BLADE SEMINAR7th February 2001

RISK - HARD & SOFT

David Blockley

Contents

•Introduction•Risk - hard•Risk- soft•Risk management•Conclusions

Risk=

Chance +

Consequences +

Context

Risk is about 14 years old!

Hard system

Soft system

Meta system

Risk in Context

Why = How (Who, What, Where, When)

Contents

•Introduction•Risk - hard (action & reaction)•Risk- soft•Risk management•Conclusions

Structural Reliability Theory

Safety factor

Capacity / Demand = C/D

Structural reliability theory

Parameters X for C, D are random variables

Z = C-D

pf = prob ( Z < 0 )

1

0X

Z = C-D = g (X)

1

Area under curve is 1

pf

Z < 0 Z > 0

Capacity/Resistance CDemand/Load D

Here D>C defines failure

Z

X1

X2

Z < 0

Z > 0

Limit state functionZ = 0

pf

mX1,mX2

Contours on the joint pdff (X1, X2) Z = g(X1, X2)

In general Z = g (C, D) = g (X)

g (X) is the limit state function

pf = Prob (g (X) < 0)

= …... f(X (x) dx g (X) < 0

timetime

a limit boundary xlxt

f (x)

pf

mx

pf = f(x, t) d (x, t) a stochastic process x>xl

time

performance measure no 2

per

form

ance

mea

sur e

no

1

Boundaries of acceptable values defining success

Initial State

Final target state

Trajectory of process

timetime

a p

erfo

rman

ce m

easu

r e

a p

erfo

r man

ce m

easu

r e

pastpast

a limit boundary

Scenarios

of future

Scenarios

of future

future

Damage/Failure

now

Target state

o

o o

o

o o

o

o

o

o o

o

Series System

Parallel System

pf = pf (1 or 2 or 3 or 4 or 5)

1 2 3 4 5

1

2

3

pf = pf (1 and 2 and 3)

o

Beam

Event Tree

o

o

o

o

o

o

o

o

o

o

o

Beam

Sway

Combined

Sway

Combined

b

cd

cd b

d

d b

c

d

Consequences

• Values - cost, safety, profit, sustainability etc

• BCIOD+R business, customer, integrating, operating, delivery, regulatory

• Limit states & Value functions• Vulnerability & Robustness

Contents

•Introduction•Risk - hard•Risk- soft (action, reaction, intention)•Risk management•Conclusions

RISK SOFT

• Precautionary Principle•Environmentalists

• Public understanding•GM Crops, BSE, mobile phones

• Risk Perception•control, ownership

• Evidence• Measurement

Contents

•Introduction•Risk - hard•Risk- soft•Risk management•Conclusions

Past Present Future

Soft & Hard Hazards

Preconditions, trendspatterns of concern

Alternative Futures (Scenarios)Soft & HardIdentification of futurehazards events with risk =chances + consequences + context

Evidence

RemoveChange processTransferRedesign etc

Reduce (Strategic)What if questionsshare, redesignetc

Remedy (Tactics)retain, redesign make acceptablecontingency plans

Managing systems to success based on evidence

Time

Transformation

Input Output

Recipe

First do thisthen do that etc-------------

Flowchart

Network

Gantt ChartActivity 1Activity 2--------------Activity

Process

mechanism

input output

control

IDEF0 diagram

Doing a Process

RolesFunctions

Players

WHOClient/

Customers

WHY

Purpose,Needs,Targets

PlaceSite

WHEREWHEN

TimeWHAT

FormState VariablesKPIs

TransformationsPhysical systemModels

Inputs, Outputs

HOW

Vision,Success

Resource, Control, QA

Decision,Alternatives,Criteria

EvidenceRisks

Stakeholders

NEW PROCESS

design

useage

business

materials

makingdelivery

C O

R I

DB

KeyB: BusinessR: RegulationC: CustomerO: OperationI: IntegrationD: Delivery

Managing RelationsManaging Relations

Considering Customers

Considering Customers UsingUsing

Integrating People & Processes

Integrating People & Processes

Doing Good Business

Doing Good Business

Delivering Assets

Delivering Assets

Being a handcrafted chair for comfort

Being a handcrafted chair for comfort

Being Hand crafted for comfort

D

OC

B

R I

Consideringcustomer Using

Managingrelations

Doing goodbusiness

Delivering

Integrating

Establishingplan

Accounting

Controllingprocesses

Managingstaff

Making

Designing

Decidingneeds

DecidingCustomer s

Customer needs Maintaining Sitting in

chair

Decidingstakeholders

Handcrafting

Designingstructure

Recruiting

Procuringpreparing

Training

Paying

Public

Decidingwhat to do

Deciding budgets

Projecting

ReturnsEstablishing

KPIsDesigning

form

Decidingaffordability

DecidingType

AskingSampling Handling

Cleaning

BeingComfortable

Maintainingteam

Regulators

KeyB: BusinessR: RegulationC: CustomerO: OperationI: IntegrationD: Delivery

FuzzinessChoosing appropriate

level of detail for model

Modeldependable?

Parametersdependable?

Includes people?

Using deterministicmethod

Note context

RandomnessUsing probability method

Note context

Using result as evidence

RandomnessIncompletenessIncluding model

uncertainties

Use Social Process

Checking forunintended effects

Looking for evidence with

Italian Flag

Manage systems to success based on incomplete

evidence - using judgement

Recognising social

process

NoNo

No

Yes

Yes

Yes

START

END

Using Interval Probability Theory

Social Processese.g. Workshops, Focus Groups,Italian Flag measure of evidence,

These methods inform judgement they cannot replace it

y = f(x)

X=xi

Y=yi

1-1 mapping Many - 1 mapping

‘plum pudding’ relation R Sets on the relation R

(a) (b)

(c) (d)

Outputset A on Y

Input set B on X

A & B

not A & B

A & not B

not A not B not A & not B

not A & not B not A & not Bnot A & B

A & not B

y = f(x)

Y

X

Y = y

X = x1 X = x2 X = x3

Pow

er/in

flu

ence

Interest

High

High

Low

Low

Time

HighLow

Interest

Min.effort

Keepsatisfied

Keepinformed

KeyplayersP

ower

/infl

uen

ce

High

Low

A Not A

B

Not B

A & B

A & not B

not A & B

not A & not B

(a) The sets of R (b) Stakeholder diagram

(c) The change process

High

Power (not B)

Low

Interest(A)

LowPower (B)

High

Interest(not A)

m11m12

m21 m22

not B

A

B

not A

m11 m12

m21 m22

m13

m23

m31 m32 m33

Unknown A

UnknownB

Lower Prob (A & B) = greenUpper Prob( A & B) = 1 - redUnknown (A & B) = white

Italian Flag for A & B

Italian Flag for A & B(b)

(c)

(a)

(d)

(A & B)

XSet ANot A Not A

Red AreaP(not A)

Area under whole curve = 1i.e P(A) + P(not A) = 1

Green AreaP(A)

Xnot AA

1.0

0

P(A)

P(not A) =1 - P(A)

P(A)

Green areaP(A)

XANot A Not A

Red AreaP(not A)

White areaP(unknown A)

Area under whole curve = 1i.e P(A) + P(not A) + P (unknown A) = 1 1.0

Sn(A)

Sp(A)

not AAX

P(not A)

P(A)

P(unknown A)

(a) (b)

(c) (d)

Four ‘Emerging’ Types of Problem

• identifying cross functional processes in large organisation

• troubleshooting clear processes with much multi-tasking

• visioning consequences of uncertainty in cross disciplinary processes

• looking for unintended consequences in an existing risk management system

Process A

Process B Process C

Note: The owner of Process C thinks his process is very likely to fail.The owner of process A thinks his process will be successfulIf Process C is necessary for Process A then the two of them need to sort out the reasons for their differing perceptions

Software

• Juniper - exists• FlowMap - exists• MindMap - exists• FlagAccess - prototype• FlagExcel - prototype• JuniperProfessional?

- coming

Conclusions

• Integrate hard & soft risk by• Systems approach based on

- holons, connectivity & process

• Evidence• Measurement & Uncertainty Mathematics