In the last unit, you leveraged all of your skills from this class to develop a system safety process plan. You
have studied how to identify and engineer out hazards within a work system; however, you have not yet
studied how to adequately tie together the risk from the remaining hazards within the engineered work system
and evaluate those risk levels. This unit covers how to make a qualitative determination with a quantitative
calculation, then relate those quantified risk values to probabilistic estimates of total system failure. It is in this
unit that you will now fully account for estimated capital at risk based on the probability of failure occurrences
within a work system.
You must remember that at the most fundamental level of safety management lies your inherent responsibility
as a safety engineer to effectively communicate organizational risks and available options to executive
management. This responsibility is only compounded as you eventually become members of executive
management within an organization with or without direct safety engineering or safety management duties. As
you use systems theory to defend the notion that a safe work system is a profitable work system, you must
learn to communicate that notion in terms of dollars, which is the unit of measurement arguably most
meaningful to any organization.
After an informative discussion about what risk really means as it relates to individual perceptions and risk
tolerances, the textbook provides you with a risk assessment methodology that accommodates this integrated
qualitative and quantitative approach with an eight-step methodology in Chapter 13. This approach serves to
normalize many of the frustrating independent variables within a risk assessment that are tied directly to these
individual perceptions and risk tolerances and moves you toward risk evaluation in Chapter 14. This is really
where you need to eventually be, given that you are ultimately attempting to evaluate and understand the
risks inherent within a work system after all controls have been designed into the system, at least during a
first cycling through Deming’s (1986) plan-do-check-act continuous improvement cycle.
Your textbook, in its discussion on risk evaluation, revisits some information and techniques from Unit IV
related specifically to probabilistic mathematics and statistical forecasting of risks; however, the concepts may
still be a little too difficult to grasp even at this point in the course. As such, it may be a good time to pause,
consider the context of what is provided in both Chapters 13 and 14, and then consider a working example of
how you can actually make a qualitative determination. Afterward, you can use those data to calculate a
UNIT x STUDY GUIDE
quantitative value for risks. Using some of the same referenced authors from the textbook, let’s focus our risk
assessment and risk evaluation on the aspect of total risk exposure within a given work system.
Stephans has published a method that will afford us the opportunity to qualitatively determine risk exposure
with human perception or perceived severity during risk assessment and then calculate a value for total
probabilistic risk exposure. Risk exposure is then used to calculate an actual projected dollar loss per unit, a
metric that can be meaningfully tied back to the ratio of exposure to projected costs of controls (Stephans,
2004). Consequently, this technique provides a qualitative determination of risk based on organizational risk
tolerances and individual risk perceptions, a quantitative risk evaluation of the work system in terms of dollars,
and a correlation of the cost of controls for the engineered work system as a function of the organization’s
You may notice how Bahr (2015) bases risk evaluation on two principles, the cut-set probabilities of system
failure and the economics management theory equation of expected values. The combination of these two
principles allows for a calculated yield of a fairly accurate estimate of safety costs. You can see the yielded
outcome of these two utilized principles in Table 14.2 and the risk calculation on page 368. This may not be
completely clear at the moment, so let’s work through Stephan’s techniques as an alternative method.
Stephans (2004) described a severity code table, based on perceived risks. Using this philosophy, we are
going to develop our own severity code table (below), but with different, fabricated values, only for the
purpose of practicing this technique. This is nothing more than a ten-point Likert scale, but it is tied to both
capital and probabilistic cut-set values. Please remember that these are fabricated numbers and are not the
same values presented by Stephans (2004).
Severity Code Range (in dollars of capital) Average
10 >11 Billion 5×1010
9 1.1-11 Billion 5×109
8 101 Million – 1.1 Billion 5×108
7 11-101 Million 5×107
6 1.1-11 Million 5×106
5 101K-1.1 Million 5×105
4 11-101K 5×104
3 1.1-11K 5×103
2 101-1.1K (1,000) 5×102
1 <101 5×101
Stephans then described an exposure code table based on the total number of accidents as lagging or trailing
metrics. Once again, we are going to develop our own exposure code table (below) with different, fabricated
values solely for the purpose of practicing this technique. The ten-point Likert scale and probabilistic cut-set
values are again utilized. This is important, given that we will be tying together these two variables, severity
and exposure, to understand total risk exposure to a work system. Please remember that these are fabricated
numbers and are not the same values presented by Stephans (2004).
Exposure Code Range (in number of accidents) Average
10 >100 5×102
9 10-100 5×101
8 1.0-10 5×100
7 0.1-1.0 5×101
6 0.01-0.1 5×10-2
5 .001-0.01 5×10-3
4 .0001-.001 5×10-4
3 .00001-.0001 5×10-5
2 .000001-.00001 5×10-6
1 <.000001 5×10-7
Finally, Stephans described a total risk exposure code (TREC) matrix. This affords us the opportunity to
quantitatively correlate the severity to exposures. We are going to develop our own risk exposure code matrix,
using more fabricated values, solely as an example of how to use this method. Realize how we have used
only qualitative determinations for establishing severity and exposure, to this point, albeit qualitative
UNIT x STUDY GUIDE
determinations based on empirical values. Please remember that these are fabricated numbers and are not
the same values presented by Stephans (2004).
10 9 8 7 6 5 4 3 2 1
10 20 19 18 17 16 15 14 13 12 11
9 19 18 17 16 15 14 13 12 11 10
8 18 17 16 15 14 13 12 11 10 9
Severity 7 17 16 15 14 13 12 11 10 9 8
Code 6 16 15 14 13 12 11 10 9 8 7
5 15 14 13 12 11 10 9 8 7 6
4 14 13 12 11 10 9 8 7 6 5
3 13 12 11 10 9 8 7 6 5 4
2 12 11 10 9 8 7 6 5 4 3
1 11 10 9 8 7 6 5 4 3 2
Now, we can do some simple calculations to derive the following four estimates using Stephan’s suggestions.
1. Total risk exposure (TRE) = 5 x 10 (TREC-5) or the total dollars estimated to be at risk, as a result of a
hazard within the work system, is calculated by subtracting 5 from the TREC, then adding that
number of zeros to 5.
2. Annual risk exposure (ARE) = TRE/projected life of work system.
3. Unit risk exposure (URE) = TRE/number of units.
4. Risk exposure ratio (RER) = TRE/total budget.
For example, consider the following scenario. A two-unit operation with a five-year projected life and $10
million total budget has a $1 million severity, giving you a correlated severity code of 6 (see severity code
table). The same two-unit operation has a documented 0.01 rate of accidents, giving us a correlated exposure
code of 5 (see exposure code table). Using the TREC matrix, you can find the correlated TREC of 11.
Therefore, the following calculations are straight-forward:
1. Total risk exposure (TRE) = 5 x 10 (11-5) or 5 x 106
2. Annual risk exposure (ARE) = 5 x 106 or $5,000,000/5 year or $1 million
3. Unit risk exposure (URE) = 5 x 106 or $5,000,000/2 units or $2.5 million
4. Risk exposure ratio (RER) = 5 x 106 or $5,000,000/$10,000,000 or 0.5
Focusing on the RER value, you could interpret this as saying that the two-unit work system currently has
50% probability of the risks incurring an accident. The strategy would then be to do a cost-benefit analysis of
proposed controls using the hierarchy of controls that could be designed into the work system ultimately
lowering the related severity and exposure values. Reducing severity and exposure then reduces the overall
risk exposure ratio, or probability of the risks negatively impacting the work system to include the affected
employees of the work system.
Now you can see exactly how the human and organizational perceptions of risks can be used to assess the
risks within a system and how that assessed risk can then be used to evaluate the risk impact of the system.
Notice how all of this is traceable back to the first unit where you were attempting to understand just how to
use the as low as reasonably practical (ALARP) concept and ultimately to decide how to determine the point
at which a work system is safe enough. This is precisely the goal of understanding system safety engineering.
Once you understand what is safe enough for a work system, the necessary controls can then be designed
into the system well before you expose humans and the environment to the work system. This is why you
study how to engineer safe work systems, rather than to simply manage work systems with safety programs.
This course has provided you the opportunity to work through some difficult concepts. Start using these skills
in your own work environment, and let’s save some lives! For more information on A System Safety Process Plan see this: https://www.encyclopedia.com/computing/dictionaries-thesauruses-pictures-and-press-releases/safety-plan
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