Risk Management: With Applications from the Offshore Petroleum Industry By Terje Aven, Jan Erik Vinnem

Risk management is a decision-making process which considers political, social, economic and engineering factors with relevant risk assessments relating to a potential hazard in order to develop, analyse and compare options to facilitate the selection of the optimal regulatory response for safety from that hazard. Rapid technological developments, organisational changes and increased demand for efficiency have all influenced the vulnerability of our society. As a result, safety and risk management is becoming an increasingly important field.

Risk Management with Applications from the Offshore Petroleum Industry presents an in-depth discussion of some fundamental principles of risk management, related to the use of expected values, uncertainty handling and risk acceptance criteria. A decision framework for risk management is developed that provides a structure for the classification of risk decision problems and a procedure for the execution of the related decision-making processes. Several examples from the offshore petroleum industry are included to illustrate the use of the framework, but it can also be applied in other areas.


With the inclusion of a risk management framework designed to achieve better decisions and therefore more desirable outcomes, Risk Management with Applications from the Offshore Petroleum Industry is a valuable resource for practitioners in the industry, engineering managers and regulatory authorities. Graduate students and researchers in risk management will find this book a comprehensive reference.

This book is about making decisions in the face of risks and uncertainties. Our ultimate goal is to arrive at decisions that provide desirable outcomes, but the risks and uncertainties oblige us to acknowledge that the best we can do is to obtain confidence in being able to obtain desirable outcomes. At the point of the decisionmaking we do not know the future outcomes of the activities (alternatives) that we are investigating, and the challenge is then, how we should perform the decisionmaking process. More specifically, some of the main challenges are:
- How we should identify the relevant decision attributes (quantities related to costs, safety, health, etc.)
- How we should measure these attributes
- How we should deal with uncertainties in future performance, in general and through different project phases in particular
- How we should balance the project risk management perspective and the corporate portfolio perspective
- How we should take into account the level of manageability in projects
- How we should use expected values in risk management
- How we should understand and deal with risk aversion, the cautionary and precautionary principles as well as the ALARP principle (risk should be reduced to a level that is as low as reasonably practicable)
- How we should formulate and use goals, criteria and requirements to stimulate performance and ensure acceptable safety standards
- How we should understand and use analyses, including risk analyses, to support decision-making
- How we should weight the different attributes, using methods such as cost-benefit analyses, cost-effectiveness analyses and multi-attribute analyses
- How we should involve the stakeholders in the decision-making process.


Contents
1 Introduction
2 Risk Management Principles and Methods – Review and Discussion
3 A Risk Management Framework for Decision Support under Uncertainty
4 Applications – Concept Optimisation
5 Applications – Operations Phase
6 Applications – Choice of Disposal Alternative
7 Applications – Risk Indicators, National Level
8 The Success Factors – Discussion
Appendices
References
Index