Catastrophic risk can
end corporate life. Catastrophic risks are unanticipated losses or damage that
cripple an organization and often lead to a survival mode. The following
questions are examples of corporate survival situations that are the results of
catastrophic risks. BP systematically underestimated physical risks, costing the
company $20 billion and the CEO his job. Risk management failures forced the
Johns-Manville company into Chapter 11 bankruptcy for 5 years. We will answer
these and other real-world questions with tools of risk assessment and
management. You will learn the good and bad points of using fault and event
trees, statistical problem formulation, probabilistic risk analysis, human
health risk tools, and risk communication as inputs for corporate strategy and
resource allocation. We will discuss how to quantify, analyze, and manage
physical risks that may be essential to your business. We will learn how
companies deal with (or deny) the inevitable risks that accompany any business.
The course contains four modules: 1) Definition of catastrophic risk; 2)
Examples of company-threatening risks; 3) Decision models for physical risk
management; and 4) Case studies. You will come out of this course with the
skills to understand and manage catastrophic physical risks – skills that are
increasingly valuable to companies worldwide.
Some of the questions we
will examine in cases include the following. Did Toyota’s secretive culture lead
them to ignore risks that lit up the blogosphere and caused a 7 million vehicle
recall? Was a billion dollar explosion a software failure, or a systems
engineering failure? Should Saccharin have been removed from the market after
tests showed it causes bladder cancer? How did Union Carbide kill 14,000 people,
and nearly repeat the disaster half a world away? How did a cost-benefit
analysis lead to “the most reprehensible decision in the history of American
engineering” and an indictment for reckless homicide? How did China turn around
its dismal airline safety record? (1/12)
