Supporting Materials For Risk Management Processes

Overview of the risk based approach to natural hazards
The 2004 Australian/New Zealand Risk Management Standard 4360 provides a generic guide for managing risk, shown in the figure below.

An overview of the risk management process

EXPLANATION: This figure shows the risk management process, with the key actions (establish the context, identify risks, analyse risks, evaluate risks, and treat risks) shown as five separate boxes. The monitoring and reviewing, and communicating and consulting of the key actions are shown to either side to indicate that they take place throughout the process.

The final step of the process, treating risks feeds directly into the monitoring and review process which in feeds into the next round of risk management through providing information on the context of the risk. Note that the three middle steps (identifying the risk, analysing the risk, and evaluating the risk) are all considered to be part of the risk assessment stage (as indicated y the stippled box in the centre of the diagram).

The Risk Management Process for Landslide Hazard

RISK ANALYSIS
Step One: IDENTIFY THE NATURE OF THE LANDSLIDE HAZARD Where are the landslides in the district or region? Step Two: IDENTIFY THE NATURE OF THE LANDSLIDE HAZARD What is the likelihood of a landslide in the district? (landlside recurrence interval) What is the nature of the landslide? (type, size, mechanism, complexity) Step Three: IDENTIFY THE CONSEQUENCES OF THE LANDSLIDE HAZARD What are the elements at risk at the proposed development site? (people,/ recurrence assets) What is the construction type? (building importance category)   Step Four: ESTIMATE THE RISK TO A SUBDIVISION OR DEVELOPMENT Likelihood of Hazard x Consequences?
RISK EVALUATION
Step Five: ASSESS AND EVALUATE THE LEVEL OF RISK TO A SUBDIVISION OR DEVELOPMENT How does the risk compare with other hazards? Is the risk acceptable? Are there alternatives or options?
RISK MANAGEMENT
Step Six: TREAT THE RISK What action should be taken to avoid or mitigate the risk within the landslide hazard area? Regulatory planning methods Non-regulatory methods Limiting the risk posed by the building Step Seven: MONITOR AND REVIEW Are our outcomes being achieved? Is new information available? Does the district plan need to be updated?

EXPLANATION: The diagram above shows how the risk management approach can be applied to managing landslide hazards. The diagram is divided into three main boxes (labelled 'risk analysis ', 'risk evaluation ', and 'risk management ' respectively). Within these three boxed there are seven steps that need to be undertaken. These are:

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Questions to assist in framing key hazard issues

In considering how to manage risks associated with natural hazards, the following questions can be of assistance in guiding decision makers:

• What is the source of each risk?
• What might happen that could:
  • increase or decrease the effective achievement of objectives of the risk management process
  • make the achievement of the objectives more or less efficient (financial, people, time)
  • cause stakeholders to take action that may influence the achievement of objectives
  • produce additional benefits?
• What would the effect on risk management objectives be?
• When, where, why, how are these risks (both positive and negative) likely to occur?
• Who might be involved or impacted?
• What controls presently exist to treat this risk (maximize positive risks or minimize negative risks)?
• What could cause the control not to have the desired affect on the risk?
• What is the source of each risk?
• What might happen that could:
  • increase or decrease the effective achievement of the risk management objectives
  • make the achievement of the objectives more or less efficient (financial, people, time)
  • cause stakeholders to take action that may influence the achievement of objectives
  • produce additional benefits?
• What would the effect on objectives be?
• When, where, why, how are these risks (both positive and negative) likely to occur?
• Who might be involved or impacted?
• What controls presently exist to treat this risk (maximize positive risks or minimize negative risks)?
• What could cause the control not to have the desired affect on the risk?
• What is the reliability of any information we have?
  How confident are we that the list of risks is comprehensive?
• Is there a need for additional research into specific risks?
• Are the objectives and scope covered adequately?
  Have the right people been involved in the risk identification process?

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An example of risk prioritisation: The Nelson Tasman Civil Defence and Emergency Management Group Plan (2005)

The risk management standard has been superseded since CDEM Groups prepared their first generation plans. However, the following provides an example of the process that was used to prioritise hazards in the Nelson Tasman region.

The qualitative risk assessment approach defined in Appendix E of AS/NZS 4360:1999 was used as the basis for an initial hazard and risk rating. The parameters used for the 'likelihood ' and ?consequence (or impact) ' assessment are summarised below. The 'likelihood ' parameters are taken straight from AS/NZS 4360:1999. The 'consequence ' parameters are those developed by MCDEM and used by other CDEM Groups. Modifications were made around potential deaths, and these are indicated in italics.

Likelihood

1. Almost certain: is expected to occur
2. Likely: will probably occur
3. Possible: might occur at some stage
4. Unlikely: could occur at some stage
5. Rare: may occur in exceptional circumstances

Consequence (or impact)

1. Insignificant: no injuries, little damage, low financial loss
2. Minor: medical treatment, possible deaths, minor building and infrastructure damage, minimal or moderate local financial loss
3. Moderate: medical treatment, moderate building and infrastructure damage, high financial loss
4. Major: extensive injuries, number of deaths, high level of building and infrastructure damage, major financial loss
5. Catastrophic: massive injuries and deaths, displaced people, wholesale building and infrastructure damage, huge financial loss

Table E3 of AS/NZS 4360 was used for the analysis, and is reproduced below.

Qualitative risks analysis matrix: level of risk (Table E3 of AS/NZS 4360:1999)

	Consequence
Likelihood	Insignificant 1	Minor 2	Moderate 3	Major 4	Catastrophic 5
A (almost certain)	M	H	E	E	E
B (likely)	M	H	H	E	E
C (moderate)	L	M	H	E	E
D (unlikely)	L	L	M	H	E
E (rare)	L	L	M	H	M

E: Extreme risk: immediate action required
H: High risk: senior management attention needed
M: Moderate risk: management responsibility must be specified
L: Low risk: manage by routine procedures

The table above shows the qualitative risk analysis matrix with likelihood shown in the vertical column and consequence as the horizontal.

The outcomes of this analysis in terms of risk ratings are shown in the table below:

Risk ratings for Nelson Tasman

Hazard and risk	Likelihood	Consequence	Level of risk
Flooding	B	2-3	Mod-high
Earthquake - alpine fault	C	4	Extreme
Earthquake - regional	C	5	Extreme
Storm surge	B	2-3	High
Tsunami	C	2	Mod
Volcanic	D	2	Low
Wildfires (rural)	B-C	2-3	Mod-high
Hazardous substances - chemical	C	2	Mod
Hazardous substances - toxins	D	2-3	Low-mod
Communicable disease outbreak	C	3-4	High-extreme
Biological pests and organisms	B-C	2-3	High
Infrastructure failure - electricity	C	3-2	Mod
Infrastructure failure - water	D	2	Low
Infrastructure failure - info. tech.	B	2-3	High
Transport accident - marine	D	3	Mod
Transport accident - plane crash	C	2	Mod
Criminal act/terrorism	C	3	High
Space debris	E	2	Low
Dam failure	Unable to be assessed

The table above shows the risk ratings for particular hazards and risks in the Nelson Tasman area. The table has four columns containing: the particular hazard and risk; the likelihood (ranging from A: unlikely to E: very likely); the consequence (ranging from 1: insignificant to 5: catastrophic); and level of risk (ranging from low to extreme).

The SMUG model: a basis for hazard prioritisation

The SMUG model was defined in the MCDEM Director 's Guideline on CDEM Group Plan Preparation (DGL 2/02). A subsequent version (referred to as SMG), developed in 2003 by MCDEM which removed the 'urgency ' parameter, was used in this process and is summarised below. The definitions of seriousness, manageability and growth that were used to prioritise hazards for the Nelson Tasman CDEM Group Plan are as follows.

SeriousnessThe relative impact in terms of people and/or dollars. The number of lives lost and potential for injury, and the physical, social and economic consequences of a hazard event were specifically considered while rating seriousness.

Manageability
Manageability includes both a measure of how difficult a hazard 's risks are to address and a measure of the cross-sector management effort being applied to hazards across the '4 Rs '.

Growth
The rate at which the risk from the hazard will increase through either an increase in the probability of the extreme event occurring, an increase in the exposure of the community, or a combination of the two.

Application of the SMG model

A small group of CDEM people (including MCDEM representation) applied the SMG methodology to the available hazard and risk information. The outcomes were presented to and discussed at the plan working group and stakeholders ' workshop, before being summarised in this section. Additional scenarios were considered for earthquake and flooding in order to reflect the possible variation in impact across the region.

Method for rating seriousness

Seriousness is defined as the relative impact in terms of people and/or dollars.
When rating the seriousness of a hazard event, the following consequences were specifically considered:

• human (potential number of lives lost and potential for injury)
• economic
• social
• infrastructure
• geographic.

For each of the applicable hazard types a seriousness score of 0-5 was assigned to each of the above five consequences. These were then averaged to give a total seriousness score.

Method for rating manageability

Manageability is defined as the relative ability to mitigate or reduce the hazard.

Manageability includes both a measure of how difficult a hazard 's risks are to address and a measure of the cross-sector management effort being applied to hazards across the '4 Rs ' directly or indirectly assisting in reduction of risk. The level of difficulty may, in some cases, be inversely proportional to the level of management effort, particularly where a hazard appears too big to address, and therefore little effort is being applied. Conversely, a lot of effort may be expended on a relatively easily managed hazard.

Method for rating growth

Growth is defined as the rate at which the risk from the hazard will increase through either an increase in the probability of the extreme event occurring, an increase in the exposure of the community or a combination of the two.

Assign a low, medium or high rating for the 'growth ' criteria using the descriptions below.

Rate of growth

Low (1): risk increases from either an increase in the probability of an extreme event occurring or an increase in the exposure of the community.

Moderate (2): risk increases from both an increase in the probability of an extreme event occurring and an increase in the exposure of the community at a low-moderate rate.

High (3): risk increases from both an increase in the probability of an extreme event occurring and an increase in the exposure of the community at a high rate.

Results

Table B1.3 below summarises in priority order the ratings assigned to each of the SMG criteria of seriousness, manageability and growth.

Summary of the component ratings and overall scores

Hazard		Seriousness	Manageability	Growth	Total score
Earthquake	Regional Event	4.0	5.5	2	11.5
	Alpine fault event	3.8	5.5	2	11.3
Storm surge		2.9	4.5	2	9.4
Biological pests and new organisms		2.0	5.0	2	9.0
Tsunami		2.9	4.0	1	7.9
Communicable disease outbreak		2.8	3.0	2	7.8
Flooding	Motueka	2.6	4.0	1	7.6
	Takaka	2.3	4.0	1	7.3
	Maitai	2.6	1.5	2	6.1
Landslip		2.1	1.5	1	4.6
Transport accident	Marine	1.8	1.0	1	3.8
	Plane crash	1.6	1.0	1	3.6
Hazardous Substances - chemical		2.1	0.5	1	3.6
Criminal act/terrorism		1.5	0.5	1	3.0
Infrastructure failure - electricity		1.9	0.0	1	2.9
Wildfires (rural)		2.5	-2.5	1	1.0

The above table above provides a ranked list of hazards with the particular hazard contained in the first column with other columns setting out the seriousness, manageability, growth and total score for each of the hazards. Due to the uncertainties in the information used in the analysis, it was considered more appropriate to group the hazards into two bands representing high and moderate priority hazards.

The following arbitrary cut-off levels reflect such a grouping:

High priority:   Total score = 5 (shaded above)
Moderate priority: Total score < 5

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Checklist for assessing risk

Identification of hazards Have all hazards that have the potential to affect the application been considered? Has the primary hazard been identified? Have secondary hazards that could be triggered by primary hazards been considered? Have cross-boundary hazards been identified, ie any risk from a neighbouring property?

Analysis and description of hazards What is the chance of occurrence of each hazardous event? How often can it occur? What will the magnitude and length of each hazardous event be? How rapidly can it occur and what warning systems and evacuation procedures are in place? What areas can be affected?

Identify gaps in knowledge and understanding of hazards Have gaps in knowledge or understanding about the hazard and its consequences been identified and explained? Is it imperative that these gaps are filled before the consent process proceeds further?

Identify and describe the important elements of the community and environment Are there any critical facilities (medical and emergency services, fire and police stations) that need special consideration in terms of operation for hazard mitigation or relocation? Are there any engineering facilities (transport, power and water supply, sewerage and telecommunications) that need special consideration?

Describe and analyse the community 's vulnerability What is the proximity of the community to hazards? What is the level of access to emergency services? What is the level of awareness within the general community? What is the level of mobility should evacuation be necessary? Are the engineering services (water, sewerage etc.) robust or frail? Have the existing civil defence emergency management response and recovery plans, prepared under the CDEM Act, been tested, and are they adequate?

Identify risks Are all credible risks identified? Has each risk been identified in such a manner that treatment priorities and treatment requirements can be determined?

Other considerations Has any hazard assessment undergone peer review? Have any identified risks been adequately treated to reduce the risks to acceptable levels?

 

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