Integrated Risk Management

1. Integrated Risk Management Gebremedhin Arefaine, Dominik Saner, Yann Blumer Embedded Case Study Methods

2. What is Integrated Risk Management? «A decision-making framework for situations in which the case agents face uncertainty about the outcome resulting their decision.» • Structural analysis of a risk situation • Access the context of the agents’ risk perception and behaviour • Integration of different perspectives (economic, sociological, environmental, cultural,...)

3. Content • Concept of risk, risk situation and risk function • Integrated Risk Management as an Embedded Case Study Method • Application of Integrated Risk Management on the case of ‘Site selection for nuclear waste disposals in Switzerland’ • Wrap-Up & Discussion

4. A B C The Concept of Risk • Mesopotamia, 3000 BC • Ashipu were responsible for risk management

5. The Concept of Risk • Laplace defined risk as:Risk = (harms and benefits) X (probability of their occurrence) • Since the industrialisation mainly possible losses are considered as risks. • Pure risk concept

6. A Risk is any circumstance or situation that poses a threat Pure Risk Concept

7. General Risk Situation Agent’s space of Risk Cognition General Risk Function Concept of Integrated Risk Management

8. Concept of Integrated Risk Management General Risk Situation A1 p1 E2,1 + A2 E2,2 p2 - Agent’s space ofRisk Cognition General Risk Situation General Risk Function

9. Concept of Integrated Risk Management • General Risk Function r(A,p,E): • Value function v(Ai) • Value function v(Ei,j) • Subjective conceptualization pi,j of all probabilities ~ Agent’s space ofRisk Cognition General Risk Situation General Risk Function

10. Concept of Integrated Risk Management Agent’s Space of Risk Cognition Numerical representation Episodic risk knowledge Emotions and feelings Pictorial Representation Agent’s space ofRisk Cognition General Risk Situation General Risk Function

11. 2. Integrated Risk Management as an Embedded Case Study Method • Defining the situation • Identification( area, type of risk) eg. Risk in firm • Case agent’s perspective, relationship • Goal • Modelling of the decision situations

12. Method continued Risk Function R( A,P, E) Events/ Outcomes Probabilities Action alternative A Defining situation Decision Maker Object of risk Assess-ment Goals Time Frame Risk assessment decision A1 A2 An p11 E11 p12 E12 r (A1,(p11,...P1k ), (E11, ...E1k1))) E1k p1k p21 Ak chosen When Optomizing r E21 R(A2, (P21, ...P2k2) ,(E21,...E2k2)) p22 E22 p2k E2k E31 p31 R ( An, ( Pn1,...Pnkn) , ( En1,...Enkn)) p32 E32 p3k E3k Fig.The Brunswikian lens mode of IRM ,source Ronald W. Scholz & Olaf Tietje, 2002

13. Constructing Action Alternatives • Defining decision alternatives • Developing model of Agent‘s action space • Set of possible events • More than one possible event • At least one outcome must be regarded as loss

14. Assessing the probabilities • Probability of occurence • Appropriate Concept of probability selected E11 P11 P12 E12 A1 P13 E13 Decision Point E21 P21 A2 P22 E22 P23 E23 P31 A3 E31 P32 E32

15. A1 A1 A2 A2 A1 Constructing risk function(RF) and risk assessment • RF is conjoint function • Risk assessment is integral and holistic • Expecte damage/ loss • Risk mapping Gain Outcome Loss Low High Probability

16. 3. Application on the case of ‘Site selection for nuclear waste disposal in Switzerland’ Theory Application

17. Todays Situation is a Consequence of Past Risk Situations … ~ 90‘000 m3 of Waste until 2050

18. Todays Situation is a Consequence of Past Risk Situations … …

19. Two Available Alternatives • Midlands • Molasse • High Population (100’000) • Alps • Continental Crust • Low Population (10’000)

20. Risk Situation so Far ~70‘000 Daly Probability? ~700‘000 Daly Alternatives Events

21. Groundwater Assault Costs Earthquake EcosystemHealth Spatial Development Excavations Possible Events – Defining Dimensions • Focus on DALY • Simplicity • Timeframe 200 years • Determinability ?

22. Assessing Probabilities • Expert‘s opinion • Estimations Midlands Alp Area Groundwater Groundwater Earthquake above Treshold Earthquake above Treshold

23. Risk = P ● Daly Alp Area: 5.52 DALY Midlands: 3.31 DALY Numerical Risk Assessment According to Laplace Is this the end of the story?

24. Worst Best Expected This is Only a Part of It Agent’s Space of Risk Cognition Numerical representation Episodic risk knowledge Emotions and feelings Pictorial Representation Agent’s space ofRisk Cognition General Risk Situation General Risk Function

25. Integrated Assessment Minimal Probability? Minimal Damage? Inhabitants Different Scenarios Uncertainties? Technical Assessment Other Risks Other Benefits? Experts Politicians Decision

26. 4. Conclusion & Personal OpinionTwo-Sided Coin Allows to tackle complex problems Theory - Application Gap:experience is needed

27. Wrap-Up What is Integrated Risk Management? «A decision-making framework for situations in which the case agents face uncertainty about the outcome resulting their decision.» • Structural analysis of a risk situation • Access the context of the agents’ risk perception and behaviour • Integration of different perspectives (economic, sociological, environmental, cultural,...)

28. Points for Discussion • Based on the Information presented • What other kind of risks and benefits do you see (stakeholders perspective) ? • Where do you see flaws and points for clarifications in regards to the applied method? • Would you trust in such an assessment?

29. Bibliography • Scholz, R., Tietje, O. (2002). Embedded Case Study Methods - Integrating Quantitative and qualitative Knowledge. • Scholz, R., Siegrist, M. (2007) Low Risks, High Public Concern? The Cases of Persistant Organic Pollutants (POPs), Heavy Metals, and Nanotech Particles. • Schulte-Hostede, S., et al. (1996) Altlastenbewertung - Datenanalyse und Gefahrenbewertung. Schriftenreihe AbfallPraxis. • Perera J., Holsomback J. (2004) An Integrated Risk Management Tool and Process.