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Risk Tolerance: How Low Do You Go?
Posted on February 26th, 2016 by Mike Schmidt in Chemical Manufacturing Excellence
“Some risks are plainly acceptable and others are plainly unacceptable.” (I.U.D. v. A.P.I., 448 U.S. 607, 655).
When Justice Stevens wrote that opinion for the majority in the 1980 OSHA Benzene case, he went on to add that odds of fatality of one in a billion could not be considered significant but that for odds of a fatality of one in a thousand, “a reasonable person might well consider the risk significant.” In that decision, the Supreme Court left a hole six orders of magnitude wide that enterprises are still left to narrow down to something they can cope with.
Make no mistake, we must narrow it down. Risk analysts spend a great deal of effort quantifying risk, determining both the consequences of a hazardous event and, just as importantly, the likelihood of that hazardous event. Unless both are known, risk cannot be determined. Knowing the risk, however, is of little used by itself. It is not until risk is compared against risk tolerance criteria (RTC), that it is possible to know whether that risk is too high or not, and if it is too high, by how much it must be reduced to become tolerable. RTC drive the allocation of finite resources for risk reduction. Rational RTC lead to rational allocation of resources, while irrational RTC lead to misallocation of resources and, ultimately, poorer safety.
Most practitioners acknowledge the need for RTC but do not discuss how they are developed. While a few countries dictate RTC, most governments, including that of the United States, leave it to enterprises to establish and justify their own RTC.
When asked what risk of fatality is tolerable, the glib answer, the one given for public consumption by public officials and senior executives, is that no fatality is acceptable. Somehow, they have confused “accepting a fatality” with “tolerating a risk”. To begin with, we don’t accept risks, we tolerate them. “To accept” suggests “to consent” or “to agree to.” “To tolerate” makes it clear that this is something we are putting up with, something we are enduring. We tolerate safety risks; we do not accept them.
Ranting and rhetoric notwithstanding, zero risk is not achievable. To demand zero risk is to set up failure. Any risk analyst will state without hesitation that “No such thing as zero risk exists,” and then go on to explain why. Yet the idea persists. In part, it is because of the pernicious repetition of slogans like “Striving for Zero” or “All accidents are preventable.” The slogan “Striving for Zero” is only meaningful when zero is recognized as an asymptote to approach (yes, by orders of magnitude), yet never achieve.
If not zero, then what?
Do the following exercise: Imagine a workplace. Any workplace. Perhaps the new facility you’re working so hard to get off the ground right now. As you imagine it, imagine how many people work there. Now imagine that you are describing it to someone you love, someone whose good opinion matters to you. You want them to believe it is a safe workplace. How infrequent would a fatality have to be to consider it safe?
Most people begin the exercise by saying “I have no idea.” So let’s narrow it down. If there was a fatality once a week, would that be safe? If you didn’t answer “no,” I really don’t have anything left to say to you. Now let’s consider the other end. NASA tells us that the universe is about 13.8 billion years old, and the earth is about 4.5 billion years old. Modern man, Homo sapiens sapiens has only been around about 200,000 years. If your workplace had been built and staffed at the time modern humans first walked the plains of Africa and there had been one fatality in that time, would the workplace be safe? I would be astonished if you didn’t say “yes.” So, you do have an idea.
Can we narrow that further? Is once a year safe? Most would agree that it is not. Is once every 100,000 years safe? Most would agree that it is. So you’ve narrowed it to just five orders of magnitude, which is better than the Supreme Court did. Is once every 10,000 years safe? For comparison, consider that agriculture was first developed in the Mesopotamia about 12,000 years ago. Most would still agree that a facility with a fatality rate of once every 10,000 years is safe.
Can we narrow it even further? Once every 1,000 years? Ghengis Khan began roaming the Mongolian steppes about 800 years ago. Is once every 10 years safe? This is usually the point for most people where the answer stops being, in the words of Justice Stevens, “plainly acceptable and … plainly unacceptable.” The most common answer I hear is that a fatality no more than once every 100 years is a safe place. Why? When pressed, most people will reply that they expect their career to last 50 years, so once every 100 years leaves them with a 50:50 chance of a fatality not happening on their watch.
Once every 100 years?
How does once every 100 years stack up? It depends on how many people work there. If there are 100 full-time equivalent employees at the facility and there is one fatality per hundred years, that works out to 10 fatalities per 100,000 FTEs. The Bureau of Labor Statistics publishes fatality rates every year.[i] In 2014, the most recent year for reporting, there were 4,679 work-related fatalities, at a fatality rate of 3.3 fatalities per 100,000 FTEs. Our hypothetical workplace is three times more dangerous than an average job – both public and private sectors – in the United States.
Some jobs are much more dangerous. Loggers were at 109.5 in 2014 and commercial fishermen are at 80.8. Some jobs are safer. Administrative workers, mathematicians, and librarians were all at 0.3 in 2014. Over the years, the chemical manufacturing industry has been at 2 fatalities per 100,000 FTEs, while the refining industry has been closer to 10 fatalities per 100,000 FTEs.
What is the risk tolerance criteria for your enterprise?
Before you decide what needs to be done in regard to reducing the risks associated with the hazards in your enterprise, it is essential to know what the risk of the hazard is and, just as importantly, to know what your RTC is. The ratio of these two numbers will tell you by how much you must reduce your risk. Without knowing both, you will misallocate resources, squandering them on hazards that have already received sufficient attention and ignoring other hazards. Neither is good for safety.
Process safety is a journey. Your risk assessments will tell you where you are; your RTC will tell you where want to get to, or at least the next stop on the journey. No one can decide for you where your next stop is. OSHA won’t and consultants shouldn’t. It’s your enterprise. Your RTC cannot be zero, if for no other reason than you cannot divide by zero, but you can decide what it will be. Do you intend to be no safer than our most dangerous jobs – logging and commercial fishing – or do you intend to be as safe as being a librarian? Or do you see the chemical industry as the benchmark, or the refining industry? You must decide where you intend to be and only then can you plot the path to get there.
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