I model/tool for cost
calculations and prevention investment
calculations – building the model
Porter Business in Context Model
MEEMO Model
Man Equipement

Organisation

Energy Product

Material Environment

55 56

Influencing parameters Influencing parameters

DIRECT COSTS
Fines
A. MAN
• medical costs, costs for
INDIRECT COSTS prosthesis, costs of orthopaedic
B. EQUIPEMENT
C. INTERNAL WORK ENVIRONMENT
material, travelling costs;
Social
Energy loss disturbances
D. MATERIAL/PRODUCTS/... • costs due to the temporary
E. ORGANIZATION
Man Equipment
Man F. PRODUCT (OUTPUT) disability of the victim;
Health Material Health damage G. CUSTOMERS
Exhaustion
damage damage Products
H. SUPPLIERS • costs due to the possible
Organization Damage I. EXTERNAL ENVIRONMENT permanent disability of the
Energy Damage
victim;
Bad products
Lost
Material Environment
Raise premium
deals • costs due to the disease of the
Waste
victim.
Raw materials
Exhaustion Waste
Damage
In case of a deathly accident, aside the possible costs above, their are
Raw material
other costs like the funeral costs, a percentage of the wage of the victim as
an indemnity for the persons left behind etc. This also is clearly described
Bad publicity
in the Belgian legislation.

57 58
Integrate supplementary information Tool can be used for estimating the accident costs

E. ORGANIZATION Ple ase enter de cimal numbers: (e g 0,25 = 2hrs, 1 = 8hrs)

Cost Estimator of Occupational Accidents: da ys spent ave rage cost/d amount
Dealing wit h t he incident
GENERAL DATA GENERAL DAT
G ENERAL DATA
GENER AL DATA Pe rsonne l perfor ming F irst- Aid trea tement 0 €
Pe rsonne l ta king injur ed person to hospital/home 0 €
Business secto r
#N/A Invest igation of incident
NACE Fill in code (XX.X XX), bus iness sector above appears aut omatic
Accide nts inve stigation safety de pa rteme nt 0 €
Accide nts inve stigation dir ect ma na ge ment 0 €
Name of compan y Da te (C21 *)
Accide nts a dm inistration HR department 0 €
Victim(s) Cho ose Accide nts a dm inistration legal de pa rtement 0 €
Fun ction o f th e victim( s) Cho ose Necess ary field! Time spent with L ocal OSH author ity 0 €
Critical for the co ntinu ity of the co mp any (sco re f rom 1 -5) External OSH service s 0 €
Re porting to boa rd of directors, He ad Office,... 0 €
Accide nt with death as consqu en ce
Extra work time safety departem ent 0 €
Cau sin g e vent 00 Ge en info rma tie (me eting, coordination, instr uctions, advise,...)
Getting back to b usiness
Cost of r ecruite ment a nd sa lary of the replace r 0 €
Con cern ed obj ect 00 .0 0G een be tro kken voo rwerp o f g een inf ormatie
Re organisa tion of work ( training,...) 0 €
Actions to safegu ard futu re business
In-company activities (promotion) 0 €
Perman en t lesio n
Communication to pe rsonne l €
Typ e o f lesio n 00 0Onb eken d le tsel: Info rmatie on tb reekt Socia l disturbances ( trade unions) 0 €
Turnov er pe rsonne l due to a ccident(s) 0 €

Typ e o f Acciden t (Belgian Leg islation ): TOTAL ORGANISATION 0 €

reg ular occu pationa l accid ent
De scription of accid ent : F. PRODUC T (OUTP UT) Ple ase enter de cimal numbers: (e g 0,25 = 2hrs, 1 = 8hrs)
da ys spent ave rage cost/d amount
Lost production ( reduce d output) 0 €
DIRECT COSTS Re work, repairs, re je ctions (Q e ffect) 0 €
Orde rs lost or cancelle d 0 €
A. MAN Innovativ e ca pa city of the firm 0 €
employer charges on t he payment 108% 35099,83 € : maximum payment
Wa rranties (Q e ffect) 0 €
on 108% : s ocial securit y bleu collars 38,34% 13,07% social sec. whit e c ollars
employer charges on t he holiday payment 16,27% 11,33% company c harges TOTAL P RO DUCTION (OUTPUT) 0 €
Costs 2,1 xgross salary=cost empl.
G. CUS TOMERS Ple ase enter de cimal numbers: (e g 0,25 = 2hrs, 1 = 8hrs)
Medical costs,travellin g cost,p rotheses,orth oped ic material, .. .
da ys spent ave rage cost/d amount
Tem porary dis abil ity (% i nvali dity)
Communication to custome rs 0 €
Pay me nt € choo se freq uen cy
Pr ice re duction, penalties 0 €
Premiu m en d o f y ear € 0 €/d ins urance
Lost de als a nd clie nts 0 €
Ho urs/week hours 0 €/d employer
Lost da ys days 0 € s al ary by insur ance TOTAL CUS TOMERS 0 €
% inv alidity tempo rary % 0 € s al ary by em pl oyer
H. SUP PLIERS
Perm anent di sabili ty (% invalidi ty)
External OSH Service 0 €
% inv alidity p ermanen t 0 % 0 € NPV provisi on
Psy chologica l support vitim(s) or witnesses €
Ho lid ay paymen t 0,00 € 0 € payed by i nsurance
Me dical ex amination Ex te rnal OSH ser vice be fore sta rt €
Death: Fu ne ral costs, % fo r pe rso n le ft b ehin d, % children 0 € 0 € payed by empl oyer
Ins uren ce c omp an y :Raise in surance premiu m 0 €
TOTA L MA N 0 €
Temp off ice €
INDIR ECT COSTS
Others 0 €

B. EQUIP EMENT/MACHINES/... Plea se enter decimal n umbe rs: (eg 0,25 = 2hrs, 1 = 8 hrs) TOTAL SUP PLIERS 0 €
days sp ent average c ost/d amo unt
I. EXTERNAL ENVIRON MENT Ple ase enter de cimal numbers: (e g 0,25 = 2hrs, 1 = 8hrs)
Makin g th e are a safe 0 €
Govern ement da ys spent ave rage cost/d amount
Da ma ged pro te ctive equ ipment 0 €
Extra control of gov erneme nt 0 €
Repa irs, clean ing of working g ear, veh icles o r in stallation s 0 €
Legal costs, fine s, indemnities 0 €
Repla cemen t o f wo rking gea r, vehicles or installations 0 €
Cha nge me nt of p rodu ction location Media
0 €
Pr ess re lease s 0 €
Oth er material co sts 0 €
External environment
TOTA L EQUIPEMENT/MA CHINES/... 0 € Dama ge to the e nv ironment 0 €
Market
C. INTER NAL WORK ENVIRONMENT Plea se enter decimal n umbe rs: (eg 0,25 = 2hrs, 1 = 8 hrs) Attractive ne ss to potentia l customer s (loss of im age) €
days sp ent average c ost/d amo unt Labour market
Costs ma de to rep air orig inal wo rk en viron me nt Position la bour mar ket, a ttr activeness ne w personnel €
0 €
TOTA L INTER NA L WORK ENVIRONMENT 0 € TOTAL EXTERNAL ENVIRON MENT 0 €

D. MA TER IAL /PR ODUCTS/... Plea se enter decimal n umbe rs: (eg 0,25 = 2hrs, 1 = 8 hrs)
days sp ent average c ost/d amo unt
OTHER COSTS: 0 €
Material damage of stock s 0 € DIREC T CO ST INDIRECT COST TOTAL CO ST
Sub stitution of pro du cts 0 €
0 + 0 = € 0,00
TOTA L MA TER IAL /PR ODUCTS/... 0 € RATIO DIRECT C OST / INDIRECT CO ST 1/ #DI V/0!

59 60

Tool can be used for carrying out an investment

analysis
Example:

Cost Estimator of Occupational Accidents:

Investment analysis
Occupational accident:
Business sector
Payback, IRR, ...
#N/A
After putting away the goods, the victim has not
• PBP / IRR lowered the forks of a forklift truck, and
NACE 0,00
Name of company 0
Subsides of governement,... 0 €
Invested amount 0 €

consequently drove with the forks against a

Total investement 0 €

- Case 1
Yearly costs of acci dents (Calculated) 0
Number of worker s (FTE) 0 FTE
Number of accidents 0 injuries sector pun
Tar get reduction of i njuries 0 injuries

- Case 2
Case 1 : Tar get reduction of injuries w ill be achieved i mmediately
Payback period
#DIV /0!

#DIV /0!
%

Years
supporting beam of the ceiling. As a result, the
fork lift truck overturned.
Rate of return #DIV /0!
cost saving per year #DIV /0! €
Case 2 : Target reduction of injuries will be achieved as fol low s:
Rate of return
after 1 year 20,00% #DIV /0! after 1 year
after 2 years 40,00% #DIV /0! after 2 years
after 3 years 60,00% #DIV /0! after 3 years
after 4 years 80,00% #DIV /0! after 4 years
after 5 years 100,00% #DIV /0! after 5 years

• Amount of sales needed

Payback period

Sales V olume / turnover

Amount o f sales ne eded tot replace Lost prof ts
0 € Link to the balance sheet data base Injury: fractures
to replace lost profits
Profit margin 0,00% % Cl ick her e and select sector-go to page
Annual Profit 0 25"toegevoegde w aarde per personeel slid"

Annual accident cost (indirect and direct)

Accident cost as a percent of profits
Amount o f sales ne eded tot replace lost profits
#DIV /0!
#DIV /0!
€
%
€
(If profit margin is 5 %, then it takes 20 euro of s ales to replac e every euro of los s)
Time of absence: 181 calendar days
Decreasing the insurance premium
Personnel expenses
% of per sonnel expenses %

• Decreasing the insurance

Yearly insur ance premi um

Number of accidents injuries

Tar get reduction of i njuries injuries %
Invested amount €

premium Decrease of premium

New premium
Cost saving s a year
0 €
0 €
€
%

Payback perio d #DIV /0! years

61 62
 Type II models/tools?

• A practical tool for the estimation of the direct and

DIRECTE KO ST IN DIRECTE KOST TOTALE KOST
indirect costs and prevention investments of major
15502 + 29289,4 = € 44791,88 accidents.
RATIO DIRECTE KOST / IN DIRECTE KOST 1/ 1,89

Opmerkin gen :
De reachttruck zou in sept 20 08 restwaard e total loss 304 7 euro
afgeschreven huur van drie maanden van reachttruck: 3350
zijn. De machine was total loss en de
verzekering heeft enkel de restwaar de
uitgekeerd.
De n ieuwwaarde reachtruck i s 25 050 eu ro

63 64

Cost benefits analysis for type II risks: need for

specific tool
Scope: “major accident”
• Identification of costs and benefits (being different of nature) for Definiton (for example):
major accident scenarios (hence: hypothetical scenario-based
benefits!)
“Major accidents are accidents that deviate from normal
• Calculation of Net Present Value of all costs and benefits (using a expectations, which cause at least several fatalities on site
discount rate, probabilities or frequencies, and an installation
lifespan) and
one fatality and many injured off site, and/or important
• Comparison of total (summated) discounted costs and benefits environmental damage, and/or material damage of tens of
millions of euros, and/or international press attention.”
• Use of a “Disproportion factor”:
Costs > Benefits x Disproportion factor

65 66
Costs and benefits? Costs and benefits?
(Prevention) cost categories Benefit (avoided accidents) categories

• Initial costs: research, selection and design, material, training and
information, adaptation of the guidelines & work procedures, etc.
• Installation costs: production losses, start-up, installation team, tools and
utensils
• Production chain benefits: production losses, start-up, planning
• Benefits regarding damages and losses: material/property/asset damages
and losses of the own company, material/property/assets damages and
losses of other companies, of neighbouring living areas, of public property, …

• Exploitation costs: utility costs • Judicial benefits: penalties, interim-lawyers, specialized lawyers, internal
investigation team, experts, legislation changes, permits
• Maintenance costs: material, maintenance team, production losses, start-up
• Insurance benefits: insurance premium
• Inspection costs: inspection team

67 68

Costs and benefits? Reputation benefits?

Benefit (avoided accidents) categories
BP Share Price (GBP)
700
• Human- and environmental benefits: victims, injuries, recruitment, 650
600
550
environmental damages 500
450
400
350
300 BP Share Price (GBP)
250
• Intervention benefits: intervention

02/02/2010
29/03/2010
26/05/2010
21/07/2010
15/09/2010
09/11/2010
06/01/2011
02/03/2011
28/04/2011
27/06/2011
19/08/2011
14/10/2011
08/12/2011
06/02/2012
30/03/2012
29/05/2012
25/07/2012
19/09/2012
13/11/2012
10/01/2013
06/03/2013
02/05/2013
Table 13: BP Share Price, Key Values
Source: Based on (BP, 2013)

• Reputation benefits: stock exchange value of shares maximum: £655,40 20/apr/10

minimum: £302,90 29/jun/10
drop: £352,50

• Other benefits: managers’ time, clean-up drop in %: 53,78%

current value: £466,25 2/mei/13

69 70
Disproportion factor:
Tool for type II risk economic analyses
research in progress
– Cost-benefits analysis for x measures for 1 scenario
– Cost effectiveness analysis for x measures for 1 scenario
– Cost-effectiveness analysis for y measures for z scenarios

1. ‘Guidelines and instructions’ sheet

2. ‘Data Input’ sheet
Disproportion(factor( 3. ‘Cost-Benefit Analysis’ sheet
!

30"
!
!
4. ‘Cost structure’ sheet
!
!
! 5. ‘Benefit structure’ sheet

Level%2%risks:%Tolerable%if%ALARP%
!

Level%1%risks:%First%priority%
Level%3%risks:%Acceptable%
!
!
!
6. ‘Cost-Effectiveness Analysis’ sheet
!

10"
!
!
7. ‘Report’ sheet
!
!
!
!
8. ‘History’ sheet
!
1"
!
Broadly( ALARP( ! Intolerable(
Risk(
9. ‘Optimization tool’ sheet
Acceptable( !
!
!
!

71 72

Use of the tool?

Type I and II cost effectiveness
• - Optimize the current/existing decision process analyses?
regarding prevention measures investment • A practical approach.

• - Approach for safety/prevention managers to

convince others of safety measure investments

73 74
 Building blocks for the approach
Cost effectiveness analysis
Approach: “Knapsack problem” formulation
max Bi xi
• Building block 1: The risk matrix
s.t. Ci xi £ Bu tot
• Building block 2: Costs and Benefits
xi Î {0,1} needed
A number of assumptions are implicitly taken in this formulation:
• A measure is either taken or not (it cannot be partially taken);
• The total benefit of all measures taken is the sum of the individual benefits of the chosen
measures;
• The total cost of all measures taken is the sum of the costs of the individual measures;
• Method used in combinatorial
• Measures can be independently implemented, without consequences for the other measures.
optimization, that is, to solve the so-
called ‘knapsack problem’

75 76

Building block 1: The risk matrix Discretization of the risk matrix

(DoD, 2000)
Probability of Hazard
Severity of
F E D C B A
consequences
Impossible Improbable Remote Occasional Probable Frequent
I
1.
Catastrophic
II
3. 2.
Critical
III
4.
Marginal
IV
Negligible Every cell of the risk matrix corresponds with a certain cost Ci.
Acceptable
Risk Code/ Un- Un-
Actions
1.
acceptable
2.
desirable
3. with 4. Acceptable (This cost is the total cost of all risks together within that cell
controls
of a certain type (e.g. fire risks) –
hence first one looks at the likelihood as well as at the
consequences, second one sums the consequences per
cell, third a final cell is assigned to the package of risks)

77 78
 Building block 2: Cost-benefit analysis
The risk matrix, with cell cost per year
• “Costs” = costs of prevention measures
Likelihood Cell assignments (in €/year)
[year-1] for decreasing from risk cell i to risk cell j;
>1 7,500 75,000 750,000 2,500,000 called COPij
> 10-1 750 7,500 75,000 250,000
> 10-2 75 750 7,500 25,000
> 10-3 7.5 75 750 2,500
> 10-4 0.75 7.5 75 250 • “Benefits” = averted costs (thus:
Consequence
classes / financial “hypothetical benefits due to the taking of
impact [€] à < 7,500 < 75,000 < 750,000 < 2,500,000 prevention measures”): to calculate by
(ideally, we have real cost values Ci, based on financial information available about risks in the organization) determining the decrease of costs related
(cfr. as used in tool under construction)
to risk cell i and risk cell j. This decrease
can be calculated by subtracting Cj from
Ci.
79 80

Cost-benefit analyses Solving the knapsack problem

• Although the knapsack problem is NP hard , it can be
solved efficiently even for very large instances.
Needed input data (in general):
• It can be solved by standard off-the-shelf commercial
software for mixed-integer programming, such as
n
Number of cells where risks do exist for the organization (= Nc; Nc Ì n )
Ci
– CPLEX (http://www.ibm.com/software/integration/optimization/cplex-
Butot optimizer/)
Costs of Prevention for going from risk cell i to risk cell j (CoPij), "i, j whereby i Î Nc – Gurobi (http://www.gurobi.org)
– GLPK (http://www.gnu.org/software/glpk/)
– lpsolve (http://lpsolve.sourceforge.net).
– even spreadsheet software such as Excel or LibreOffice include a
solver that can be used to approach and optimize the safety
measures portfolio using the method described in this paper.

81 82
 Illustrative example (1) Illustrative example (2)

• Input information: • Input information:

Prevention measure ij (Illustrative) costs of Hypothetical benefits for
Prevention for going from i going from i to j (€)
to j (CoPij) (€)
Start = Risk cell 3
3 2 35 67.5
3 1 42 74.25
n = 20 Start = Risk cell 7
7 6 325 675
Nc = 6: risk cells 3, 7, 10, 12, 13 and 15 from Figure 2 7 5 460 742.5
7 3 295 675

Ci = see risk matrix from Figure 1 7 2 420

590
742.5
749.25
7 1
Start = Risk cell 10
Butot = €50,000 10 9 330 675
10 6 350 675
Costs of Prevention for going from risk cell i to risk cell j (CoPij) = see Table 7b 10 5 390 742.5
10 2 400 742.5
10 1 880 749.25
Start = Risk cell 12
12 11 13,500 17,500
12 10 13,750 24,250
12 9 14,800 24,925
12 8 13,000 22,500
12 7 15,000 24,250
12 6 16,500 24,925
12 5 26,000 24,992.5
12 4 13,900 24,750
12 3 17,000 24,925
12 2 27,500 24,992.5
12 1 38,000 24,999.25
Start = Risk cell 13
13 9 410 675
13 5 550 742.5

83 84

Illustrative example (3) Solution of the illustrative example (4) chosen cost benefit
Start = Risk cell
1
3
3 2 35 67.5 0 0 0
3 1 42 74.25 1 42 74.25
Start = Risk cell
to solve this problem, four conditions have to be met: (i) the total benefit of measures taken, 7
7 6 325 675
1

0 0 0
7 5 460 742.5 0 0 0

needs to be maximized; (ii) the available budget constraint needs to be respected; (iii) 7 3
7 2
295
420
675
742.5
1
0
295
0
675
0
7 1 590 749.25 0 0 0
Start = Risk cell
maximum 1 decrease per risk cell is allowed; and (iv) a measure can be taken, or not. These 10
10 9 330 675
0

0 0 0
10 6 350 675 0 0 0
10 5 390 742.5 0 0 0
conditions translate into the following mathematical expressions: 10 2 400 742.5 0 0 0
10 1 880 749.25 0 0 0
Start = Risk cell
1
12
12 11 13500 17500 0 0 0
12 10 13750 24250 0 0 0

åB
12 9 14800 24925 0 0 0

(i) max i , j ij xij 12 8

12 7
13000
15000
22500
24250
1
0
13000
0
22500
0
12 6 16500 24925 0 0 0
12 5 26000 24992.5 0 0 0

(ii) å CoP
i, j
ij £ Bu tot 12 4
12 3
12 2
13900
17000
27500
24750
24925
24992.5
0
0
0
0
0
0
0
0
0
12 1 38000 24999.25 0 0 0
Start = Risk cell
0
13
(iii) åxj
ij £1 13 9
13 5
13 1
410
550
700
675
742.5
749.25
0
0
0
0
0
0
0
0
0
Start = Risk cell
1
15

x ij Î {0,1}
15 14 31000 67500 0 0 0
(iv) 15 13
15 11
36650
29880
74250
67500
1
0
36650
0
74250
0

• Solution: total cost = 49,987€; total hypothetical benefit = 97,499.25€. Total hypothetical profit =
47,512.25€.

85 86
Possible approach refinements for further application in real Possible approach refinements for further application in real
industrial practice industrial practice

Relationships between measures: Relationships between measures:

In general, the portfolio of safety measures chosen by a company is subject to a

number of extra constraints, that express relationships between these measures. Another possibility:
Fortunately, these relationships are generally easily added to the knapsack-based
approach, usually by introducing additional constraints.
if risk cell r is decreased: risk cell t has to be decreased, but the
Binary relationships: reverse is not true.
(e.g. firedoor and extra layer of fireproof coating)
Mutually dependent prevention measures (e.g., installing safety fire equipment and
training):
Risk cell decrease ràs = installing the coating
Relationship between risk cell decrease from r to s and from u to t can be expressed in Risk cell decrease tàu =installing the door
the approach by an extra constraint:

Then: extra constraint:

x(ràs) = x(tàu)
x(tàu) <= x(ràs)

87 88

Possible approach refinements for further application in real Possible approach refinements for further application in real
industrial practice industrial practice

Relationships between measures: Relationships between measures:

Yet another possibility: Another possibility:

either risk cell r or risk cell t needs to be decreased, but not both risk cells at either risk cell r, or risk cell t, or both, need to be decreased.
the same time.

(e.g. two measures are redundant (they duplicate each other’s effects), and (e.g. either invest in a company fire department or in a sprinkler
the organisation judges it superfluous to invest in both measures system, or in both)
simultaneously)
Mathematical constraint:
(e.g. protection of machine from fire by procedural measures or by physical
X(ràs) + x(tàu) >= 1
measures (fire wall), but not by both)

Extra constraint:
x(ràs) = 1 – x(tàu)

89 90
Possible approach refinements for further application in real
industrial practice
Relationships between measures:
Another possibility:
if risk cell t is decreased, risk cell r cannot be decreased, and vice
versa. The possibility also exists that both measures are not taken.
(e.g., management has decided that one part of a facility will be
protected by a sprinkler system at most, but not two parts)
Mathematical constraint:
X(ràs) <= 1 – x(tàu)
91
Possible approach refinements for further application in real
industrial practice
Relationships between measures:
Example for logical operators:
M1: automatic fire door is installed [e.g. x(4à2)]
M2: fire alarm system is installed [e.g. x(6à2)]
M3: electricity system is upgraded [e.g. x(3à1)]
M4: back-up generator is installed [e.g. x(7à3)]
M5: a link to an additional electricity system is installed [e.g. x(5à2)]
The condition is the following:
If both the automatic fire door and the alarm system are installed, and the
electricity system is not upgraded, then either a back-up generator should be
installed, or a link to an additional power system should be purchased.
Logical equivalent: (M1 AND M2) AND NOT(M3) IF THEN M4 OR M5
93
Possible approach refinements for further application in real
industrial practice
Relationships between measures:
Other relationships:
• In principle, all relationships between measures can be expressed in a
mathematical way as constraints
• Logical relationships can also be used, and expressed by operators
– NOT (risk cell i is not decreased)
– AND (risk cell i and risk cell j are decreased)
– OR (risk cell i or risk cell j is decreased)
– IMPLICATION (if risk cell i is decreased, then risk cell j is decreased)
These logic-operators can be used to create arbitrarily complex relationships that can
be used to express the most complex logical relationships between safety measures
92
Possible approach refinements for further application in real
industrial practice
Relationships between measures:
Logical equivalent: (M1 AND M2) AND NOT(M3) IF THEN M4 OR
M5
Converted into its conjunctive normal form:
(NOT(M1) OR NOT(M2) OR M4 OR M5) AND (M3 OR M4 OR M5)
Which, in turn, can be translated into the following mathematical
constraints which need to be met both:
X(4à2) + x(6à2) – x(7à3) – x(5à2) <= 1
X(3à1) + x(7à3) + x(5à2) >= 1
94
Possible approach refinements for further application in real Possible approach refinements for further application in real
industrial practice industrial practice

Relationships between measures: Relationships between measures:

Example for the non-additive case:
Non-additivity situations:
The effect of combining risk cell decreases (3à1 and 7à3) does not yield a benefit of A
+ B = C, but it yields a benefit of D (<C)
The benefits and costs may not simply be additive.
Suppose further that the cost of implementing (3à1 and 7à3) is not R+S=T, but is S
(e.g. the effect of one fire door instead of none will be greater than the effect (<T)
of installing two doors instead of one, due to the diminishing rate of return of
the second door) This can be handled by adding an extra risk cell decrease with cost S and hypothetical
benefit D.
Additionally, constraints are necessary to ensure that this extra measure is not taken if
In such situations, ‘virtual’ measures need to be created in the cost-benefit either 3à1 or 7à3 are taken.
table to represent the action of taking both measures.
Thus:
If you want to ensure that each measure is taken only once, additional x(extra risk cell decrease) <= 1 - x(3à1)
constraints are also needed. x(extra risk cell decrease <= 1 - x(7à3)
X(3à1) + x(7à3) <= 1 (that is, both 3à1 and 7à3 are not chosen at the same time)

95 96

Optimal diversified selection of prevention

5. New? measures within a budget constraint

• Innovative ways of dealing with

economics of operational safety and
prevention investments?

97 98
 Optimal diversified selection – application
Evaluating + and – side of risk treatment
of the Langrange multiplier method
Assume the following functions for the curves of diminishing marginal rate of return on investment for
Technology, Organisation, and People respectively:

yT =
0.5 xT
; yO =
0.2 xO
; yP =
0.3xP
• Method for Risk Treatment decisions
xT + 5000 xO + 200 xP + 2000

Furthermore, the safety budget is for example set to be 20,000€. Hence, since x i represents the safety
budget for safety measure of type i, the condition xT + xO + x P = 20000 can be drafted. The following
using:
maximization problem thus arises:

é 0.5 xT 0.2 xO 0.3 xP ù

Max ê
ë xT + 5000
xT , x O , x P
+
xO + 200
+ ú
xP + 2000 û – Cost = Cost of Risk Treatment (retention, transfer,
s.t.
xT + xO + xP £ 20000 prev., combination; taking probabilities into account)
To solve the problem, the Lagrange function is formulated:

0.5 xT 0.2 xO 0.3x P

– Min cost: NO accident cost; Max cost: worst-case
+ l × (20000 - xT - xO - x P )
L=
xT + 5000
+
xO + 200
+
x P + 2000 accident cost
The four first order conditions look as follows:

¶L 2500
– Variability = Max cost – Min cost
= -l = 0
¶xT ( xT + 5000 )
2

¶L
=
40
-l = 0
– Uncertainty = Variability / Max cost
¶xO ( xO + 200)
2

¶L
=
600
-l = 0
– Hypothetical benefit = Cost of retention – Cost of
¶x P (xP + 2000 )
2

¶L
= 20000 - xT - xO - x P = 0
retention AFTER treatment
¶l

Solving this system of equations gives xT » 11,700; xO » 1920; xP » 6350 . Hence, under the made – Defining a maximum uncertainty level for the company
assumptions, the safety budget of 20,000€ should be allocated to technological measures for some
11,700€, to organisational measures for some 1,920€, and to people-related measures for some
6350€. Therefore, using a budget of 20,000€ allows to achieve a safety benefit of some (0.35 + 0.18 +
(e.g. 30%)
0.23)% = 76%.

99 100

Event trees and economics –

Scenario thinking approach for a

Evaluating + and – side of risk treatment

runaway reaction

101 102
 Event trees and economics – cost-
Other promising techniques under
variable approach for domino effects
investigation
prevention
- Safety value function approach

- Multi-attribute utility approach

- Bayesian theory approach

- Limited memory influence diagram approach ?

- Monte Carlo simulations for safety economics

- Game theory applications for safety economics

103 104

Heuristic for economic decision-making 6. Recommendations

105 106
 Thank you!
Conclusions & recommendations
• Preventing accidents is an important expenditure on a yearly
basis for organizations

• Optimizing prevention investments and making investment Questions?

decisions in a cost-efficient way is very rewarding for companies

• The two types of risks should be treated differently when making

economic analyses, and different techniques should be used

• Economic analyses should be explored and elaborated more in

depth to make them more accurate and more user-friendly, and
usable for companies Ming Yang, PhD, P.Eng.
Assistant Professor
Safety and Security Science Section,
Faculty of Technology, Policy, and Management,
TU Delft, the Netherlands
107 Email: m.yang-1@tudelft.nl 108

On the quantitative Outline

resilience assessment of
• Why to assess resilience?
complex engineered • What to be assessed?
systems • How to assess resilience quantitatively?
Dr. Ming Yang
Assistant Professor of Safety and Security Science
Faculty of Technology, Policy, and Management
TU Delft, The Netherlands

1 2
 Safety?
• What is Health?
• Absence of illness/sickness
• How to measure and
maximize?
• Check for any illness or
sickness
• Avoid unhealthy conditions
• Do regular checkups
• What is Safety?
• Absence of accidents
• How to measure and
maximize?
• Check for any accident
causing situation - RISK
• Minimize Risk
• Monitor and Manage Risk

3 4

Safety? (resilience-based thinking) The need for resilience engineering

• What is Health? • VUCA (Volatility, Uncertainty, Complexity, and

• What is Safety?
• Strong immunity and absence of illness Ambiguity) world
• Strong ability to handle
disruptions and maintain • Resilience engineering accepts that:
desired performance – Residue risk cannot be eliminated
• How to measure and maximize? • How to measure and – Root causes may not be found in complex systems
maximize?
• Do healthy things (exercise regularly, • Check for functionality
variability balancing productivity
Hydrate, get plenty of sleep)
and safety - Resilience
• Do regular checkups (both immunity and
• Maximize Resilience
Adverse event System capability
disease)
• Monitor and Manage Resilience
Risk Resilience
Health to the human is Safety to the System
Pre-accident During an accident Post-accident
Let’s build up our immunity!
5 6
 Is risk assessment useful in resilience
What is Resilience Engineering?
assessment and management?
• Broad qualitative risk assessment of • The first definition (Hollnagel, 2006, p. 16)
events, recovery, and uncertainties for states: "The essence of resilience is,
therefore, the intrinsic ability of an
(Aven, 2017): organization (system) to maintain or regain a
– Making a judgment of the type of events that dynamically stable state, which allows it to
can occur (what we know and do not know) continue operations after a major mishap
– Making a distinction between known and and/or in the presence of a continuous
unknown types of events, and suprising stress."
events • Resilience Engineering is a paradigm for
– Assessing the probability for these types of safety management that focuses on systems
events using subjective probabilities coping with complexity and balancing
productivity with safety (Patriarca et al.,
– Conducting assessments to reveal unknown 2018)
and suprsing events
Hollnagel, E. (2006). Resilience - the Challenge of the Unstable. In E. Hollnagel, D. D. Woods, & N. Leveson (Eds.), Resilience
Aven, T. (2017). How some types of risk assessment can support resilience analysis and management, RESS, 167, 536- Engineering: Cocnepts and Percepts (pp. 9–17). Ashgate Publishing, Ltd. .
543. 7 Patriarca, R. et al. (2018). Resilience Engineering: Current status of the research and future challenges. Safety Science, 79-100. 8

A horse as an engineered system What man do to the horse?

A tamed and trained • Tam and train the wild
A wild horse horse horse
• Equip the trained horse
• Grow a new breed of
horse
• Train the new breed of
horse
• Equip the trained horse
• …
Anticipate?
Absorb? Adapt? Restore?

9 10
 Tong, Q., Yang, M., Zinetullina, A. (2020). A dynamic Bayesian network-based approach to resilience assessment of engineered systems, JLPPI, 65, 104152

Research fields References Definitions Key words

Ecological system Holling (1973) [5] The measure of the persistence of systems and Absorb
of the ability to absorb change and disturbance Maintain

Questions to be answered and still maintain the same relationships

between populations or state variables.
Organization system Kendra and Wachtendorf (2003) [29] An ability to sustain a shock without completely Sustain a
deteriorating; that is, most conceptions of shock
resilience involve some idea of adapting to and Adapt
‘bouncing back’ from a disruption.

• How to define resilience for complex engineered Burnard and Bhamra (2011) [30] Resilience is the emergent property of
organizational systems that relates to the
Adaptive
capacity
inherent and adaptive qualities and capabilities Improve
systems? that enable an organizations adaptive capacity
during turbulent periods. The mechanisms of
awarenes
s
organizational resilience thereby strive to Reduce
• How to measure resilience? improve an organization’s situational awareness,
reduce organizational vulnerabilities to systemic
vulnerabi
lity
risk environments and restore efficacy following Restore
the events of a disruption. efficacy

Economics Charles Perrings (2006) [31] Economic resilience refers to the ability or Absorb
capacity of a system to absorb or cushion against
damage or loss.
Joseph Fiksel (2006) [32] Enterprise resilience refers to the capacity for an Survive
enterprise to survive, adapt, and grow in the Adapt
face of turbulent change. Grow
Rose and Liao (2005) [33] Economic resilience refers to inherent ability and Inherent
adaptive response that enables firms and ability
regions to avoid maximum potential losses. Adaptive
response
Avoid
losses
Social system Adger (2000) [34] Ability of groups or communities to cope with Cope
external stresses and disturbances as a result of with
social, political and environmental change. external
stresses
and
disturban
ces
Social-ecological system Gumming et al. (2005) [35] Ability of a system to maintain its identity in case Maintain
11 of disturbances. 12
Kinzig et al. (2006) [36] Resilience in a social-ecological system refers to Survive

Sharma, N., Tabandeh, A. and Gardoni, P. (2017). Resilience analysis: a mathematical formulation to model resilience of
Dinh, Pasman, Gao, and Mannan (2012) Sharma, Tabandeh, and Gardoni (2017)
• Resilience is the ability to recover quickly after an
• “The resilience of a system is related to its ability
upset, has been recognized as an important
to withstand stressors, adapt, and rapidly recover
characteristic of a complex organization…

engineering systems. Sustainable and Resilient Infrastructure, 3(2), 49-67.

from disruptions.”
• Six principles: flexibility, controllability, early
detection, minimization of failure, limitation of
effects, administrative controls/procedures.

Cumulative resilience function

Dinh et al. (2012). Resilience Engineering of industrial processes: principles and contributing factors, JLPPI, 25(2), 233-241. Resilience density function
13 Resilience mass function 14
 Time-dependent functionality curve under
Tong, Yang, Zinetullina (2020)
disruptions
• S1: the normal operating state
with the functionality of F1 when
• The four attributes: a disruption occurs at t1.
• S2: the disrupted state with the
– Adaption, Absorption, Restoration, Learning functionality of F2 at t2.
• S3: the state with the
• The terminology of “functionality” is used. functionality of F3 when
adaptation action finishes at t3.
• S4: the new state with the
• ofIfathe
“the probability system
system’s is state
functionality more probable
sustaining to orsustain
a “high” state restoring to functionality of F4 when
a “high” state from a “low” state during and after the occurrence of disruptions in the restoration finishes at t4.
a “high
operation of a system within afunctionality”
specific time.” state or restore to a The resilience can now be quantified as the
“high functionality” state from a “low sum of the probabilities of state S1 and S4 at
each time step
functionality” state subject to the
disruptions, it can be considered more
resilient. Fig. 1. Time-dependent functionality curve
under a disruption

Tong, Q. Yang, M.*, Zinetullina, A. (2020). A dyanmic Bayesian newtork-based approach to resilience assessment of Tong, Q. Yang, M.*, Zinetullina, A. (2020). A dyanmic Bayesian newtork-based approach to resilience assessment of
engineered systems, JLPPI, 65, 104152 engineered systems, JLPPI, 65, 104152
15 16

DBN, as a system resilience modeling tool

• Ability of modeling
time-dependent
factors
• Ability of
decomposing the
primary attributes
• Ability of modeling
multiple states
• Ability of
incorporating both
subjective and
objective data
Tong, Q. Yang, M.*, Zinetullina, A. (2020). A dyanmic Bayesian newtork-based approach to resilience assessment of
engineered systems, JLPPI, 65, 104152 Zinetullina, A., Yang, M.*, Khakzad, N., Golman, N. (2020). Dynamic resilience assessment for process units operating in
17 Arctic environments. SIEE, 2, 113-125. 18
 Resilience profile Zinetullina and Yang et al. (2021)
Start

Define the system

I. FRAM modeling
Develop FRAM model
for the system

• Integration of FRAM
Resilience

Identify critical coupling

using MSC

with DBN II. Hysys simulation III. Generate DBN parameters

Establish linkages
Simulate the system between the identified

• Use of a process in Aspen Hysys critical couplings and the

attributes of resilience

simulator (Aspen Obtain PoFs based on

simulation results
Develop CPTs based on
data from simulation,
literature and surveys

Hysys) to estimate IV. Resilience assessment

before imprvement
Develop DBN model

the probabilities Run DBN to obtain

resilience profile

V. Resilience assessmernt
after improvement
Propose additional safety
measures based on FRAM
model

Reassess resilience and

compare with previous
profile

Conduct sensitivity analysis to

identify the most influential
Zinetullina, A. Yang, M., et al. (2020). Quantitative resilience assessment of chemical nodes

process systems using functional resonnance analysis method and dynamic Bayesian
Zinetullina, A., Yang, M*., Khakzad, N., Golman, N. (2020). Dynamic resilience assessment for process units operating in
19 network. RESS, 205, 107232 End 20
Arctic environments. SIEE, 2, 113-125.

Typical performance curve for

Chen, Yang, Reniers (2021)
resilience quantification
• Resilience is represented by a physical
parameter (e.g., storage resilience)

Chen et al. (2021). A dynamic stochastic methodology for quantifying HAZMAT storage resilience.
RESS, 215, 107909.
21 22
Cai and Xie et al. (2017) Sun, Wang, Yang, Reniers (2021)

• Availability-based engineering resilience • Application of resilience metric for safety

metric barrier performance assessment

Steady-state availability is
used as a resilience metric

Cai et al. (2017). Availability-based engineering resilience metric and its corresponding evaluation
Sun et al. (2021). Resilience-based approach to safety barrier performance assessment in process
methodology. RESS, 6041.
facilities, JLPPI, 73, 104599
23 24

Essential elements of a generic

Summary on resilience quantification framework for resilience quantification

• Quantification using performance over a

time period
• Quantification using probabilistic
System
indicators classification Disruption
and stakeholder analysis
• Quantification using multiple indicators analysis

Resilience
quantification

Functionality
assessment

25 26
 The goal is to improve resilience
Health to the human is Safety to the System
Let’s build up the immunity of complex
systems!
Thank you for your attention!
& Questions?
Ming Yang, PhD, P.Eng.
Assistant Professor of Safety and Security Science
Faculty of Technology, Policy, and Management,
TU Delft, The Netherlands
Email: m.yang-1@tudelft.nl
References
• Aven, T. (2017). How some types of risk assessment can support resilience analysis and
management, RESS, 167, 536-543.
• Cai et al. (2017). Availability-based engineering resilience metric and its corresponding evaluation
methodology. RESS, 6041.
• Dinh et al. (2012). Resilience Engineering of industrial processes: principles and contributing
factors, JLPPI, 25(2), 233-241.
• Hollnagel, E. (2006). Resilience - the Challenge of the Unstable. In E. Hollnagel, D. D. Woods, & N.
Leveson (Eds.), Resilience Engineering: Cocnepts and Percepts (pp. 9–17). Ashgate Publishing, Ltd. .
• Patriarca, R. et al. (2018). Resilience Engineering: Current status of the research and future
challenges. Safety Science, 79-100.
• Sharma, N., Tabandeh, A. and Gardoni, P. (2017). Resilience analysis: a mathematical formulation
to model resilience of engineering systems. Sustainable and Resilient Infrastructure, 3(2), 49-67.
• Sun, H., Wang, H., Yang, M., Reniers, G. (2021). Resilience-based approach to safety barrier
performance assessment in process facilities, JLPPI, 73, 104599
• Tong, Q. Yang, M., Zinetullina, A. (2020). A dyanmic Bayesian newtork-based approach to resilience
assessment of engineered systems, JLPPI, 65, 104152
• Woods, D. (2003). Creating foresight: how resilience engineering can transform NASA’s approach
to risky decision-making.
• Zinetullina, A. Yang, M., et al. (2020). Quantitative resilience assessment of chemical process
systems using functional resonnance analysis method and dynamic Bayesian network. RESS, 205,
10723.
.
27 28
Risk reduction and
management
Lecture 5 of SPM 9448
Dr. Ming Yang, Assistant Professor of Safety and Security Science
Safety and Security Science Section
May 17th 2021
Email: m.yang-1@tudelft.nl
29 1
 Outline Incident Pyramid G. Creedy/CSChE

• Risk reduction measures in general

• Inherent safer design: from safety and Incident Pyramid
environmental perspectives
1 Serious Injuries/Fatalities

10 Medical Aid Cases

Property Losses/First Aid

30 Treatments

600 Near Misses

Unsafe Behaviors/Conditions
10,000

2 3

D. McCutcheon
Planned
Reviews
RISK MANAGEMENT
Management Activities
To track company
actions against policy.
Identification of
Hazards
• Knowledge uncertainty
– Various techniques
Reduce the Risk Risk Analysis/
A GENERIC • Physical scope
Assessment
Risk Analysis/ FRAMEWORK – Definition of system boundary for assessment
Assessment Activities
Yes To track, look for and FOR RISK • Analytical scope
analyze and assess MANAGEMENT
Can the
No
Is the risk
hazards or concerns that
arise and challenge
– Nature of hazards under consideration
risk be acceptable?
reduced?
policy.
• Perception, in addition to
Yes
– Event likelihood & Severity of consequences
No
Management Activities
Discontinue the Manage the To ensure company
Activity Residual Risk activities keep risks
under control.

4 5
Hierarchy of Controls D. Hendershot
6 7
Risk reduction/treatment – (ii)
• Techniques of control and risk reduction:
– Reduction/mitigation are techniques whose
goal is to reduce the severity of accidental
losses when an accident occurs:
• Measures applied before the occurrence
of the event (often also have an effect on
the likelihood/frequency)
• Measures applied after the occurrence of
the event (often aim to accelerate and
enhance the effectiveness of the rescue)
8 9
Risk reduction/treatment – (i)
• Techniques of control and risk reduction:
– Substitution: by replacing substances and
procedures by less hazardous ones, by
improving construction work, etc.
– Elimination of risk exposure: this consists in
not creating or completely eliminating the
condition which could give rise to the
exposure.
– Prevention: combines techniques to reduce
the likelihood/frequency of potential losses.
Observation and analysis of past accidental
events enable the improvement and
intensification of prevention measures.
Risk reduction/treatment – (iii)
• Techniques of control and risk reduction:
– Segregation summarizes the techniques
which are to minimize the overlapping of
losses from a single event. It may imply very
high costs.
• Segregation by separation of high risk
units
• Segregation by duplication of high risk
units
 Risk reduction/treatment – (iv) Risk reduction/treatment options

• Techniques of control and risk reduction: • Risk reduction:

– Transfer, risk transfer by: – Risk avoidance (inherent safety or safety-by-
• Contractual transfer of the risk financing, design)
essentially insurance. – Risk control (prevention, protection,
• Risk financing by retention (auto mitigation)
financing), finance planning of potential • Risk acceptance:
losses by your own resources.
– Risk retention (conscious or unconscious)
• Alternative risk transfer (ART) solutions – Risk transfer (insurance)
comprise both elements of auto financing
and contractual transfer and so cannot be
classified in any of the above categories.

10 11

Design Basis
Protection Layers

Effect Mitigating
Measures
Passive Protection Measures
(eg. PSV)
an

SIS
Inherent safer design
Pl

lan
cy

yP

Critical Alarms
en
rg

nc
me

ge

Safety Management System

lE

er

Proces control via DCS

Em
na
ter

al
rn
Ex

te
In

HSE TOTAL
12 13
PETROCHEMICALS
INHERENTLY SAFER DESIGN
Principles of Inherent Safety (EARLY)

• Minimization (Intensification)
INHERENT SAFETY
Minimize amount of hazardous material
in use (when use of such materials
PASSIVE ENGINEERED cannot be avoided – i.e. elimination)
(ADD-ON) SAFETY

ACTIVE ENGINEERED
(ADD-ON) SAFETY

PROCEDURAL
(ADMINISTRATIVE)
14 15
SAFETY

Principles of Inherent Safety (EARLY) Principles of Inherent Safety (EARLY)

• Substitution • Moderation (Attenuation)

Replace substance with less hazardous Use hazardous materials in least
material; replace process route with one hazardous forms; run process equipment
involving less hazardous materials with less severe operating conditions
(e.g. T and P)

16 17
 With respect to stairs, an inherently safer
Principles of Inherent Safety (EARLY)
option to a two-story house is a…

• Simplification
Simplify equipment and processes that
are used; avoid complexities; make
equipment robust; eliminate opportunities
for error

18 19

With respect to stability, an inherently Safety by Design

safer option to a bicycle is a… Inherent Safe Design
• Reduction of product inventory
• Alternative fabrication processes (operating conditions, chemicals
used,…)
• Spacing
• Location
• Equipment design (full containment design,…)
• Location of buildings in low risk areas
• Reduction of occupancy of building occupants in high risk areas
• …

20 21
 Safety by design
Safety Management System/ Safety by Design
Control Safety Instrumented Systems
• Redundancy/diversity of instrumentation
• Planned inspections/maintenance
• ESD system
• Emergency preparedness
• Blowdown systems
• Knowledge and skill training
• Interlock systems
• Engineering and change management
• …
• Communication
• Materials and services management
• Hiring and placement, contractor selection
• …

22 23

Safety by Design Safety by design

Passive Protective Measures Effect Mitigating Measures
• Safety valves
• Water curtain
• Control of ignition sources
• Containment (in building,…)
• Blast resistant buildings
• Flow orifices
• Mounted bullets of spheres
• Diking
• …
• Release direction
• Fire fighting measures (foam application, …)
• Explosion suppression systems
• Explosion venting
• …

Passive Potective Measures

24 25
 Safety by Design Safety by Design
Inspection and Maintenance Inspection and Maintenance

• Change inspection frequencies

INSPECTION PLANNING • Change inspection scope/thoroughness
• Change inspection tools/techniques
Corporate Philosophy Inspection Planning activity
The Inspection • Acoustic Emission Testing (AE)
Local Legislation Plan • Eddy Current Testing (ET)

Monitoring info.

House keeping
General "Good
RBI analysis/
priotitization

findings
• Infrared/Thermal Testing (IR)
Corporate Policy • Leak Testing (LT)
i. Inspect
ii. Onsite assessment • Magnetic Particle Testing (PT)
iii. Detailed FfS if
Codes and
needed • Neutron Radiographic Testing (NR)
Standards, RP's, Data analysis
RAGAGEP • Penetrant Testing (PT)
Anomolies
DM's
• Radiographic Testing (RT)
Database Update database
Design Construction
• Ultrasonic Testing (UT)
Operation Inspection
•Visual Testing (VT)
06_Inspection Planning RBI role.vsd

26 27

Prevention Prevention
• Prevention is an attitude and/or a series of • 9 Principles of prevention:
measures to be taken to avoid degradation – 1. Avoid risks: remove the hazard or the exposure to it
of a certain situation (social, environmental, – 2. Assess risks that cannot be avoided: assess their
nature and importance, identify actions to ensure
economical, technological, etc) or to prevent safety and guarantee the health of workers.
accidents, epidemics or illness. It acts mainly – 3. Fight risks at the source: integrate prevention as
on the likelihood of occurrence and the early as possible, from the design of processes,
causality chain, trying to lower the probability equipment, procedures and workplace
that an event happens. Prevention actions – 4. Adapt work to man: design positions, choose
equipment, methods of work and production to reduce
are also intended to keep a hazard risk the effects of work on health.
problem from getting worse. They ensure – 5. Consider the state of technological developments:
that future development does not increase implement preventative measures in line with the
hazard losses. technical and organization developments.

28 29
 Prevention
• 9 Principles of prevention:
– 6. Replace the hazardous by what is less hazardous:
avoid the use of harmful processes or products when
the same result can be obtained with a method with
less hazards.
– 7. Plan prevention integrated in a coherent package: Environmental risk minimization –
a) technique, b) work organization, c) working
conditions, d) social relations, e) environment pollution prevention
– 8. Take collective protection measures and give
them priority over individual protective measures: use
of personal protective equipment’s (PPE) only to
supplement collective protection or their defaults.
– 9. Give appropriate instructions to employees:
provide them the necessary elements for
understanding the risks and thus involve them in the
preventative approach.

30 31

Wastes? Pollutants? Pollution? Why do we care pollution?

• Wastes • Pollutants can
– Wastewater easily contaminate
– Air emissions our drinking water
– Solid wastes
– Energy
• We all breathe the
– Time & Money
same air
• Pollutants are wastes that contaminate air,
water, land and make it unfit for use
• Pollution is the release of pollutants from a
particular activity

32
32 33
 What is Pollution Prevention (P2) P2 vs. Pollution Control

• POLLUTION PREVENTION is the use of • Past industrial practices

Raw material Products
processes, practices, materials or energy
Process
that avoid or minimize the creation of Energy
pollutants and wastes without creating or Wastes to environment

shifting new risks to communities,

workers, consumers or the environment • Recent industrial practices
(Environment Canada’s Definition) Raw material Products

Process
Energy Wastes
Treatment

Residual waste to environment

pollution
control
34
34 35
35

P2 vs. Pollution Control, Cont’d Ideal P2 practices

• Current P2 practices Minimize wastes
during usage and
Cleaner raw Products Cleaner raw Products disposal
material material
Process Reuse & Process Reuse &
Energy Waste Treatment Cleaner Energy Residuals Reprocess
Residuals Recycle Residuals Recycle

Recycles Secondary Residuals Recycles Secondary Reuse &

Products waste to Products Recycle
environment
Recycles
Minimize wastes in
System raw material
boundary Not a P2 practice extraction and
energy generation

Define your system boundary first!

36
36 37
37
P2 Principles P2 practice or not?

• Elimination • Offsite recycling

• Minimization • Waste treatment such as detoxification,
• Substitution incineration
• Moderation • Concentrating hazardous or toxic
constituents to reduce volume
• Diluting constituents to reduce toxicity
• Transferring hazardous or toxic
constituents from one environmental
medium to another

38
38 39
39

Group Discussion #1 P2 Examples in a Restaurant

• As a restaurant manager, reduce wastes • To reduce energy use:

from the daily operation. What are the
potential P2 opportunities?
– What are the waste streams?
– Can we eliminate or reduce those wastes
through P2 principles? (Elimination,
minimization, substitution, and moderation)
– Replace outdated equipment and appliance
with more energy-efficient ones
– Change air conditioning filters regularly to
help it run more efficiently
• To reduce water use:
– Turn off faucets and hoses when not in use
– Install low volume toilets
– Serving water only to guests who requests

40
40 41
41
P2 Examples in a Restaurant, Cont’d Group Discussion #2

• To reduce solid wastes • Standardize the process to identify P2

– Work with the suppliers to take back and opportunities?
reuse corrugated cardboard boxes, five
gallon buckets and other packaging
– Serve soft drinks on tap
• To reduce food wastes
– Buy in bulk to reduce container waste but
avoid buying too much of a product that might
spoil
– Strict inventory control to prevent usable
materials from needlessly becoming waste
42
42 43
43

Benefits of P2
• Reduced material, operation, and
production costs
Application of P2 to OOG Operations –
• Reduced waste treatment and future clean
up costs A Brief Discussion
• Improved business efficiency and
profitability
• Improved company image
• Reduced risks to employees and
communalities
• …
44
44 45
45
 Environmental Impacts
Four Main Stages of OOG Operations
Stage Activity Type of nature of impacts
Acoustic source, short-term disturbance to marine
• Geological and geophysical survey Geo. survey Seismic survey
organism and fish population
– Identify areas with favorable geological conditions Increase in turbidity, disturbance on bottom
Test drilling
– Aerial and seismic survey to provide detailed geological information
• Exploration Exploratory Emissions and discharges of pollutants, disturbance to
drilling fisheries, accidental blowouts
– Exploration drilling to verify presence and quantity of hydrocarbons
– Determine if the reservoir is feasible to develop Exploration Plugging well Long-term impacts on benthic and pelagic habitats,
and biodiversity
• Development and production
abandonment
– Platform and pipeline emplacement
Platform Construction discharges, long term and chronic effects
– Drilling for production of discharges on benthic and pelagic biota
emplacement
– Produced hydrocarbon separation and gas processing and pipeline
– Oil and gas export laying
• Decommissioning Development and Drilling for Drilling fluids and cuttings discharge, produced water,
– Removal of platform facilities production production and accidental spillage, impacts on fisheries, physical
injection wells disturbance
– Remediation of environmental impacts
Vessel traffic Operational emissions and discharges, impacts on
marine birds, mammals and other organisms
Decommissioning Facility removal Operational emissions and discharges, impacts on
fisheries, marine organisms if explosive charges are
used
46
46 47
47
Patin (1999)

Waste Streams at Production Stage P2 Opportunities

• Produced water • Produced water

• Drilling wastes – Separation of produced water with oil-body
– Drilling fluids down the well using sub-sea separation
technology
– Drilling cuttings
– Produced water re-injection for pressure
• Storage displacement water maintenance and oil recovery
• Deck drainage –…
• Flaring emissions

48
48 49
49
P2 Opportunities, Cont’d P2 Opportunities, Cont’d

• Drilling wastes • Deck drainage

– Use of SBF is considered one P2 practice
compared to WBF and OBF because it
reduces cuttings, emissions and energy use
and SBF is environmental benign due to its
potential to biodegrade
– Application of advanced drilling tools that
enable drilling to penetrate precise targets
–…
– An appropriate platform size design since the
volume of deck drainage is proportional to the
size of platform
– Efficient wash down operation to reduce
frequency of regular cleaning

50
50 51
51

Thank you!
P2 Opportunities, Cont’d

• Storage displacement water

– This water can be directed into the water
injection system after minor treatment Questions?
• Flaring emissions
– Reduce the number of well testing
– Collect waste gas (light hydrocarbons), if
economically and technically feasible,
compressed and used for onsite power
generation Ming Yang, PhD, P.Eng.
Assistant Professor
Safety and Security Science Section,
Faculty of Technology, Policy, and Management,
TU Delft, the Netherlands
52
52 Email: m.yang-1@tudelft.nl 53
 It’s the Risk Governance, stupid!

Risk Governance can be defined as the totality of actors, rules,

Risk Management conventions, processes and mechanisms concerned with how
relevant risk information is collected, analysed and communicated,
and how management decisions are taken.

Risk Governance starts with good Corporate Governance and

Dr. Ming Yang
Assistant Professor of Safety and Security Science
Faculty of Technology, Policy, and Management
TU Delft, The Netherlands
integrated board management, conditioned by:
(i) Diversity: strategically targeted composition of the board team
(ii) Trust: constructive and open-minded board culture
(iii) Network: efficient board structure
(iv) Vision: stakeholder-oriented board measures of success
Although these preconditions of success have been proven in a
variety of studies, they seem to be very hard to achieve by
organizations. In the light of the recent economic crises, put it this
way: “How can a team of committed board members with
individual IQs above 120 have a collective IQ of 60?”

1 2

Remember from Lecture 1: Risk management –

Uncertainty management? Approach to adequately
Risk Governance govern risks?

• Principal agent theory / shareholder model / Anglo Saxon

model

• Stakeholder model / Rijnland model

• Anyway, Risk Governance requires generalism, strategic

viewpoint, and holism

3 4
A Risk Governance PDCA Mindset: Risk Governance Model

5 6

Knowledge and know-how: Safety Management System –

Loop Risk Management 12 items

1. Safe work practices (procedural and adm control of work

activities, safety reviews, MOC procedures, …), including
emergency planning and procedures!
2. Safety training
3. Group meetings
4. Pursuing in-house safety rules and complying with
regulations
5. Set of basic safety rules and regulations
6. Safety promotion
7. Contractor and employee evaluation, selection and
control
8. Safety inspection, monitoring and auditing
9. Maintenance regimes
10. Hazard analysis and incident investigation and analysis
11. Control of movement and use of dangerous goods
12. Documentation control and records
7 8
Stakeholders and expertise: Securing organizations:
Risk Governance Framework Playing it safe or Playing with safety

9 10

Why?
Presentation outline Safety Concerns

• Why? – Safety Concerns

• What? – Safety Matters

• Easy? – Safety Bothers
• How? – Playing with Safety
• New? – Safety Futures
Remark:
‘Safety’ = ‘Safety + Security’
(i) everyone
(ii) safety anxieties

• Who? – Safety Scores

• The End. – The Safety Tail/Tale:

A Never-ending Story.

11 12
Why? - Safety Concerns (i) Why? - Safety Concerns (ii)

• All stakeholders
• Prudence due to industrial activities should be present
in every industry, and certainly also in the hazardous
materials using industries
• Characteristics of chemicals using industries: use of
hazardous materials, existence of chemical industrial parks,
license to operate/acceptability linked with reputation, high
uncertainties linked with debatable opinions
• Belgium & The Netherlands: densely populated area
combined with highly concentrated chemical industrial
activities
• The Rotterdam Port Area is part of the “ARRRA” and is
extremely important for the Dutch
(/Belgian/German/European) economy

13 14

What?
Safety Matters
What? – Safety Matters (i)

(i) Good News: Focus on Safety

(ii) Improvement News: The “AND” Story

http://www.youtube.com/watch?v=2MpsArclaxw

15 16
 What? – Safety Matters (i) What? – Safety Matters (i)
• Specialistic AND Generalistic • Analytic
• Technology AND HOFS
• Reactive AND Proactive
• Current practice
• Individu AND Group • Linear

• Short-term AND Long-term

• Top-down AND Bottom-up
• Normal acc. AND Disaster
• Operational AND Strategic
• Blue-collar AND White-collar
• Simple AND Complicated

• Confidential
• Static
• Practical
• Realist/Pragmatic

17 18

Easy?
What? – Safety Matters (ii) Safety Bothers

• Specialistic AND Generalistic

• Analytic AND Systemic
• Technology AND HOFS • Current practice AND
• Reactive AND Proactive Innovation
• Individu AND Group
• Linear AND Cyclic (i) Safety Leads to Headaches
• Short-term AND Long-term (ii) Safety Disturbs
• Top-down AND Bottom-up
• Normal acc. AND Disaster
• Operational AND Strategic
• Blue-collar AND White-collar
• Simple AND Complicated

• Confidential AND Transparant

• Static AND Dynamic
• Practical AND Theoretical/Fundamental/Conceptual
• Realist/Pragmatic AND Dreamer/Idealistic
19 20
Easy? - Safety Bothers (i) Easy? - Safety Bothers (ii)

• Measures to take to be safe (how safe is safe

enough?) • 1999: “Throughout the evolution of the chemical industry,
• Possible costs (all types, not only financial) of minor safety has been treated as an afterthought. It is the tag-
along in a group of kids on the playground: at times
and major accidents
annoying yet unavoidable.”
• Safety investments Osborne L., Process Safety Progress 18(4): W5
• Strategic decisions (game-theory - what do others do Chemical engineering students were invited to write an
w.r.t. safety?) essay on a safety topic. The quotation is from the
• Competences available / Company memory winning essay.
• …
• 2012: “A picture is slowly emerging of chemical industrial
clusters that will set their own sustainability standards
• License to operate / authorities & politics through intensive collaboration.”
• Media Reniers G. & Amyotte P., Journal of Loss Prevention in
• Academia the Process Industries, 25, p.227-231.

21 22

How?
Playing with Safety How? - Playing with Safety (i)

• Closed-mindedness (‘been there, done that, seen that’)

• No or few innovations (a.o. regarding using risk
assessments)
(i) …so that it gets dangerous • Inadequate investments in prevention
(ii) …so that it gets safer • Perceiving safety as a cost
• Considering safety as being evident (complacency)
• Insufficient transparency (towards any stakeholder)
• Insufficient collaboration (with competitors,
authorities, and academia)
• Inadequate integration of safety in business
management system
• Too much focus on compliance
• Inadequate company memory
• …

23 24
How? - Playing with Safety (ii)
(so that it gets safer!)
• Open-mindedness (open for creative new ideas /
techniques / solutions to further improve safety) linked
with available budget
• Technological and HOFS innovations (e.g., using
innovative risk assessment techniques, company memory
conceptual models and/or software, new model of safety
culture linked with performance management and total
respect management)
• Trying new collaborations (e.g., with academia), new
safety projects, new safety investments on top of usual
investments, high transparency, applying game-
theoretical models, …
25
New? - Safety Futures (i)
• Agreement between parties committing themselves to
trade at a specified time in the future, a good or service at a
predefined price.
(good = safety; predefined price = prevention
investment)
à Impact of prevention investment decisions on future of
a company
• From a prevention investment point of view, different
types of risks should be dealt with differently (high-
uncertainty decisions possibly leading to huge profits always
go hand in hand with huge possible losses (Disasters)!
Hence, focus on low-uncertainty decisions for making
‘normal’ profits.
• Credo ‘Safety not for sale’ or ‘safety before sale’ not true:
Story of Safety versus Productivity is comparable to Story of
chicken and egg!
• THERE IS NO ALTERNATIVE: The right way forward is not
to reject the economic approach in safety decision-making,
but to improve the tools and their use! (much like risk
assessments)
• Loss Aversion: We do not gamble with gains, while we
tend to gamble with losses (because we really hate to lose)! 27
New?
Safety Futures
(i) Economics of Safety
(ii) What holds the future?
26
New? - Safety Futures (ii)
• Megatrends: Communication devices, Big data,
Collaboration, Sustainability, Performance-based decision-
making, Aging, Accelerated urbanization, Resource scarcity
• Technological improvements and innovations will lead
to more accurateness of risk perception and assessment,
better knowledge of uncertainties, better knowledge
dispersion, dynamic risk assessment results and real-time
risk data processing, more complete data and information,
calculation of systemic risks, serious games, changing role
of media in communication of risks
• Globalization: decrease of risk perception differences,
decrease of differences in safety cultures, more integration
of safety within other domains, decrease in differences of
values of life, decrease in ethical differences
• ‘Uncertainty measurement’ device for people and
organisations: risk radars, risk dashboards, risk watches,
• Safety apps, safety QR code for equipment, google glasses
28
 Who?
Safety Scores Who? – Safety Scores (i)

• Quality of Perception of Leaders: The map is NOT the territory!

(i) Good Leadership

(ii) Excellent Leadership

29 30

The End.
Who? – Safety Scores (ii) The Safety Tail/Tale: A Never-ending Story.

• Improve the perception of reality of every member

of an organization, and this way make better (individual
and group) decisions
• Organizational alignment (i) Does Safety have a tail?
• Developing the “Respect culture” within the
organization (we are evolving from a ‘risk society’ (Beck, (ii) The Story of the Dinosaurs
1986) towards a ‘respect society’)
• Thinking in “AND” terms
• Focus on 7 domains for excellence: Productivity,
Effectiveness, Quality, Safety & Security, Efficiency,
Ecology, Ergonomics

31 32
The End. The End.
The Safety Tail: A Never-ending Story. (i) The Safety Tale: A Never-ending Story. (ii)

• The Future will be ‘Safe’ and ‘Excellent’, or there will be no

future at all!
• Safety is a circle – it never ends!

Some recommendations:
• Safety (or rather: ‘dealing with uncertainty’) should be
taught at all levels of education, and in all studies
• Safety thinking should always in some sort be part of
technological innovation
• Safety Science should be a true pillar of society if it wants
to excell
“All I’m saying is now is the time to develop the technology to
deflect an asteroid.”
(from: Risk-benefit analysis, Wilson and Crouch, Harvard Univ. Press,
2001)

33 34

Thank you for your attention!

& Questions?

End of the course

Ming Yang, PhD, P.Eng.

Assistant Professor of Safety and Security Science
Faculty of Technology, Policy, and Management,
TU Delft, The Netherlands
35 Email: m.yang-1@tudelft.nl 36