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On how to manage uncertainty when considering regulatory HSE interventions

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  • Leif Inge K. Sørskår

    (University of Stavanger)

  • Eirik B. Abrahamsen

    (University of Stavanger)

Abstract

Regulatory health, safety, and environment (HSE) interventions have an impact on both costs and benefits for the industry. It is common for the regulators to evaluate such interventions by providing a comparison of costs and benefits as a basis for decision-making. Fulfilling an assignment for the Norwegian government, two consulting companies proposed a methodology for regulatory evaluation in the petroleum industry. This methodology acknowledges that uncertainty must have a higher weight than given through traditional cost–benefit analyses, but it is still to a great extent based on the use of expected values. We question this use of modified cost–benefit analyses for providing decision support in contexts where uncertainty is the dominating attribute. Furthermore, we argue that the decision-makers should be able to take a dynamic approach, where the chosen method should fit its context. As an example, we present a framework in line with such a dynamic approach. The article is an extended version of an ESREL conference article.

Suggested Citation

  • Leif Inge K. Sørskår & Eirik B. Abrahamsen, 2017. "On how to manage uncertainty when considering regulatory HSE interventions," EURO Journal on Decision Processes, Springer;EURO - The Association of European Operational Research Societies, vol. 5(1), pages 97-116, November.
  • Handle: RePEc:spr:eurjdp:v:5:y:2017:i:1:d:10.1007_s40070-017-0073-0
    DOI: 10.1007/s40070-017-0073-0
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    References listed on IDEAS

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    1. Abrahamsen, Eirik Bjorheim & Abrahamsen, Håkon Bjorheim & Milazzo, Maria Francesca & Selvik, Jon Tømmerås, 2018. "Using the ALARP principle for safety management in the energy production sector of chemical industry," Reliability Engineering and System Safety, Elsevier, vol. 169(C), pages 160-165.
    2. Binder, Monika, 2002. "The Role of Risk and Cost-Benefit Analysis in Determining Quarantine Measures," Staff Research Papers 31911, Productivity Commission.
    3. Terje Aven & Ortwin Renn, 2010. "Risk Management and Governance," Risk, Governance and Society, Springer, number 978-3-642-13926-0, March.
    4. Stéphane Hallegatte, 2006. "A Cost-Benefit Analysis of the New Orleans Flood Protection System," Post-Print hal-00164628, HAL.
    5. Aven, Terje, 2016. "Risk assessment and risk management: Review of recent advances on their foundation," European Journal of Operational Research, Elsevier, vol. 253(1), pages 1-13.
    6. Aven, T. & Flage, R., 2009. "Use of decision criteria based on expected values to support decision-making in a production assurance and safety setting," Reliability Engineering and System Safety, Elsevier, vol. 94(9), pages 1491-1498.
    7. Monika Binder, 2002. "The role of risk and cost-benefit analysis in determining quarantine measures," International Trade 0203002, University Library of Munich, Germany.
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    Cited by:

    1. Abrahamsen, Eirik Bjorheim & Milazzo, Maria Francesca & Selvik, Jon T. & Asche, Frank & Abrahamsen, HÃ¥kon Bjorheim, 2020. "Prioritising investments in safety measures in the chemical industry by using the Analytic Hierarchy Process," Reliability Engineering and System Safety, Elsevier, vol. 198(C).
    2. Langdalen, Henrik & Abrahamsen, Eirik Bjorheim & Selvik, Jon Tømmerås, 2020. "On the importance of systems thinking when using the ALARP principle for risk management," Reliability Engineering and System Safety, Elsevier, vol. 204(C).

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