The Public’s Perception of Fault

It is important to use appropriate values in pricing the consequences of failure for different events.

The outcome that is most likely to create the highest economic impact is loss of life. Although it should be properly assessed in the risk calculations, it must not be over estimated.

The two issues that will affect the risk cost of loss of life are:

• Ensuring that the correct probability of the loss of life is used
• Assessing the value of that outcome.

The community’s perception of the value of the life lost must be assessed, and in some cases this will differ substantially depending on the cause of the failure. The key difference will be whether the failure was perceived to have been caused by the organization through negligence or lack of care or whether it was beyond the control of the organization.

Negligence or lack of care would relate to failures of assets from old age or poor maintenance. Causes beyond the control of the organization include:

• Lightning strikes
• Cyclonic winds
• Earthquakes
• Landslides
• Floods
• High intensity thunderstorms.

The organization needs to determine a value for loss of life that varies for different circumstances based on the exposure of the organization and the perceived responsibility.

For example, an oil company may adopt a value that differs for each of the following locations or situations:

• Port facility
• Oil terminal
• Refinery
• Distribution center
• Petrol station
• Petrol tanker on road.

In each event the public will have a different perception of the degree of responsibility of the oil company. Although the loss of life may be identical in each event, ancillary consequences and costs will vary and therefore produce a different risk cost to the organization.

Similar differences will also occur where the death may relate to an employee rather than a member of the public.

For one large oil company, the differences in cost of life lost varies from $6 million to $30 million.

It is important for all organizations to develop a clear policy on pricing the consequences of loss of life so that risk can be assessed uniformly and appropriate resources can be applied to manage the risk.

Example 1

A lightning strike on a substation caused a power blackout covering some 200 000 users. Within 6 hours half of these customers had power restored. However the facility was critical and some 100 000 users were without power for 16 hours until a new transformer could be installed.

The public and the media praised the Power Authority and its staff for working so hard to restore power.

No criticism was levied at the Authority yet it transpired that they:

• Were unaware of the criticality of the facility
• Had not assessed the consequences of this cause and type of failure
• Had no failure management plan
• Had no method for optimizing the spare parts to rectify the problem and reduce the impact of the failure.

The public perceived that "Mother Nature" was to blame. Service providers will not be so lucky in the future as customer rights are becoming more well known.

Example 2 - Risk of electrical installations

A large electricity authority constructed a small sub station many years ago to supply a local factory. The supply was achieved by an underground cable to a distribution pole and distribution transformer and then overhead to the factory, all this work completed close to the substation.

As there were no major electrical contractors in the area the electrical authority offered to maintain the installation to the local factory and this offer was accepted. For the next forty years the organization continued with this arrangement. Then development reached this area and a subdivision of land resulted in houses being built along one side of the original substation.

One house included the substation fence as part of their fencing extending from this using steel framed poles cyclone wire and some form of brush covering. As you will be aware the substation fence is considered a high risk as any failure within the yard that may make contact with the fence will then cause this to be live and by attaching their fence in this way this new owner really faced the risk of creating a live contact right throughout their internal fencing, effecting not only themselves but their adjacent neighbors and people walking along the street at the front.

It also should be realized than an external earth ring was originally installed around the station, however some of the housing work and fencing activity had broken this ring and as such the entire potential control for the substation fence had been destroyed.

On the property adjacent the owners had not installed a fence and their children often played in the factory grounds without anyone being too concerned. However one day a child decided to climb the distribution pole and reached a height to which they entered the induction zone and received a substantial shock. Although the shock did not kill them it resulted in them falling from the pole and dying as a result of the fall. The local factory were able to show that the Electricity Authority had been responsible for the maintenance for the entire life of the installation and as such legal liability was considered to be shared by both the factory and the electricity authority.

It is interesting to note that the other issues such as the fence extension and the broken earth ring were only realized as part of an investigation into the death of the child.

These issues should never have arisen and would have been located or identified with regular condition assessment or risk audits. This type of audit may also allow us to develop procedures on the subdivision of land and notices to adjacent owners etc. that would have ensured a separation between the substation and a property fence and protection of the earthing ring. It may have also resulted in the identification of appropriate signage for the power pole or even safety protection.