Mining 012 riskope is it true that pi_gs

Optimum Risk Estimates (ORE) will help you steering your organization.

Is it True that PIGs Fly when
Evaluating Risks of Tailings
Management Systems?
Franco Oboni
Oboni Riskope Associates Inc.,
Vancouver, British Columbia, Canada

Cesar Oboni
Oboni Riskope Associates Inc.,
Vancouver, British Columbia, Canada

(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 1 of 27 12/10/2012


Risk Management used to be a “Compliance”
or “Loss Minimization” afterthought.

Companies interpreted the
results of Risk Assessments
with Probabilities Impact
Graphs (PIGs).

PIGs became ubiquitous, despite intrinsic
conceptual errors, with potential dramatic
negative consequences on their users.



Our clients then started asking for real
MEASUREMENT OF RISK.
They understood that bringing risk
management in at (Pre) Feasibility Stage
would CREATE VALUE.
VALUE.
They are starting now to look at
STRATEGIC INTEGRATION OF RISK.
There was no chance that a flawed,
simplistic PIG would bring satisfying
replies...so we started anew.
replies...so



Lets' first start looking at PIGs flaws:

●
Arbitrary selection of cell limits
●
Arbitrary selection of “coloring” frontiers
●
Simplistic definition of consequences
●
Lack of “resolution” between risks
●
Fuzzy results
●
Etc.



This is a real PIG from a large project
Risk Assessment.



If we look at historic and recent set of
tolerability criteria...



We can ...and plot the PIG on top, the discrepancy
foresee becomes evident!
that cases
will be
challenged
in Courts
of Law
against
companies
using PIGs
for their
risk
assessments
and the
resulting
decisions.


To steer away from the
PIGs generated hazards
and risks you need a
“Savior”.

One that is in tune with
our “modern” world and
the numerous (and “new”)
challenges we have to
face.

Optimum Risk Estimates
(ORE) will help you from
pre-feasibiity stage to
operations and closure.


Case Study 1

We will use, for this first Case Study, Operation
Ten (OT) belonging to our client AAA Inc. (AAA)
(names, locations and risk names have been
altered to respect client's confidentiality), a
medium sized mining operation. Geographic
location, mining type and product do not matter
for this discussion.

They had done a PIG....
PIG....



Using common procedures and
instructions for the definition of
probabilities
Class Frequency of Failure

1 1 in over 100 years
2 1 between10 to 100 years
3 1 between 5 to 10 years
4 1 between 1 to 5 years
5 more than 1 failure per year

Class Severity
1 $0 to $1,000,000 in costs
2 $1,000,000 to $5,000,000 in costs
3 $5,000,000 to $15,000,000 in costs
4 $15,000,000 to $50,000,000 in costs
5 more than $50,000,000 in costs



50 risks which split into:

-0 Severe
-14 High
-25 Medium
-11 Low risks

They called us in because they did not
know how to tackle 14 high, 25
medium...too fuzzy, too costly!!!


We deployed ORE (Optimum Risk
Estimates) as I have detailed in the short
course last Sunday at this conference.

ORE is the result of twenty years experience
world-wide and has been deployed for
various clients, including Fortune 500 at
various stages including acquisitions, pre-
feasibility, operations, closure.

Let's see how focus can be increased with
ORE so the client gets a clearer roadmap for
managing risks, decision making, etc...
making,


Let's build a Tolerability Curve: we display it
here on top of the original PIG's cells, for
comparison
A specific Tolerability Curve
exists for any project,
operation, company.

NB: if uncertainties are
included then you'd see a
band instead of a line, and
risks would be plotted as
“bubbles”, on this p-C
diagram.


For each risk let's evaluate the intolerable
part (orange) v.s. tolerable part (blue).



Top 20 Total Risks prioritization. However,
we can do better than that!



Risks prioritization with the intolerable part as
discriminant constitute the core of ORE
because...

...the only risks that
actually matter are the
ones that extend above
the Tolerability Criteria
created for your specific
project/operation/
company.


Now it is possible to take rational decisions in
allotting mitigative funds, planning ahead!

ORE show that only 5
scenarios count for 83%
of the total intolerable
risks. Concentrating on
them will greatly improve
the situation.

Five instead of 14 (+25)
suggested by PIG!



ORE benefits brought to this operation can be
summarized as follows:

-The prevalent critical risks are brought forward
in a clear, rational and defensible way.

-The number of critical issues is smaller than
originally evaluated.

-The insurance portfolio was shown to be poorly
balanced and adjustments were proposed.

-The new priority list ensures better mitigative
investments' allotments and frees moneys for
other allocations.


Case Study 2

This case study bears on a complex tailings pond
system, as described in the next slide



Map of Acme Mine TSF with
Cascading ponds...



Each “Appendix” correponds to the risk assessment of
elements 1 to 17. Left Total Risk, Right ORE Ranking
with Intolerable Risk as discriminant.



Same results in the pie-diagram format. Total Risk
left, ORE Intolerable Risk right.

The total risk prioritization lacks definition, leads to poor
allocation of funds and causes managers to be overwhelmed by
the number risks that appear “on the radar screen” for possible
mitigation. ORE offers a clearer roadmap.


-ORE ranked risks bring in clarity, not fuzzyness;
ORE does not need scenarios censoring.

-Probabilities are defined by selecting the most
appropriate methodology for each scenario.
Inevitable uncertainties are given due consideration.

-ORE does not require “classes”; does not ask to
arbitrarily select “the worse” between physical,
human, environmental losses.

-The Tolerability Criteria is established using
repeatable methods specifically for the client's
operation(s) under consideration (and corporately).


Let me guess, your car has a
better cockpit than this old
clunker!
Modern cars have more
sophisticated instruments,
right?

However, in your company you
probably use this matrix as a
RM/ERM cockpit.

Your tailings deserve better than this rudimentary,
obsolete tool! Manage your tailings and your
company using all available information...


Tailings/Corporate ORE Cockpit.
Acme Inc. Sources of Threats
4 Divisions:
A,B,C,D;
Diversified
3 countries;
International
Exports. Potential Losses per Product

Logistic Risks Media Vulnerability Hazardous Sectors


ORE are the key
to your business
prosperity,
survival and
sustainability.

Now you can
drive safely.
CONTACT: Franco Oboni
foboni(a)riskope.com

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