1

So much for safety

Rolf Skjong and Knut RonoldDet Norske Veritas

Rolf.Skjong @dnv.com & Knut.Ronold@dnv.com

OMAE, Oslo, June 24-28, 2002

2

Background

Work with introducing risk assessment as basis for the decision making process

Formal Safety Assessment at International Maritime Organisation

Risk based rules & regulations Not initially intended to be used for individual design IMO is a UN organisation: Globally accepted criteria for

shipping

3

Background

Formal Safety Assessment Current Approach

Step 1 What might go wrong? Hazard identification What did go wrong?

Step 2How often, how likely?

How bad?

Risk analysisFrequencies, probabilities

Consequences

Risk = probability xconsequence

Step 3 How can matters beimproved?

Risk control optionsidentification

How can matters beimproved?

Step 4 How much?How much better?

Cost benefit evaluation

Step 5 What actions areworthwile to take?

Recommendation What actions areworthwhile to take?

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Status of criteria

Industrial Self Regulation Regime – Criteria Defined by Operator

Safety Case Regime– Criteria Defined by Regulator

FSA: For use by the regulator in own decisions– With acceptance criteria given, IMO may still

decide not to adhere strictly to criteria (will lead to “inconsistency”)

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Individual Risk

1.00E-07

1.00E-06

1.00E-05

1.00E-04

1.00E-03

1.00E-02

Ind

ivid

ual

risk Intolerable Risk

ALARP

Negligible Risk

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Societal Risk - FN Diagrams

1.0E-06

1.0E-05

1.0E-04

1.0E-03

1.0E-02

1 10 100

Fatalities (N)

Fre

qu

en

cy

of

N o

r m

ore

fa

taliti

es

(p

er

sh

ip

ye

ar)

Oil tankers

Chem. tankers

Oil/Chemicaltankers

Gas tanker

Negligible

Intolerable

ALARP

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Societal Risk - FN Diagrams

1.0E-05

1.0E-04

1.0E-03

1.0E-02

1 10 100 1000

Fatalities (N)

Fre

qu

en

cy

of

N o

r m

ore

fa

taliti

es

(p

er

sh

ip y

ea

r)

Bulk and ore

Container

Intolerable

ALARP

Negligible

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Individual and Societal Risk

Individual and Societal risks are in ALARP area

Individual and societal risks are not ALARP

Cost Effectiveness Assessment (CEA) must be carried out to arrive at recommendations

Societal risks for Bulk Carriers were recently close to intolerable or intolerable

Note: Not all ship types included

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Format in FSA Guidelines

Low Risk

High Risk Intolerable

ALARP

Negligible

Not acceptable

Acceptable

Acceptable if made ALARP

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Methods for deriving criteria

Human capital approach Willingness to pay Comparing to well informed (risk informed) decisions in

democratic forum (a willingness to pay) Comparing to previous decision (a willingness to pay) Societal Indicators (a willingness to pay) Individual decisions

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Cost Effectiveness Criteria

Cost of averting fatalities in actual decisions

Decision DecisionMaker

Value

Strengthening Bulkheads on Existing BulkCarriers

IACS andIMO (1)

> $ 1.5 million

Helicopter Landing Area on non-Ro/RoPassenger Ships

IMO(2) < $ 37 million

3 bulkheads on car deck Passenger Ro/Ro IMO(3) < $ 5 million3 bulkheads + sponsons IMO(3) < 7.8 millionExtended sponsons only IMO(3) < $ 11 millionExtra Deck Officer IMO(3) < $ 5.5 millionTwo conventional lifeboats BC IMO(4) > $ 1 millionThrow overboard life-raft on BC IMO (4) > $ 3 millionRe: (1) Mathisen et al.(1997), (2) Skjong et al.(1997), (3) DNV(1997), (4) Skjong andWenthworth,

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Cost Effectiveness

Table: Published CAFs in use as acceptance criteriaORGANISATION SUBJECT CAF SOURCE

US Federal HighwayAdministration

Road Transport $2.5m (£1.6m) FHWA (1994)

UK Department ofTransport

Road transport £1.0 m (1998, uprated withGDP per capita)

DETR (1998)

UK Health & SafetyExecutive

Industrial safety As above or higher HSE (1999)

Railtrack (UK railinfrastructure controller)

Overground railways As above to £2.65m Railtrack (1998)

London Underground Ltd Underground railways £2m Rose (1994)EU Road Transport ECU 1 million (£0.667m) from Evans (1998)

Norway All hazards NOK 10m (£0.8m) Norway (1996)

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Human capital approach

Value of man as a resource in economic production Has discredited cost effectiveness & cost benefit

assessment Contradicts ethical principle (Protagoras: “Homo

mensura” and later formulations, e.g. Kant) Same principle has resulted in a ban on research on

human stem-cells by many governments

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Willingness to pay

Many forms of willingness to pay studies– Questionnaires– Observed behaviour (e.g. insurance)– Implicit in previous decisions– Implicit in existing regulations– Etc.

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Previous decision

Results from Tengs et al. (1995)“Five Hundred Life-Saving Interventions and their Cost Effectiveness”

Number of measures studied 587Range of cost effectiveness Negative to $10 billion/life year

savedMedian Value $ 42.000/life yearMedian for Medical Interventions $ 19.000/life yearMedian for Injury Prevention $ 48.000/life yearMedian for toxic control $2.8 million/life year

•By reallocation 40.000 lives could be saved annually in the US•$ 42.000 •35 = $ 1.5 million

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Societal Indicators

Societal Indicators used to rate “quality of life” in countries

Published by e.g. UN (UNDP) Many different indictors exist Include such parameters as: GDP/Capita, Life

Expectancy at Birth, literacy etc.HDI (1999)

1 Norway 0.9392 Australia 0.9363 Canada 0.9364 Sweden 0.9365 Belgium 0.9356 United States 0.9347 Iceland 0.9328 Netherlands 0.9319 Japan 0.92810 Finland 0.92511 Switzerland 0.924

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Social Indicators

e

dew

g

dgw

L

dL)1(

wwegL 1

w

wgeegNCAF

1

4max

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Societal Indicators

CAF for OECD Countries ( $ million )

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

Aus

tral

ia

Aus

tria

Bel

gium

Can

ada

Cze

ch R

epub

lic

Den

mar

k

Fin

land

Fra

nce

Ger

man

y

Gre

ece

Hun

gary

Icel

and

Irel

and

Italy

Japa

n

Kor

ea

Luxe

mbo

urg

Mex

ico

Net

herla

nds

New

Zea

land

Nor

way

Pol

and

Por

tuga

l

Spa

in

Sw

eden

Sw

itzer

land

Tur

key

Uni

ted

Kin

gdom

Uni

ted

Sta

tes

Ave

rage

OE

CD

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Individual Decisions

Also individuals take decision that increase life expectancy and reduces accident frequencies

For example:– Buy safer cars– Buy more healthy food– Go to the doctor more frequently– Etc.

How much increase in purchasing power is necessary to increase the life expectancy in a population by “e”

Effect demonstrated in the US (Keeney, Lutter, see references)

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Individual Decisions

0

10

20

30

40

50

60

70

80

90

0 5000 10000 15000 20000 25000 30000 35000 40000

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Societal Indicators

0

2

4

6

8

10

12

14

16

18

Austra

lia

Austri

a

Belgium

Canad

a

Czech

Rep

ublic

Denm

ark

Finlan

d

Franc

e

Ger

man

y

Gre

ece

Hunga

ry

Icela

nd

Irelan

dIta

ly

Japa

n

Korea

Luxe

mbo

urg

Mex

ico

Nethe

rland

s

New Z

ealan

d

Norway

Poland

Portu

gal

Spain

Sweden

Switzer

land

Turk

ey

United

King

dom

United

Sta

tes

Avera

ge O

ECD

$U

S m

illi

on

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Societal Indicators

0

0,2

0,4

0,6

0,8

1

1,2

1,4

Cameroon

Pakist

an

Mau

ritan

ia

Ghana

Vietnam In

dia

Cote d'

Ivoire

Azerb

aijan

Centra

l Afri

can

Repub

lic

Turkm

enist

an

Seneg

al

Cuba

Avera

ge [1

00]

$U

S m

illio

n

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The new Format

Low Risk

High Risk Intolerable

ALARP

Negligible

Not acceptable

Acceptable

Acceptable if made ALARP$ value of Life

Life/Life

Life for $

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Conclusion

An upper limit on investing in safety exists, where self protective measures are more effective

No regulator should implement less effective measures

– New meaning to “Born free, taxed to death” Different methods for defining criteria give similar results For an OECD member country (excluding the newest

members) the criteria is somewhere in the range $ 1.5 -3.0 million

– Some uncertainties relates to:

• Fatalities as indicator or actual fatalities

• NCAF or GCAF

• Assumptions used in derivation

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Conclusion

Human Capital Approach ~ ge/2 Life Quality Index/Human Capital Approach ~ 10/3 Self Protective Measures/Life Quality Index ~ 10/3 This is a narrow band! Published criteria are in the range between the Human

Capital and Life Quality Index approaches A measure that should be implemented in a wealthy

country, may be a “net killer” in a less developed country, as self protective measures give better effects