1 / 51

Energy Insurance Mutual Risk Managers’ Meeting Orlando 26 February 2008 John-Adams.co.uk

Risk Management: Making God Laugh. Energy Insurance Mutual Risk Managers’ Meeting Orlando 26 February 2008 www.John-Adams.co.uk John.Adams@ucl.ac.uk. 1980 The Society for Risk Analysis forms in Washington 1986 The Institute for Risk Management begins in London

chin
Download Presentation

Energy Insurance Mutual Risk Managers’ Meeting Orlando 26 February 2008 John-Adams.co.uk

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Risk Management: Making God Laugh Energy Insurance Mutual Risk Managers’ Meeting Orlando 26 February 2008 www.John-Adams.co.uk John.Adams@ucl.ac.uk

  2. 1980 The Society for Risk Analysis forms in Washington 1986 The Institute for Risk Management begins in London 1993 The title “Chief Risk Officer” is first used by James Lam, at GE Capital 1996 The Global Association of Risk Professionals 1996Peter Bernstein’s Against the Gods: The Remarkable Story of Risk http://www.mccombs.utexas.edu/dept/irom/bba/risk/rmi/arnold/DOWNLOADS/Hist_of_RM_2002.pdf

  3. Risk: Google Hits - millions May 2004 Sept 2005

  4. The death of Captain Cook

  5. Risk assessment of all activities is required by law. You may find a risk that you hadn’t thought of!

  6. CAUTION These plants are covered in sharp spikes that may puncture the skin if touched DO NOT HANDLE The entrance to the Health and Safety Laboratory, Buxton

  7. Different kinds of Risk e.g. cholera: need a microscope to see it and a scientific training to understand Terrorism Scientists don’t know or cannot agree: e.g. BSE/vCJD, global warming, low-level radiation, pesticide residues, HRT, mobile phones, passive smoking, stock market …. Unknown unknowns The legal environment e.g. climbing a tree, riding a bike, driving, car

  8. The New Yorker March 21, 1988

  9. A successful risk manager Risk management is • a balancing act • instinctive • intuitive • influenced by experience • modified by culture

  10. Rewards Propensity to take risks BMJ bans “accidents” 2 June 2001 Balancing behaviour Perception of risks Accidents Injidents

  11. Bottom loop bias Propensity to take risks Rewards Balancing behaviour Reducing Risks - Protecting People Perception of risks Accidents

  12. www.acm.ab.ca/safety/images/ fault-tree.gif

  13. foresight the present bad luck

  14. foresight bad luck hindsight the present

  15. hindsight foresight the present bad luck Culpable negligence

  16. hindsight risk assessment the present Culpable negligence

  17. No children No swings barriers Rubberized matting “The swings are packed away at night because kids might climb the fence and use them unsupervised and hurt themselves.”

  18. Top loop bias Propensity to take risks Rewards Balancing behaviour No pain, no gain Perception of risks Accidents No risk, noreward

  19. Jérôme Kerviel 'You get a bit carried away' Société Générale's 'rogue trader' refuses to be held as 'scapegoat' for the French bank's $7.1billion loss. But many Calgary traders are willing to cut him slack. “He’s a bright guy who got this call wrong,” says one. “He won’t have much trouble getting another job.”http://www.moneyweek.com/file/19829/brian-hunter-from-hero-to-zero-in-two-years.html

  20. Examples of behavioural interventions by senior leaders to promote a safety culture—promoting workplace safety to signal a wider change •          When arriving at a meeting room, the most senior person checks the fire escapes are unlocked and unblocked and encourages colleagues to place bags out of the way •          The most senior person opens the meeting with a reminder of the safety procedures (e.g. any fire tests planned, congregation points, nearest phone, fire extinguisher and alarm points) •          Backup junior colleagues challenging more senior staff on these issues.

  21. Some of the other interventions that are used to set a cultural tone for safety within the oil industry include: •          promoting safe stair walking techniques, such as holding the handrail •          providing lids for the safe carrying of coffee •          correcting colleagues tipping back on their chairs •          encouraging colleagues to refuse any form of road transport that does not provide seat belts •          regular safety tours, meetings and reviews led by senior staff.

  22. U.S. Chemical Safety Board Chairman Carolyn W. Merritt "significant role of budget and production pressures in driving BP's decision-making - and ultimately harming safety." “BP focused on personal safety statistics but allowed catastrophic process safety risks to grow." http://www.csb.gov/index.cfm?folder=news_releases&page=news&NEWS_ID=375

  23. Propensity to take risks Rewards Propensity to take risks Rewards Balancing behaviour Balancing behaviour Perception of risks Accidents Perception of risks Accidents The truck driver and the cyclist

  24. Propensity to take risks Rewards Propensity to take risks Rewards Balancing behaviour Balancing behaviour Perception of risks Accidents Perception of risks Accidents Propensity to take risks Rewards Lawyer on contingency fee Insurer Balancing behaviour Perception of risks Accidents

  25. 69% of Americans believe in angels. 46% have their own guardian angel.

  26. Inside the UK's fastest machine £113m HECToR will help British researchers simulate everything from climate change to financial markets James Randerson, science correspondent, The Guardian, Wednesday January 2 2008 The High-End Computing Terascale Resource, or HECToR 100 trillion calculations every second “It measures up well internationally, sitting at 17 in the top500.org list of the most powerful computers in the world.” “Professor Jacek Gondzio at the University of Edinburgh plans to use HECToR to model financial markets. He is working on finding the safest and most profitable investment strategies for pension funds …”

  27. A virtual risk: vCJD from BSE? “I have worked in this field for 25 years … did I go out and eat lamb chops, did I go out and eat lamb brain, sheep brain? The answer was ‘no’, but it was not based on scientific criteria, it was based on just emotion. … At a scientific level I cannot give you a scientific basis for choosing or not choosing beef, because we do not know the answers.” Nobel Laureate Stanley Prusiner BSE Inquiry, 6 June 1998 (www.bse.org.uk)

  28. Propensity to take risks Risk thermostat with perceptual filters Rewards Balancing behaviour Perception of risks Accidents

  29. A typology of perceptual filters Fatalist Hierarchist Egalitarian Individualist

  30. Fatalist Hierarchist Egalitarian Individualist

  31. Fatalist Hierarchist Egalitarian Individualist Alcohol? Prozac Lithium Chlorpromazine

  32. Fatalist Hierarchist Egalitarian Individualist The legislators Purveyors of “guidance” Enforcers Compliance managers Lawyers Insurers Media Singleissuecampaigners

  33. Fatalist Hierarchist Egalitarian Individualist The legislators Purveyors of “guidance” Enforcers Compliance managers Lawyers Insurers Media Singleissuecampaigners

  34. “Only 59% of those questioned about Brent Spar were aware of the incident.” (Shell spokesman, P.J., 5.2.96). 41% is a conservative estimate of the proportion of fatalists in the UK. Fatalist Hierarchist Egalitarian Individualist

  35. Fatalist Hierarchist Egalitarian Individualist “The U.S. oil industry has dumped thousands of oil rigs into the Gulf of Mexico. That’s because … man-made structures like sunken ships or oil rigs create habitats for marine life quite similar to that of a coral reef.” (Wall Street Journal, 6/9/95)

  36. “Government permission has been given for the disposal of the redundant structure in a designated deepwater Atlantic site.” (Shell, Daily Mirror, (1.5.95) “The British Government says that it has observed all the rules and that it must take a ‘balanced and proportionate approach’.” (Guardian, 6.5.95) Fatalist Hierarchist Egalitarian Individualist “The U.S. oil industry has dumped thousands of oil rigs into the Gulf of Mexico. That’s because … man-made structures like sunken ships or oil rigs create habitats for marine life quite similar to that of a coral reef.” (Wall Street Journal, 6/9/95)

  37. Fatalist Hierarchist Egalitarian Individualist ”It is wrong to dump old cars in the village pond,and it is wrong … to treat the sea as a dump.” (Greenpeace, Dundee Courier, 6.2.96.

  38. “God has afforded only the twilight, as I may say, of Probability, suitable, I presume, to that state of Mediocrity and Probationership He has been pleased to place us in here.” • Concluding words of Peter Bernstein’s Against the Gods: The Remarkable Story of Risk – quoting Keynes, quoting Locke

  39. Pure – rock climbing Acceptability of risk Self controlled Applied – driving Voluntary Diminished control Cycling No control Plane Train Nature Economy Mount Etna Impersonal Benign Mobile phone masts Imposed Profit Motivated GMOs Malign Murder Risk Amplification Al Qaida Risk

  40. Risk management: where are the keys? Here be dragons

More Related