Forum 2013 Climate change: new challenges, new approaches

Climate change:

new challenges and new approaches

Workshop moderated by

Gaëtan Lefèvre Insurance Manager CMI Group,

Chairman of BELRIM, Member of the scientific committee of FERMA

01/10/2013 - Inspire 1

Lucka Kajfez-Bogotaj

Professor for Climatology, University of Ljubljana, Slovenia

“Climate change: facts & choices”

Tommaso Capurso

Head of Internal Audit Division “ Operations and Technical Systems”, SNCB Holding

“Practical application of “Cyndinics” – the science of danger – for risk managers”

David Cadoux

Property & Casualty Chief Risk Officer, AXA

“Macro-economic trends, political risk management & insurability”

Jeremy Hindle,

Head of Enterprise Risk Aggregation, XL Group

“Climate change risk assessment: impacts & opportunities”

2

Climate change:


Climate change:


Facts & choices

Lučka Kajfež Bogataj

University of Ljubljana, Slovenia

01/10/2013 3

Agenda

1. Key problems

2. Climate Change Challenge in a Nutshell

3. Extreme events

4. Swift action required: mitigation

5. Adaptation issues

6. Conclusions

4

Key questions

Increased demand 50% by 2030 (IEA)

Energy

Water Increased demand

30% by 2030

(IFPRI)

Food Increased demand

50% by 2030

(FAO)

Climate Change

1. Can 9 billion people be fed

equitably, healthily and

sustainably?

2. Can we cope with the future

demands on water?

3. Can we provide enough

energy to supply the

growing population coming

out of poverty?

4. Can we mitigate and adapt

to climate change?

5. Can we do all this in the

context of redressing the

decline in biodiversity and

preserving ecosystems? Biodiversity

The Perfect Storm? (Beddington, 2009)

5

Transgressing safe boundaries

6

Rockström et al. 2009 Nature, 2009

7

Greenhouse gases climb Earth’s energy imbalance: more energy coming in than going out

Additional radiative forcing from GHG above

preindustrial times is now 2.9 Wm‐2

(32% increase since 1990)

The climate change challenge in a nutshell

Average temperature of the earth has risen by 0.8 degrees Celsius since 1900

Expected rise in global temperature of 3°C or more by the end of the century

Temperature rise results in extreme weather events and impacts (e.g. flooding, droughts, sea level rise, etc.)

Human action mainly responsible for observed and projected climate change

Risk of major economic and social disturbances particularly in developing countries

Swift action required to: Reduce the causes of climate changes (mitigation)

Prepare for the impacts of climate change (adaptation)

8

Monitoring of climate system

9

10

Mechanisms responsible for changes

in climate extremes

Frequency of occurrence (vertical axis)

local standard deviation (horizontal axis).

Temperature anomalies in the period 1951-1980 shown in green

Hansen et al., Proc. Natl. Acad. Sci., 2012.

Observations for northern hemisphere land

global warming is already increasing extreme weather events

Extreme summer heat anomalies now cover about

10% of land area, up from 0.2% (1951-1980)

11

Socio-economic Impacts of

weather and climate-related

extremes on the rise !

Intensity

Frequency

Heatwaves

Heavy rainfall / Flood

Strong Wind

Drought

Hazard intensity and frequency increasing

linked to climate variability and change

12

Climate change scenarios

Ava

ilab

le th

eo

ries o

n c

au

saili

ty

ag

reem

ent o

n t

he

se th

eo

ries

Information on relevant parameters

For instance,

World economy

in 100 Years

For instance,

climate system

For instance,

Weather next

week

13

IPCC AR5 2013

14

Provisional scenario analysis 2050-2100

High Climate

Sensitivity

Low Climate

Sensitivity

Failed

Mitigation

Policies

Successful

Mitigation

Policies

Worst

Case

6-8ºC

2-5ºC

3-6ºC

Best Case

2-3ºC

15

Climate Change Impacts

Physical systems (ice, rivers, etc.)

Biological cycles

Economy: infrastructure, output, growth

Stern Report (UK, 2006)

Human

Well-being

Indirect

impacts Wealth (and

distribution); local

environment; etc. Direct health

impacts (heat,

extreme events...)

Food yields

Climate change impacts

16

Climate risk as an enterprise risk

17

Enterprise Risks Example Specific to Climate Change

Hazard risks:

liability torts, property damage,

natural catastrophe

o Property damage or increasing maintenance costs from

floods, hurricanes, droughts

Financial risks:

pricing risk, asset risk, currency

risk, liquidity risk

o Insurance or business loans that rise in price or become

unavailable in flood-prone or coastal areas

o Energy or other commodity price shocks or volatility

Operational risks:

customer satisfaction, business

continuity, product failure,

reputational risk

o Changing requirements for equipment or heating and

cooling

o Changing resource availability and quality (water, power)

o Customer obligations not met due to supply interruption

Strategic risks:

competition, social trend, capital

availability

o Market shifts, reduced product demand

o First mover advantage for meeting new market demands

o Possible public responses to resource constraints (water

access, public health concerns) leading to compliance or

regulatory costs

www.C2ES.org. , 2013

Fossil Fuels are Cheapest Energy

Subsidized & do not pay costs (solution: rising price on carbon)

Technology Development Needed

Driven by certainty of carbon price (government role limited)

Regulations also Required

Efficiency of vhicles, buildings...spatial planning

18

Climate change mitigation in a nutshell

http://www.cleanenergyfuture.gov.au/clean-energy-future/our-plan/

Stabilizing at 450 ppmv CO2-e means 2050 global CO2 emissions must be

reduced by ~7-9 GtC/yr

To understand the size of this challenge, consider some examples of what

avoiding 1 GtC/yr in 2050 requires…

- energy use in buildings cut 20-25% below BAU in 2050, or

- fuel economy of 2 billion cars ~4 l/100 km instead of 8 l/100 km, or

-1 million 2-MWe wind turbines replacing coal power plants or

- 2,000 1-GWe(peak) photovoltaic power plants replacing coal power plants

- cutting 2005 tropical deforestation rate in half worldwide

Socolow & Pacala, 2004

Realities of reducing CO2 emissions

19

Adaptation is now inevitable...

The only question is “will it be by plan or by chaos”?

IPCC, 2007

20

Climate change and European regions

21

Adaptive capacity “is the ability or potential of a

system to respond successfully

to climate variability and

changes.“ (IPCC 2007)

Awareness

Technology and infrastructure

Economic resources

Institutions

22

Vulnerability to climate

change “ is a function of the character,

magnitude, and rate of climate

variation to which a system is

exposed, its sensitivity, and its

adaptive capacity.” (IPCC 2007)

Countries which expect a high

increase in impact seem to be less

able to adapt

Climate change would trigger a

deepening of the existing socio-

economic imbalances between the

core of Europe and its periphery.

Future runs counter to territorial

cohesion ?

23

Progress requires closer

integration of research on climate

science and human systems

24

Projecting changes in both physical and human systems is

necessary for anticipating future risks from climate change

IPCC SREX (2012)

www.gtinitiative.org/perspectives/taxonomy.html

Taxonomy of the future

25

Climate Change is a Large Issue : majority of the sciences and engineering disciplines are involved, business/industry has a stake, every sector of the economy affected, involves citizens and politicians, all aspects of our lives touched: jobs, health, politics, national security, etc.

Exploration of future climate is relevant : Where are we heading? Actions now influence the future: Inertia (lifetime avg. power plant > 40 years; lifetime CO2 in atmosphere > 100 years. Climate system may change irreversibly, we may pass thresholds…

We shall (or need) to act: prevent certain futures from happening, adapt to certain futures

Companies must address climate risks: not only financial, operational

and strategic risks, but also regulatory, liability, or reputational risk

Conclusions

26

Practical Application of

"Cindynics“

The Science of Danger

for Risk Managers

Ir. Tommaso Capurso

MIA, CCSA, CIA, QA, EFARM, CRMA

Internal Audit, SNCB Holding,

Belgian Railways, Belgium

Climate change:


Agenda

– Major accidents: generic and specific lessons learned

– The dilemma of "antagonist" and/or not prioritized objectives

– Why the cindynics now, since other methodologies are available

– No theory here, just a few recalls and definitions

– Key concepts in the methodology of cindynics

– Seven-step process/tool kit for systematic application

– Illustrations based the major accident of Fukushima

– Conclusions

– Discussion

1. Introduction 2. Cindynics 3. Conclusions

1. Introduction

2. Cindynics

3. Conclusions

4. Q/A

4. Questions/Answers

One may ask the

question: is there

a feeling of risk?

Yes !

28

• "Experience shows that catastrophes … never have a single and simple

cause. There is always a complex chain of events and deficiencies that

leads to these kinds of accidents. Causes can almost always be traced

back to managerial, organisational and human interface factors.

A catastrophe is an accident of the organisation …"

(ERA, European Railway Agency, Railway Safety Performance in the European Union, 2010)

• "An accident generally arises from a failure of the dynamic interactions in

the whole system rather than the local failure of one or more parties"

(René Amalberti)

• "In technological systems, it is not possible to avoid all serious accidents,

regardless of the effort invested in safety, because their complexity

reaches levels that prevent us dealing fully with all the eventualities" (Charles Perrow, "Normal Accidents", Princeton, 1999)

1. Introduction 2. Cindynics 3. Conclusions 4. Questions/Answers

29

Major accidents (1/2): generic lessons learned

“It was a profoundly manmade disaster”.

« We believe that the root causes were the organizational

and regulatory systems that supported faulty rationales for

decisions and actions, rather than issues relating to the

competency of any specific individual ».


30

Official report of The National Diet of Japan Fukushima Nuclear Accident

Independent Investigation Commission (NAIIC), July 4th, 2012

Major accidents (2/2): specific lessons learned

(Fukushima)

In particular

in the field

of safety


I just want

that one ! Sorry, they

are sold

together !

Enter-prise Risk

31

The Management to the Chief engineer :

« Take off your engineer's hat and put on your manager's hat »

The general dilemma of the decision-maker/manager:

"antagonist" and/or not prioritized objectives

Service

Performance

Productivity

Budgets

Schedules

…

Most of the existing approaches are using :

The thematic approach, not necessarily using a specific/exhaustive typology

The chronological approach (event-based)

To be pointed out the air crash investigations approach (by an "AAIB" or Air

Accident Investigation Bureau)

– Reconstructing the event

– What happened?

– Why did it happen?

– Understanding the phenomena

– Updating codes and models

– Publishing recommendations

Inventor of the wheel

Inventor of risk

He should have applied

cindynics!


32

Little or no systematic methodology for the

systemic analysis of incident/accident risks


33

Risk perceptions vary among individuals


• The concept of “cindynics” was presented in 1987 by Georges-Yves

Kervern at the UNESCO international conference in Paris on

technological risk management

• Litterally, its meaning is “science of danger”, from the greek

“kindunos” (“danger”)

• The concept is based on the “theory of systems”, organizations

being considered as complex, open and interacting systems

• In the cindynic approach, the danger can be characterized by:

– the different networks of actors confronted with “dangerous” situations;

– the way they look at the situation;

– the structuring of the different views according to 5 “dimensions”,

“perspectives” or “axes” (facts, models, goals, rules and values);

– the identification of "dissonances" between the networks of actors;

– the deficits that affect each of these dimensions.

34

Definition of a « new » word : cindynics

Seven-step application of the cindynic approach

to incident/accident studies

Step Aim

I Defining the cindynic situation

II Developing a description of the system or organisation

III Developing and studying the hyperspaces associated with

networks of actors

IV Identifying systemic cindynogenic deficiencies, deficiencies in

cindynic systems and dissonances

V Establishing a summary matrix correlating actors with cindynic

failures

VI Drafting a narrative summary

VII Deducing actions to reduce deficiencies and dissonances


EFARM presentation of the “mémoire” on the application of cindynics, 06/04/2011, AMRAE/Carm Institute, T Capurso

The 7-step tool kit.

35

Description of the situation:

• Prospective view: risk analysis (potential danger)

• Retrospective (after-the-fact) view: observations (incident, near-

miss, accident, catastrophe)

– The facts characterising the problem, whether potential or real

(statistics, data, KPI’s,… and context)

– Example from the nuclear plant context (adapted from source EPRI,

11/2011): accidents remain possible, despite years of continuous

risk analysis

Chernobyl

(04/1986)

(03/1979) (03/2011)


36

Step I: Defining the cindynic situation

Attempt to model the network of Fukushima actors

→ Timeframe:

~ 40 to 50 years

→ Limits on the

network of

actors: TEPCO

and the various

national and

international

stakeholders

involved


Step II: developing a description of the system

or organisation

IAEA

WANOWorld Association

Nuclear Operators

TEPCO

TSO(Technical Safety

Organization)

(JNESO)

JAEA(Japan Atomic

Energy Agency)

METI(Ministry Energy,

Trade & Industry)

SAFETY REGULATOR:

NISA (Nuclear Safety and

Industry Agency)

[WENRA]Western European

Nuclear Regulators Association

OECD

NEA(Nuclear Energy Agency)

[UE]Regional Authority

NB: Directives for radio

protection, but no harmonization

of safety

Network of TSO's

(= ETSON network in

Europe)

Exchanges R-Ex

Peer review independent of the TSO

IRS

(International Reporting System)

Data base

(~8000 incidents reported)

R-Ex

Annual input from R-Ex (return of rexperience)

by country: description; codification;

lessons learned; correctives actions )

Input =

nuclear philosophy

Proposal of

standards and

design criteria

Appro

val

US NRC(Nuclear Regulatory

Commission)Initial design rules

MEXT(Ministry

Education...

Technology)

CABINET OFFICE

AEC(Atomic Energy

Commission)

NSC(Nuclear safety

Commission

Supervision

& audit of

safety

regulation

Basic

Law

Basic design

Controls"Preparedness"

Emergency plan

OFF-SITE CENTER

Insp

ectio

ns

37

Step III: developing and studying the hyperspaces

associated with networks of actors


Epistemics

(models)

Ethics

(rules)

Teleology

(objectives, missions, goals)

Statistics

(or memory)

(memory of facts

and figures)

Axiology

(values)

Facts (memory, history, data

and statistics, lessons learned)

Representations and models

(based on facts)

Objectives

(goals, reasons for

working)

Rules (norms, laws, standards and ethical

codes, inspections etc.)

Culture (value systems)

38

The interactions between the various hyperspaces of danger are identified and

located based on the missions/roles/responsibilities given to each actor (internal or

institutional) → "cindynic flowchart" (interaction diagram with numbering if necessary).

Each actor/organisation is modelled by its hyperspace of danger, which has 5 axes

Step IV: identifying systemic cindynogenic deficiencies,

deficiencies in cindynic systems and dissonances (1/2)

10 main

Systemic

Cindynogenic

Deficiencies

DSC

4 cultural

deficiencies

DSC1 Infallibility

DSC2 Oversimplification

DSC3 Non-communication

DSC4 Navel-gazing

2 organisational

deficiencies

DSC5 Overemphasis on

productivity

DSC6 Dilution of responsibilities

4 managerial

deficiencies

DSC7 Failure to learn lessons

DSC8 Lack of adaptation to

experience

DSC9 Lack of cindynics training

DSC10 Lack of crisis preparation

5

Dissonances

D

Statistical

dissonance

DS

Epistemic

dissonance

DE

Teleological

dissonance

DT

Ethical

dissonance

DD

Axiological

dissonance

DA

27

Cindynic system

deficiencies

Dsc

Hyperspace gaps Dsc 1 to 5

Space gaps Dsc 6 to 10

Disconnects Dsc 11 to 18

Degeneration Dsc 19 to 23

Blockages Dsc 24 to 27

The specific typology of G-Y.Kervern, with … specific semantics


According to G-Y Kervern

39

Generic questions from reference systems such as

SDLC (System Development life Cycle)

Questions based on the development model of

socio-technical systems

Questions inspired by the "5 axes" of cindynics

applied to the problem and its context

Cin

dyn

ic q

uesti

on

nair

e

(illu

str

ation)

(abstr

act)

Cin

dyn

ic f

low

ch

art

(in

tera

ctions/d

eficie

ncie

s)

(illu

str

ation)

(real pic

ture

is A

1fo

rmat)

Intellectual

integrity:

- "healthy

scepticism"

- no complacency

Ishikawa's “5 " questions


Questions based on the components of an

integrated safety model

Step IV: identifying systemic cindynogenic deficiencies,

deficiencies in cindynic systems and dissonances (2/2)

The methodical doubt in 3 steps

1) You doubt

2) You doubt

3) You doubt

Are you sure ?

Models

Statistics

Rules

Culture/values

Goals

People involvement ?

Values "corporate" ?

Safety policy/charter ?

Motivation towards safety : reactive or proactive ?

Comparisons (benchmarking)

Process of re-visitingand up dating of models?

"Technology" vs. "socio-technics"

Using the lessons learned ?

Change management ?

Culture of rik management ?

KPI's - Performance management ?

Empowerment to laws and regulations?Legitimacy of rules? Understandability?

Ergonomy?

Socio-technical countermeasures to human and organizational factors ?

Process of trade-off of strategic priorities ?

Data base facts ?

Sufficient attention to "weak" signals ?

Appreciation of complexity?(simplism, infaillibility,

development in stand alone) ?

Safety culture : "no blame" philosophy?Collection of data : systematic lessons learned,

follow-up/reporting, concrete action plan ?

Knowledge tranfer formalised? Training?

Attitude when facing perturbated situations : principles or rules based to manage safety?

Are

th

e c

orp

ora

te g

oals

prio

ritise

d?

Clear segregation of duties ?(decision, management, control)

Wh

at le

vel o

f sa

fety

is s

ettle

d ?

Way of using installations : integration in the "design"?

Objectives "SMART"?

Preparation of a cindynics questionnaire

Ro

les a

nd r

espo

nsib

ilitie

s a

re

co

ntr

olle

d a

nd r

espe

cte

d ?

Go

als

an

d m

issio

ns o

f th

e v

ario

us

sta

keh

old

ers

id

entifie

d a

nd a

lign

ed

?

40

Interactions among actors

Step V: establishing a summary matrix correlating actors

with cindynic failures (1/3)

The matrix in step V aims to (try to) consolidate the cindynic potential of the organisation and the main stakeholders.

Examples.


Rel

ati

on

ship

no.

TE

PC

O

TS

O

NIS

A

ME

TI

ME

XT

JA

EA

US

NR

C

AIE

A

NS

C

Sym

bol

of

syst

emic

def

icie

ncy

Description of the

deficiency

Observations/interpretations in relation to

Fukushima

i X X X x x

DSC2

Cultural deficiency:

"oversimplification".

In terms of preventing Serious Accidents

Given the "cognitive limits" at a particular time, the

lack of a legal framework and clear, harmonised

guidance (standards) in terms of design

(scenarios/hypotheses to consider:

earthquakes+tsunamis; power supplies-SBO; multi-

unit issues etc.)

j X X X X

DSC6

Organisational

deficiency: dilution

of responsibilities

In terms of inspections.

Lack of independence, transparency of operation and

authority on the part of the regulatory bodies

k X X X X X X

DT

DSC6

Goal dissonances.

Dilution of

responsibilities.

In terms of "emergency plan" (crisis management)

Lack of emergency preparedness

Excessive organisational

fragmentation/specialisation.

Communication and coordination difficulties (crisis

management, evacuation, operation of the off-site

centre, etc.)

41

Risk axis Deficiencies A few examples of systemic deficiencies.

1. Facts (memory,

history, data and

statistics, lessons

learned)

Dsc22, Dsc18-dE/S

DSC7

Cognitive and learning deficiencies (historical, scale/probability of

tsunamis etc.)

Lessons/feedback, nonetheless reinforced by the cooperation between

the Japanese TSO (JNES O) (associate member in 2010) and the

European TSO network, "ETSON"

2. Representations

and models

(based on facts)

Dsc21-DE

DSC1, Dsc21-DE

Failure to adapt models to experience

Inadequate ability to question the design and the operational

hypotheses

3. Objectives

(goals, reasons for

working)

DT, DSC6,Dsc23-DT

Dsc23-DT

Lack of clear priorities between objectives (NISA vs TSO in

particular: separation of functions).

Organisational fragmentation and administrative formalism


Or according to the 5 cindynic axes, Fukushima (1/2)

"The Fukushima accident revealed a significant need for consultation between TSO’s so that they

can share information and ensure that analyses are consistent" (IRSN communiqué, 24/11/2011)

42



Risk axis Deficiencies A few examples of systemic deficiencies.

4. Rules (norms,

laws,

standards and

ethical codes,

procedures,

inspections

etc.)

DSC2

DSC6

DSC10

Lack of a legal framework (clear, harmonised guidance: standards) in

terms of design and safety evaluation (earthquakes, serious accidents)

Failure to take account of "complex" events (multi-site impact, SBO

etc.)

Lack of independence, transparency of operation and authority on the

part of regulatory bodies in terms of inspections

Lack of preparation for the management of a nuclear emergency

(coordination and harmonisation of methods and national technical

support resources)

5. Culture

(value

systems)

DSC2 Failure to disseminate an organisational culture of safety ("safety

consciousness") through all the bodies involved in nuclear activities


"Whatever to plan, design and execute, nothing can be done without setting assumptions. At the same

time, however, it must be recognized that things beyond assumptions may take place.

The Accident presented us crucial lessons on how we should be prepared for such incidents that we had

not accounted for." (Investigation Committee, December 26, 2011)

Or according to the 5 cindynic axes, Fukushima (2/2)

43



Step VI: Drafting a narrative summary (1/2)

This aims to: • "tell the story", i.e. reconstruct

the sequence of events, their

causes and the decisions taken

in the form of a summary,

preferably free of jargon,

putting the deficiencies and

dissonances identified in

context • avoid the reader having to

decode the "cindynic flowchart"

(often complex) and the table

(potentially long) of correlations

between actors and

deficiencies

The goal is to join the "dots" of the

deficiencies identified. Child's play?


44

One suggestion (there are others!)

of a "reading grid" for interpreting

the narrative:

the components of a "socio-technical"

system:

• The technology • The human factor and safety

culture • The governance ("organisation") • The environment


Step VI: Drafting a narrative summary (2/2)

Adapted from J-L Nicolet

45

Step VII: Deducing actions to reduce deficiencies

and dissonances According to one typology of socio-technical models.

Section Reduction action. Examples relating to Fukushima.

Technology • Reviewing the design of the installations' monitoring systems to acquire relevant information

and an overview and enable the appropriate decisions (evacuation etc.) to be made and the

necessary actions to be defined

• For emergency situations, providing means of (tele)communication that will remain

operational under "SBO" (Station Blackout) conditions

Human • Technical culture → socio-technical culture → safety culture (controlledmanaged) ["No

blame", "accident culture" etc.]

• Disaster training (emergency response)

• Staff education upgrading

Organisation • The regulator must define the methodology (guides, standards etc.) for the ad hoc

consideration of tsunamis, including design measures and criteria for evaluating their

effectiveness

• Emergency Preparedness: take steps to ensure operational functionality, especially off-site

(Nuclear Emergency Response Headquarters) even in the event of a large-scale disaster

• Define cooperation modes (vs excessive fragmentation of work)

• Formal risk analysis, kept up to date and communicated to decision-making bodies

• Evaluate plant robustness (stress test)

• Improve the independence of the regulator (separate NISA from METI) with a unified agency

(e.g. the Environment Ministry). (Nuclear Safety and Security Agency)

The environment • Update scientific and technical knowledge in the area of tsunamis (probability, severity, etc.)

( deep defences + barriers)


46

Conclusions


Well! draw

benefit from

this experience

47

Added value?

The cindynic approach: • is general/generic in terms of risk management • is adaptable to the complexity of the problem (increased complexity of socio-technical

systems, emergence of new risks, importance of lessons learned, multiplicity of

relationships/actors etc.) • constitutes a qualitative systemic method for representing systems:

• dynamic interaction between actors • putting in perspective the actors' context/knowledge in the danger situation

It enables us to: • understand and model the "system" (organisational/procedural, cultural, technical,

environmental, communication/information) and its temporal evolution cycle (events,

decisions etc.) • structure the results • find what needs to be modified in the system to prevent the incident/accident recurring

or, at least, reducing its probability • express an opinion (e.g. "deficiencies" vs "maturity" reading grid) about risk

management


$

48

Yes, but …


• Modelling and evaluation based on an empirical typology, requiring

interpretation by the user

• Omissions or redundancies possible in the formulation of

diagnoses/deficiencies

• Expert judgement required to cover strategic and operational aspects

• Need for learning (case study prototype before any truly

systematic/methodological application)

• Limits in relation to operational specificities (development models for socio-

technical systems: J Rasmussen, N Levison, etc.)

• Usefulness of cross validation via other approaches/models (J Reason's "Swiss

cheese", integrated safety model, etc.)

• Multiple skills of the cindynician (methodological + business knowledge;

facilitation techniques; courage, etc.)

I'll

never !

Yes, you

will !

49

The cindynic approach has a well-deserved place

in an integrated approach to risk assessment

"The new trend in accidentology will be cindynic flowcharts!"


50

However, « cindynicians » must take the culture

and maturity of the company into account


Rome was not

built in a day !

The cindynics

either !

51

Thank you for

listening!


52

Mr Capurso,

take

a question

at random!

Can I

give an

answer

at random?


53

Executive summary “Practical Application of "Cindynics", The Science of Danger, For Risk Managers”

Ir. Tommaso CAPURSO

Internal Audit, SNCB Holding, Belgian Railways, Belgium

Head of the "Operations & Technical Systems" Audit Division

[email protected]

“Cindynics”, the “science of danger”, word invented by Georges-Yves Kervern, is a discipline generally unknown to the large

public of risk managers.

Catastrophes of these last years (transportation; chemical industries; powerplants; oil platforms; financial crisis;…) are of multi

causal nature and an “accident of the organization".

The practical application of the systemic concept of “cindynics”, by modelling the interactions of the actors’networks :

– illustrates the links of the complex chain of events and deficits, which may lead to an accident or a crisis,

– shows that “an accident/a crisis is usually a failure of the dynamic interactions throughout the system rather than a local

failure of one or more parties” ,

– provides a new, holistic perspective on risk assessment and management.

The human factor is only the apparent “weak link” that should not overshadow other factors fundamental and deeply rooted

(organization /procedure, culture, equipment, environment, communication/information).

Thereby, risk managers can play a new, significant and adding-value role in tackling and auditing sensitive areas, through risk

assessment, understanding of accidents/crisis, prevention of catastrophes or limitation of their impact …

In this session, participants will :

– Discover the key concepts of “cindynics”,

– Understand its potential usefulness , in various sensitive domains, not limited to industry ,

– Get a “7 steps tool kit” for a systematic and disciplined application ,

– Learn how the approach can be used, through concrete examples and illustrations (the accident of Fukushima).

54

mailto:[email protected]



A few bibliographic references 1. « Master Classes In Entreprise- wide Risk Management » EFARM (« European Fellow in Applied Risk Management »), Carm Institute,

Prof. J.-P. Louisot, Augerville, 27-29 september 2010

2. « L’archipel du danger », G.-Y. Kervern & P. Rubise, Ed.Economica, 1991

3. « Cindyniques – Concepts et mode d’emploi », G.-Y. Kervern & P.Boulanger, Ed.Economica, 2007

4. “Mémoire” EFARM about the application of cindynics, April 6th 2011, AMRAE/Carm Institute, T.Capurso

5. “Lessons learned from Fukushima – Application of cindynics”, T.Capurso, annual AMRAE Conference in Deauville, 8th february 2012

6. « Les décisions absurdes : sociologie des erreurs radicales et persistantes », C.Morel, Gallimard

7. ”Executive summary of the interim report”. Investigation Committee on the Accidents at Fukushima Nuclear, Power Stations of Tokyo Electric Power

Company (TEPCO), 26/12/2011

8. “Nuclear safety: new challenges, gained experience and public expectations”, Forum EUROSAFE on nuclear safety, Paris, 7&8 november 2011, and

particulalrly:

1. “JNES’s response to TEPCO Fukushima NPS accident” , Y.Nagakome

2. “Learning lessons from accidents with a human and organisational factors perspective: deficiencies and failures of operating experience feedback

systems”, N. Dechy, J.-M.Rousseau, F. JeffroY, IRSN (Institut de Radioprotection et de Sûreté Nucléaire), France

9. “US industry response to the Fukushima accident”, EPRI (Electric Power Research Institute), J.P.Sursock. Presented to International Risk Governance

Council (IRGC), Lausanne, Swizerland, 3/11/2011

10. “Facts of and lessons learned from the Fukushima Daiichi Nuclear Power Plant Accident”, H.Nariai, WEC2011 Special session Fukushima, Facts and

consequences, 07/09/2011

11. “Premiers enseignements de l’accident de Fukushima par l’Autorité de Sûreté Nucléaire”, Pr. M.Bourguignon. Presentation at the SFEN (Société

Française d’Energie Nucléaire), 20/06/2011.

12. “Concepts de la démarche dans les centrales nucléaires. La défense en profondeur : principe fondamental de la maîtrise des risques”, IMdR, D.Vasseur,

EDF R&D, 10/04/2008

13. « Risques et accidents majeurs - Retour d’expérience cindynique », J.-L. NICOLET, Techniques de l’Ingénieur.

14. « Introduction to human factors in the field of ATM » (« Air Traffic management »), Cours de l’Ecole Nationale de l’Aviation Civile et DSNA, S.Barjou,

21/01/2008

15. Illustrations about risk : « Le risque d ’entreprendre », Série Polynômes, Essentiels MILAN, 1999

16. Editorial Volume : 2000-2 , Bernd Rohrmann, Dept. of Psychology, Univ. of Melbourne, Parkville, Victoria 3052, Australia

17. « Consumer risk perception », http://www.safefoods.nl/en/safefoods/Elearning/Social-Science/1.-Introduction/1.2-Consumer-food-risk-perceptions.htm

55

http://www.safefoods.nl/en/safefoods/Elearning/Social-Science/1.-Introduction/1.2-Consumer-food-risk-perceptions.htm













Macro-economic trends,

political risk management

& insurability

David Cadoux

AXA P&C Group Chief Risk Officer

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Climate change:


01/10/2013

Agenda

1. Increasing frequency and cost…

2. …with radical socio-economic impacts

3. Insuring and managing climate risk

57

Increasing frequency and cost…

58

Munich Re, 2012

…with radical socio-economic impacts

59

• Deep reshaping of the socio-economic environment:

Agriculture

Water

Health

• Significant damage to world GDP

Insuring and managing climate risk

60

• Insurability ?

• Insurance industry can help society manage climate risk: Provider of expertise

Driver of sustainable economies

Means to change behavior

Partner for public authorities

Conclusion

61

Climate change is a major challenge requiring a call for collective action

Climate change

risk assessment:

Impacts & opportunities

Jeremy Hindle

Head of Enterprise Risk Aggregation

XL Group

62

Climate change:


01/10/2013

Agenda

1. Potential Impacts for Insurers

2. Putting Recent Losses into Context

3. Gaps exist in Catastrophe Modelling

4. Risk Aggregation & Tail Risk Management is Key

5. The Opportunity

63

Potential impacts for insurers

What can we expect?

Increased drought, heat and extreme weather events

Climate change risk assessment report (UK Government 2012)

Many risks are not NEW, but adaptation to change is required

National Adaption Programme (2013): Flood Risk Management

The climate challenge (GDV 2011 – German Insurance Association)

Return periods of storm / Flood events are reducing

72% of house owners still do not have natural catastrophe

insurance

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Putting recent losses into context

Floods, drought & severe convective storms continue to cause havoc 2013

Germany Floods May / June €12 billion? Moore (USA) Tornado May $3.5 billion? Germany Hail July €1.5 billion?

2012 Post-Tropical Storm Sandy September $20 - $25 billion? US Drought May/July - $11 billion?

2011 US Tornadoes - $15 billion? Thailand Flood - $12 billion?

However, the total cost so far in 2013 ($45 billion) is only 50% of 10-year average (per Munich Re) Floods caused 45% of insured losses

Meanwhile, tropical cyclone activity globally remains light

65

Gaps exist in catastrophe modelling

Many gaps exist in vendor

catastrophe models

Often these are for the

perils most impacted by

climate change

How do we capture

"Exposed but Not Modelled"?

How do we model "Not Enough Modelled" ["Model

Miss"]?

How to model "Not Modelled" risks?

CountryTropical

CycloneFlood Windstorm

Severe

Convective

Storm

Winterstorm Wildfire

Australia x x x

Austria x x x

Canada x x x x x

Chile x

China x x

Colombia x

Czech Republic x x

France x x x

Germany x x x

Japan x x x

New Zealand x

Puerto Rico x x

Switzerland x x x

Thailand x x

United Kingdom x x

United States x x x x x

x = Model Exists

x = Material Gap

x = Becoming Material

x = less vital

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Risk aggregation / tail risk management is key

Flood exposure is increasing in coastal cities1

Suggested tenfold increase in exposure by 2050

Ranking exposure by 1-100 year loss and annual average loss (AAL) yields surprising results:

Future risk assessment must encompass Tail Risk (TVaR)

Correlated lines of business (non-property) contribute to loss

1 Future flood losses in major coastal cities - Nature Climate Change 3 August 2013

67

RankUrban

Agglomeration

100-yr

exposure AAL $m

AAL (%

of GDP)Rank

Urban

Agglomeration

100-yr

exposure AAL $m AAL (% of GDP)

1 Miami 366,421 672 0.30% 1 Guangzhou 38,508 687 1.32%

2 New York-Newark 236,530 628 0.08% 2 Miami 366,421 672 0.30%

3 Osaka-Kobe 149,935 120 0.03% 3 New York-Newark 236,530 628 0.08%

4 New Orleans 143,963 507 1.21% 4 New Orleans 143,963 507 1.21%

5 Tokyo 122,910 27 0.00% 5 Mumbai 23,188 284 0.47%

6 Amsterdam 83,182 3 0.01% 6 Nagoya 77,988 260 0.26%

7 Nagoya 77,988 260 0.0026 7 Tampa-St Petersburg 49593 244 0.0026

8 Rotterdam 76,565 2 0.0001 8 Boston 55445 237 0.0013

9 Virginia Beach 61,507 89 0.0015 9 Shenzen 11338 169 0.0038

10 Boston 55,445 237 0.0013 10 Osaka-Kobe 149935 120 0.0003

The opportunity

Data quality is key to sound decision making

Need industry leadership on data mapping / industry

classifications / industry exposure / loss databases

Limits tracking will assist in risk management

Insurance penetration is still low

Predictive modelling will be a competitive advantage for those

that use it

And a competitive disadvantage for those that do not!

"Big Data" business intelligence modelling will help

Requires courage and skill to underwrite when the "goal posts"

are moving

68

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