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Risk Analysis

Risk Analysis. RISK = LIKELIHOOD X CONSEQUENCE. Quantitative Analysis Uses mathematical/ statistical data to derive numerical descriptions of risk More precise analysis More difficult to perform. Qualitative Uses defined terms (words) to describe and categorize risk Less precise analysis

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Risk Analysis

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  1. Risk Analysis RISK = LIKELIHOOD X CONSEQUENCE Session 18

  2. Quantitative Analysis Uses mathematical/ statistical data to derive numerical descriptions of risk More precise analysis More difficult to perform Qualitative Uses defined terms (words) to describe and categorize risk Less precise analysis Easier to perform Quantitative vs. Qualitative Session 18

  3. Quantitative Likelihood • Can be expressed as either: • Frequency – gives the number of times of occurrence over a chosen timeframe. 3/year, 1/decade, 10/week. • Probability – expresses the outcome as a measure between 0 and 1, or as a percentage between 0% and 100%. Session 18

  4. Qualitative Likelihood Just one example…. • Certain - >99% chance of occurring in a given year • Likely - 75 - 99% chance of occurring in a given year • Possible - 5-74% chance of occurring in a given year • Unlikely - 1-20% chance of occurring in a given year • Rare - .1 - 1% chance of occurring in a given year • Extremely rare – <.1% chance of occurring in a given year Session 18

  5. Consequence • Deaths/Fatalities (Human) • Injuries (Human) • Damages (Cost, reported in US dollars) Session 18

  6. Direct Losses“those first order consequences which occur immediately after an event” • Fatalities • Injuries • Repair and replacement of damaged or destroyed public and private structures • Relocation costs/temporary housing • Loss of business inventory/agriculture • Loss of income/rental costs • Community response costs • Cleanup costs Session 18

  7. Indirect Losses“may emerge much later, and may be much less easy to attribute directly to the event” • Loss of income • Input/output losses of businesses • Reductions in business /personal spending – “ripple effects” • Loss of institutional knowledge • Mental illness • Bereavement Session 18

  8. Tangible Losses“those for which a dollar value can be assigned” • Cost of building repair/replacement • Response costs • Loss of inventory • Loss of income Session 18

  9. Intangible Losses“those that cannot be expressed in universally accepted financial terms” • Cultural losses • Stress • Mental illness • Sentimental Value • Environmental Losses • Fatalities/Injuries Session 18

  10. Gains • Decreases in future hazard risk • New technologies used in reconstruction • Removal of old/unused/hazardous buildings • Jobs created in reconstruction • Greater public recognition of hazard risk • Local/State/Federal funds • Environmental Benefits Session 18

  11. Quantitative Consequence • Deaths/Fatalities – 55 people killed • Injuries – 530 people injured, 56 seriously • Damages - $2 billion in damages, $980 million in insured losses Session 18

  12. Qualitative Consequence Just one example…. • Insignificant - No injuries or fatalities. • Minor - Small number of injuries but no fatalities. First aid treatment required. • Moderate - Medical treatment needed but no fatalities. Some hospitalization. • Major - Extensive injuries, significant hospitalization. Fatalities. • Catastrophic - Large number of severe injuries. Extended and large numbers requiring hospitalization. Session 18

  13. Other Measures of Consequence • Emergency Operations • Social Disruption • Disruption to Economy • Environmental Impacts Session 18

  14. Trends • Changes in Disaster Frequency • Changes in the attributes of the hazard • Changes in Human Activity • Changes in Disaster Consequences • Changes in the attributes of the hazard • Changes in human activity Session 18

  15. 6 Changes in Human Activities • Population Growth • Land Pressure • Economic Growth • Technological Innovation • Social Expectations • Growing Interdependence Session 18

  16. 4 Steps of Risk Analysis • Calculate the (quantitative) likelihood of each identified hazard • Calculate the (quantitative) consequences that are expected to occur for each hazard • Develop a locally-tailored qualitative system of measurement • Translate all quantitative data into qualitative measures Session 18

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