Risk modelling refers to the application of a wide range of analytical and mathematical techniques to determine the likelihood of particular (undesirable) events occurring, their escalation and potential consequences.
The team at Sotera has been undertaking risk modelling since 1990 and developed the first network wide railway risk model for London Underground in 1992.
Our first location specific risk network wide risk model was completed a decade later in 2002 model. Both these models have stood the test of time and are still maintained today.
We have also been developing risk models for the oils and gas and chemical sectors over 25 years.
Why do we need risk models?
Risk models are our way of determining the level of risk currently and to be able to make predictions about future in terms of undesirable event and particular consequences. The applications of a risk model include:
- Enabling the prioritisation of expenditure to maximise return on investment.
- To help demonstrate risk is reduced so far as is reasonably practicable.
- To understand the relationship between acts, errors and omissions and the potential consequences.
- To seek additional budget for investment in assets and people.
- To help minimise the potential for catastrophic events.
- To help convey the safety of a product, system or process.
Breathing life into a model
- Linking the model to data systems, such as incident data and asset, this two-way process that ensures the relevant events are recorded and the model is updated to account for changes in performance levels.
- Developing leading Key Performance Indicators that provide a responsive, early indication of areas of non-optimal performance, allowing proactive action to manage is taken.
- Running investment plans through the model to ascertain whether the perceived benefits are likely to be realised in practice.
Windscreens and rear view mirrors
John Adams, Emeritus Professor of University College London once likened the response to learning from accidents to driving a car using only the rear view mirror for guidance.
Extending the metaphor a little further, we believe that developing a suitable risk model firmly fixes the gaze through the windscreen, while taking an occasional glance through the rear view mirror and an eye on the key indicators on the dashboard.
The Danish philosopher, Søren Kierkegaard observed that
Life can only be understood backwards; but it must be lived forwards
He seems to be making the same point as John Adams, but in 1840, he probably didn’t have access to a predictive risk model!
Cost benefit analysis
Cost benefit analysis is a systematic approach to the assessment of alternative options. It enables the safety, operational and performance costs and benefits of a range of options to be compared on a common monetary basis.
Sotera has developed tools with which to complete cost benefit analysis in the rail industry as there is fairly stringent criteria for how the assessment should be structured, accounting for:
- Converting safety costs and benefits into financial terms
- Application of different discount rates for safety and other costs and benefits.
- Assessment of uncertainty
- Consideration of gross disproportion
- Assessment of the scale of the potential consequences
- The differences between an assessment considering reasonable practicability and an business decision.
Get in Touch
It is always great to hear from clients, practitioners and people interested in risk modelling and safety and operational performance.
So if you would like a chat over the phone, exchange emails or meet-up over a coffee and cake please get in touch.