Why does running an SQRA deliver a 20-to-1 ROI in the Energy Business?

The standard explanation goes something like this: we know the severity is catastrophic and the likelihood is extremely rare so what’s the point of wasting time calculating a risk rating?

A recent paper published in Risk Analysis by Ohio State’s Christian C. Blanco and UCLA Anderson’s Felipe Caro and Charles J. Corbett explains that if your goal is fewer safety-related incidents, reduced downtime and significant cost savings, then you are wasting a lot of time by not performing Probabilistic Risk Assessments (PRAs).

In the Australian context, PRAs align fairly closely with Safety Cases, at least for those blessed to be using Meercat RiskView, so I’ll switch to the more familiar Safety Case term from now on.

Looking at the data from over 25,000 monthly event reports across 101 U.S. nuclear reactors from 1985 to 1998, the authors found that the number of safety-related disruptions reduced between 8% and 27% per month in periods after operators submitted their Safety Cases. “One possible mechanism for this is that the adoption of [Safety Case] may have increased learning rates, lowering the rate of recurring events by 42%” they said.

The time and expense normally associated with performing Safety Cases precludes them from a very large part of industry. But would this long-term evidence convince non-nuclear operators to implement Safety Cases if they knew they were up for a 20-to-1 ROI?

According to the authors, “the direct and indirect benefits of [Safety Cases] appear to easily outweigh the cost to implement them”, adding that “it is plausible that the effect of conducting [Safety Cases] in other sectors would be at least as large as what we find in this industry”. So, a big, fat YES.

But how does a Safety Case differ from a normal risk assessment? From NOPSEMA’s perspective:

Overall, a well-structured, coherent safety case will facilitate an operator’s ability to demonstrate to others that they have a clear understanding of the factors that influence risk and the controls that are critical to minimising risk to people on their facility.

It must be demonstrated that in the development or revision of a safety case there has been effective consultation with, and effective participation of, members of the workforce in order to facilitate informed opinions about the risks and hazards to which they may be exposed on the facility

In practical terms, Safety Cases generally involve Semi-Quantified Risk Analyses or SQRAs. The SQRA can take the form of a bowtie which describes, in probabilistic terms how all elements of the company’s people, process and plant interact to prevent and mitigate risks.

Typically, industry or company incident databases can supply the actual root causes and frequency rates, and the same sources, insurers or accountants can provide actual injury and asset impacts and long-term rehabilitation or remediation costs. Understanding these historical sources gives everyone a realistic sense of proportion with regard to actual frequency and severity.

Equally, when identifying and assessing controls, industry databases provide risk reduction values based on the known reliability of each type of control in terms of Probability of Failure on Demand (PFD). For example, for controls based on a person performing some act, a typical value is 0.1, i.e. for every 10 times you ask someone to do something, they should do it correctly 9. An automated control, like a sprinkler system, may be expected to have a PFD of 0.01, meaning 1 failure in every 100 requests to function.

Involving all personnel in an assessment at this level of detail ensures they are involved in a real-world activity where the processes, equipment and activities of their daily lives are placed in perspective as the physical walls that separate them from harm and the numbers underpinning that threats and walls are real.

Going on this journey ensures greater consideration of all vulnerabilities, clarifies the dynamics of interdependence, resolves misunderstandings and merges silos of knowledge and experience. It’s no wonder that risk is reduced at the same time, and in long lasting and beneficial ways.

Next time you are thinking of conducting a risk assessment, consider how the team might benefit from going on a SQRA journey, how the overall level of conversation around risk might benefit, and how, in addition to all the other improvements, the effort might be repaid 20 times over.

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