Maritime Vulnerability

Revised on: 2015-09-22

Maritime transport is a vital backbone of today’s global and complex supply chains. Unfortunately, the specific vulnerability of maritime supply chains has not been widely researched. This paper by Øyvind Berle, Bjørn Egil Asbjørnslett and James B Rice puts it right and presents a Formal Vulnerability Assessment of a maritime transportation system. This is not the first maritime paper that Asbjørnslett has contributed to on this blog, and he keeps up the good work he started in 2007, when he presented Coping with risk in maritime logistics at ESREL 2007.

Maritime transport – a forgotten part of supply chains?

I guess it is true that maritime transport or sea transport is an overlooked part of supply chains, even on this blog. In my more than 500 posts the word “maritime only occurs in 20 of them. Well, perhaps not so forgotten, but maybe such an obvious part of today’s supply chains that it is not looked at specifically, and just assumed to be part of the wider picture. Considering Norway’s maritime and seafaring tradition, it is not surprising to see Norwegian researchers taking up this particular question. One of the authors, Asbjørnslett, is part of the Marine System Design research group at the Department of Marine Technology at NTNU in Trondheim, Norway, where he among other topics is involved in research related to risk taxonomies in maritime transport systems, risk assessment in fleet scheduling, and studies of vessel accident data for improved maritime risk assessment.

The invisble risk?

It is interesting to see what starting point the authors use in their introduction, namely the 2008 Global Risk Report by the World Economic Forum. In my post on Supply Chain Vulnerability – the invisible global risk I highlighted that report, which listed the hyper-optimization of supply chains as one of four emerging threats at that time, and as the authors put it:

[…] risks in long and complex supply chains are obscured by the sheer degree of coupling and interaction between sources, stakeholders and processes within and outside of the system; disruptions are inevitable, management and preparation are therefore difficult […]

Akin to the infamous “Butterfly effect”, even a minor local disruption in my supply chain could have major and global implications not just on the company directly linked to the supply chain, i.e. me, but also on other businesses. Or conversely, some other company’s disruption may affect me severely, even though I in no (business) way am connected to said company.

Issues and questions

With that in mind the authors set out to address these particular issues they found in their preliminary observations:

I1—respondents have an operational focus; in this, they spend their efforts on frequent minor disruptions rather than the larger accidental events.

I2—stakeholders do know that larger events do happen, and they know that these are very costly, yet they do not prepare systematically to restore the system.

I3—maritime transportation stakeholders find their systems unique. As a consequence, they consider that little may be learnt from benchmarking other maritime transportation system’s efforts in improving vulnerability reduction efforts.

I4—there seems to be little visibility throughout the maritime transportation system.

which led them to to propose these research questions:

RQ1—what would be a suitable framework for addressing maritime transportation system vulnerability to disruption risks?

RQ2—which tools and methods are needed for increasing the ability of operators and dependents of maritime transportation to understand disruption risks, to withstand such risk, and to prepare to restore the functionality of the transportation system after a disruption has occurred?

I like this introduction, clearly identifying a direction and purpose of the paper.

FSA – Formal Safety Assessmement

In order to solve the research questions the authors transfer the safety-oriented Formal Safety Assessment (FSA) framework into the domain of maritime supply chain vulnerability, and call it Formal Vulnerability Assessment (FVA) methodology. FSA – for those of you who don’t know, including me – is a structured and systematic methodology, aimed at enhancing maritime safety, including protection of life, health, the marine environment and property, by using risk analysis and cost benefit assessment:

What might go wrong?
= identification of hazards (a list of all relevant accident scenarios with potential causes and outcomes)
How bad and how likely?
= assessment of risks (evaluation of risk factors);
Can matters be improved?
= risk control options (devising regulatory measures to control and reduce the identified risks)
What would it cost and how much better would it be?
= cost benefit assessment (determining cost effectiveness of each risk control option);
What actions should be taken?
= recommendations for decision-making (information about the hazards, their associated risks and the cost effectiveness of alternative risk control options is provided).

While not fully the same, this assessment follows in essence the ISO 31000 risk management steps of risk identification, risk analysis, risk evaluation and risk treatment, a framework that I am very familiar with.

Deconstructing the maritime transport network

What I like in particular is how they deconstructed the maritime transport network, divided the land from the sea and looked at how a vessel interacts with a port that in turn interacts with other modes of transport:

It’s a figure that reminds of my last project I took part in during the autumn of 2011 while still in academia, where we investigated Customer and Agent Initiated Intermodal Transport Chains, and looked at barriers and incentives to competition and collaboration in intermodal transport. I’m not sure the figure would have helped if I had known about it, but it would have made a few things a bit clearer. Kudos to Berle et al. for coming up with it.

Kaplan and Garrick

It is rare to find papers like this that use Kaplan and Garrick’s definition of risk:

Risk may be defined as a triplet of scenario, frequency and consequence of events that may contribute negatively (in this case to the transportation system’s ability to perform its mission. A hazard is a source of potential damage; Kaplan and Garrick describe risk as hazards divided by safeguards. In this, risks cannot be completely removed, only reduced.

I do like this definition of risk, because risk can be seen as incompletely described unless all three elements are in place. An untrained individual or business entity often stops short after the first, or maybe the second question, without fully considering the third. In risk management, addressing the impacts is an important issue, which is why the consequences need to be considered along with the likelihood and source of risk. In this paper, developing a method for assessing the vulnerability i.e. consequences, and deconstructing the maritime transport network, i.e. scenario, this definition of risk makes a lot more sense than any other definition of risk.

Failure modes

Another interesting idea in the paper is the concept of failure modes, taken from the book System Reliability Theory: Models, Statistical Methods, and Applications, written by two Norwegian professors (from NTNU, again, no surprise). Failure modes are used to investigate and understand how the maritime transport system is able to handle unexpected hazards and threats and low-frequency high impact scenarios:

Failure modes are defined as the key functions and capabilities of the supply chain, loss of any such would reduce or remove the ability of the system to perform its mission.

The concept of “mission” is important here, because it emphasizes what vulnerability in a systems perspective is, namely the inability to function and deliver (whatever the system is supposed to deliver):

The critical ways a transportation system may fail can be summed up as the loss of capacity to supply, financial flows, transportation, communication, internal operations/capacity and human resources, which may be described as follows: supply capacity is the ability necessary to source provisions needed for the element to perform its function; for a factory, this is inbound materials, utilities and electricity. Financial flows cover the ability to access capital and liquidity/cash flow. Transportation is the ability to move materials, including those presently at work. Communication would include enabling technology, and is vital for transparency in the supply chain. Internal operations entail the organization’s processing capacity (e.g. converting materials into a good). Quality issues reducing outputs fall into internal operations. Loss of human resources singles out the human factor explicitly from internal operations—what are the personnel needs for the supply chain functions?

The concept of failure modes is an idea the authors developed in a previous paper, Failure modes in ports – a functional approach to throughput vulnerability, a paper which I will review as soon as I get a copy of it. I think the failure modes concept captures the idea of what could go wrong in the maritime supply chain, as seen from a systems perspective:

Hazards and Mission

This is where it gets interesting. In order to transfers the FSA into a FVA, the FVA hazard focus is shifted towards the FVA mission focus. For example, the question of what can go wrong is turned into the question of which functions/capabilities should be protected (to ensure the functionality of the maritime transport system). The same is done for the other questions. Where the FSA looks at measures to mitigate most important risks the FVA looks at measures to restore functions/capabilities. This kind of parallel or similar thinking shows how easy it may be to transfer a concept from one domain into another domain.

Case example – LNG

The FVA is put to test in practice, using LNG (Liquid Natural Gas) shipping as their case. At first I thought there must be better examples, but the issue is that

[…] this analysis is relevant to study energy import dependencies, as current LNG supply chains are optimized to the level that much of the system storage and flexibility can be found in the shipping element, lacking on-shore infrastructure […]

and therefore, definitely a case worth studying.

Conclusion

Not only do the authors develop a conceptual framework for assessing the vulnerability of maritime transport networks, the successfully transfer the maritime Formal Safety Assessment (FSA) framework into the domain of maritime supply chain vulnerability and demonstrate that the approach works. It is not done according to IMO’s own standard, the FSA, thus extending vessel safety to port safety and supply chain safety. I think that this will help this approach gaining acceptance within the wider maritime community. The paper is well-written and well-structured, but I could have wished for a bit more about the FSA. Never having heard about it I had to do some research to find what this was all about. All in all, the paper is a showcase example of how easy it can be to transfer concepts from one domain to another domain, exemplifying a cross-fertilization of research strands.

Reference

Berle, Ø., Asbjørnslett, B.E. and Rice, J.B. (2011) Formal Vulnerability Assessment of a maritime transportation system. Reliability Engineering and System Safety (96) 6, 696–705 DOI: 10.1016/j.ress.2010.12.011

Author links

linkedin.com: Bjørn Egil Asbjørnslett
linkedin.com: James B. Rice
linkedin.com: Øyvind Berle

Read online

ntnu.edu: Formal Vulnerability Assessment of a maritime transportation system

Appetite versus Attitude

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Revised on: 2015-09-20

Finally, and long overdue, another review in the Gower Short Guide to Business Risk book series. This is the 7th book I’m covering, and I must say that the main topic of Risk Appetite versus Risk Attitude has brought a whole new perspective on risk and risk management to my attention. Basically, what the books states is that every company should ask themselves two questions: 1) How much risk do we want to take? That is risk appetite. 2) How much risk do we think we should take? That is risk attitude. There are actually 4 more questions, dealing with risk propensity, risk capacity, risk perception and risk exposure that make up the risk management framework presented in this book.

Risk management – difficult or easy?

Risk management, so the authors, is a way of understanding the trade-offs we are making when we decide a course of action, not only in the short-term, but more importantly, in the long term, because a long-term perspective helps in making strategically consistent decisions time and again, instead of simply listening go your gut feelings. Understanding your risk appetite, and your risk attitude, lays the groundwork for making good decisions in uncertain yet important situations.

Who says what?

An interesting feature of the book is a whole chapter dedicated to collecting the views on risk appetite from regulators, standards bodies like, professional associations and consultants, clearly showing that there is a lot of debate about risk appetite, but no consensus.

Risk appetite risk tolerance, risk attitude and risk profile are mentioned by the regulators, but appear to be the same. Risk appetite is mentioned in standards, but not always well defined. Professional associations do fare a bit better; at least they do show some guidance in how to express risk appetite in a useful way. Consultants, seeing business opportunities in helping confused managers, have produced a wide range of white papers on risk appetite.

Although there is some common thinking among all these sources, there is little agreement and no agreed-upon definition. The list of 24 different definitions taken from these sources definitely shows that. However, so the authors claim, two strands of thought are common in these definitions, risk as a level or threshold that should not be crossed, and risk as a willingness to cross that same threshold, i.e. how much risk do we think we should take and how much risk do we want to take respectively.

Appetite versus attitude

The authors spend a whole chapter on describing and discussing appetite and attitude, their differences and similarities, perhaps a bit too much in my view, but the message sinks in finally:

Risk appetite: Tendency of an individual or group to take risk in a given situation.

Risk attitude: Chose response to a given risky situation, influenced by risk perception.

While this makes perfect sense when reading it the first time, the second time I ask myself, what is “risk” in risk appetite, and what are “risky situations” in risk attitude? Nit-picking, perhaps, and quickly forgotten, because their next point is rather brilliantly explained:

So when we face a risky and important situation and we need to decide how much risk to take […] we could just go with our gut, and make an intuitive decision [..] that might lead to a good outcome. But i might not. This is where is risk attitude comes in, allowing us to chose an appropriate positioning towards the risk.

Risk appetite comes from the heart, or rather, gut, whereas risk attitude comes from the head. Simple as that.

Risk elements at play – inputs and outcomes

The perhaps most difficult part of the book is the chapter that puts all risk elements together:

Risk propensity: How much risk do we usually like to take?
Risk appetite: How much risk do we want to take?
Risk capacity: How much risk can we take?
Risk perception: How much risk do we think we are taking?
Risk attitude: How much risk do we think we should take?
Risk exposure: How much risk are we actually taking?

Inputs to risk appetite and risk attitude and their respective outcomes are then used to construct what the authors call the RARA-model.

What I noticed here is that risk actions are outcomes of risk attitude, not risk appetite. Risk appetite on the other hand sets the risk threshold, against which risk actions and the resulting residual risk should be checked against. They way I interpret this is that risk attitude has a lower risk level than than risk appetite, and risk attitude should be the guiding principle for risk actions, not risk appetite.

Risk attitude and risk appetite exemplified

Half the book is devoted to a number of convincing examples of how the RARA-model can be used in practice in making well-informed risk decisions. In doing so, the authors use three kinds of scenarios: Unmanaged, Constrained and Informed Scenario.

Unmanaged, where risk thresholds are set by the organisation with no conscious or intentional reference to risk appetite or risk attitude.

Constrained, where risk thresholds are consciously modified by an understanding of the inherent risk appetite.

Informed, taking into account the chosen risk attitudes of key stakeholders as well as wider organisational factors when setting risk thresholds.

The beauty of these different scenarios is that they make use of the above elements in the RARA-model in very different ways, demonstrating how everything comes into play.

Conclusion

At first glance the RARA-model appears unnecessarily complex, and the case examples, using every single element of the model, are very elaborated. However, what the model really is all about is answering the six questions above. I like this book, but it takes a while to sink in, especially for someone like me, who uses the ISO 31000 standard extensively in my daily work.

Reference

Murray-Webster, R. and Hillson, D. (2012) A Short Guide to Risk Appetite. Farnham: Gower Publishing.

Organisational Resilience

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Revised on: 2015-09-16

Organisational Resilience Literature. “What to read, and what not to read”. That could be the popular title of this paper. Written by Alessandro Annarelli and Fabio Nonini their paper on Strategic and operational management of organizational resilience: Current state of research and future directions classifies and sorts more than 70 articles along two axes: static versus dynamic resilience and single organisations versus supply networks or industries.. Essentially, this paper will help you decide which papers that fall into which of these four quadrants and which papers you should read depending on your research interests.

Comprehensive

According to the authors, they did “a systematic literature search and co-citation analysis to investigate the specific research domains of organizational resilience and its strategic and operational management to understand the current state of development and future research directions”. More than 400 papers out of thousands of documents were selected and narrowed down to 70 or so core papers, clearly showing the dominating trends within research into organisational resilience.

1.Theoretical foundations and applications, e.g. Christopher and Peck (2004)
2. Implementation, improvement and measurement of resilience, e.g. Sheffi and Rice (2005)
3. Models for resilience.
4. Other theoretical perspectives.

(The linked papers have been reviewed on this blog)

What to read, or not

In addition, the authors used multidimensional scaling(MDS) to produce a graphic that represents conceptual proximity, or similarity, between publications. This is what I found to be the most interesting part about this paper, because I now can find the most related or otherwise different literature, just by looking at the figure below and going to the reference list in the paper. That is very helpful, indeed.

Annarelli and Nonino (2015)

It’s quite interesting to see where some of the papers that have been reviewed on this blog fall and what papers that are closely related and that I have not yet discovered, which means that I have a lot of work to do in terms of possible reviews on this blog.

Future research

Finally the authors describe 7 areas of future research

Theory testing on design, implementation, and improvement processes to enhance organizational resilience.
Measurement of organizationalandoperationalresilience.
Resilience in Small Medium Enterprises.
Restoration models for the supply chain and operational processes.
Impact of introducing information systems on organizational resilience.
Anticipatory innovation to enhance processes’ resilience.
Strategic approach and dynamic capabilities for becoming a resilient organization.

and why these are the important issues that warrant further investigation.

Conclusion

This paper’s reference list contains more than 200 items. Combined with the sorting and review done in the paper this is very valuable resource for any researcher of organisational resilience.

Reference

Annarelli, A., & Nonino, F. (2015). Strategic and operational management of organizational resilience: Current state of research and future directions Omega DOI: 10.1016/j.omega.2015.08.004

Author links

linkedin.com: Alessandro Annarelli
linkedin.com: Fabio Nonino

husdal.com: The resilient organization

Pork Barrel spending?

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Revised on: 2015-09-23

Why is it that some infrastructure projects in sparsely populated regions of Norway receive more funding than other projects in more densely-populated regions where the potential benefit/cost ratio would be much better? That is the question asked by Thor-Erik Sandberg Hanssen and Finn Jørgensen in their recent article on Transportation policy and road investments. The article hits the nail on the head on the topic of how Norways is spending – or perhaps “wasting” money on its infrastructure.

Return of investment

What the authors found was that the reason for spending so much money on some projects was not that the politicians were particularly concerned about the people in these constituencies, but rather that they perceive high political returns for investing in these constituencies. Definitely pork barrel spending in practice. However, it is not so much done intentionally, but as a result of the skewed representation of the electorate in the Norwegian parliament, where less-populated counties with regional road investment projects are overrepresented compared to the more central and well-populated areas and cities.

Deja-vu

This article brought back memories to a blogpost of mine from 2009, Why does the world’s richest country have the world’s worst roads?, where I reflected on a similar paper. Here the conclusion was that the politically attractive projects win over the economically attractive, simply because is not the planning authorities or the central government who decides which national roads to build, but the local politicians, voting for “their” roads in parliament budget discussions. Adding to the misery is that investment or funding decisions are made on a year-to-year basis, thus frequently setting aside any long-term strategies that may exist.

How road investments are done in Norway

The article provides a brief overview of how Norwegian roads are planned and financed.

Road planning and investment in Norway

Which roads that should receive funding are presented in the National Transport Plan(NTP) by the Norwegian Ministry of Transport and Communications. This plan is produced every four years, and covers a period of ten years and aims to provide a base for decision making. The words that need to be stressed here are “aims to be”, because although the plan is ratified by the parliament every four years, it is still only intentional, it is not a binding budget document. Following ratification by parliament, the Norwegian Public Roads Administration then prepares an action plan. However, this action plan still needs yearly funding, and is where local politicians can have great influence.

Politicians know that allocating nationally financed projects to their home districts is an effective way to win votes

Why? Well, every potentisal voter is someone who is out and about driving every day, and everybody enjoys having a good road to drive on, and given the state of much of Norway’s crumbling infrastructure it is not surprising then that good roads win votes easier than other political issues. Voters are just simple-minded, aren’t they?

What factors are the most influential for investment decisions?

To decide whether political representation in the parliament is indeed a driving factor the authors looked at a number of variables and hypothesize that

roads with longer improvement stretches receive more money, because there are economies of scale to be reaped
roads with a high average traffic volume receive more money
roads with a high predicted traffic growth will receive more money

These are variables indicating the present and future importance of the road

roads with many sharp horizontal curves receive more money (to improve road standard)
roads that are narrower than 6 metres receive more money (explanation: roads narrower than 6 metres do not have a middle separation line in Norway and are considered sub-standard)
roads with avalanche problems receive more money
roads with lower speed limit receive more money, implying that higher speeds reduce travel time and make roads more efficient

These are variables that are linked to the standard of the road

roads with many fatalities and serious injuries receive more money
roads with noise nuisance issues receive more money

These are variables that are linked to external costs

roads in sparsely populated constituencies receive more money

This is the core variable, suggesting that regardless of everything else, this is what matters most. But is that really the case?

Conclusion

Based on their findings the authors conclude that

the importance of the road matters, but there are neither economies of scale nor diseconomies of scale in Norwegian road investments, suggesting not so much pork barrel spending after all
the narrowness of the road is the most important factor when it comes to road standard, suggesting that widening narrow is more visible than straightening curves or reducing avalanche problems or increasing speed limits, and hence offer higher political returns, and thus some pork barrel spending
traffic safety improvements or noise nuisance reductions have no influence on road investments, suggesting that they are simply overlooked by politicians in their final decision making
parliamentary representation in the electoral district where the road is located influences the amount of money spent significantly, indeed suggesting pork barrel spending

Critique

While this paper is home turf and thus easy to feel at home wit,h I find it hard to see the conclusions from the hypotheses, because the hypotheses are not stated as such explicitly (e.g. H1, H2, H3, etc.), but are stated within the description of the variables (“we assume that…”, “we hypothesize that…”). I would have helped the conclusion if the hypotheses had been stated in listed order, making it easier for the reader to grasp what relationships the authors are actually trying to investigate.

Nonetheless, the authors’ point is still valid: The main critique of the Norwegian procedures for road investments, as highlighted the 2009 paper, is still valid.

Norwegian politicians invest more money in roads in regions overrepresented in the Parliament because the expected political return is higher as fewer voters in these regions to be persuaded for the politicians to win a seat in Parliament.

Well, unless we reform our election system, which I doubt will ever happen, this is a problem we will have to deal with until the end of time. And that is why Norwegian roads always have been, currently are and forever will be, a patchwork of high-standard and sub-standard roads.

Reference

Sandberg Hanssen, T., & Jørgensen, F. (2015). Transportation policy and road investments Transport Policy, 40, 49-57 DOI: 10.1016/j.tranpol.2015.02.010

Author links

researchgate.net: Finn Jørgensen
researchgate.net: Thor Erik Hanssen

husdal.com: World’s richest country, but he world’s worst roads?

Resilience as a job description

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Revised on: 2015-09-13

Ever since I started to work for the Southern Region office of the Norwegian Public Roads Administration (Statens vegvesen Region sør) three years ago I haven’t been able to come up with a good job title in English. There simply isn’t any immediate equivalent in English to the Norwegian title that springs to mind, or that exists in a similar fashion in the English-speaking world. It was only after reading Erik Hollnagel’s definition of resilience that I finally realised that I am an Resilience Adviser.

Safety or security ?

Even in Norwegian it’s hard to explain to friends and family, and colleagues for that matter, what I actually do for a living. I am an adviser in “samfunnssikkerhet” as it is called in Norwegian. Finding the English equivalent hasn’t been easy, as I said, until I started studying the concept of resilience. So why does samfunnssikkerhet equal resilience?

Well, samfunn in Norwegian means society, sikkerhet can mean either safety or security in Norwegian since we do not have separate words for it. So samfunnssikkerhet can be societal security or societal safety, or both.

Samfunnssikerhet and Societal security

Societal security is a concept developed by the Copenhagen School of security studies in the 1990s (Wikipedia). It refers to

the ability of a society to persist in its essential character under changing conditions and possible or actual threats

The standard definition for samfunnssikkerhet in Norway, set by a government commission in 2000 is

the ability of a society to maintain critical (essential) functions and the life, health and essential needs of its population under various forms of stress

The wording is perhaps not exactly the same, but both definitions emphasize “essential”, and in my view social security as the English translation captures what samfunnssikkerhet is all about.

Societal security as the English translation of the Norwegian samfunnssikkerhet has been used in particular by Jan Hovden from SINTEF,the research intstitute of the Norwegian University of Science and Technology, NTNU. He even wrote an English paper on the subject in 2004 titled Public policy and administration in a vulnerable society: regulatory reforms initiated by a Norwegian commission. I found and reviewed it on my blog 5 years ago: Risk society.

Societal security and safety – Resilience

What I found most brilliant about the paper was how he managed to merge the concept of societal safety and security. So safety is included in societal security, but is societal security then really the right word? I think perhaps.

Samfunnssikkerhet and Societal safety

Societal safety as the translation of samfunnssikkerhet is mostly used by SEROS, the Centre for Risk Management and Societal Safety, a research centre with the University of Stavanger, UiS. They describe social safety as cross-disciplinary theory and methods for social planning, emergency preparedness, crisis management, safety management, risk perception and risk communication.

UiS offers BSc, MSc and PhD in samfunnssikkerhet or what they in English call Risk Management and Societal Safety, and societal safety is then the term that is most likely to be widely used for samfunnssikkerhet in the future. Is that the right word? I don’t think so.

Samfunnssikkerhet and Resilience

While societal security or societal safety are no too bad translations of samfunnssikkerhet that do make sense in English, I’m not so sure they capture the essence of samfunnssikkerhet. That is why I am strongly in favor of resilience. As Hollnagel puts it, resilience is

the intrinsic ability of a system to adjust its functioning prior to, during, or following changes and disturbances, so that it can sustain required operations under both expected and unexpected conditions

If you think of society as a system and if you replace required with essential in this definition, or if you replace the words vice versa you pretty much have the same definition.

Meet the Resilience Adviser

In my view resilience would be a much better English word for the Norwegian samfunnssikkerhet, just look at Resilient Organisations in New Zealand. They have taken research on resilience in organisations (and society) to a whole new level and put it into practice, and I hope to spread and disseminate what they do in my own work, and thus contribute to spreading resilience thinking in Norway.

So I now call myself “Resilience Adviser”. And what do I do? My job is to oversee that the state-managed road network in my region is planned, built, operated and maintained so that it can function 24/7/365, and thus ensure societal safety and societal security, i.e. resilience.

The only problem now is that there is no good Norwegian word for the English word resilience…sigh…

Resilience times four

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Revised on: 2015-09-20

Resilience. It is not so much about reducing the number of things that go wrong, but it is about improving the number of things that go right. So says Erik Hollnagel in the opening prologue of Resilience Engineering in Practice, a book he co-edited with several others. To me this means that resilience thinking turns risk management thinking on its head, and resilience engineering, so Hollnagel, rests on responding, monitoring, anticipating and learning. In that order. But why are these four elements so crucial to resilience?

Risk matrix and risk management redefined

What Hollnagel means is that the ability to respond to events, the ability to monitor ongoing developments, the ability to anticipate future threats – and importantly, future opportunities, and that the ability to learn from past failures and successes is what makes a business resilient, or an organisation, or society for that matter.

Personally, I have always seen the learning part as important to resilience, much like Liisa Välikanga wrote in her book on The Resilient Organization. But where Välinkanga focusses on an organisation that is innovative, robust, adaptable and strong, an organization that is engaged, competitive and strives for success, Hollnagel focusses on an organisation that is, well, uhm…resilient? Just that, simple and beautiful.

Hollnagel’s range of outcomes

Hollnagel relinquishes the good old risk matrix, because he thinks it is too concerned with the negative and too concerned with what we fear. The risk matrix perspective tends to overstate the importance of preparing for worst-case scenario, instead of looking at how the world really is. Normally, things go right, very right, even if they start out wrong. Therefore, he describes a new model, that includes the positive side as well, and that takes into account the full range of outcomes to any situation.

Four possible outcomes

Hollnagel divides the outcomes into four possibilities:

Positive outcomes that have a high probability – things that not only go right, but that are also intended to go right.

Positive outcomes that have a low probability – things that happen, not because they were meant to happen, but they just happened, sometimes out of sheer luck.

Negative outcomes with a low probability – things that go wrong, often unexpected, but less often unimaginable, and more often than not with dire consequences.

Negative outcomes with a high probability – things that go wrong, which must realistically (or statistically) be expected to happen, however, usually without serious consequences.

In my opinion, this way of looking at the world not only makes us spend less efforts on preventing low-probability-high-consequence events, or Black Swans as Nassim Taleb calls them. Instead it enables us to spend more efforts on making things go right and looking at why and how things go right.

This point of view is essential to resilience engineering. According to Hollnagel, in Resilience Engineering sees”things that go wrong” as the flip side of “things that go right”, assuming that hey are the result of the same underlying process.

It therefore makes as much senses to try to understand why things go right as to understand why they go wrong. In fact it makes much more sense because there are many more things that go right than wrong. Resilience Engineering argues that it is necessary to look at success as well as at failures precisely in order to understand why things go wrong. There are no fundamental differences between performance that leads to failure and performance that leads to success.

Hollnagel defines resilience as

the intrinsic ability of a system to adjust its functioning prior to, during, or following changes and disturbances, so that it can sustain required operations under both expected and unexpected conditions

and argues that this definition emphasises the ability of the system to function under both expected and unexpected conditions, not just to avoid failure or withstand adversity. Hence, it is wiser for an organisation to do more things right than to do less things wrong. Learning from success, not learning from failure, is the key to sustaining any business.

Four cornerstones of resilience

In my previous post on vulnerability and resilience in transport networks I already mentioned them. Today I will examine them one-by-one:

Knowing what to do, that is, how to respond to regular and irregular disruptions and disturbances, either by a prepared set of measures or by adjusting normal functioning. This is the ability to address the actual.

Knowing what to look for, that is, how to monitor that which is or can become a threat or in the near term, both in the environment and in the system itself. That is the ability to address the critical.

Knowing what to expect, that is, how to anticipate developments, threats and opportunities further into the future, such as potential changes, disruptions, pressures and their consequences. That is the ability to address the potential.

Knowing what has happened, that is, how to learn from experience, in particular how to learn the right lessons from the right experiences – successes as well as failures. That is the ability to learn.

This figure illustrates how the cornerstones work together:

Hollnagel’s four cornerstones of resilience

Critique

Perhaps I shouldn’t be too hard on this, but Hollnagel states that resilience engineering must look at both sides of the coin, things that go right and things that go wrong. I can see that in the first cornerstone, what to do, and the fourth cornerstone, what has happened. In the second cornerstones it is missing. I for one would say that that what to look for should not only include near term threats, but also long-term opportunities. However, it does seem to appear in the third cornerstone, what to expect, where opportunities is mentioned.

Conclusion

This is a brilliant discussion of what resilience is all about. I must admit that I haven’t read all the other chapters in the book,yet this introduction stands out as a marvel in explaining in simple words what the core issue is. Nothing here that is “academically interesting, but practically totally irrelevant”, as I like to say about some research. This is not only academically sound, it is also practically sound, and I look forward to putting this into practice in my line of work.

Reference

Hollnagel, E. (2011) Prologue: the scope of resilience engineering. In: Hollnagel, E., Dédale, J.P., Woods, D., Wreathall, J. (Eds.) Resilience Engineering in Practice: A Guidebook. Ashgate, pp. xxix–xxxix.

Vulnerability and resilience of transport systems

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Revised on: 2015-09-16

I’ve been away from academia for the last three years, and in my efforts to catch up with the latest research in transport-related vulnerability and resilience I decided to start with the most recent papers, and track my way backwards using the references cited as a potential guideline. This paper by Lars-Göran Mattsson and Erik Jenelius on Vulnerability and resilience of transport systems – A discussion of recent research seemed like a good start. What first struck me with this paper not the extesive reference list, but a figure the authors used.

Not the first time

The reason why the figure struck me is that from time to time there are similar figures that appear in a number of different papers, and as a researcher I am always intrigued to find the original source and who came up with this figure in the first place. I first saw this figure it in 2007 when I reviewed Youssi Sheffi’s book The Resilient Enterprise. There they describe what they call a “disruption profile”, which looks something like this:

Sheffi 2004

Going back in time 20 years, a very similar figure was used in Rausand and Einarssons paper from 1997 on An Approach to Vulnerability Analysis of Complex Industrial Systems, showing how an accidental event produces a consequence scenario, a disruption that tests the systems survivability:

Einarsson and Rausand 1997

Similarly, Mattson and Jenelius use a figure they call “Effects of decision-making on resilience”, which relates to same subject, but has a different approach:

Mattsson and Jenelius 2015

Obviously all figures address the same issue, that is the effect of disruptive events on system function (Mattson an Jenelius) or supply chain performance (Sheffi). The difference is that while Sheffi integrates mitigation and adaption in the shape of his one curve, Mattson and Jenelius specifically show how much mitigation and adaption contribute to changing how the curve bends.

So, while the principle behind the figure may not be original, the way that Mattson and Jenelius put it to use in their paper is definitely ground-breaking, because it clearly shows how mitigation can lessen the impact of an event and how resilience can be an expression of how the organisation returns to normal after an event.

Mitigation and adaptation

Now, mitigation and adaptation are two very intriguing concepts here. Essentially, risk management is all about mitigation, whereas adaptation lays the groundwork for resilience. In my world, where risk management is very much based on the bow-tie principle, mitigation is primarily concerned with the left side of the bow-tie, reducing the likelihood of events occurring. I called it mitigative actions and contingent actions respectively.

Bow-tie

Mitigation, where I come from, is mostly concerned with prevention. However, as I am now gradually discovering, mitigation addresses the whole bow-tie, both the causes on the left side and the consequences on the right side. Resilience then, looks further to right of the bow-tie, and how the organisation tries to deal with the long-term impacts of an event. That is a new point of view that I hadn’t thought about, or rather, I had thought about it, but I haven’t able to put it into a figure as brilliantly as Mattsson and Jenelius have done in this paper. It appears to me now that the bow tie is only about preparedness, response, and recovery. By adding adaptation to those three we also add resilience.

First a vulnerability analysis, then resilience

The authors go on to discuss the current literature on resilience and settle for Hollnagel’s four cornerstone definition: knowing what to do, what to look for, what to expect, and what has happened. Vulnerability analysis is an important prerequisite for adequate proactive actions.

Mattsson and Jenelius (2015) Resilience

Resilience, so Hollnagel, can be defined as:

the intrinsic ability of a system to adjust its functioning prior to, during, or following changes and disturbances, so that it can sustain required operations under both expected and unexpected conditions

That is an interesting definition, because in my world, as I wrote about in my post on how road vulnerability is analysed in Norway, vulnerability is seen as

the degree of ability that an object has to withstand the effects of an (unwanted) event and to resume its original condition or function after that event.

Here the negativity of vulnerability (as in susceptibility to fail) is defined in a positive way, by saying that the better the ability to withstand, the lesser the vulnerability. So actually, my definition of vulnerability in a sense is not too far from Hollnagel’s definition of resilience. Another new discovery for me.

Conclusion

This is a very interesting paper that combines a qualitative introduction with a quantitative argumentation when it comes to exemplifying their discourse. The paper also contains a number of promising references related to resilience that I plan to discuss in a later post.

Reference

Mattsson, L-G., Jenelius, E (2015) Vulnerability and resilience of transport systems – A discussion of recent research. Transportation Research Part A 81 (2015) 16–34. DOI:10.1016/j.tra.2015.06.002

Author links:

linkedin.com: Lars-Göran Mattsson
linkedin.com: Erik Jenelius

husdal.com: Resilience Engineering in Practice
husdal.com: A Supply Chain View of the Resilient Enterprise
husdal.com: The resilient Enterpris
husdal.com: Contingent versus Mitigative
husdal.com: Road Vulnerability Analysis in Norway

Book Review: Your Research Project

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Revised on: 2015-09-06

This book is a must-have for any serious student or budding research. Even if you consider yourself a seasoned researcher, this book could still teach you some tricks. Now in its third edition, the book will guide through how to write about your research, it will also take you through uthe various research methods, how to make a really good literature review, and it will teach you about honesty and ethics. It is a short, compact and comprehensive guide, better than most other how-to guides on research that I have read.

Did it help me?

Browsing through unfinished work on my blog I found a post draft meant to be a review of this book, dating back to October 2009, a draft I left and never returned to continue, not until now. I have no idea why I never finished that post, because the book did indeed help in me in my own research. At the time I was still aiming for a PhD, a path I have since abandoned. Or maybe not, who knows? Anyway, I did make good use of the tips and tricks the book provided me with, and I did use it when making my philosophical essay on Transportation Network Reliability and Vulnerability back in 2004, when I still believed that my PhD was not too far away.

Structure, structure, structure

The book emphasises that research is based on structure and logic. Now wonder that each chapter is like a small research project or paper in itself, with aims, introduction, content, conclusion, next steps and further reading. Tedious at first, but once you get the hang of it, you start to realise that this is indeed the way research should be conducted. The book teaches by example how to do research. I think that is what makes this such a brilliant book to have and read and put to use.

Reference

Walliman, N. (2011) Your research project, 3rd ed. Sage Publications, London UK

Author link

linkedin.com: Nicholas Walliman

Publisher link

sagepub.com: Your Research Project

Buy the book at amazon.com

amazon.com: Your Research Project

husdal.com: My PhD in Logistics
husdal.com: A philosophical essay on Reliability and Vulnerability
husdal.com: Published. Not Perished

Migrants and European supply chains

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Revised on: 2015-09-26

Truckers caught up in Europe’s migrant crisis say business is increasingly disrupted by queues and stowaways, but they are far more worried governments will step up border controls. In a worst case scenario this could mean serious supply chain disruptions or supply chain delays if EU governments decide to make border crossings more difficult than today.

Schengen about to be scrapped?

Europe is currently facing a major migrant crisis, so severe that there is already a Wikipedia entry for European migrant crisis. While this is first and foremost a humanitarian issue, there could be potential supply chain consequences, as an article on euractiv.com reports, stating that Haulers fear migrant crisis:

Truckers caught up in Europe’s migrant crisis say business is increasingly disrupted by queues and stowaways, but they are far more worried governments will step up border controls.

If the border-free zone within Europe were to disintegrate or be scrapped, it would call into question not only the road haulage industry’s own, time-sensitive business model but the supply chains of industries across the continent, they say.

The article on euractiv.com paints a rather frightening picture of what could possibly happen if the worst hit EU countries decide to enforce stricter controls, let alone close their borders completely. That would bring us back to the days we still had passport checks, document controls, crosschecks, and all of this increasing the waiting time for border crossings to hours at best and days at worst.

Are we heading in the right or wrong direction?

This brings to mind what I highlighted in a previous post on cross-border supply chains:

The vulnerabilities of international supply chains will increase in the future, driven by various external hazards and risks, lean operational models as well as changes imposed by regulatory countermeasures. Companies are particularly concerned about future disruptions in material supply and transportation, which will have negative impact on just-in-time operations.

That post was written in 2011, and now, 4 years on, “the vulnerabilities of international supply chains” has definitely increased, albeit migrants were probably not the shortlist of possible future vulnerabilities at that time.

A new beginning – a fresh start

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Revised on: 2015-09-26

15 years. More than 500 posts. Countless design changes. New friendships. Exciting opportunities. Insights. Knowledge. A 3-year break from blogging. And now, a new beginning, a fresh start with a new and according to Google, mobile-friendly theme. Perhaps that is the motivation I need to get started again? I don’t know for sure, but I hope so. There is a Norwegian saying, “Forandring fryder”, which best translates as “Making a change will make you happy”, and so far the change has indeed made me a bit happier.

Source of supply

In the 3 years that have passed since I changed jobs my blog has not seen many posts. Actually, hardly any posts. Not that there hasn’t been anything to blog about, there has been plenty, but there has been a major lack of inspiration. Why? Because a major source of supply in blogging material has dried up. No longer part of academia, my online access to academic journals is severely restricted at best and practically non-existent at most. Consequently, I haven’t been able to keep up with the latest research, and thus, most of my blog post ideas simply never turned up, since I was no longer able to tie up current research with current events and current trends. My blog suffered a supply chain disruption, as I wrote in Does a blog have a supply chain in 2010.

Back in business

Well, that well of knowledge has now started of flow again, having signed up as a part-time student. As I discovered when I scoured Science Direct for articles on transport(ation) vulnerability, transport(ation) resilience and alikes, quite a lot has been written on these subjects. That is the first source of future inspiration. What is surprising, though it shouldn’t be is that quite a few articles cite some of my work as their reference. I may have published and vanished, but I have not published and perished. That’s good to know, and is the second source of inspiration for future articles. What remains to bee seen is whether I will actually have the time or make the time to write about these articles, or whether the infamous Writer’s Block will strike again. I hope not.

husdal.com: Does a blog have a supply chain
husdal.com: Writer’s block

Transport infrastructure resilience

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Revised on: 2015-09-26

Is it possible to devise a simple framework for assessing the resilience of the transport infrastructure? The answer is Yes, and the New Zealand Transport Agency has done so. That said, it is not a “simple” framework. It is comprehensive, it is academically well-founded, it is practical, but it is not easy to put into use. Nonetheless, New Zealand has done that, too. In my opinion, it is something many countries can learn from.

My own struggles

I came across this report on Measuring the resilience of transport infrastructure, published by the NZ Transport Agency, while trying to come up with a similar means of measure for the Norwegian road network. The measure would be put into use (among many other criteria) for prioritising investment projects in our National Transport Plan, a ten-year-plan that is revised every four years and that outlines how the Government intends to prioritise resources within the transport sector. The emphasis here is on “outlines” and “intends”, since the plan is not a commitment, merely an intention, and funding has to be allocated and voted upon by the parliament every year. Still, the four national agencies that are responsible for air, sea, rail and road transport in Norway spend considerable resources for finding projects, evaluating them and prioritising them, just to see the politicians then preferring the politically attractive projects over the economically attractive projects, as I wrote in a post some time back on why the world’s richest country has the world’s worst roads.

Resilience defined

Anyway, back the New Zealand report, and the reason for mentioning it on this blog, is the thoroughness with which the subject of resilience is described, and then narrowed down into two components: technical resilience and organisational resilience.

But before I get to that point, what enticess me most of all is their definition of resilience:

The concept of resilience is wider than natural disasters and covers the capacity of public, private and civic sectors to withstand disruption, absorb disturbance, act effectively in a crisis, adapt to changing conditions, including climate change, and grow over time.

As the report states, this definition rightly acknowledges that the service the infrastructure delivers will be disrupted, due to damage to the infrastructure; however, the service is able to reduce the possibility of failure, adapt and recover from a disruptive event and/or gradual external changes over time.

This reminds me of one my previous posts, about resilient organisations. There, resilience is about a company’s capacity to benefit from unlikely events, events which could have turned into threats, but instead were turned into opportunities. It is about the capacity to take advantage of serendipity, to take advantage of involuntary sagacity.

Two dimensions of resilience

The reseach report goes through a number of approaches towards resilience, citing academic references and relevant literature, and focuses on the key point, that resilience has two dimensions: organisational and technical:

Technical resilience: The ability of the physical system(s) to perform to an acceptable/desired level when subject to a hazard event.

Organisational resilience: The capacity of an organisation to make decisions and take actions to plan, manage and respond to a hazard event in order to achieve the desired resilient outcome.

I think this makes sense. While you can invest in strengthening your infrastructure techincally, this will not make you any more resilient unless the organisation(s) responding to an event are skilled, prepared and trained towards it.

Within these dimensions the authors describe underlying principles of both technical and organisational resilence:

Technical:

Robustness: the ability of elements, systems and other units of analysis, to withstand a given level of stress or demand without suffering degradation or loss of function

Redundancy: the extent to which elements, systems, or other infrastructure units exist that are substitutable, in the event of disruption, degradation, or loss of functionality.

Safe-to-fail: the extent to which innovative design approaches are developed, recognising that the possibility of failure can never be eliminated.

Organisational:

Change readiness: the ability to sense and anticipate hazards, identify problems and failures, and to develop a forewarning of disruption threats and their effects.

Networks: the ability to establish relationships, mutual aid arrangements and regulatory partnerships, understand interconnectedness and vulnerabilities across all aspects of supply chains and distribution networks.

Leadership and culture: the ability to develop an organisational mind-set/culture of enthusiasm for challenges and opportunities.

As I see it, the authors have captured mots if not all of which that goes into resilience.

Overall resilience score

Based on the dimensions and principles the authors devise a resilience assessment framework that comes up with a final overall resilience score: Very High, High, Moderate and Low resilence.

Complicated? Maybe. Comprehensive? Yes.

Reference

Hughes, JF and K Healy (2014) Measuring the resilience of transport infrastructure. NZ Transport Agency
research report 546. 82pp

Author links

linkedin.com: James Hughes
K Healy

Download

nzta.govt.nz: Measuring the resilience of transport infrastructure

husdal.com: Resilient organisations

Analysing road vulnerability in Norway

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Revised on: 2015-09-09

How does the Norwegian Public Roads Administration NRPA assess the vulnerability of the Norwegian road network? This is the first post in an attempt at resurrecting this blog from its hibernating state that has now lastet for some 18 months., and marks the start of blog posts form my life as senior adviser in contingency planning and crisis management, where I spend much of my working hours developing tools for risk analysis and giving lessons on how to conduct risk analyses. The inspiration for this post is taken from the course material I prepared for a recent course.

Why risk and vulnerability analysis?

As a government body, the NRPA adheres to many laws and rules, and is guided by a number of policies and principal documents. One of these documents, the National Transport Plan, or NTP in short, states that the national goal for transport is:

To provide an efficient, accessible, safe and environmentally friendly transport system that covers society’s requirements and encourages regional development.

with accessibility being one of four main goals, as described here:

Our transport policy is to improve traffic flow and reduce the time of travel in order to strengthen competitiveness of industry and contribute to maintaining the main features of existing settlement patterns.

The most recent NTP 2014-2023 emphasizes reduced vulnerability and more adaptation to climate change as an important issue for the future:

Precipitation, temperature and wind have a strong impact on transport infrastructure and traffic management. Extreme weather, with strong winds, storm surges, heavy rains and temperature fluctuations, imposes increased demands on infrastructure. Large sections of the current transport network are not sufficiently resilient to withstand such increased strains. The infrastructure must be made more robust and emergency preparedness must be improved.

The NRPA has its own bylaw, describing in detail which tasks that we are responsible for doing, and with accessibility closely linked to vulnerability, it is no wonder then that risk analysis and contingency planning (among many other tasks) is mentioned specifically:

The NRPA is to have an overview of the threats to and the vulnerability of the road network, and work across its own organsation (and together with other agencies) in necessary contingency planning in order to ensure the best possible accessibility under changing conditions and/or possible or actual threats.

Being able to see, evaluate and manage potential risks and vulnerabilities is in fact part of the NPRA’s obligation towards society.

Societal security and business continuity

The background for this obligation can be found in the term “Societal security”, a term not very common outside of Norway. “Societal security”, which I tried to explain in a previous post, is best translated as the ability that a society has to persist under strenuous circumstances, to maintain important functions, and to provide the necessary services to uphold the life, health and welfare of its members.”It is very similar to the Finnish “security of supply” that I wrote about some time ago.

For the NRPA societal security, or “samfunnssikkerhet” in Norwegian, means the ability that we (the NRPA) has to to persist under strenuous circumstances, to maintain important functions, and to provide the necessary transport network so that society can persist. Since we plan, build, operate and maintain the Norwegian road network, it is our duty to make sure that it is functioning and accessible 24/7, even during worst of times. That is the obligation that we have towards society.

This obligation towards “societal security” is apparently so important in today’s world that the ISO in 2013 published an international standard, ISO 22301 – ″Societal Security — Business continuity management systems”, as a response to governments and regulators beginning to recognize the role of business continuity in mitigating the effects of disruptive incidents on society.

This is also reflected in Helen Peck’s 2006 article on Reconciling supply chain vulnerability, risk and supply chain management, where Peck refers to the UK Civil Contingencies Act of 2004 that requires the undertaking of business continuity planning and risk management from local government authorities, utilities providers and commercial organizations with responsibilities for essential public transport and critical infrastructure.

Risk and vulnerability

Back to risk and vulnerability, according to ISO 31000 Risk Management, there is no distinction between risk analysis and vulnerability analysis, it’s just risk analysis. However, for reasons that I cannot really understand, in Norway we mostly call it risk and vulnerability analysis. Linking risk and vulnerability is difficult. Where does one end and the other start? In my understanding, I usually use these definitions:

Risk is the potential likelihood that an event will occur and the potential consequences if the event occurs.

Vulnerability is the ability that an object has to withstand the effects of an (unwanted) event and to resume its original condition or function after that event.

Hence, to me, risk is associated with the immediate consequences of an event, while vulnerability is associated with the extent of the ability to manage or handle the wider consequences and long-term effects rather than the imminent consequences. Essentially, the less you can handle, the more vulnerable you are. Or, to use the term business continuity, vulnerability is that which stops business from continuing.

Example: Risk: A bridge is prone to being closed because of frequent flooding. Vulnerability: There is no diversion route.

I often use the bow-tie figure below to illustrate the difference between risk and vulnerability, and between proactive and reactive measures, i.e. mitigative actions and contingent actions..

Please note that the consequence in the right column does not necessarily relate directly to the cause on the same line in the left column. Also note that the consequences illustrate the wider effects on society, i.e. the business continuity issues related to societal security, whereas the event is the immediate effect resulting from the cause(s).

ISO 31000 Risk and Vulnerability Analysis

The risk and vulnerability process in the NRPA follows the terms and steps (5.3 to 5.5) used in ISO 31000, as described in the figure below: While ISO 31000 describes very well what is meant by these terms, I have made my own a bit more hands-on descriptions for what a risk and vulnerability analysis contains:

What Values do we have? Establishing the context 5.3

What do we want to protect? What can we accept?

What are the Threats we face? Risk identification 5.4.2

What are our challenges? What can go wrong? What do we fear?

What are the Likelihood and Consequences of events? Risk analysis 5.4.3

Why and how can things go wrong? Causes, drivers and results?

How is our Vulnerability and Robustness? Risk evaluation 5.4.4

If things go wrong, how bad is it really? Can we cope (or not)? What are the wider effects?

Which Likelihood-reducing measures are there? Risk treatment 5.5

What have we done (and what more can we do) to prevent things from happening?

Which Consequence-reducing measures are there? Risk treatment 5.5

What have we done (and what more can we do) to prevent things from getting worse, if they indeed do happen?

Perhaps not the best of descriptions, but they work for me.

Three levels of analysis

As to the risk and vulnerability analysis itself, it is done at three different levels: simple, simplified and detailed. Simple analysis (Level 1):

A risk and vulnerability analysis that is used to identify what risks and vulnerabilities that exist and to make initial easement of how they should be treated. The analysis shall point at possible challenges and solutions, and is a mostly qualitative analysis, a best guess or estimate.

Evaluation criteria: Best judgement

Situation OK, risk treatment can be done if desired, but is not required.
Situation NOT OK, risk treatment is necessary and should be done, it is not required, but highly recommended.
Situation NOT OK AT ALL, i.e. unacceptable, risk treatment is required and must be done.

Simplified analysis (Level 2)

An extended risk and vulnerability analysis that is used to evaluate risk and vulnerability, when or where the first analysis does yield conclusive results or when or where there is a need for a more thorough analysis to evaluate different risks and risk treatments. This is a mostly quantitative analysis that aims at determining more precise values for likelihoods and consequences.

Evaluation criteria: Risk matrix

Note that this is a generic matrix and that one must decide on which values and increments to use for likelihood and consequence before starting the analysis, by answering the question “What can we accept?” when establishing the context. This also establishes the colour grading of the matrix, which may or may not be as seen above. Being generic, this matrix should be extended to include analysis-specific consequence categories, as seen in this book on Security Risk Management, e.g. consquences for people’s life/health, environment, accessibility, property/equipment.

Detailed analysis (Level 3)

A special risk and vulnerability analysis that is used to analyse specific risks and vulnerabilities, e.g. in the construction and design details of roads, bridges and tunnels. This is a detailed and quantitative analysis using statistical methods and forecasting tools aimed at ruling out any missed uncertainties in the previous levels of analysis.

Evaluation criteria: analysis(object)-specific This type of analysis is not often used within the NRPA and mostly contracted out to consultants and risk analysis experts.

Events

Obviously, there are many events that could close down a road, too many to think of, actually. That is why the NRPA risk and vulnerability analysis guidelines lists a set of “standard” events for which a road should be analysed, in order to generate a risk profile.

Adverse weather
Bridge closed
Drainage failure
Electricity blackout
Ferry link failure
Fire (in objects on or near the road)
Flooding
Foundation failure
Frequent accident point
Hazardous goods accident
High winds
Landslide (earthflow)
Malicious actions/terrorism
Quick clay slide
Restrictions (in height, width, weight, axle load etc. that make the road inaccessible to some vehicles, typically Heavy Goods Vehicles)
Road rescue and towing (of Heavy Goods Vehicles, other car rescues are neglible)
Rockfall
Snow avalanche
Storm surge
Terrain sinking (non-slide)
Transport hub inaccessible
Tunnel closed

In a later post I will present some of the analyses done in my work region and the risk profiles they resulted in. It is quite interesting to see which events that are most frequent in which areas.

Summary

This post was meant to give some basic insight into how the Norwegian Public Roads Administration NRPA assesses the vulnerability of the Norwegian road network. It will be followed up by more detailed posts.

Author’s note

This is my first post for some 18 months now, and it has taken me more time than expected to write this. Not just because of the language barrier, as the original material for this post is in Norwegian, but also because of a “writing barrier”. Wording and phrasing and structuring a blog post is a skill that needs regular training and I must admit that my skills are still a bit rusty. Nonetheless, there’s more to come.

Resurrection – back in business or not?

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Revised on: 2015-09-26

Perhaps it’s about time to get this blog up and running again? It has been 18 months since my last post, and while I have had many thoughts and ideas about what to write, I simply haven’t found the time or – more importantly – motivation to do so. Serious blogging does take some serious effort, which I have been lacking. While I cannot promise the same prolific posting that I used to have, I still want to post enough to let my readers know that this blog is still alive and kicking.

That said, getting back into blogging will not be an easy task. First of all, given my last job change, which is what lead to the demise of my blog in the first place, supply chain risk is no longer the main focus. The academic perspective and literature and research review posts that I used to have are also no longer possible, at least not in-depth, as I no longer have complete access to academic journals. That is sad, but that’s the way it is.

Well, what from now on will be the main topic is transport vulnerability and crisis management as seen from my current workplace, the Southern Region office of the Norwegian Public Roads Administration, NPRA, (Statens vegvesen Region sør) in Arendal, Norway, where I work as a senior adviser in contingency planning and crisis management. Mostly, my work consists of supervising risk and vulnerability analyses, conducting crisis management drills and exercises, and developing tools and methods for this. My blog posts will report from this work, as a real-life example of how ISO 31000 Risk Mangament can be put to into practice.

One of the challenges I face, and perhaps the main reason why this blog has suffered, is that my work is conducted in Norwegian, so are the papers and reports I read and the presentations I produce – and to be put here they must be translated first, and not simply translated, but also adapted such that readers without inside knowledge of Norway and the NPRA will understand how things work here.

Nonethless, I have no intentions of letting this blog die, and I have already prepared some posts that will show up in the near future.

Save costs and the environment

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Revised on: 2015-09-09

Hitting two birds with one stone? Can you shrink manufacturing costs while at the same time operate in an environmentally friendly manner? Veolia Environment thinks it’s possible, and that is why WTG is featuring Veolia in an upcoming webinar titled Environmentally Friendly Initiatives to Shrink Manufacturing Costs. This live and interactive session is set to show you how to combine sustainability excellence and cost reduction targets to better focus your environmental performance initiatives.

What will you learn?

Effective design, implementation and operation of environment-friendly initiatives in a meaningful and cost-effective way:

Activate environmental performance while reducing costs
Maximise efficiencies with waste, treatment and recovery initiatives
Sustain seamless and comparable quality of service in multiple locations
Set sustainability excellence and cost reduction targets (case study examples)

Case study examples will illustrate how Veolia Environnement helps industrial customers globally enlarge, improve and speed up manufacturing processes, while improving their environmental performance.

Agenda and registration

wtgwebinar.com: Environmentally Friendly Initiatives to Shrink Manufacturing Costs

husdal.com: WTG webinars on supply chain risk

What are Logistics Clusters?

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Revised on: 2015-09-02

This is a guest post by Professor Yossi Sheffi, Director, MIT Center for Transportation & Logistics

Many global supply chains benefit from the operational flexibility and distribution efficiencies provided by logistics clusters, yet we have a relatively poor understanding of these vital nodes. This lack of knowledge is even more pronounced when the broader economic benefits are considered.

One of the main motivations for writing my new book Logistics Clusters: Delivering Value and Driving Growth (MIT Press, October 2012), is to shed light on the crucial role played by logistics clusters in supply chain management and international commerce.

Logistics clusters are communities of companies that come together to share logistics expertise and know how. They can be found in most countries, often near consumer markets or within ports and airports. And they play host to a wide range of enterprises including the logistics arms of enterprises, third-party logistics services providers, distribution companies, and freight carriers.

In the loop

What advantages attract companies to these agglomerations? There are quite a few, not only for supply chain managers but also for the regions where these communities are located and for the global economy.

First, the growth of logistics clusters is self-reinforcing. They are the focal point of large volumes of freight, making it possible to achieve economies of scale and scope. Carriers and shippers use these gains to reduce the number of empty backhauls by identifying opportunities to pick up follow-on loads. And they exploit the scale of cluster-related freight activities by deploying larger conveyances to move freight and achieve higher vehicle utilization. Moreover, as the freight volumes in and out of logistics clusters grow, transportation service levels improve due to higher frequencies and more direct operations.

More efficient cargo flows lead to lower transportation costs and higher service levels, which attract additional companies to the cluster, creating a positive feedback loop. Further, by raising the efficiency bar they promote global growth, which increases the demand for cluster-based services and stimulates further trade growth.

Additionally, logistics clusters offer advantages based on the interchangeability of transportation and logistics assets. Since equipment such as rail cars, containers, trailers, and airplanes come in standard sizes and shapes, it can be shared by the community. The same goes for the logistics expertise that resides within these groupings. Sharing resources in this way enables the incumbents to withstand the variations in freight flows associated with the industries they serve.

A model for job creation

A powerful attribute – and one that is generally underestimated – is the ability of logistics clusters to create jobs. The port of Rotterdam employs 55,000 people directly and 90,000 indirectly. Los Angeles County supports more than 360,000 jobs in logistics. The Memphis International Airport in the U.S. is responsible for supports 220,000 jobs in the local economy, 95% of which are tied to cargo operations. In fact, more than one in three jobs in the Memphis area linked to the airport.

As I explain in the book, the employment opportunities in logistics clusters are wide ranging. There are blue collar jobs in areas such as warehousing, white collar positions in IT, customer service, and management, and work associated with value-add activities including light manufacturing and repairs. In its Louisville Worldport hub, UPS employs hardware technicians to repair Toshiba laptops, for instance.

These jobs are difficult to offshore, and not tied to the performance of a single industry. The late-stage customization of products that is carried in many clusters needs to be located in close proximity to end markets. In addition, the economics of transportation dictate that clusters should not be located too far from customers.

In many cases logistics clusters are also building highly valuable expertise in environmental sustainability. These freight hubs make it possible to improve vehicle utilization rates and to deploy larger conveyances, which lower the carbon footprints of supply chains.

The pitfalls

Logistics clusters also have a number of downsides that users should be aware of. Some local communities resent the noise, heavy traffic, and pollution that come with logistics clusters. In April 2012, a German court upheld a ban on night flights in Frankfurt Airport that restricts freight operations in the hub, for instance.

These entities are vulnerable to the economic downturns and geopolitical risks that are part and parcel of global trade. Rising energy prices and protectionist trade measures can undermine the viability of logistics clusters. Their competitiveness can also be affected by technological change. The port of Singapore, for instance, is investing in cranes that lift four containers simultaneously, making port operations faster and more efficient.

It should also be noted that not every logistics cluster is a success story; flawed decision making and inadequate resources can impede their development. Locations that initially appeared to be a perfect fit turn out to be less favorable. An example is Port Said at the northern mouth of the Suez Canal, which has not developed into the major global logistics hub envisaged by its creators.

Global competition is another factor to consider. Take for example, the expansion of the Panama Canal and the developing logistics clusters along the canal. This raises the competitive stakes on three fronts. First, there will be competition with transshipment ports in the Caribbean, Secondly, ports along the Atlantic Coast of the US and Latin America will compete to handle the larger container ships that the enlarged canal will attract. And thirdly, competition with other, non-canal routes is expected, specifically between the canal and the US Pacific Coast and rail combinations.

Bright future

Will these threats stymie the growth of logistics clusters? I think not. Trends such as globalization will continue to fuel the expansion of these communities. Indeed, as I argue in my book, more investment in logistics clusters is taking place in developing countries, notably China. Several European countries including Germany and the Netherlands are busy attracting logistics operations. Other countries should pay more attention to building and developing logistics clusters, so they can reap the full benefits that these remarkable communities have to offer.

Reference

Sheffi, Y. (2012). Logistics Clusters. MIT Press.

Author links

mit.edu: Yossi Sheffi
linkedin.com: Yossi Sheffi

Book website

mit.edu: Logistics Clusters

Buy the book

amazon.com: Logistics Clusters: Delivering Value and Driving Growth

husdal.com: Third party logistics – a risk orchestrator?
husdal.com: 3PL outsourcing – challenges and benefits

Other books reviewed by husdal.com

Crisis? What crisis?

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Revised on: 2015-09-12

Finally, almost to the day six months into my new job, a genuinely new post on husdal.com. My new line of work has kept me so busy that I haven’t had much time to think about supply chain risk, let alone post about. Besides, my new job is all about business continuity and crisis management, and I haven’t even read a single article on supply chain risk since I came here, so if there is to be a new post, it has to be about crisis management. And frankly speaking, supply chain risk is probably going to be a very seldom topic on this blog from now on, unless popular demand wants it otherwise.

What is a crisis?

You see, part of my job at Southern Region office of the Norwegian Public Roads Administration is to develop and maintain crisis management plans. One of the important questions to ask when developing contingency plans is the question “When is does a situation turn into a crisis? When is a crisis really a crisis? What makes a crisis a crisis? For that I need to define the term crisis.

An “ordinary” contingency is not a crisis

Obviously, within the Norwegian Public Roads Administration (or Highways Agency in the UK) there are contingency plans for a wide range of unexpected situations such as accidents, heavy snowfall in winter, flash floods in summer to mention but a few. There are also detailed detour plans if this or that link is closed. These are what I call “ordinary contingencies” that happen every day so to speak and that do not warrant extraordinary attention.

An extraordinary contingency is a potential crisis

It is only when the ordinary contingency plans fail or when the ordinary contingency measures are not enough that we have potential crisis at our hands. Hence I came up with this definition of a crisis:

A crisis is a situation following an unwanted event that cannot be resolved through an organisation’s ordinary contingency efforts, but that requires a coordinated and extraordinary effort across all/many organisational units, and often additional assistance from external agents.

This definition is translated from Norwegian and my choice of words in English may not be perfect or to the point, but I hope it brings the message across.

When incidents turn into crises

Essentially, what the crisis definition says is that any eventuality that is not covered in a contingency plan can become a crisis, simply because one does not know what to to, since it is not planned for or prepared for. However, even eventualities that are covered can turn into crises, if they are not managed properly. And importantly, even if an eventuality is not covered it may not always turn into crisis, if it is managed as it should be, despite the lack of contingency plan guidance.

Do you agree/disagree?

I’d love to hear you opinion on my definition of crisis. lease comment below or contact me directly.

husdal.com: A crisis is not an opportunity

Operational Excellence – or not

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Revised on: 2015-09-12

Operational Excellence or OpEx for short, what does that imply and why should you care about it? Well, if you don’t know it, here’s your chance to learn more: A webinar by WTG webinars, the leading provider of B2B educational online events. I’ve been a media partner with them for several years now, and from a humbling and fumbling start their webinars have evolved into do-not-miss-events that you should make time for. I always do. many of them, if not most, are also available for on-demand viewing.

Operational Excellence – key issues

The upcoming webinar on Top 5 OpEx Success Strategies will help you become more successful, using Lean and OpEx to enable and accelerate business growth, Presented by Simon Law, a former manufacturing leader of the Toyota Motor Manufacturing Corporation, who worked as a team leader responsible for delivering 600 vehicle bodies per shift to two assembly plants for 11 years, the webinar is centered around these topics:

Top 5 blunders that make OpEx failand how to avoid them
How to Integrate and deploy OpEx strategically for growth in earnings & sales
Why a comprehensive management system that shows improvements is key for sustaining results and cultural change
Understand how to develop the right culture and the way it impacts upon your business performance
Real examples of the tools and behaviours highly successful companies are using to enable cultural change and sustainability of OpEx and Lean

The Effective Lean Enterprise

Along with the webinar WTG in cooperation with TBM is also releasing a white paper on lean enterprises. As applicable to companies that are just starting out on their lean journey as it is to those that might be further along, this white paper (download below) reviews 10 best practices for establishing and growing a continuous improvement program or Kaizen in Japanese.

Download

tbmcg.com: TBM White Paper – 10 Best Practices for Lean

husdal.com: WTG webinars on supply chain risk

4th SCRM Seminar Barcelona 2012

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Revised on: 2015-09-12

This is an event that should not be missed: The 4th supply chain risk managment seminar in Barcelona, 25th and 26th October 2012. This annual event has been featured on my blog since its first inception in 2009, and over the last 4 years, the seminar has provided many of the world’s leading organisations with a platform to find real “in-process” solutions to their specific Supply Chain Risk Management issues.

New format

This year they have reshaped the seminar to incorporate one full day dedicated to General Supply Chain Management issues and a second full day to Supply Chain Risk Management challenges. Will that make it an even greater success? I think so. It could be a sign that thye are running out of supply chain risk topic, but I chose to think that it’s a sign of greater integration of risk thinking into supply chain management thinking. That is perhaps also why they changed the name, it is the the Supply Chain and Supply Chain Risk Seminar.

Key Issues

Day 1 is devoted to Supply Chain Management, while Day 2 is devoted to Supply Chain Risk Management, albeit, looking at the program in more detail, Day 1 isn’t exactly void of any risk-related topics.

Supply Chain Management

Supply Chain Collaboration
Supply Chain Finance
Increasing Supply Chain Visibility and Flexibility
Demand-Driven Value Network
Reduce Supply Chain Complexity to improve SC Efficiency
How to manage supply chain complexity in today’s global volatility?
Delivering Sustainable Profitable Growth through the Supply Chain
Increase Upstream and Downstream Supply Chain Flexibility
Establishing Reliable Supply Chains
Measurement & Metrics & ROI

Supply Chain Risk Management

Loss Mitigation
Supplier Risk Assessment and Monitoring
Securing Global Supply Networks
New Models for Supply Chain Risk
Supply Chain Disruption: Japan´s Tsunami business case
The role of total cost analysis (design versus disruption) in effective supply chain risk strategies.
The role of supply chain risk management in global competitiveness
End-to-end Supply Chain Risk Management
Successful business case of SCRM implementation
Measurement & Metrics & ROI

As always, there is an impressive list of speakers, taken from a wide range of different industries.

Download

husdal.com: SC+ SCRM 2012 conference flier (pdf)

husdal.com: 3rd Supply Chain Risk Management seminar Barcelona 2011

husdal.com is back?

2 Replies

Revised on: 2012-08-04

Many of you may have wondered why there hasn’t been a new post on this blog for 6 months, and admittedly, I am quite embarrased about it, because I used to be such a regular blogger. Unfortunately my career change has led me down a path less in touch with supply chain risk, in particular the academic side of supply chain risk, and hence less to blog about. At least, that is how I have felt for the past six months.

Besides casting blogging aside for a while, I have been very busy with getting to know my new home area and I have also built a new house for my family (which I did blog about, albeit in Norwegian only). Add to that, my baby daughter has grown and no longer sleeps through the day or lies still on the floor, but demands full-time attention, round the clock, so my time for blogging is very limited. Good explanations, but bad excuses, I know.

That said, I hope to get back to blogging soon, because, despite what I first thought, my new job has ample opportunties/topics for blogging, although more related to business continuity and crisis managment, and less related to supply chain risk.

Supply Chain and Transport Risk

1 Reply

Revised on: 2012-03-07

In our interconnected world, safety, reliability and efficiency can only be secured through collaboration between industries and government. This is the theme of a recently published report titled New Models for Addressing Supply Chain and Transport Risk. Written in collaboration with Accenture and published as an initiative of the Risk Response Network with the World Economic Forum, the report highlights the urgent need to review risk management practices to keep pace with rapidly changing contingencies facing the supply chain, transport, aviation and travel sectors.

Continue reading →

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