The dynamics and control of operational risk
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AbstractThis research use cases, models and conceptual frameworks to provide insights into risks associated with complex operations. An important contribution of this research is to further understanding of risks dynamics in operational systems and to suggest how such operational risks might best be controlled. Although this research is primarily concerned with safety in industrial operations, risk in service operations is included within the overall conceptual framework, which focuses on risks arising from the interactions of human decision-makers with the operational system. The research has three major components. The first component includes a detailed case study and simulation model of a major industrial accident, the Westray mine disaster. This research demonstrates that a dynamic simulation model can capture the essential elements of the interactions between the human system, the production system, and the safety system. The model provides insights into the complex interactions that can lead to disaster and suggests valuable lessons for organizational learning. The second component of the research takes a systems view of the unexpected or unwanted events, called "incidents," that inevitably arise in an operational system. The research suggests that by learning from incidents, organizations can reduce risk and minimize loss. The elements of an effective system for learning from incidents are discussed, and the simulation model for the Westray mine disaster is extended to incorporate an incident learning system. Again, lessons for organizational learning are drawn from the results of this analysis. The third component of the research draws insights from the literature and from case studies to develop a conceptual model of operational risk and a framework for risk control. Besides case studies of operational failures drawn from the literature, this research also draws on a case study of operational improvements at a chemical manufacturing facility. This part of the research explores similarities between operational risk management and quality management, and suggests that an effective approach for some corporations might be to integrate operational risk control into a total quality management framework.
Bibliography: p. 198-210