Quantitative Risk Assessments - Why They Fall Short and How to Use Them Better

Abstract Objectives/Scope This paper discusses and demonstrates the limitations of Quantitative Risk Assessment (QRA) with respect to the usefulness of the concept in managing day-to-day and emerging risks as well as the impact of change. The paper goes on to discuss improved solution sets than pure reliance on QRA. Methods, Procedures, Process The paper discusses a number of examples of real world QRA analysis from within the oil and gas industry as well as other industries, identifying how these have failed to approximate the actual risks. The paper then analyses the process and describes the types of information used in QRA. This is contrasted with the data that is not included in these analyses and how that has contributed to real world failures. Results, Observations, Conclusions The paper discusses the types of solutions that QRA provides and critiques this within the context of the Levels analysis of barrier risk management SPE-199496 (Hudson and Hudson, 2020i) and the understanding of Hudson's Culture Ladder (Hudson, 1991)ii. It explains why the concept of QRA follows a flawed understanding the emergence of risks. It does on the basis that: - QRA data is historical, being derived from reported barrier failures and incident investigations. This means barrier failure rates may be significantly higher without impacting the QRA number. - QRA assumes that failure rates for barriers are independent. Whilst this may be correct, the levels analysis demonstrates that independence is much harder to achieve than assumed. - QRA rates defined within the context of historical data may demonstrate a bias for a type of organisational culture that may not apply to the operation being analysed. The paper goes on to address the question why do we still have numerous industrial incidents with serious impact when QRA may predict failure rates of 1 in a billion? It discusses the nature of such failures and recommends ways in which QRA can be improved or the use of QRA can be moderated. Novel/Additive Information The current use of QRA, particularly by members of the senior leadership team, creates a mismatch between the management of risks on paper and the real world. This is especially true of the degradation of barriers. This paper lays out, with novel understanding, the way in which QRA should be treated and in doing so improve the risk understanding of professionals and their senior leadership.