Basic Concepts of Risk Analysis

1. Basic Concepts of Risk Analysis Session 1 Dr. Bijan Khazai Risk Analysis Fundamentals of Risk Analysis

2. 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.

3. 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)

4. Risk as Path to Disaster… • Disasters are preceded by… • Triggering event, usually called hazard at this potential state; • A pre-existing vulnerabilityof 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

5. Risk Perception 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). 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.

6. 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.

7. 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.

8. Elements of Risk Hazard Risk = F (Hazard, Vulnerability) Risk A 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

9. 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).

10. Disaster Impacts Disaster Impacts Direct Indirect Tangible Intangible Tangible Intangible Cost of replacing and repairing physical capital Loss of know-how, and intellectual property Impact on production and services Impact on innovation and value systems Economic Loss of life and Injuries, dislocation, evacuation Loss of personal memorabilia or cultural heritage Loss of social networks , drops in school attendance, etc. Psycho-social trauma caused by displacement Social/Cultural Loss of ecosystem use values Loss of ecosystem amenity values Increased soil erosion, water pollution, etc. Effects on biodiversity and natural habitats Environmental

11. Disaster Risk Assessment • Risk Analysis • What can go wrong? • What is the likelihood of it going wrong? • What are the consequences? Risk Reduction Outcome • RiskCommunication • Who are the stakeholders? • What information do they need? • How is it presented? • Risk Management • What can be done? • What are the options? • What are the trade-offs? Importance of Risk Analysis Risk Analysisis a basic instrument of Disaster Risk Assessment paradigm which enables the integration of the risk assessment findings into a Risk Reduction Strategy and Outcome.

12. 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.

13. Process of Risk Analysis Identify, analyze and estimate all possible hazards Hazard Identify and study the vulnerability of infrastructure, population groups and gaps in existing coping strategies Vulnerability Risk Disaster Impact Loss Estimation Quantify the potential impacts of hazard events on buildings, infrastructure, population, and institutions. Risk Analysis Foundation for planning and implementing risk reduction Interpret the impacts on the community, institutions, organizational processes, and available resources.

14. Risk Analysis Components Fragility/Susceptibility Analysis • Analysis of fragilities in infrastructure and built environment • Analysis of susceptibility in non-physical systems (e.g. populations, ecosystem, etc.) Risk Analysis Vulnerability Analysis Hazard Analysis • Geological • Hydro-meteorological • Biological • Technological • Environmental • Social • Economic • Physical • Environmental • Cultural Capacity/Resilience Analysis • Analysis of weaknesses and gaps in existing protective and adaptive strategies. • Legal/institutional frameworks and policies • Social and economic development practices

15. Risk Analysis Applications • Preparedness • Scenario Analysis • Community Preparedness • Capacity Building • Locations for Shelters 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

16. 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