Risk Evaluation Methods

The ALARP (As Low as Reasonably Practicable) principle is based on the fundamental thinking of ‘acceptable’ or ‘tolerable’ risks. It allows analysts and decision makers to define boundaries to combine probability-consequence scales. These boundaries can be used to delineate acceptable and intolerable risks. This allows decision makers to evaluate whether a system or process poses certain risks which need to be treated using risk-control options. The ALARP principle can easily be combined with tools such as Risk Matrices to graphically represent the boundaries of risk tolerability.

The cost-benefit analysis is about comparing the costs and benefits of a project or a major activity and using this comparison as a basis for decision-making for the implementation of the project/activity. The costs and benefits are in most cases described in monetary terms to allow comparison. However, it is sometimes difficult to express welfare gains, for example, as a monetary unit. If at the end of the analysis the benefit is higher than the total cost, a project/activity should be implemented. Experience and expected values are used to determine costs and benefits in advance.

The Delphi method was developed in order to identify possible targets in the USA during the Cold War. The Delphi method was gradually applied in civilian areas and is now frequently used for political and social questions and issues, for the development of science and technology and in the business environment (e.g. marketing, R&D). The Delphi method is a structured group communication process with the aim of answering questions or finding a consensus on facts about which uncertain and incomplete knowledge naturally exists.

The Failure Mode and Effects Analysis is a cross-industry established method to identify and eliminate potential failures, problems, errors and risks of a system, design or process before adverse consequences reach the internal/external customers. The basic idea of the FMEA is thus the preventive risk identification and error prevention instead of a subsequent correction. 

In a qualitative approach, risks are usually categorized into “high”, “medium” and “low”, and are represented in a risk matrix. This risk matrix represents the possibility and severity in order to integrate the potential accident scenarios that were identified in the threat identification stage. Inside the matrix, the criticality of a risk, through the use of colors, can identified. The results provided by this matrix can be used to compare risks and identify improvement and mitigation measures.