Basic Concepts of Risk Analysis

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Basic Concepts of Risk Analysis

Session 1

Dr. Bijan Khazai

Risk AnalysisFundamentals of Risk Analysis


Learning Objectives

Learn Terminology, definitions and key concepts of (disaster) risk. The notions of probability, acceptable risk and risk

perception. Basic elements and processes in risk analysis.

Understand Risk as a dynamic process of hazard and vulnerability. The difference between direct and indirect impacts. Risk analysis as a basic component of the disaster risk

assessment paradigm. How risk analysis can help disaster managers and decision

makers. The key applications of risk analysis.

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What is a Disaster?

“A serious disruption of the functioning of the community or a society causing widespread human, material, economic or environmental losses which exceed the ability of the affected community or society to cope using its own resources.”

(UNISDR)

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Risk as Path to Disaster… Disasters are preceded by…

Triggering event, usually called hazard at this potential state;

A pre-existing vulnerability of people, processes, infrastructure, services, organizations, or systems to be affected, damaged or destroyed by event.

Risk is not the disaster itself, but the path to disaster if: Protective capabilities of society cannot deal with the

potential losses and impacts of the event. Increasing vulnerabilities in society due to lack of

building codes and zoning laws, population increase, overwhelming migration to urban areas, and settlements in high hazard areas

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Risk Perception Risk is a normal part of daily life.

Our response to natural hazards is often influenced by our perception of risk.

Risk perception depends on whether we feel in control of a perceived risk.

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Scenario of a nuclear accident

Risk perception is influenced by past experience, cultural values, societal opinion, and socio-economic background.

Risk analysis is the process of understanding risk (a cost versus benefit decision).


Concept of Risk Risk combines the probability of a hazard event occurring

and the impact of that event.

A risk analysis tries to answer the questions: What can happen? How likely is it to happen Given that it occurs, what are the consequences?

“Acceptable risk” describes the likelihood of an event with either low probability of occurrence, or insignificant consequences (and/or immense benefits) so individuals or groups are willing to be subjected to the risk.

Defining “acceptable risk” is an important part of the risk analysis process which is connected to risk perception.

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Multi-faceted Concepts of Risk Physical

Expected damage to built environment, human, and capital assets. Economic

Expected financial losses or gains. Ecological

Threat to ecosystem stability and sustainability. Health

Statistical association between disease risk factors and clinically observed outcomes. Psychological

Based on perception of harm as dictated by social constructions or culture-specific rules of pending threats.

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Elements of RiskA function of a natural hazard, described in terms of severity and frequency of hazard event, and the vulnerability of an individual or group of people given their physical setting, environment, and socio-economic conditions.

Vulnerability

Hazard

RiskRisk = F (Hazard, Vulnerability)

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Disaster Impacts Direct vs. Indirect Impacts

Impacts of natural disasters can be classified according to whether they are triggered directly by the event or occur over time as indirect macroeconomic, social or environmental impacts.

Direct impacts include all physical damages to assets plus the monetary losses associated directly with the repair, replacement or loss of functionality of the damaged assets.

Indirect impact is any impact other than the direct consequence of the event.

Damage - Degradation in condition of physical, human, social, environmental assets as a direct consequence of the event.

Loss - Decrease in asset value as a consequence of damage (not always measured in monetary terms).

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Disaster Impacts

Indirect

Tangible Intangible Tangible Intangibl

e

Direct

Disaster Impacts

Economic

Social/Cultural

Environmental

Impact onproduction and services

Cost of replacing and repairing physical capitalLoss of life andInjuries, dislocation, evacuation

Loss of social networks , drops in school attendance, etc.Loss of

ecosystem use values

Loss of ecosystem amenity values

Psycho-social trauma caused by displacement

Loss of personal memorabilia or cultural heritage

Loss of know-how, and intellectual property

Impact on innovation and value systems

Effects on biodiversity and natural habitats

Increased soil erosion, water pollution, etc.


Importance of Risk Analysis Risk Analysis is a

basic instrument of Disaster Risk Assessment paradigm which enables the integration of the risk assessment findings into a Risk Reduction Strategy and Outcome.

Disaster Risk Assessment

Risk ReductionOutcome

Risk Management• What can be done?• What are the

options?• What are the trade-

offs?

Risk Communication• Who are the stakeholders?• What information do they

need?• How is it presented?

Risk Analysis• What can go wrong?• What is the likelihood of it going wrong?• What are the consequences?

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Why Perform a Risk Analysis? Disaster managers have to answer some

fundamental questions about disasters and their occurrence. Where do they occur? (maps) How much warning would it be possible to have? (tools for

decision making) How could people prepare for it?

What sort of damage does it do to people and the

environment? (direct vs indirect) How would the different people be affected? (holistic

analysis) Who would be most affected? What support might affected people need to rebuild their

lives?

Breaking from the destructive cycle of destruction and reconstruction to addressing root causes of vulnerability.

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Process of Risk Analysis

Quantify the potential impacts of hazard events on buildings, infrastructure,

population, and institutions.

Identify and study the vulnerability of infrastructure, population groups and gaps in

existing coping strategies

Identify, analyze and estimate allpossible hazards

Risk Analysis Foundation for planning and

implementing risk reduction

Interpret the impacts on the community, institutions,

organizational processes, and available resources.

Hazard

Vulnerability

RiskDisaster ImpactLoss Estimation

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Risk Analysis Components

Risk Analysis

Vulnerability Analysis

Hazard Analysis

Fragility/Susceptibility Analysis

Capacity/Resilience Analysis

Social Economic Physical Environme

ntal Cultural

Analysis of weaknesses and gaps in existing protective and adaptive strategies.

Legal/institutional frameworks and policies

Social and economic development practices

Geological Hydro-

meteorological Biological Technological Environmental

Analysis of fragilities in infrastructure and built environment

Analysis of susceptibility in non-physical systems (e.g. populations, ecosystem, etc.)

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Risk Analysis Applications

Risk Analysis

Disaster Mitigation Building Code

Regulations Building Code

Enforcement Land-Use Planning Urban Renovation Risk Transfer

Recovery Planning Housing &

Reconstruction Infrastructure Repair Funding & Capital

Allocation Victim Needs

Response Planning Real-time Damage

Estimation Resources Deployment Health Care Delivery Urban Search & Rescue

Preparedness Scenario Analysis Community

Preparedness Capacity Building Locations for Shelters

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Conclusions Risk Analysis more than just a tool for experts. Process that

provides the tools for integration of stakeholders into decision making process (i.e. optimal approach to tackling risks that are generally unacceptable to the target communities).

Risk Analysis consists of a scientifically based process of evaluating hazards, vulnerability to those hazards, and then estimating the resulting impact.

Risk Analysis enables government and communities to: Understand potential human and material losses and their

spatial and sectoral distributions Estimate potential impact on critical facilities, infrastructure

and lifelines Prepare and plan for a disaster and optimize the allocation of

resources Communicate risk parameters to different stakeholders for

developing strategy for risk management and for risk communication

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Basic Concepts of Risk Analysis