Operational risk management: a new paradigm for decision making

The need for more effective ways to manage the risk and safety of technological systems has been widely recognized and accepted by government and industry. Traditionally, risk analysis has been considered as part of the process of planning a technological system and addressed the risk inherent in its day-to-day operations. However, risk must also be considered when responding to episodic events whose uniqueness requires taking actions that are variants of, or different from planned operational procedures. The purpose of this paper is to present a new paradigm for real-time risk analysis that capitalizes upon the advances in computer power, human-machine interfaces, and communication technology. A new process for risk assessment and an appropriate reasoning algorithm for choice has been developed which supports the human operator in analyzing risks and making decisions in real-time during unexpected disruptions in the operations of large-scale systems. The process recognizes that although advances in technology may automate many tasks, humans will always be an integral part of managing large-scale systems. The practical realism of the new approach of operational risk management is illustrated by two examples, hazardous material transportation and emergency management. The first example is discussed within the context of a prototype decision support system for interactive real-time risk management