29 October 2008
An Overview of Methods of
Risk Assessment and Risk Management
Randall M. Peterman and Kendra R. Holt
School of Resource and
Environmental Management,
Simon Fraser University,
Burnaby, B.C., CANADA V5A 1S6
Web site: www.rem.sfu.ca/faculty/peterman.htm
Research: www.rem.sfu.ca/fishgrp/index.html
For: Workshop on Climate Change Risk Assessments
30 October 2008, SFU
1
Outline
1. Background
- Uncertainties
2. Risk assessment
- What is it?
- Components
3. Risk management (making decisions)
2
Outline
1. Background
- Uncertainties
2. Risk assessment
- What is it
- Components
3. Risk management (making decisions)
3
Rain
& snow
Whistler
Snow
Rain
Average ~1990
2050
Whitfield and Cannon (2000)
4
Environment Canada
Recent: Snow-melt dominated
10
8
Water
flow
6
(1000s
m3/sec) 4
2
Fraser River
Flow At Hope
0
1 31 61 91 121 151 181 211 241 271 301 331 361
Jan
Mar May July Sep Nov
Julian Day
5
Recent: Snow-melt dominated
10
8
Water
flow
6
(1000s
m3/sec) 4
2
Fraser River
Flow At Hope
0
1 31 61 91 121 151 181 211 241 271 301 331 361
Jan
Mar May July Sep Nov
2080:
Julian Day
10
Water
flow
(1000s
m3/sec)
Rainfall dominated
8
6
4
2
0
1 31 Mar
61 91 May
121 151 July
181 211 Sep
241 271 301
331 361
Jan
Nov
Julian Day
6
Morrison et al. (2002) J. Hydrology 263:230
Southern B.C.
Summer
sea-surface
temperature,
oC
7
Southern B.C.
Summer
sea-surface
temperature,
oC
Relative
survival rate
of southern
B.C. sockeye
Mueter et al. (2002)
Summer sea-surface temperature, oC
8
Effects of climatic change and human activities
on humans and ecosystems:
Fraser Valley smog
Chilliwack flood
Mt. pine beetle
9
Threatened species
Mountain caribou
Landslides
Water quality
and quantity
10
Other examples of decisions related to climate
• Usage of surface waters; flow regimes from dams
• Regulations to reduce greenhouse gases, ...
• Locations of wildlife reserves, fish restoration actions
• Early warning systems for natural disasters
• Forest species to replant after harvesting
• Actions against invasive species
11
Our CTEF project
1. Human health (diseases and physical well-being)
2. Mitigation of human disasters (floods, earthquakes)
3. Environmental toxicology
4. Ecosystem health
- Water, glaciers
- Fisheries
- Forests
- Conservation
5. Economic evaluation of risks
12
Reviewed general risk assessment guidelines/methods
- Not specific case studies (later today)
- Not risk assessments of secondary effects of climate
(later in this project)
Purpose:
General overview across fields of methods in
risk assessment and risk management
13
Example general guidelines
• International Risk Governance Council (IRGC). 2005.
“Risk Governance – Towards an Integrative Approach”.
White Paper No. 1, Geneva. http://www.irgc.org
• Canadian Standards Association. 1997. “Risk
Management: Guidelines for Decision-makers”. http://
www.csa.ca/
• U.S. Environmental Protection Agency (EPA). 1998.
"Guidelines for Ecological Risk Assessment"
http://www.epa.gov/ncea/ecorsk.htm
• B.C. Provincial Emergency Program - Hazard, Risk and
Vulnerability Analysis Tool Kit.
http://www.pep.bc.ca/hrva/toolkit.html
14
Common features of decision problems
Complex structure
Features shared
15
Common features of decision problems
Large variability
Complex structure
Features shared
16
Common features of decision problems
Large variability
Complex structure
Imperfect
information
Features shared
17
Common features of decision problems
Large variability
Complex structure
Imperfect
information
Features shared
Causal
mechanisms
are confounded
18
Common features of decision problems
Large variability
Complex structure
Imperfect
information
Features shared
Imperfect forecasts:
- Natural system
- Human responses
Causal
mechanisms
are confounded
19
Common features of decision problems
Large variability
Complex structure
Imperfect
information
Features shared
Unclear
management
objectives
Imperfect forecasts:
- Natural system
- Human responses
Causal
mechanisms
are confounded
20
Common features of decision problems
Large variability
Complex structure
Imperfect
information
Pervasive uncertainties!
Unclear
management
objectives
Imperfect forecasts:
- Natural system
- Human responses
Causal
mechanisms
are confounded
21
Common features of decision problems
Large variability
Complex structure
Imperfect
information
Pervasive uncertainties!
Best decisions not clear
Unclear
management
objectives
Imperfect forecasts:
- Natural system
- Human responses
Causal
mechanisms
are confounded
22
Uncertainties create risks:
• Risks to humans
- Health
- Economic
- Social
• Risks to ecosystems
- Structure
- Function ("ecosystem services")
• Reversible and irreversible outcomes
23
Outline
1. Background
- Uncertainties
2. Risk assessment
- What is it?
- Components
3. Risk management (making decisions)
24
• What is risk?
- A measure of adverse effects of
human actions or natural processes
25
Risk has two components
1. Magnitudes of consequences from uncertain events
2. Chance (probability) of those consequences occurring
26
Risk has two components
1. Magnitudes of consequences from uncertain events
Uncertain events
Highest avg.
weekly
temperature
Consequences
Increase in
mortality rate
from heat stroke
25o
0.5%
30o
2%
35o
10%
27
Risk has two components
1. Magnitudes of consequences from uncertain events
2. Chance (probability) of those consequences occurring
Uncertain events
Probability Highest avg.
of
weekly
occurrence temperature
0.2
0.5
0.3
Consequences
Increase in
mortality rate
from heat stroke
25o
0.5%
30o
2%
35o
10%
28
Example #2
Uncertain events
Probability B.C. interior
of
avg. summer
occurrence temperature
0.2
0.5
0.3
Consequences
Thousands
of hectares
burned per year
25o
40
30o
100
35o
300
29
Example #2
Uncertain events
Probability B.C. interior
of
avg. summer
occurrence temperature
0.2
0.5
0.3
Consequences
Thousands
of hectares
burned per year
25o
40
30o
100
35o
300
Probability
of
occurrence
Avg. summer temperature
30
Example #3
Uncertain events
Consequences
Probability Travel distance Number of people
of
of avalanche
living in affected
occurrence debris flow (m) area
0.2
0.5
0.3
200
50
400
80
600
500
31
Example #4
Uncertain events
Probability Avg. summer
of
stream
occurrence flow (m3/sec)
0.2
0.5
0.3
Consequences
Percentage
of coho salmon
juveniles surviving
2
5%
10
40%
50
80%
32
• How estimate risk?
• How make decisions based on those estimates?
• Depend on:
- Management objectives
- These determine indicators for estimating risks.
Later ...
33
What is risk assessment?
• Systematic, flexible process for:
- Estimating magnitude and probability
of adverse effects of stressors
- Communicating about risks to public
and decision makers
- Assisting with decision making
34
What is risk assessment?
• Systematic, flexible process for:
- Estimating magnitude and probability
of adverse effects of stressors
- Communicating about risks to public
and decision makers
- Assisting with decision making
• Environmental risk assessment methods
- Evolved from human health risk assessments
- Emerged in early 1990s
- Methods are still evolving
35
Components of risk assessment
1. Problem definition
- What are the potential threats, hazards, concerns?
36
Components of risk assessment
1. Problem definition
- What are the potential threats, hazards, problems?
2. Management objectives (hierarchical)
- Broad aspirational objectives
--“Maintain healthy ecosystems or human populations”
- Operational objectives (measurable)
-- “Decrease chance of losing an endangered species”
-- “Decrease incidence of disease caused by airborne
pollutants”
- Means objectives (ways to move toward objectives)
-- “Enact endangered species legislation”
-- “Control air / water quality”
37
Components of risk assessment
1. Problem definition
- What are the potential threats, hazards, problems?
2. Management objectives (hierarchical)
- Broad aspirational objectives
--“Maintain healthy ecosystems or human populations”
- Operational objectives (measurable)
-- “Decrease chance of losing an endangered species”
-- “Decrease incidence of disease caused by airborne
pollutants”)
- Means objectives (ways to move toward objectives)
-- “Enact endangered species legislation”
-- “Control air / water quality”
38
Components of risk assessment ...
3. Indicators of risk (endpoints, performance measures)
- Show how well a given operational objective is being
met (or will be met) for a given management action
39
Operational objective
Indicator
Reduce impacts of burst dam
Maximum discharge, distance
Minimize incidence of asthma
caused by air quality (SO2)
Minimize costs to governments
of invasive species
Reduce ecological effect of fish
harvesting
Maintain water quality in forest
stands in presence of extreme
wind events
Less than 10% chance that
species X exposed to
([toxin] > threshold)
Additional cases of asthma at
high SO2
Long-term $ costs of control
and remediation
Abundance and diversity of
fish populations
% of forest landscape in high
wind-vulnerability category
Probability distribution for
[toxin]
40
Components of risk assessment ...
- Categories of indicators of risk:
a. Magnitude only (% of population with disease X;
$ loss of agricultural crops due to water shortage )
b. Probability for each of those magnitudes occurring
- Probability of an invasive species getting into
10%, 20%, 30% ... of habitat)
c. Some combination of magnitudes and probabilities
"Expected" or weighted average value of indicator
41
Uncertain events
Probability Highest avg.
of
weekly
occurrence temperature
0.2
0.5
0.3
Consequences
Increase in
mortality rate
from heat stroke
25o
0.5%
30o
2%
35o
10%
"Expected"
increase in = (0.2*0.5%)+(0.5*2%)+(0.3*10%) = 4.1%
mortality rate
where "expected" means the statistical expectation,
or weighted average forecast value
42
Uncertain events
Probability Highest avg.
of
weekly
occurrence temperature
0.2
0.5
0.3
Consequences
Increase in
mortality rate
from heat stroke
25o
0.5%
30o
2%
35o
10%
"Expected"
increase in = (0.2*0.5%)+(0.5*2%)+(0.3*10%) = 4.1%
mortality rate
where "expected" means the statistical expectation,
or weighted average forecast value
One index
of risk
43
Uncertain events
Probability Highest avg.
of
weekly
occurrence temperature
Another
index
of risk
0.2
0.5
0.3
Consequences
Increase in
mortality rate
from heat stroke
25o
0.5%
30o
2%
35o
10%
Worst case
44
Uncertain events
Probability Highest avg.
of
weekly
occurrence temperature
0.2
Another
index
of risk
0.5
0.3
Consequences
Increase in
mortality rate
from heat stroke
25o
0.5%
30o
2%
35o
10%
Worst case
"Expected"
increase in = (0.2*0.5%)+(0.5*2%)+(0.3*10%) = 4.1%
mortality rate
where "expected" means the statistical expectation,
or weighted average forecast value
One index
of risk
45
•  Choice of management action depends on
wording of management objectives
–  Maximize expected value of …
–  Minimize expected value of…
–  Choose the action with the most favorable
worst-case outcome ("mini-max" or
"minimum regret")
46
Uncertain events
Probability Highest avg.
of
weekly
occurrence temperature
0.2
0.5
0.3
Consequences
Increase in
mortality rate
from heat stroke
25o
0.5%
30o
2%
35o
10%
How determine
consequences?
47
Uncertain events
Probability Highest avg.
of
weekly
occurrence temperature
25o
0.2
0.5
0.3
30
o
35o
Quantitative
model
Consequences
Increase in
mortality rate
from heat stroke
0.5%
2%
10%
48
Components of risk assessment ...
4. Model of system’s processes / relationships / linkages
Climatic
regime and
management
options
Output
indicators
49
Common approaches to uncertainties
1. Ignore uncertainties
- Use best estimates of parameters and state variables
- Assume they reflect the true state of nature
- Manage accordingly
(Common -- scientists are pushed to give AN answer).
Using only this best-fit
line implies that the
probability = 1.0
that this is the true
state of nature.
Mortality
rate
Temperature
50
Components of risk assessment ...
4. Model of system’s processes / relationships / linkages
Climatic
regime and
management
options
Output
indicators
- Deterministic model: no random component (no risk)
- Ignores uncertainties
51
2. Take uncertainties into account quantitatively:
There is a non-zero
probability
on several
possible lines
Mortality
rate
Temperature
Weight each potential state of nature (and its
consequences) by its probability of occurrence
52
Components of risk assessment ...
4. Model of system’s processes / relationships / linkages
Climatic
regime and
management
options
Output
indicators
- Deterministic model: no random component (no risk)
- Stochastic model: at least one random component
(takes uncertainty into account)
53
Components of risk assessment ...
How do we represent uncertainties?
5. Uncertain hypotheses or states of nature (parameters,
structural form of relationships)
6. Probabilities or degrees of belief in uncertain
hypotheses or states of nature
Mortality
rate
Probability
Temperature
Slope, bi
54
How estimate the probabilities
or degrees of belief for the states of nature?
(1) Extensive data (n=100 years) (or literature)
Frequency
Water level (m) on 1 May in Richmond
55
How estimate the probabilities
or degrees of belief for the states of nature?
(1) Extensive data (n=100 years) (or literature)
Frequency
Water level (m) on 1 May in Richmond
(2) Limited data, but analyzed with Bayesian statistics
Posterior
probability
0.6
0.7
0.8
Some parameter, e.g.,
proportion of population surviving
56
(3) Extremely limited data
- Use expert judgment
- Produces subjective probability distribution for
degrees of belief in different hypotheses
Probability
Water level (m) on 15 Aug. at
some remote, unrecorded location
57
Components of risk assessment ...
7. Management options considered in analysis
- Actions that might meet the management objectives
Climatic
regime and
management
options
Output
indicators
Frequency
Indicator
58 1
Hoffman and Gardner (1983)
59
Components of risk assessment ...
8. Analyses of sensitivity of your conclusions (especially
rank order of management options) to:
- Assumptions
- Parameter values
- Model structures (e.g., linear vs. nonlinear)
- Management objectives
Set research priorities
60
Components of risk assessment
1. Clear definition of problem (well-scoped)
2. Clear management objectives
3. Indicators of risk
4. Model of system’s processes
5. Uncertain hypotheses or states of nature
6. Probabilities or degrees of belief in uncertain
hypotheses or states of nature
7. Management options
8. Sensitivity analyses
---> Iterative
61
Methods for conducting risk assessments
1.  Identify objectives, indicators
2.  Quantitative model
3.  Dedicated software (e.g., EcoTox)
4.  Decision analysis
- Examples later
62
Outline
1. Background
- Uncertainties
2. Risk assessment
- What is it?
- Components
3. Risk management (making decisions)
63
U.K. Dept. of Environment, 1995
Description of intention
Hazard identification
Identification of consequences
Estimation of magnitude
of consequences
Risk estimation
Estimation of probability
of consequences
Risk evaluation
Risk
perception
Risk assessment
Risk management
Risk monitoring
(Power and McCarty 2002)
64
U.S. Environmental Protection Agency
Risk Assessment Paradigm (1998)
RESEARCH
RISK ASSESSMENT
Laboratory
and field
observations
Problem Formulation,
Hazard Identification
Information on
extrapolation
methods
RISK MANAGEMENT
Analysis
DoseExposure
response
characteriz.
characteriz.
Field measurements, char. of
populations
Research needs
identified
Risk
characterization
Regulatory
decision
Development of
regulatory options
Evaluation of
public health,
environmental,
economic, social,
and political
consequences of
regulatory options
65
Risk assessment
• Potential threats, hazards, ...
• Management objectives
• Indicators of risks • Management options to consider • System's component processes
• Uncertainties
• Estimated consequences
• Sensitivity analyses
Public,
scientists, interest groups
66
Communication
Risk assessment
• Potential threats, hazards, ...
• Management objectives
• Indicators of risks • Management options to consider • System's component processes
• Uncertainties
• Estimated consequences
• Sensitivity analyses
Public,
scientists, interest groups
Risk management
• Choose mgmt. action after considering:
- Risk assessment
- Other factors
(economic, social,
political)
- Tradeoffs
67
Communication
Risk assessment
• Potential threats, hazards, ...
• Management objectives
• Indicators of risks • Management options to consider • System's component processes
• Uncertainties
• Estimated consequences
• Sensitivity analyses
Public,
scientists, interest groups
Risk management
• Choose mgmt. action after considering:
- Risk assessment
- Other factors
(economic, social,
political)
- Tradeoffs
Communication
68
Added components for risk management step
1.  Communication
- Early
- Multiple actors
- Innovative methods
2.  Tradeoffs
- Informed by sensitivity analyses
3.  Monitoring
69
Why bother representing uncertainties explicitly?
1. Management objectives often focus on parts
of distributions; indicators should too.
Threshold
Average
Frequency
of forecasts
Annual rate of change in abundance
Proportion of cases in which
rate is less than threshold
70
Why bother representing uncertainties explicitly?
1. Management objectives often focus on parts
of distributions; indicators should too.
2. Asymmetry in probability distributions
71
Estimates of
concentration of
chemical
Freq.
Low
Concentration of chemical (µg /
m3)
High
72
Vulnerabilities in
population
Freq.
Low
Concentration of chemical (µg /
m3)
High
73
Estimates of
concentration of
chemical
Mortality
Vulnerabilities in
population
Freq.
Low
Concentration of chemical (µg /
m3)
High
74
Vulnerabilities in
population
Freq.
Low
Concentration of chemical (µg /
m3)
High
75
Estimates of
concentration of
chemical
Mortality
Vulnerabilities in
population
Freq.
Low
Concentration of chemical (µg /
m3)
High
76
Why bother representing uncertainties explicitly?
1. Management objectives often focus on parts
of distributions
2. Asymmetry in probability distributions
3. Asymmetry in loss functions
77
Objective:
Minimize total
expected cost
Pollution control
Fines
Scenario A
Symmetric
loss function
Cost ($)
0
5
10
15
20
10
15
20
Probability
(frequency of
occurrence)
0
5
Nitrates in drinking water (mg/L)
78
Objective:
Minimize total
expected cost
Pollution control
Fines
Scenario B
Asymmetric
loss function
Cost ($)
0
5
10
15
20
10
15
20
Probability
(frequency of
occurrence)
0
5
Nitrates in drinking water (mg/L)
79
Objective:
Minimize total
expected cost
Pollution control
Fines
Scenario B
Asymmetric
loss function
Cost ($)
0
5
10
Probability
(frequency of
occurrence)
15
20
Safety factor
0
5
10
15
20
Nitrates in drinking water (mg/L)
80
Objective:
Minimize total
expected cost
Pollution control
Fines
Scenario B
Asymmetric
loss function
Cost ($)
0
5
10
Probability
(frequency of
occurrence)
15
20
Safety factor
0
5
10
15
20
Nitrates in drinking water (mg/L)
81
Limitations of quantitative risk assessment
1. Poor data
2. Overconfidence created by the method
3. Limited scope of analyses
4. Limited technical expertise
5. Multiple objectives and indicators
6. Difficulty in communicating technical information
7. Difference between public's perception of risks
and views of experts
82
Summary for dealing with risks
• Do data warrant analysis?
• If so, conduct risk assessment or risk analysis:
"Risk assessment"
• Choose among management options:
"Risk management"
83
84