Risk Management: Analyzing Atypical Scenarios and Unknowns - Report

This report delves into the realm of atypical scenarios and risk management, focusing on the challenges of identifying and mitigating risks that fall outside the scope of standard analysis. It explores the concept of "unknown unknowns" and "black swan events," emphasizing the importance of proactive strategies to address events that are difficult to predict or have never occurred before. The report highlights the limitations of traditional hazard identification methods and the need for imaginative approaches to risk assessment, such as critical task analysis and human error analysis. Through the lens of Donald Rumsfeld's quote, the report underscores the significance of converting unknown unknowns into known knowns, using historical incidents like the gasoline tank leakage in Houston and the Fukushima nuclear disaster as examples. It advocates for the use of cost-benefit analysis and robust protection measures to minimize the impact of worst-case scenarios, ultimately aiming to enhance the ability to design actions that proactively tackle risks.

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The known and unknown categorization is being used in many areas of knowledge. It
is a powerful tool to find the known and unknown facts of any problem. The framework helps
in understanding the approach to knowledge and research. When any hazard is identified, it is
assessed in the severity scale. Also, finding the initiators and identifying the barriers as well
as the mitigation, it is necessary to manage with a degree of success. It has been found in the
researches that when a scenario is not properly identified, things can go wrong. Sometimes,
it is difficult or even not possible to predict the wrong event or the ultimate consequences as
it never happened before or happened but people are unaware of it. Such events are called
black swan events. On the other hand, there are some atypical scenarios in which events are
not generally imagined and the events where all protections failed. Hence, in order to find the
hazards it is essential to start with describing the parameters for normal operation. Some
effective hazard identifying methods are Process Hazard Analysis (PHA), Hazards and
Operability (HAZOP), and others that help in identifying the atypical scenarios and
simultaneously, some other tools that include layer of protection analysis, fault tree analysis,
quantitative risk assessment can help in managing risk comprehensively. HAZOP studies are
frequently carried out in the steady state and are generally dominated by credible versus
worst cases. Again, some of the unknown knowns are there which some of the people know
but not everyone or they have forgotten the things. At the same time, some unknown
unknowns are there that are really not known to anyone and people also are not aware of the
things. Hence, it is important to deal with the learning and to convert the unknown knowns
into known knowns. As for example an incident can be considered from the past that
occurred on April, 1962 in Houston, Texas, USA, where there was leakage from a gasoline
tank. Such incidents were not unknown unknowns because studies found that there was major
gap in the protection that was the common cause of the failure. Again, the Fukushima case
can be considered, where the Indian Ocean tsunami produced waves up to 15m high in the

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year 2004. However, Japan’s methodology to assess the risk of tsunami was behind the
international standard studies also revealed that tsunamis are underestimated and
recommendations are not properly followed. Hence, in order to design actions to tackle risks
proactively, it is necessary to be imaginative enough. However, it is also true that sometimes
we fail to identify the significant scenarios due to the limitations of the methods used or being
unaware of the events that occurred in the past. Critical task analysis is essential in this
purpose and furthermore, human error analysis can also help in managing the risks
proactively. Henceforth, the quote of Donald Rumsfeld is vital in mitigating the risks and
reducing the hazards with worst case consequences because protections against the worst
cases are not always too difficult or too expensive. A cost benefit analysis using historical
data is also helpful in this regard.