Simple But Effective Risk Analysis!

It is impossible that improbable will never happen.

-Emil Gumbel, Mathematician

Risk is part of every endeavor.  By analyzing your situation, you can determine the risks associated with a course of action and then reduce the risk to improve the chance of success.   

I have spent a lot of timing in risky situations and I have found understanding the associated risks will ensure success.  As a military pilot, I accomplished an Operational Risk Management (ORM) evaluation before each mission.  ORM allows you to quantify the risk you face, and determine if a mission is worth the risk.  I have used risk analysis in business to determine if a startup business was worth the investment.  I have also used risk analysis as an emergency manager and emergency management instructor, risk analysis allows the emergency manager to determine what mitigation steps should be taken or how to prepare for a possible disaster.  I have diverse experience and I have found risk analysis improves the chance of success, saves lives, saves property and improves profitability.

What is risk?  From Merriam-Webster: 1- possibility of loss or injury, 2-  someone of something that creates a hazard. I have a simple definition; risk is the likelihood a hazard will occur.  A hazard to a business is the loss of a large customer; a hazard to combat mission is flying against an enemy with an SA-14 surface to air missile or the hazard to the emergency manager is the breaking of a dam.  What is the likelihood a hazard will cause damage… it is the risk. 

In risk analysis we measure the likelihood of a hazard impacting your endeavor and the consequence it causes.  There are complex risk analysis tools available and risk analysis consultants but I will present a simple method to capture your risks and rank them. 

The Risk Analysis Process:

During the Risk Analysis, identify the hazards that directly impact your business, endeavor or operations’ process. There are many hazards in the world but what effects you directly.  Indirectly a storm could effect the delivery of your products, the hazard is not the storm to you, but the failure of your logistics operation to deliver products as schedule… does that effect your business?

  

1-   Brainstorm Hazards: What hazards effect your business? 

2-   Determine the likelihood a hazard will effect you and assign a numerical value to the hazard, 1- low probability of a hazard effecting you to 5- a high likelihood a hazard will occur.

3-   What is the consequence of a hazard’s impact on your business? Rank according to the problems associated with a hazard, 1- low to no effect on the business to 5- the business’ operation may fail.

4-   Total up he likelihood and consequence thus you have the risk to your business. 

5-   Rank the hazards based on the risk

6-   Consider methods to avoid, mitigate or prepare for the risk.

Preparedness is your fallback position, first avoid a risk if you can still accomplish your goals, secondly mitigate the risk if the costs are affordable and finally be prepared to respond if the risk effects your operation.

What do you think?  Will disaster strike?  Lightning doesn't strike twice?

Be prepared!

Michael James Smyth

Energy Security – Are We Secure?

“All power corrupts but we need electricity”

-Anonymous

Could the United States’ electrical grid be knocked offline?  For months… What would this do to our society? The United States’ electrical grid is a national asset for without it, we would quickly revert to the Middle Ages or worse! Without electrical power, we do not have power for gas pumps, transportation would be limited, supermarkets will struggle to operate and resupply their stock, and banks? Investments? Communications require power… yes, we could live for awhile without food or the stock market, but what about water? Our water supply requires electricity to power the pumps and to clean the water. 

I spent time in Iraq as a military leader and as a Diplomat. During my stay, I met a lot of Iraqis. The people were great, most had the same issues as we in the States, kids’ activities, prepping the children for University or jobs, finding useful work or creating a small business… While working with the Iraqis I heard many stories of life in Baghdad after the US military attacks of 2003. Power was knocked out; that’s when the city people of Baghdad realized they had no water for drinking, septic system or showers.  Eventually the government was able to provide a few hours of power a day and that allowed people to fill their bathtubs and storage containers with water… But what if the power didn’t come back?

The United States’ electrical power grid has approximately 2,000 very large transformers; these transformers are critical pieces of the power grid. The transformers take months to build and cost millions of dollars each. These transformers a custom made for a location, hard to replace. These custom-made transformers which allow electricity to flow through the grid from the power plant to your home, without the transformers it is like having a bridge out along a large canyon, it is not easy to get across

The US has about 6000 power plants. According to the Department of Energy, damage to high voltage transformers could keep a power plant offline while replacement transformers are procured which may take months, possibly years. See figure 1 for a big picture layout of the electrical grid. 

Figure 1: Electrical Grid  (US Department of Energy, 2006)

Hospitals, government and many businesses have backup power generators. These generators can provide essential services, however keeping those running while the electrical grid is repaired could get complicated. There are a lot of logistics involved in refueling the diesel generators dispersed throughout a city or county. 

Are we safe today?  No. In the past year and a half, we have had at least 2 terrorist attacks on the grid.  Maybe more?

Last year terrorist attacked a San Jose, CA substation. Referencing a Wall Street Journal account of the incident (Smith, 2014); the attack began around 1 am April 16, 2013. Multiple coordinated attackers were involved, how do we know multiple attackers were involved? The attack took place at multiple locations and surveillance video recorded the attackers using flashlights to signal each other. First, the attackers cut telephone lines then they used sniper rifles with precision to knock out 17 large transformers that sent power to Silicon Valley. Fortunately the power was quickly routed from others parts of California to cover the shortfall.

On 10 June 2014, a power plant in Nogales, AZ was attacked with an Improvised Explosive Device (IED). An IED was left next to a valve of a 50,000 gallon tank of diesel gas.  Fortunately the IED did not destroy the valve or rupture the tank of diesel  fuel.  The tank was charred and the ATF is investigating. Act of terror… yes. 

Bloomberg News has reported that "dozens" of cyberattacks were made from China on U.S. electric and gas utilities in 2012 and 2013. Is a cyberattack dangerous? Yes, it is possible for a coordinated cyberattack to cause more physical damage to the electrical grid than a conventional attack. It would be hard for terrorist to target all of the grid with guns and explosives because there are 6000 power plants, 2000 very large transformers and thousands of critical transformers spread-out all over the country.  However, a simultaneous attack to power plants and the grid could be programmed through the internet!  The electrical grid is vulnerable to cyberattack because power plants and transformers are connected to the internet, thus connected to hackers, Chinese and terrorist.

What is being done about the vulnerability of the electrical grid? Multiple government agencies, departments and utility companies are looking into safeguarding the electrical grid. I have attended DHS tabletop exercises on a cyberattack and I participate with the Colorado Emergency Preparedness Partnership (CEPP). CEPP is an organization designed to allow private businesses, governmental organizations to work together to prepare for disasters and other problems.

Energy security is an important topic requiring more discussion. In the next article, we will discuss the definition of Energy Security and the cost of improving security.  Also we will look into what you can do at your business and home, and what should your elected officials be working on.

Michael James Smyth

References:

·         The Colorado Emergency Preparedness Website. http://thecepp.org/new/

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·         http://www.washingtontimes.com/news/2014/jun/11/makeshift-bomb-explodes-at-nogales-power-plant/

Smith, R. (2014, 2 5). Assault on California Power Station Raises Alarm on Potential for Terrorism. The Wall Street Journal.    http://online.wsj.com/news/articles/SB10001424052702304851104579359141941621778

US Department of Energy. (2006). Benefits of Using Mobile Transformers and Mobile Substations for Rapidly Restoring Service. DOE. http://energy.gov/sites/prod/files/oeprod/DocumentsandMedia/MTS_Report_to_Congress_FINAL_73106.pdf

  http://energy.gov/sites/prod/files/Large%20Power%20Transformer%20Study%20-%20June%202012_0.pdf

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