Ten Lessons on Risks

Table of Contents

1. Frontmatter

2. Chapter 1. First Lesson: Risk Understanding

   Xingwei Zhen, Jan-Erik Vinnem

   Abstract

   The concept of “risk” lies at the heart of decision-making processes across industries, yet its interpretation and application often vary depending on the context, objectives, and stakeholder perspectives. This lesson seeks to demystify the multifaceted nature of risk by exploring its definition, description and measurement. Building on this, the purpose of risk assessment is highlighted as it is easily forgotten. The lesson further explores the crucial frameworks of the Norwegian, UK (United Kingdom) and EU (European Union) regulations and relevant standards, which provide structured methodologies and compliance requirements to ensure systematic and consistent risk management practices. After that, uncertainties and sensitivities, which are tightly linked but distinct concepts, are discussed. This discussion extends to black swan risks, which has attracted significant public attention. The authors argue that the concept of black swan risk should be restricted to the realm of “unknown unknowns”. Lastly, a key focus is placed on Human and Organizational Factors (HOFs) and their significant influence on risk. By synthesizing these elements, the lesson aims to equip readers with a holistic understanding of risk.

3. Chapter 2. Second Lesson: Process and Main Elements of Risk Management

   Xingwei Zhen, Jan-Erik Vinnem

   Abstract

   According to the international standard ISO 31000, risk management refers to coordinated activities to direct and control an organization with regard to risk. Nowadays, there is a strong desire and enthusiasm across various industries to implement risk management in organizations. It is recognized that risk cannot be eliminated, and must be managed. This lesson unpacks the core principles of risk management, starting with the distinction between qualitative and quantitative risk assessment. Then, the lesson explores how to select risk assessment methods. The lesson further outlines the risk management process, and the main elements of risk management are introduced. Notably, the most recent NORSOK Z-013 standard is followed. A focus is placed on defining the risk tolerance criteria (RTC) and the ALARP principle, which seeks to reduce risk to a level that is as low as reasonably practicable. On this basis, the lesson examines the philosophical conflict between RTC and ALARP. Lastly, challenges in implementing quantitative risk assessment are addressed. The lesson prepares readers to grasp the fundamentals of risk management.

4. Chapter 3. Third Lesson: Accident Lessons and Investigations

   Xingwei Zhen, Jan-Erik Vinnem

   Abstract

   There has been a saying that “If you think accident prevention is expensive, try an accident”. Some enterprises have learned this lesson the hard way. Undoubtedly, investigating accidents and learning their lessons are crucial for preventing future analogous accidents. This lesson explores the importance of learning lessons from past accidents. Then, the lesson presents and discusses the critical implications of four notable accidents across different countries. A core focus is placed on the importance of root causes, which are the most essential outcomes derived from accident investigation. The lesson further outlines the accident investigation process and compares two types of investigation, i.e., enterprise internal investigation and external investigation. After that, two commonly used investigation modelling techniques based on sequential models are introduced. Further, the lesson presents the integration principle between accident investigation and QRA so as to enhance the understanding of the accident scenario and establish a comprehensive risk picture. Lastly, the challenges of lessons learned from accidents are addressed. Some reputable accident investigation organizations are also introduced for reference. This lesson prepares readers to realize that accident lessons are not about blame but learning, ensuring errors of the past pave the way for a safer future.

5. Chapter 4. Fourth Lesson: Main Techniques for Risk Modelling

   Xingwei Zhen, Jan-Erik Vinnem

   Abstract

   Risk modelling techniques are crucial tools for conducting a QRA. This lesson dives into the commonly used techniques in engineering practice, which facilitate the identification and calculation of risks. By applying these techniques, readers can acquire proficiency to effectively connect theoretical concepts with practical applications in risk analysis. The lesson begins with hazard identification (HAZID) techniques, including HAZOP (Hazard and Operability Study), PHA (Preliminary Hazard Analysis) and FMECA (Failure Modes, Effects and Criticality Analysis). Subsequently, the focus shifts to ​causal, probability and frequency analysis, where techniques like CED (Cause-and-Effect Diagram), FTA (Fault Tree Analysis) and BNs (Bayesian Networks) are explored. For risks influenced by HOFs, the specialized methodologies of BORA (Barrier and Operational Risk Analysis) and Risk_OMT (Risk Modelling: Integration of Organizational, Human and Technical factors) are introduced. With respect to consequence analysis, ETA (Event Tree Analysis), ESD (Event Sequence Diagram) and escalation modelling are presented. Finally, the lesson discusses the principle of online risk analysis, which draws particular focus from regulatory authorities.

6. Chapter 5. Fifth Lesson: Principle of Risk-Based Design

   Xingwei Zhen, Jan-Erik Vinnem

   Abstract

   The risk-based design approach represents a transformative shift from prescriptive design rules to goal-based solutions. The offshore petroleum enterprises have expressed their enthusiasm for supporting this promising design approach. This lesson starts with exploring the need and challenges underlying the implementation of risk-based design. Then, the lesson outlines regulatory requirements for risk-based design and clarifies its relationship with risk modelling. A focus is placed on the safety integrity level (SIL), which serves as a measure of the level of risk reduction provided by a safety function or the reliability of a safety system. Finally, practical considerations for risk-based design in the context of accidental loads are discussed. This lesson aims to equip readers with a comprehensive understanding of risk-based design principles and their practical applications.

7. Chapter 6. Sixth Lesson: Risk-Based Emergency Response Planning

   Xingwei Zhen, Jan-Erik Vinnem

   Abstract

   Given the severe consequences of major accidents, regulatory authorities and enterprises have paid considerable attention to emergency response planning. This lesson explores the risk-based emergency response planning from a practical point of view. To begin with, the philosophy of risk-based emergency response planning is presented. After that, particularities of offshore emergency preparedness are addressed. Then, the controversial relationship between accident prevention and emergency preparedness is explored from the perspectives of regulatory requirements and industry viewpoints. On this basis, principles for achieving a balance between regulatory and industry viewpoints are suggested. In addition, the general requirements on the establishment process of risk-based emergency response are presented on the basis of the most recent NORSOK Z-013 standard. Further, the lesson explores the area-based emergency response planning on the basis of defined situations of hazards and accidents (DSHAs), of which the critical parameters for the risk-based emergency response planning are discussed. Finally, the lesson discusses the challenges for deciding on the response level, emphasizing the determination of what is “realistic worst case” and what is not. The lesson holds critical value for readers in building a theoretical framework and practical expertise in risk-based emergency response planning.

8. Chapter 7. Seventh Lesson: Barriers for Major Accident Risk

   Xingwei Zhen, Jan-Erik Vinnem

   Abstract

   The term “barrier” has emerged as a prevailing and prominent concept in the field of offshore risk management. It is frequently employed in various contexts, with significantly different meanings, such as human barrier, operational barrier, organizational barrier, technical barrier and non-technical barrier. This variability suggests that achieving a consensus on a clear and uniform interpretation of the barrier concept is challenging. This lesson aims to clarify the concepts of the barrier and barrier management, along with the principles and process involved in barrier management. The foundation for this clarification is the set of guidance documents titled “Principles for Barrier Management in the Petroleum Industry” (Havtil in Principles for barrier management in the petroleum industry. Stavanger, Norway, 2013; Havtil in Barrier memorandum: principles for barrier management in the petroleum industry. Stavanger, Norway, 2017). In addition, this lesson addresses the regulatory requirements pertaining to barriers, as well as the structure principle of barriers and hazards. Lastly, the challenges faced in implementing barrier management are discussed.

9. Chapter 8. Eighth Lesson: Indicators for Major Accident Risk

   Xingwei Zhen, Jan-Erik Vinnem

   Abstract

   Conventional wisdom has long assumed that the major accident risk directly correlated with occupational accident statistics. Yet, the facts tell a different story. This lesson focuses on major accident risk indicators that could maintain high levels of awareness, motivation and emphasis on prevention against potential major accidents. The lesson begins by clarifying indicator concepts and definitions. In response to the conceptual confusion surrounding indicator concepts, the authors advocate adopting the terms of precursor indicator and barrier indicator. Then, the lesson explores the need for major accident risk indicators, emphasizing their particular characteristics. After that, a comprehensive set of evaluation criteria for major accident risk indicators is proposed and discussed to avoid the “garbage in-garbage out” problem. Finally, major accident risk indicators for the nation and enterprise are recommended. The lesson equips readers with the theoretical foundation as well as practices in the development and application of major accident risk indicators.

10. Chapter 9. Ninth Lesson: Risk-Informed Decision-Making Framework

    Xingwei Zhen, Jan-Erik Vinnem

    Abstract

    The risk management has generated considerable expectations from enterprises as it could effectively balance the benefits of opportunities with accident prevention. This lesson focuses on the decision-making framework for risk management. Firstly, the need for risk-informed decision-making is discussed, exploring why the conventional mechanized approach falls short in the decision-making process. Then, the challenges of current decision-making frameworks are presented. On this basis, the fundamental components of the decision-making framework are discussed. These components underpin the justification and appropriateness of the decision-making framework. The central focus of the lesson delves into a suggested ​decision-making framework. In the final, the lesson explores how the decision-making framework is influenced by its framework conditions. This lesson provides a theoretical basis and practical guidance for readers on how to make optimal decisions.

11. Chapter 10. Tenth Lesson: Ethics in Risk Assessment

    Xingwei Zhen, Jan-Erik Vinnem

    Abstract

    Engineering ethics is an important but sensitive subject across all industries, ensuring the technical analyses align with societal values, justice, and long-term safety. This lesson concentrates on ethics in risk assessment, starting by elucidating its necessity. Then, the lesson discusses the ethical implications of risk analysis and risk tolerance criteria (RTC) in the planning processes of hazardous facilities, based on a Norwegian case study involving a liquefied natural gas (LNG) plant in populated areas. The Norwegian approach to risk-informed planning of hazardous facilities is outlined. Following this, the Norwegian case study and the main characteristics of the risk-informed decision-making in this case are presented. On this basis, the Norwegian approach to applying risk analysis and RTC is discussed, along with ethical challenges for enterprises, consultants, and authorities. Lastly, the potential misuse of risk analysis is discussed and highlighted. Among the ten lessons presented in this book, this final lesson holds the utmost importance, as it seeks to cultivate a heightened awareness among readers regarding their own ethical responsibilities and obligations.

12. Backmatter