What is risk assessment?
Risk assessment is the process of determining the relative
probability and consequence of taking an action in response to an
event. In risk assessment we are looking at the probability of
an event taking place, the actions we take in anticipation of
the event, and the consequences of each action if the event does
or does not take place.
It is important to include the action "do nothing" as one
of the potential actions.
At the end of the risk assessment we will have the ability to
look at all of the potential outcomes, the likelihood of each
outcome, as well as how acceptable each outcome is.
For any event there is a probability of that event taking place.
What is the probability of the power failing tonight for more than
an hour? What is the probability of the power failing in the next 6
weeks for more than an hour? What is the probability of power
failing sometime in the next 6 months for more than a day?
Each of the above named events has a probability. Where we live,
the probability of losing power for more than 5 minutes sometime in
the next 12 months is near 100%. The probability of losing power
for more than 6 hours sometime in the next 12 months is closer to
40%. These are very rough numbers and are the result of looking at
history of power failures in our area. It is also the result of
looking at preventive maintenance by the power company in our
area.
Identifying an event and assigning the probability of the
event happening is the first step in risk assessment.
For each of the above events we can make a list of actions we can take
in anticipation of these events. The following are some of the
actions we can take in anticipation of a power failure event.
- Do nothing
- Buy and install a full building power backup system (UPS)
- Buy and install a full building power system.
- Buy a portable generator and install a generator feed with
switching capability for the building.
- Buy a portable generator and some extra extension cords
- Set aside $500 to buy a portable generator and some extra
extension cords if the event takes place.
- Buy extra candles, some oil or Coleman lanterns and a camp stove
along with some sleeping bags.
The next step is the hard step. Each of these actions needs to be
evaluated in terms of what the consequences are of the event
happening or the event not happening for each action.
To put it differently, the event will or will not take
place. For each action you have identified, you have to identify
the consequences of taking that action if the event does take
place as well as if event does not take place.
Here's a simple example: A standing dead tree will fall on
the house. The probability is low. One possible action:
I will cut the tree down now so it will fall safely away from
the house. The consequence of taking no action and the tree
falling is that our house is damaged and maybe somebody is hurt.
Also, the contents of our house are likely to be damaged. The
consequence of taking no action and the tree NOT falling is that
there is no change. The house is still at risk but nothing has
happened. The consequence of cutting down the tree is that I
have to buck it up and turn the tree into firewood. The
consequence of cutting down the tree which would NOT have
knocked it over is that I have to buck up the tree and turn it into
firewood.
Of the four possible outcomes, 2 are good, 1 is very bad and 1
is no change in condition.
An approaching hurricane changes the probability of the event
taking place which changes the risk assessment which led me to go
out and cut down the tree.
In the following table we go back to our power outage event and
list our actions and the consequences of taking that action if the
event takes place and if the event does not take place.
| Power Goes Out For 24 Hours |
|---|
| Action | Happens | Does Not Happen |
|---|
| Do nothing | Frozen goods start to melt, no internet,
no water pump, no electric heat, no electric fans, no hot water (and
maybe more) | Nothing |
| Install Full Building UPS | Nothing happens. Use up some
fuel. | $15,000-$25,000 gone |
| Install Full Building Backup Power | Power goes out to
everything for 3 to 5 minutes | $5,000-$6000
gone |
| Buy Portable Generator | Power failure to house.
Extension cords have to be run. Some items will not have power.
All 220V (well pumps, furnace blowers, electric dryer will need
special handling or might not work at all. Fuel use will have to be
monitored | $200-$1000 gone |
| Put aside $500 | Power goes out. You have to get to a
store that still has a generator. Buy generator. Buy gas
container. Buy gas. Get generator home and hooked up like
above. | Nothing |
| Get electric free equipment | Computers and internet
go down. People gather around the wood fired stove for heat.
People go to bed earlier because candles or oil light not bright
enough. People talk to each other. Food is cooked over wood or
propane stove. | A few hundred dollars are spent on food,
candles, an extra tank of propane for the grill. |
Setting up a table like this helps us understand the different
possible outcomes. We get to see the good side and the bad side
of each and how we can evaluate which choices are best for
us.
The Complexities
Unfortunately, risk assessment is not a simple process. In fact
it is very complex due to interactions between different actions
and events.
Let's consider an example of such an action. It is 9/11/2001 and
then-President Bush is informed that four aircraft have been hijacked.
He is told that there is actionable intelligence stating that
the hijackers are going to fly the aircraft into the World Trade
Center, the Capitol Building in DC and the White House.
He has two choices. He can let the events play out and the
hijackers MIGHT actually do what is predicted, or he can push the
destruct button on the aircraft, causing them to be destroyed
instantly with loss of the lives of everybody onboard.
The risk assessment says that there is a 95% chance that 5,000
to 30,000 people will lose their lives if he lets the events
unfold.
If he pushes the button there is a 100% chance that 200-400
people will die on those aircraft. Does he push the button? Would
you push the button? Could you kill 400 people when nobody might
die if you don't?
The consequences then cascade from there. We know the
consequences of those aircraft destroying the World Trade Center
buildings. We know the horrible cost in lives lost, in families
ripped apart, and of health issues for those that were there. We know
how even today we pay the price in freedoms lost when we go to
board an aircraft.
What of the consequences if he had pushed the button? He would
have gone down in history as a mass murder. "He killed 400
defenseless people!", "He didn't KNOW they would have crashed the
aircraft into those buildings; everybody knows that hijackers
always fly someplace and then demand something.", "It was all a
government plot, there were never any hijackers, he lied and people
died!" Those are some of the things that would have been
said.
What would never have been said was, "He saved the lives of tens
of thousands of people." Because we would never have known the
results of him NOT pushing the button.
One of the real problems with risk assessment is that successful risk
assessment means nothing happened. The only visible consequence of
the assessment and choosing an action is that there was some
cost that a bean counter can see.
Avoiding the "Dead Baby Story"
People react much more strongly to a good emotionally driven
story than they do to numbers, logic or reason. A dead baby
story is exactly that, a strong, emotionally driven story used
get people to make a decision. The decision could be a good one
or a poor one but it is impossible to judge due to the nature of
it. A poor decision is one made with out regards to fact or
logic.
Dead baby stories are used all the time to explain why
something should be outlawed or forbidden. "I once heard that
somebody put razor blades in apples so don't ever accept fresh
fruit when trick or treating", "A friend of a friend drowned
because she was wearing her seatbelt and couldn't get free when
her car went in the river." These are examples of "dead baby"
stories. In almost all of these stories, something terrible
happened to somebody or something, which pulls on the heart
strings. However, the probability of the event in question was very,
very low.
The reason they are called "Dead Baby Stories" is often the
story involves some child being hurt or killed. "You should
never have a gun in your house. I read a story where a 2 year old
got a hold of his father's pistol and accidentally killed himself
with it."
One of the real problems with not getting caught up with a dead
baby story is that sometimes they are real events with real
consequences. There are babies that died because the bathwater
was too hot. There are people that died because they couldn't get
out of their seat belts when their car went into the water. These
are real events and consequences.
Regardless of whether or not the stories are real, the risk
assessment must take into account both the probability of the
event taking place and the consequences of that event.
The stories of people dying because of seat belts trapping
them in a situation where they had to escape are
many. But the analysis has to take into account two different
events. The first is, "My car goes into the water and my seat
belt does not release." The probability of this happening is
very low but the consequence is high. Total risk, LOW.
On the other hand, the probability of getting into an accident
is relatively high. The probability of being injured in an
accident if you are NOT wearing your seat belt is even
higher. Therefore the risk from wearing your seat belt is
much lower than the risk from NOT wearing your seat belt.
Part of the problem with dead baby stories is that sometimes we
don't recognize them as dead baby stories. Sometimes the stories
are presented in the news as a "did you know?" with lots of facts
about how bad the consequences are. Or how awful the company is
for letting this consequence happen.
Sometimes the information is presented in such a way that we want to
believe, and our risk assessment goes out the window.
BPA might be an example of this. There is some
research that shows this chemical might leach into the contents
and this leaching might cause issues. But the people that are
pushing this research just happen to have been hired by a
company which was selling BPA free bottles . . . before BPA was an
issue.
So is this a dead baby story being used to sell a product or is
it good research that was brought to view by a company who just
happens to represent a client that sells BPA free items? Makes
you wonder.
Here's an example from a few years ago. IUDs are one of
the
safest, most effective forms of birth control available.
They have one of
the
lowest failure rates and one of
the
lowest side effect rates of any birth control method. For
a long time, they were considered dangerous to use and were
often ignored in the
U.S. However,
that is now changing.
Because the IUD has to be inserted and removed by a medical
professional, a woman will not "forget" it. It is not going to have
"pinprick" failures. A woman won't accidental stop taking her birth
control pills. An IUD just works.
I've had multiple doctors tell me these facts and my research
supports their opinions. (Personal contact with multiple
obgyns - while the sample size is not large, having all report
the same thing leads me to believe that these facts are true).
But then the dead baby stories started. They are based on
fact. They really did happen.
The Dalkon
Shield had
a
design flaw. The flaw led to Pelvic Inflammatory Disease
(PID). PID could cause scaring and adhesions which in turn
lead to significant reproductive health issues.
Under the risk assessment, we have a consequence, "PID," and a
probability. Given that there were millions of women using IUDs
(160,000,000+ in 2002) but there were only 4,000,000 Dalkon Shields
used. Math gives us a 2.5% chance of a woman having a Dalkon Shield
if she choose to get an IUD. Of those, only 8% had issues, meaning
that the probability of a negative outcome was 0.2%
Looking at the statistics for other birth control methods it is
easy to see higher failure rates. But the stories were so horrible
of some women being unable to have children after using "an IUD," or
of birth defects "caused" by "a IUD," that many women stopped
choosing IUDs as a form of birth control.
This example of a dead baby story shows a consequence with a
horrible outcome (sterilization, birth defects) but a very low
probability of occurrence, led women to chose a path with bad outcomes
(getting pregnant, headaches, dizziness, spotting, decreased
libido, mood swings, interactions with other medications and health
conditions) with a much higher probability of one or more of these
negative consequences.
I apologize for not having all the citations
for this digression. Please feel free to use Google to double-check my information.
Other examples are the outlawing of DDT. There was a very
small probability of health issues from DDT. But DDT controlled
the mosquitoes which carried a wide range of diseases that
killed many more people than DDT ever harmed. In fact there
is some research
which says
outlawing
DDT is one of the reasons for such serious health issues in
third world countries. Just look at the advertisements asking
for netting to protect people from mosquitoes.
Still another example is our airport security procedure. The
facts say that the TSA
is
not preventing terrorists or others from getting weapons on
aircraft. Note the "shoe bomber", "underwear bomber", and "toner
cartridges" were all discovered or stopped by people other than
the TSA. The hope that they might just stop one bad guy is
worth it to the majority of people, and so they give up vast
amounts of personal liberty in exchange for appearance personal
protection.
To put a little perspective on dead baby stories affecting our
choices, there
are
43,600 injuries per year of just children in the bathroom or bath
tub and around 140,000 per year over all
vs.
165,000 ladder related falls. Yet ladders have all sorts of
warnings on them and everybody talks about how dangerous they
are. There are even rules that say that people have to use
"fall arresting" gear when on ladders, yet almost as many people
are hurt in bathroom related accidents every year.
Risk assessment requires separating the
probability of an event, from the actions taken in response to that
event, from the consequences of those actions in the face of the
event happening or not happening. When these parts are not
separated it becomes almost impossible to create a good risk
assessment.
Just because there is a consequence that is horrific does
not mean that avoiding that action is the correct path to
choose.
How Event Probability and Consequences Affect the Risk
Risk is the combination of the probability of an event and the
consequences of that event taking place in the face of
preventative actions. The higher the probability of an event
taking place, the higher the risk of from the event, and the
higher the consequence from the event, the higher the risk.
When we are doing a risk assessment we are looking at actions
we can take prior to the event in order to modify the total risk
involved.
To better understand the interrelationship between probability
and consequences in determining total risk, we are going to use a
simple example of placing a bet. There are only two actions to be
considered.
For the purposes of this example we are going to use an event of a
coin toss. The coin and toss are "fair" which is to say the coin
will land heads up 50% of the time.
Event: The coin will land heads up.
The action will be "placing a bet" on the outcome of the event. In
other words we are betting on the coin landing heads up. The
second action is "do nothing."
The consequence is the loss of the amount bet.
| Flipping A Fair Coin |
|---|
| Action | Event Happens | Event Does Not
Happen |
|---|
| Do Nothing | Nothing | Nothing |
| Place a Bet | Win Amount of Bet | Lose Amount of
Bet |
From the table we can see that there are four potential
consequences: two neutral, one good, one bad. If we choose not
to bet, nothing bad will happen but nothing good will happen
either.
If we set the amount of the bet low, say $1, then we can set
a "value" to the consequence, "acceptable" and "unacceptable". If
the bet value is low enough then all four outcomes are
"acceptable".
If we raise the amount of the bet to $20, then things start to
change. Now we have three results which are acceptable and one
that is "unacceptable". With only two choices we can't tell how
"unacceptable" the bad result is. What we do know is as the
size of the bet increases the level of "unacceptable" becomes
higher.
Using a scale from 0 to 10 with 0 being totally unacceptable
and 10 being acceptable, anything less than 10 is unacceptable to
some extent. So to use this in our example, if we are betting $1
then the consequence of losing the bet has a value of 9. On the
other hand if we are betting our mortgage payment, the consequence
of losing might be a 4. If we were betting our life it is likely
that it will have a value of 0 or 1. (For most people the thought
of losing the life of a loved one is a 0 while the loss of their
own life is about a 1).
We can actually see how people are affected by risk assessments
when we watch the same group of people play poker for cash and
when they play for tokens with no physical value. People that have
nothing to lose (the tokens don't have value) will bet heavier and
on poorer hands than when they are using real cash.
One thing that has to be taken into consideration when these
types of risk are calculated is the value assigned to each
consequence is very personal. A person with a "fun" budget of a
few thousand dollars will assign a consequence value to a $100 bet
much differently than a person with a fun budget of only $500.
At this point you should be able to look at our simple example
and see how the risk changes based on the consequences. But we
can also modify the risk by modifying the probability of an
event.
We modify the probability of an event by learning more about an
event or by changing the circumstances in which the event might
take place.
Taking an example of rock climbing, the probability of a "fall"
happening is reduced by increasing the experience of the climber.
We can also reduce the probability by changing equipment or
conditions in which the climb is taking place.
Here is an example of a set of risk analyses that was
performed in the mid 1980s. They bet wrong.
The event will be: A catastrophic
failure with loss of lives because of a gasket failure. The
probability of gasket failure is set at 0.1% when the temperature is
above 32°F. We know the failure rate is higher if the
temperature is lower but we don't know what the actual failure
rate will be.
The actions we can take are: Refuse to perform the mission if
the temperature is below 32°F. Test to determine the failure
rate below 32°F. Perform the mission if the temperature is
above 0°F. (The entity in charge had already decided that
launch at sub-zero temperatures was unacceptable.)
| Catastrophic Failure Of Seal |
|---|
| Action | Event Happens | Event Does Not
Happen |
|---|
| Do Nothing | People die, equipment lost, huge PR
issue | Procedure continues as is |
| Refuse Mission | Event can not happen | PR
issues, loss of revenue, loss of face, loss of management
bonuses |
| Perform Extra Tests | Same As Do Nothing | Same
as Do Nothing |
In this case we can see that one of these actions does not
actually affect the risk analysis. So why include it? The answer
becomes that performing the test gives us a better understanding
of the probabilities of the event. Given a better probability,
we can make better decisions.
This analysis was actually done for NASA. The actual event was
hidden. The event that should have been analyzed was, "Is the
probability of seal failure significantly higher at 32°F such
that our risk analysis for a mission go decision should be
modified?"
| Do Tests show different probabilities? |
|---|
| Action | Event Happens | Event Does Not
Happen |
|---|
| Do Nothing | Same Probability feed to Primary
analysis. | Same probability feed to Primary
analysis. |
| Test Performed | High cost of test, loss of face,
potential delay in missions, new better probabilities
leading to more mission delays | High cost of test,
loss of face, potential delay in mission |
In the analysis done it was decided that the cost of doing the
testing to determine the probability of failure at low
temperatures was prohibitive. Therefore the testing was not
done. Therefore the risk assessment stated the same which was it
was safe to launch the space shuttle when the temperature was at
freezing the night before. Therefore the launch did take place.
During the launch a gasket (O-Ring) failed leading to the
catastrophic failure of the mission including loss of all lives
aboard and the loss of the vehicle as well.
Please note an important aspect of risk
analysis is having good information on consequences and
probabilities. If you are working from bad data then your
assessment is likely to be bad as well.
So far we've been modifying the consequences to show
how that changes the risk assessment. We can also change the
probability of an event taking place in order to increase or
decrease the risk involved.
If the probability is modified, the risk is modified. Consider
the standard movie leap (see The Day After Tomorrow)
where our hero starts to run and then leaps over a chasm, narrowly avoiding
falling to his certain death. Yeah, most of the time the leaps
are long enough to make an Olympic gold medalist envious, but let's
ignore that for the moment.
The consequence of the leap succeeding changes the risk. If we
KNOW the probability of making the leap is 100% then there is
nearly no risk. If on the other hand we know there is almost no
chance of the hero making the leap then the risk is
astronomical.
The
movie
Executive Decision is an example of the movie maker playing
with the audience by presenting the standard, "It would take a
super human effort to survive this," with the
audience knowing the hero will survive because he does
have top billing and it is very early in the film. Then the hero
doesn't make it. The hero dies. Oh my, what is this movie about
now?
The movie maker has taken our innate sense of risk assessment
and told us, "yeah, this is impossible. You and I both know it is
impossible but the hero can always do the impossible." In other
words the real world probability is near 0% but in the movie world
the probability of succeeding has always been 100% so the
perceived risk is low. Then the movie maker breaks the rules:
"Fooled you! I used real world probabilities. Now you can't
assume that movie probabilities are in effect for this movie."
So rather than the three probabilities we've looked at so far,
nearly 100%, 50% and nearly 0%, we can have probabilities anywhere
in between. As the probabilities change the risk also changes.
Where you might be willing to "bet on the event" if the
probability is "fair" and the consequences are "acceptable" you
might decide the odds are against you too much and refuse to
bet.
If you know that you are going to lose 100% of the time then it
is highly unlikely you will place the bet. On the other hand
people will bet on losing odds every single day of the week,
knowing the odds are against them.
Would you bet $2 when the odds are 1.8% of winning even $4?
Those are pretty bad odds. They say for every $110 you bet you
will win $4. But you could do better, you could win $7 but the
probability is 0.14% or you'd have to spend $1412 to make $7.
Note, math-wise there is a point before you get to the $1412 where
you are likely to win something but it is still fairly high and
much higher than $7.
But we can really entice you! If you are willing to bet $2 with
a probability of 0.013%, I'll pay you $200. Does that sound like
good odds? Most people can look at that and see there is a very
low chance of winning the $200 before you've spent well over
$200.
And here is the kicker, I'll give you a 0.00002% chance of
winning a million dollars or more! And all you have to do is give
me your $2. Just remember, you can't win if you don't play.
The preceding odds are for "Power Ball Lotto".
In general, in a "game of luck" the "house" attempts to hide
the fact that the game is rigged so over time the house will
take in more money than they pay out. The game is not "fair".
The fact that it is not fair is hidden in the payouts. As an
example US roulette double zero wheels have a house advantage of
5.26%. Put another way for every $100 bet at roulette the house
takes $5.26.
The player doesn't see that 5.26% house edge, instead they see
a pay out of $35 for a dollar bet. If they only bet a single
number a 100 times they'll win big! Unfortunately the house will
still take $5.26 of that hundred. The probability of winning is
2.63% the pay out is 35 to 1. 100*35*0.0263=$92.05. The reason
this is not exactly $94.74 is because when you win you get your
original bet back.
I once read: Lotteries are taxes on people that don't understand
math. What they are actually saying is that people do the risk
assessment and are willing to lose $2 or $5 or what ever it is they
bet per week.
As the probability changes so does the risk.
Often times the actual risk is hidden by the feeling of
potential profit. Risk assessment requires looking at both the
probability and the consequences. Evaluating either in
isolation can lead to serious errors in assessment.
Cascading Consequences
The problem with the simple risk assessment examples given is
they do not take into account how a consequence could
cascade.
Consider a person placing a $100 bet in order to win $1000.
The odds are not good but if he wins then he can pay off his
credit card. He has the $100 in his pocket. The consequence is
he will lose the $100.
The cascading consequence could be he no longer has enough
money to make his mortgage payment. Now instead of being behind on
his credit card he is also going to be behind on his mortgage.
This happens all the time in casinos. As a matter of fact casinos
often are designed to make it easy for a gambler to bet more than
they can really acceptably lose.
Cascading consequences occur when the first consequence causes
some other consequence, which in turn causes more consequences.
Consider the power outage scenario. Losing power in our household
is no big deal. Wood heat and propane grill gives us heat, food and
water. But there are bad things that go along with extended loss of
power. The largest is that our freezer will start to warm and we
might lose some food.
On the other hand if you are on an O2 generator and
the power fails there is no more Oxygen being generated. You
need to get the power on or have a secondary source of
oxygen.
We do have long power outages where I live. I had a telecommute
job. The job required me to be at my desk at 0800 and be available
through 1700 to take customer calls and to provide additional
technical support to my team. For most people a power outage is not
a huge thing. For me it could mean my job.
My risk assessment said that being with out internet access which
included my phone service was an unacceptable risk. So we ended
up rewiring parts of the house and installing a T1 (type of high
speed internet connection). This meant that if there was a power
failure in the area we could bring up the computers and the
internet with a whole house generator.
But there was another thing that happened. Installing a T1
connection means that the phone company treats a "down
connection" exactly the same as if an entire town lost phone
service. This means that while my Comcast neighbors were still
waiting for service to come back up we'd been up and running for
two days. Mean time before repair was about 2 hours.
Of course there was a cost for all of this. We had to invest in
the time to rewire the house and we had to pay a premium price for
our T1 connection.
In this case the cascading consequence was that I might lose my
job if we lost power. And that would be because we lost computers
and internet.
Why Are People Concerned About Major Catastrophes?
Or: Why are people worried about what to do after the end of
the world as we know it? Simple, because their risk assessment
says that it is OK and reasonable to plan for it.
When doing a risk assessment we often find actions which are
not bad, which reduce the likelihood of the event or which would
mitigate the event if it takes place. By choosing to do the
action we have an investment in resources (time and money) but it
causes no harm and might prevent a bad consequence.
My daughter shows signs of dyslexia. My wife is a reading
specialist. She thinks there is a 90% probability that my
daughter has dyslexia. But we do not have a diagnosis
of dyslexia.
Because of her training my wife does not want to flatly say my
daughter is dyslexic. So we did the risk assessment.
| Daughter might have dyslexia
(90%) |
|---|
| Action | Event is True | Event is
false |
|---|
| Do nothing | Daughter is slow to read, has
frustration reading, will have spelling
issues. | Nothing |
| Teach her as if she has dyslexia | Daughter is
given the tools to read is not significantly slowed, does
not become frustrated, will have coping methods in place
for spelling. | Daughter will learn new reading
tools, will likely read better and faster, will spell
better |
When we look at the risk assessment we have one negative
consequence which is doing nothing and she is dyslexic. We have
one neutral consequence and two positive consequences. Both
positive consequences are the result of taking action.
Therefore since there is no downside to taking the action we
proceed by taking the action.
It does not matter if she does
or does not have dyslexia because in either case taking action
will cause no harm and will help regardless.
At the end of October 2012 there was a large hurricane which
hit the north east states of the U.S. For some people it was a
big deal. For others it was "no big deal." Why the
difference?
My adult daughter in Maryland was asking me as the storm was
coming ashore if she should stay where she was or
evacuate? She was not prepared for either option.
For us, we stopped by the local store to fill up the spare propane
tank and get an extra couple of gallons of fuel for the
generator. My lady stopped at the store on her way home to pick
up eggs.
It was no big deal. We have been preparing for a bad
situation. As such this situation was just a minor test of the
plans.
A friend of mine has lost her job a couple of times. One time
it was for over six months. She was getting some unemployment but
not enough to pay all her bills. She paid her bills with that
money but they lived on the food she had put away for an
emergency.
My parents gave me a hard time a couple of months ago about
thinking and planing for major events. My father's statement was
something along the lines of "When we go shopping we always do a
check of our pantry first. If we are down to a couple of cans of
something then we'll pick it up but it doesn't pay to buy more
than you are going to need."
My parents have been preparing all their lives! They are so
good at it that they don't even think about it. They have a few
months of food at hand. They might not be happy about the choices
but they won't go hungry if they get snowed in. Their toilet paper
supply won't be exhausted if the snow keeps them home for a week.
This is just the way they grew up.
Summary
Risk assessment allows us to make good decisions based on
facts and logic, not emotion. These sorts of decisions might hurt
people's feelings but are unlikely to get people harmed or
killed.
Risk assessment is a process. It begins with identifying an
event. Once an event is identified a set of actions are
analyzed by determining the consequences of the event happening
or not happening based on the action.
Each consequence or set of consequences for an event action
intersection is given an acceptability level. The event is
given a probability of happening. The risk of each intersection
is the combination of the probability of the event happening or
not happening and the acceptability of the consequence.
Consequences have to be evaluated at both the first level and
as a sequence of cascading events. (For lack of a nail the shoe
was lost, for lack of a shoe the horse was lost, for lack
of...)
At times the correct response to a risk assessment is, "We have
to have a better determination of the actual probabilities and
conditions in which those probabilities hold true."
It is possible and actually probable that a single action
can be used for multiple events. While the worst of those events
might never take place, the action you choose to perform in case of
that event might very well be the correct action for a multitude
of other events whose combined probability is very high.
