Improving Sustainability through Reasonable Risk and Crisis Management

Riskope International 

Book design by Le Jardin Secret de Yorokobi 

An impenetrable aura of complex mathematics, myths and impervious literature may be the root cause of many professional’s misleading impression that risk assessment (RA), quantitative risk assessments (QRA) and the resulting risk-based decision making (RBDM) are to be used and constitute the exclusive domain of high-stake decision-makers hiding in boardrooms with their analysts, a sort of modern version of Merlin advising King Arthur and the knights of the Round Table. 

Beck (Beck, 1992) a sociologist who has devoted part of his life to the discussion of risk sees it has having increased: “…In the course of the exponentially growing productive forces in the modernization process, hazards and potential threats have been unleashed to an extent previously unknown”. Following Beck modern risks are typically invisible and their consequences incalculable because they have potential to jeopardize all forms of life on earth (because most of Beck’s work focuses on environmental and industry-consumer risks). Thus society becomes a worldwide catastrophic risk society where risk assumes the role of defining social classes, in addition to the old divisions: Beck sees a correlation between extreme poverty and risk exposure, the transfer of risk from rich countries to poor ones, but also the inevitable “democratization of risk”, as we all end up using the same water and breathing the same air. These concepts are widely shared by Giddens, another “risk sociologist” (Giddens, 1991). 

The stance adopted in this book is not as dark: risks do exist, and for some aspects they may be extremely high and catastrophic, but for a large part they can be dealt with, understood and managed in a sustainable way. Also, focusing on the “new risks”, i.e. the technological, food related, disease-related modern hazards certainly brings a skewed angle of observation of the world: natural hazards still exist, are extremely significant, and in many cases do not fit the model described above. 

Beck considers that risk has political potential as “averting and managing these (risks) can include a reorganization of power and authority”; moreover he considers that risk cannot be seen as a scientific monopoly, as usually there is little or no expert agreement on their tolerability and management, leading to public criticism and turmoil (Fischhoff, Slovic, & Lichtenstein, 1981). Other authors, commenting for example on AIDS risk management (Burja, in Caplan, 2000) discuss how risk management could be deformed to become the arm of an authoritarian state bending on surveillance and control (of industries? of individuals?) through preliminary screening and testing. The stance adopted in this book is that certainly the risk has a political strategic dimension and risk management could be used as an excuse to alter socio-political positions; after all leading with fear “of the Devil” (modern or old fashioned) has proven successful in many occasions, worldwide, but the risk discourse at operational level cannot be obscured by these high level postures. 

As a matter of fact, the last decades have seen Risk Assessments being voluntarily used by a wide array of industries, or being enforced by national authorities, in environments where perceived hazards (Fischhoff, 1985) (Morgan et al., 1985) or visible-predictable consequences were such to possibly stir public outcry and indignation, i.e. decisive moments, particularly in times of danger or difficulty, generally named crises. 

These environments have included for example heavy industries and energy production as well as chemical, petrol-chemical, natural resources, mining and transportation sectors, but any human activity can turn into a crisis due to media reactions, voluntary misinformation (Information Warfare), involuntary misinformation with consequences that can encompass image damages as well as significant monetary damages (loss of share capitalization). 

Risk and Crisis Assessments have taken multiple forms, depending on their general scope and aim, the requested level of analysis, legal implications and requested or imposed level of detail. 

The reality is that QRA & RBDM should be used in daily business decisions, where every penny counts and where high level concepts developed in the boardroom may be far less significant than immediate profitability decisions made at the mid-management level. At operational level, although avoiding complex mathematics is a general requirement, hard numbers are crucial in differentiating risks incurred by sometimes hundreds of components of a similar system (for example, a component can be a valve, a tank, an office, the CEO, a dam, a transformer station, etc.) Simplified QRA methods exist and can be applied by company personnel after adequate training and with the guidance of an expert. If used systematically and coherently, QRAs provide a comparison of risk exposures which can be benchmarked on an international scale across components belonging to one or more corporations. By applying simplified QRA, a corporation’s personnel can be empowered with a new set of tools. 

Any industry/business which has to make sound decisions forms the audience of this book. A non exhaustive example list of interested readers could be: 

• transportation (roads, railroads, pipelines, naval and aviation), 
• natural resources (mining, forestry, oil and gas), 
• energy (hydro electrical, thermo electrical etc.), 
• suppliers (food and non-food, including luxury) 
• organizations (UN, World Bank etc.) 

Additionally, engineers, MBAs and consultants working for any project on behalf of the above list of industrialist will appreciate adding to their skills the concepts of “Comparative Decision Analysis” (CDA) and “Economic Safety Margin” (ESM) developed in the book after reviewing more classic aspects of Risk Assessment and Evaluation. CDA/ESM is not about avoiding risks at all costs, but rather to bring more evaluation elements to the decision makers. Indeed, “…there can be no question of merely taking a negative attitude towards risk. Risk needs to be disciplined, but active risk-taking is a core element of a dynamic economy and an innovative society” (Giddens, 1999). The stance adopted in this book is precisely the one of taking calculated risks at operational level to enhance sustainability of human projects in front of uncertainties and hazards. 

The book is split in four parts: two present methodological and conceptual aspects (I and III), and two (II and IV) present real life examples often drawn from the author’s professional practice. 

Seen from a different angle, the first half of the book (Parts I and II) deals with the more classic Risk and Crisis Assessment/Risk Management approach, including a specific section on the topic of Crises and a full chapter on Risk Tolerability, a somewhat neglected theme in the literature. The second part of the book (Parts III and IV) features a detailed discussion on CRBDM, demonstrates the benefits of intensive and day to day use of this approach and finally demonstrates with a specific set of examples how such an approach may lead to sustainable, transparent decisions.