Mobile Edition
Print
Get the Mag
Weekly UpdatesOperational Risk Management: A Case Study Approach to Effective Planning and Response
By mark D. Abrowitz
John Wiley & Sons, Inc.
2008, 278 pages, $50
[ILLUSTRATION OMITTED]
Risk assessment is an important responsibility for the governmental manager. Preparing for multiple contingencies can be an intimidating task--particularly in these uncertain times. Operational Risk Management: A Case Study Approach to Effective Planning and Response identities risk factors that governments may face and offers solutions to these challenges through individual case studies.
Abkowitz prefaces the case studies comprising this book with a discussion of why disasters happen. In answer to this question, he organizes disasters into three categories: 1) accidents that result from some human action or inaction; 2) terrorist acts that are purposefully destructive; and 3) natural disasters that are mostly the result of weather or earthquakes. The inevitable human tragedy that results from these three types of disasters is invariably aggravated by certain risk factors that are often overlooked or ignored, ultimately compromising the safety of citizens and often worsening already-desperate conditions.
The author identifies 10 risk factors that can either cause a disaster or exacerbate an existing situation. They are covered in brief detail and enable the reader to frame each ensuing case study in terms of what could have been done to prevent, or at least mitigate, each disaster. For example, design and construction flaws were a major risk factor in the 1986 Chernobyl nuclear accident and the 2005 Hurricane Katrina disaster. Similarly, the 1994 South Canyon fire tragedy in Glenwood Springs, Colorado, and the 1984 toxic gas disaster in Bhopal, India, can be blamed primarily on communication failures that existed at the time of the incidents. Other risk factors such as deferred maintenance, inadequate training, and lack of planning and preparedness can also be seen in many of the case studies. Abkowitz leads the reader through each study and identifies significant violations of one or more of these risk factors that inevitably lead to some tragic conclusion.
Abkowitz also develops a risk factor scorecard that contains a list of the 10 risk factors and matches them against the case studies. He analyzes each case study and makes a determination regarding which risk factors were prevalent. For example, the scorecard shows that the cause of the 2005 London transit bombings can be directly attributed to the following risk factors: communication failure, economic pressures, lack of planning and preparedness, and political agendas.
The real value of the text is found within this scorecard. The single table that identifies the risk factor violations for each event enables readers to quickly identify which risk factors are most often involved in a tragedy Abkowitz is quick to point out that this scorecard is not intended to be a statistical analysis; instead, the table should be used to point out trends that should be considered. The visual representation of this information in a table format is particularly compelling. A simple overview of the table shows that communication failure, lack of planning and preparedness, economic pressures, not following procedures, and design/construction flaws are the five risk factors most commonly violated. While this information may or may not be intuitive to the reader, the table provides a clear guide to the factors that most organizations should immediately evaluate in developing disaster preparedness plans.
Following the scorecard, Abkowitz lays out 12 key lessons that can be learned from the case studies. Each one provides important information that governments can use in disaster planning. Among the more important of these lessons is the fact that risk factors do not usually occur individually Abkowitz points out, correctly, that most systems are developed with certain failsafe features that will allow them to continue operating safely even if something goes wrong the overall system. However, when when multiple problems occur, the situation quickly worsens, and tragic results can result.
Abkowitz also points out that a failure in communications is a risk factor that occurs in all disasters. Each case study included in the book includes some example of communication problems--that is, the inability to share timely and accurate information. This is the case regardless of whether the disaster is caused by human error, intentional acts, or events outside of human control. These communication problems may lead to the disaster, and they may also worsen the situation if the problem persists during the disaster itself.
Governments are also encouraged not to overlook the importance of planning and preparedness. The best way to go about this is to assess the likelihood of something going wrong and considering what the consequences might be. Then, a strategy can be developed to address the situation. Abkowitz offers two success stories that illustrate the importance of this strategy In two situations I the 1989 crash of United Airlines Flight 232 and the 2002 Denali fault earthquake that threatened the Alaska pipeline--significant planning and preparation had occurred ahead of time to address potential risks. In the case of the plane crash, the crew's effective use of available resources allowed 175 of 285 passengers and 10 of 11 crew members to survive; and in the case of the earthquake, the pipeline suffered only minor damage and no oil spillage because it had been designed to withstand such an event. Abkowitz notes that these cases demonstrate how proper risk management planning can make a significant difference.
Finally, the author points out that no risk can be entirely avoided. Even the best risk planning will involve choices, and sometimes the wrong choice is made. Not even the best risk planning can create a perfectly safe environment. "Even if we had unlimited resources to invest in safes we could not guarantee that nothing bad would happen. Consequently, we must recognize that life is an inherent choice among alternative risks. The key to managing these risks is an inherent choice among alternative risks," Abkowitz writes.
Abkowitz also calls for communities to begin an examination of risks within "an all-hazards context." This would involve a community-wide analysis of risk factors and facilities that are subject to potential disaster situations. This all-hazards approach would include developing a decision-making process to prioritize the investment of resources, thereby reducing exposure in high-risk areas. Ideally, managing these risks in a comprehensive fashion might even lead to the sharing of resources among those risks of greatest concern.
While the average reader may not find the 1975 wreck of the Edmund Fitzgerald or the 1981 collapse of the Hyatt Regency walkway in Kansas City, Missouri, particularly useful in their daily lives, public risk management officials will find useful instruction in most of the case studies. Operational risk management is a helpful tool for the world we live in, and it should be of interest for communities that are struggling with where to start in their own risk assessments. The main thing is to begin the work now, motivated not by fears of what could happen but by the importance of minimizing the impact of some future act on our communities.
10 Basic Risk Factors
1. Design and Construction Flaws
2. Deferred Maintenance
3. Economic Pressures
4. Schedule Constraints
5. Inadequate Training
6. Not Following Procedures
7. Lack of Planning and Preparedness
8. Communication Failure
9. Arrogance
10. Stifling Political Agenda
DAVID B. VEHAUN is finance director for the City of Rock Hill, South Carolina. He is a member of the GFOA executive board and chairman of the GFOA's Committee on Governmental Budgeting and Fiscal Policy. Vehaun is also a GFOA representative to State and Local Advisory Committee of the Streamlined Sales Tax Governing Board, and the GFOA state representative for South Carolina's Municipal Finance Officers, Clerks and Treasurers Association, of which is a past president and board member.
FEED