Upload
sophia-hodges
View
215
Download
1
Tags:
Embed Size (px)
Citation preview
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Risk-Informed Decision Making
Charles Yoe, [email protected]
Institute for Water Resources2010
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
In a Nutshell
• Decision making is going to change if we do risk assessment
• Making decisions under uncertainty• Using the available information
– Considering more than expected value
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Risk-Informed Decision Making
• Confluence of risk management and risk assessment– Assessors convey significance of uncertainty– Managers take it explicitly into account in
decision making
• Develops and uses risk information to aid decisions made under uncertainty– Decision metrics and rules developed by
decision makers– Use risk assessment approach to develop
science-based values of risk metrics
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
The Job
• Success in risk management is defined by practical and useful solutions for dealing with uncertainty
• It is the risk assessors’ job to address the uncertainty and variability in inputs
• It is the risk managers’ job to address the uncertainty and variability in the decision criteria– And to manage risks that are not acceptable
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Key Focal Points
• Decision criteria/metrics• Acceptability/tolerability• Principles for choosing an option• Uncertainty• Strategies for managing risk
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Metrics
• Decision criteria will reflect– Risk metrics– Other risk management objectives
• These are the usual impacts of interest to decision makers
– Costs, benefits, compliance with laws, budget impacts, capability, and so on
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Possible Risk Metrics
• Life safety risk– Number of lives at risk, social vulnerability
• Economic risk– Net economic benefits, financial risks
• Engineering risk and reliability– PUP
• Residual risk• New, transformed and transferred risk• New metrics like partitioned risk
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
First, Understand
• …assessors have to become more clever and help risk managers know what is possible
• …conditional probabilities can help– …given that something happens then how bad
is it?
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Consider the Hydroeconomic Risk Model
Existing
Existing
Levee
Levee
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Expected Annual Damage
$12,411,000
$2,151,000
Existing Risk
Residual Risk
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Refining Residual Damage
Existing flood risk (EAD) = $12,411,000Residual flood risk (EAD) = $2,151,000Flood risk reduction (EAD) = $10,260,000
What are the EAD given that a flow with an exceedence frequency of 0.002 (.2 on left) or less occurs? This conditional probability requires a risk partition.
Rescale the partition
90.0% 5.0%
0.8418 0.9644
0.8
20.8
40.8
60.8
80.9
00.9
20.9
40.9
60.9
81.0
01.0
2
Values in Millions
0.0
0.2
0.4
0.6
0.8
1.0
New CDF / INTERVAL
Cumul(840130.3798,999999.9783,{},{})
Minimum 840130.3798Maximum 999999.9783Mean 872658.5740Std Dev 36000.3467
Integrate this rescaled partition and the expected damage is now$872,659,000. Given that a ‘bad’ flood occurs, it will be very bad.
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Extreme Event Conditional Expected Values
• With condition residual = $2,151,000• Benefits = $10,260,000• Partitioned residual = $872,659,000• A channel or nonstructural project could
have lower benefits and a much reduced partitioned risk
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
What Kinds of Decisions
• Is the status quo acceptable? Can we accept this risk?
• If the existing risk is not acceptable, what level of risk is tolerable?
• What is the best way to achieve a tolerable level of risk?
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Two Important Ideas
• Acceptable Risk-A risk whose probability of occurrence is small, whose consequences are so slight, or whose benefits (perceived or real) are so great, that individuals or groups in society are willing to take or be subjected to the risk (or that the event might occur).
• Tolerable Risk-A tolerable risk is a non-negligible risk that has not yet been reduced to an acceptable level, but the risk is tolerated due to the inability to reduce it further, the cost of doing so or the magnitude of the benefits associated with the risky activity.
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Principles for Choosing Management Option
• Policy• Zero Risk• Weight-of-evidence• Precautionary Principle • ALARA Principle• ALOP Principle• Reasonable Relationship• Safety Standards
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Policy
• Some decisions have been made for the risk manager, e.g., the national economic development plan
• Corps guidance often restricts what can be done
• Working with EPA means dealing with their policy restrictions and requirements
• International treaties and agreements may identify solutions or limit options
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
© Charles Yoe, Ph.D.
Zero Risk• The ban or taboo—any action that involves any
risk at all is forbidden—ignorance made it possible to imagine 0 risk
• “De Minimis”—numerical value of risk too small to be bothered about
• 1-in-a-million has captured the imagination in some contexts– 1-in-a-million annually is 70 or 80 times more than 1-
in-a-million lifetime– “Practically” zero
• PMF, 100-year, 500-year have all been used by the Corps
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Weight-Of-Evidence
• We like once and for all resolution on the basis of compelling scientific evidence
• Risk managers assess credibility of conflicting evidence about hazards and risks in a systematic and objective manner
• Diverse group of scientists examine the evidence to reach consensus views
• Weight-of-evidence is an ongoing activity attempting to balance positive and negative evidence of harmful effects based on the best available evidence
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Precautionary Principle
• "When an activity raises threats of harm to human health or the environment, precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically. In this context the proponent of an activity, rather than the public, should bear the burden of proof." Wingspread Statement
• In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation. UNCED Rio Declaration Principle 15
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
© Charles Yoe, Ph.D.
ALARA Principle
• As Low As Reasonably Achievable• Minimize known risks, by keeping
exposures as low as reasonably possible, taking into consideration costs, technology, benefits to public health and safety and other societal and economic concerns
• Similar to best available technology WHO Backgrounder
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
© Charles Yoe, Ph.D.
Appropriate Level of Protection
• Risk society is willing to accept or tolerate• Statement of degree of protection that is
to be achieved by the risk management option implemented
• Can be intentional choice• Can be result of what is doable
– Sometimes overlaps with ALARA
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Factors in Determining ALOP
• Technical feasibilityTechnical feasibility of prevention and control options
• RisksRisks that may arise from risk management interventions
• Magnitude of benefitsbenefits of an activity and the availability of substitutes for that activity
• Cost of preventionCost of prevention and control versus effectiveness of risk reduction
• PublicPublic risk reduction preferencespreferences, public values
• DistributionDistribution of risks and benefits
• Policy
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Reasonable Relationship
• Costs of risk management should bear “a reasonable relationship” to corresponding reductions in risks
• Not a true BCA but balance of benefits and costs should at least approximate each other
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Safety Standards
• Safety standards– Zero risk standards– Thresholds– Balancing standards
• Risk-Benefit Trade-Off: Greater benefit => Greater acceptable risk
• Comparative Risk Analysis: Rank risks for seriousness of threat posed
• Benefit-Cost Analysis: Economic efficiency
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
© Charles Yoe, Ph.D.
Safety Standards
• Threshold standards– Non-zero level of risk stipulated as acceptable
• Tolerable level of risk• Appropriate level of protection
• Procedural standards– Agreed upon process– Negotiation– Referendum
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Uncertainty
• Consider net NED benefits as a decision criterion
• Which is the best plan?
Net Benefits Plan 1: Red Plan 2: Blue Plan 3: Green
Mean $6,998,000 $6,001,142 $4,000,039
Decision making will becoming multi-dimensional.Can we handle that?
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Uncertainty
12.3% 86.2% 1.5%2.6% 97.4% 0.0%
0.00 20.00
-20
-15
-10
-50
51
01
52
02
5
Net Benefits (Millions)Values in Millions
Frequen
cy
Net Benefit Comparison
Five Number Summary Plan 1 Plan 2 Plan 3Plus Mean Red Blue Green
Mean 6,998,000$ 6,001,142$ 4,000,039$ Minimum (10,173,310)$ (4,114,583)$ (15,726,346)$ 1st Quartile 3,076,969$ 3,960,606$ 318,544$ Median 6,978,948$ 5,952,181$ 4,031,267$ 3rd Quartile 10,931,366$ 8,087,706$ 7,682,767$ Maximum 23,635,943$ 16,894,192$ 19,273,900$
P(Negative return)
Which is the best plan now?
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Possible Rules for Making Decisions Under Uncertainty
• Maximax—appeals to gamblers (R, G, B)– Choose plan with best upside payoff
• Maximin—appeals to cautious (B,R,G)– Choose plan with best downside payoff
• Laplace—risk neutral (R,B,G)– Choose plan based on expected value payoff
• Hurwicz—neither neutral nor extreme (depends)– Choose plan based on assigned weights
• Regret-make wrong decision and regret it (Red)– Identify the maximum regret associated w/ each choice– Choose plan that minimizes this regret
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Regret
States of the world
Min Max
Red $ (10,173,310) $ 23,635,943 Blue $ (4,114,583) $ 16,894,192 Green $ (15,726,346) $ 19,273,900
Regret MatrixMaximum
Red $ 6,058,727 $ - $ 6,058,727
Blue $ - $ 6,741,751 $ 6,741,751
Green $ 11,611,763 $ 4,362,043 $ 11,611,763
Minimax $ 6,058,727
If we choose red our regret will at most be $6.1 million
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Trade-Offs
Plan A Plan B Plan C Plan D Plan E Plan F Plan G Plan HFlood risk management ($1000s EAD) $10 $800 $60 $80 $25 $50 $100 $900Annual HU's 46 0 50 90 85 75 116 116Annual user days of urban recreation 700 0 850 2000 1000 800 3000 3000Property value effects 2 3 2 1 3 1 2 3Cost ($Millions) $15 $15 $23 $33 $20 $27 $53 $68
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Sensitivity
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
General Risk Management Strategies
• Accept • Mitigate
– Avoidance– Reduce probability of event (prevent)– Reduce consequence of event (mitigate) – Insurance
“ Building Strong “
Delivering Integrated, Sustainable, Water Resources Solutions
Charles Yoe, [email protected]
Questions?