Running head: MANAGING RISKS IMMEDIATELY FOLLOWING AN EARTHQUAKE Risk in Managing Logistics and Projects after an Earthquake Louise Shaw-Barry PMAN637 – Project Risk Management
University of Maryland University College
Prof. Patricia Rife-Beavers
Spring 2017 / Section 9043 April 23, 2017 Version 2.0 MANAGING RISKS 2
Table of Contents Introduction 4 Project Risk Management
Processes and Standards 4
5 Project Risk Management Methods 6
Checklist Method 6
Interview Approach 6
Risk Register
6
Qualitative Project Risk Management Methods
Probability and Impact Matrix
8
Delphi Technique 10
Risk Categorization 11
Expert Judgement 12 8 Quantitative Project Risk Management Methods
Probability Distributions 14
Expected Monetary Value Analysis
15
Decision Tree Analysis
16 14 Results / Analysis
18
Risk Prioritization 18
Risk Responses
19
Risk Contingency Plan 21 Conclusion / Recommendation
Appendix A 23
References
25 22 MANAGING RISKS 3
Abstract MANAGING RISKS 4
Introduction Any earthquake can happen quickly and unexpectedly, and like most natural hazards
there is never enough time to prepare. Cities, towns and even rural areas at risk for earthquakes
can never be fully ready but should certainly have a clear level of preparedness in place to
mitigate the damage once an earthquake has struck. An emergency response manager must
ensure these mitigation factors are in place ahead of a disaster, hence a comprehensive risk
management plan is essential.
In 1994, the Auditor General issued a report recommending that government agencies
“assess risks associated with their activities and initiate risk management approaches to minimize
identified risks” (Baccarini and Archer, 1999). In actuality, no project is ever without risk and
therefore will be wholly successful only if they foresee any potential risks and make assessments
for mitigating them. JISC (2012) infers that risk management is about turning challenges into
opportunities; moreover, PMI maintains risk management is more effective when tailored to the
project and in line with the organization’s principles and processes (2009, p. 3). With focus
specifically on risk management, this paper will review and assess the risk factors and impacts
on post-earthquake areas through risk identification, probability analysis and quality assessment
using effective processes using useful tools and techniques to complete a successful project.
Project Risk Management
“Project risk is an uncertain event or condition that, if it occurs, has a positive or negative
effect on one or more project objectives such as scope, schedule, cost, and quality” (PMI, 2013,
p. 310). Kendrick (2015, p.4) said that projects that usually avoid pitfalls are often viewed as
lucky. It can be see that when projects are well-planned, organized, and well lead. With every
project there are risks involved or some level of uncertainty regarding the projects outcome,
therefore, with every project risk management is vital to the success or failure of a project. Risk MANAGING RISKS 5 can be defined as loss multiplied by likelihood or the expected consequences of an event and the
probability that the event might occur (Kendrick, 2015).
Although there are benefits of risk management, they come at a cost. Managing risk
entails work and requires a lot of time an effort on the project team. The processes for project
risk management involves planning risk management, identifying the risk, performing qualitative
and quantitative risk analysis, planning the risk response, and controlling the risk (PMBOK,
2013, p. 309). Done effectively, there should be an increase in the likelihood and impact of
positive events and a decrease in the likelihood and impact of negative events.
Risk management is fundamentally made up of two vital elements: uncertainty (or
probability) and the effect (or impact) on a project’s objectives (PMI, 2009). If risk occurs
following an earthquake, it is bound to have a negative impact on the project objectives,
therefore assessing the potential for risk should provide a significant level of probability of risk
happening, thus leading the PM to understand how to mitigate the risk.
Processes and Standards
Given that project risk management is now a standard condition for projects, the Project
Management Institute was established for PMs to follow specific guidelines and standards. A
risk management plan should be established for any project by following the PMI standards
based on the substantive knowledge of thousands of highly-skilled PMI volunteers with
experience in every kind of project and so providing set standards to the project management
industry (PMI, n.d.). Standards play an important role in safeguarding the process of effective
organizations. RIMS (2011) describes a de facto standard as guidance not always written by a
standard-setting organization but most often an accepted instrument used as a standard (p.3). MANAGING RISKS 6 The objectives for this project is essentially to provide an effective risk management plan
following the standards and processes provided by PMI in addition to other global guidelines to
aid in risk identification and mitigation in a post-earthquake crisis.
Project initiation is the critical phase in the project risk identification process. Using
various identification methods and techniques project risks may be identified during the
development of the scope and objectives. PMI standards call for defining the objectives against
which risks can be identified, defining the measurement for the project risk management
components and defining risk limits and tolerances (2009, p. 14). All stakeholders should be part
of the risk identification process so that they can generate alternative dimensions of risk to the
outcome. Management should be involved to assess the level of resources for risk management
and allow stakeholders to provide their input “in the areas of risk tolerance and evaluation
measures” for their interpretation and support (2009, p.22).
Project Risk Management Methods
Checklist Method
The first element in project identification is to create and review a project checklist and
identify what risks may have arisen during each phase. PMI suggests that project stakeholders
are encouraged by the creative use of risk identification techniques to inspire them to find clear,
unambiguous risks that potentially may influence a project’s objectives (2009, p.28). Appendix
A provides a checklist based on Team Weekend Warrior’s Mini Project Plan.
Interview Approach
Interviewing is essentially a way to gather information from SMEs who are highly
knowledgeable in specific fields and are asked to give input or feedback on risks they have
actually experienced. An example is the PERIL database in which a researcher hosted a series of
workshops and asked the attendees about what went wrong and what could have been mitigated.
The information covers a wide range of projects mostly in the product development and IT MANAGING RISKS 7 industries. The data are collected in the PERIL database and “serve as the basis for the analysis
of high-tech project risk” (Kendrick, 2015).
Risk Register
Every project goes through a standard risk identification phase to be then categorized
through a table called a Risk Register. Each risk is rated based on whether the impact is a threat
or opportunity and how much of an impact it will make on achieving project objectives. A risk
urgency assessment may be done by combining the risk rankings from the risk register
(probability x impact) to decide which risks will have the highest priority on the project impact
(Dash, 2015). This method of prioritization allows the areas of risk to be established soonest and
therefore mitigated quickest. In a post-earthquake crisis, Table 1 below identifies the risks with
highest probability and impact.
Table 1: Risk Register Ris
k ID Prob Imp Total
(prob x
impact
) MOD 4 3 12 Use of emergency broadcast system,
information tents, billboards HI HI 4 4 16 HI MOD 4 3 12 Relocate civilians to safe shelters, provide
temporary housing, provide food and
housing
When rebuilding ensure building codes are
up to national standard MOD HI 3 4 12 HI HI 4 4 16 Leading to
starvation and/or
illness. VHI HI 5 4 20 Ensure standards in place for checking and
testing foods. Advise residents on how to
preserve food from contamination. Leading to limited
or no access to
critical and
emergency care MOD VHI 3 5 15 Ensure backups for any electric equipment
are available, set up emergency
communications system between medical
staff and administration, set up mobile and
triage units outside of hospital. Coordinate
mobile blood drives. Risk Topic Risk Description Specifics (if any) Prob 1 Comms People will be
unable to get access
to communication HI 2 Structural Widespread
cellular outages
following downed
towers occur
Structural
Damage to homes 3 Structural Damaged homes 4 Utilities 5 Utilities Pipes or Levees
Burst
Water pollution Shelter needed for
those without
homes
Leading to serious
infrastructure
damage
Leading to massive
flood damage
Leading to
starvation and/or
illness. 6 Utilities Food
contamination 7 Utilities Power outages at
hospitals Imp Mitigation Strategy Prevent spread of mold, coordinate
cleanup of water and damage
Ensure standards in place for water testing,
notify residents of water any water
advisories or contamination. MANAGING RISKS 8 Scale Qualitative Project Risk Management Methods
Probability and Impact Matrix
A probability and impact matrix is a grid for mapping the probability of each risk
occurrence and its impact on project objectives if that risk occurs (PMBOK, 2013, p. 318). With
this matrix the project team can prioritize which risk impact project objectives the most. The
risks are then rated from “high’, “moderate”, or “low” importance. An essential element about
the matrix is that you can also rate the risk based on the objective; cost, time, and scope. If a risk
is considered high-risk with negative impact they require aggressive actions. High-risk with
positive impact should be targeted first and take priority over everything else. Low-risk activities
with negative impact should be watched carefully, same for positive impact.
Qualitative risk analysis is the “process of prioritizing risks for further analysis or action
by assessing and combining their probability of occurrence and impact” (PMI, 2013, p.328).
After an earthquake occurs, it is necessary to evaluate, assess and approximate damage caused by
a seismic event in order to prioritize emergency tasks and repairs. This can be challenging
depending on the size of the affected area but it is a necessary action needed in order to make
additional decisions. One way that risk probability and impact data can first be gathered is by
holding interviews or meetings, but this might not be an option immediately following an
earthquake.
The Applied Technology Council (ATC) instead conducted a survey after an earthquake
occurred in Northridge, California on January 17, 1994 (Bai, Hueste and Gardoni 1155-1163).
They collected 530 survey results from 31 motion recording stations, including 15 building types MANAGING RISKS 9 and 20 occupancy types, in the Los Angeles area. Four categories of qualitative damage states
were used to classify overall damage. In addition, building damage was further categorized into
seven damage states and corresponding damage factor rates. This data is shown below in tables 2
and 3 from the Journal of Structural Engineering (Bai, Hueste and Gardoni 1156).
The categories from Table 2 have a corresponding relationship damage states and damage
factor range values. For example, damage state None (N) will have a damage state value of 1 or
2 and a damage factor range % between 0-1. A probability and impact matrix can be used to
further analyze this data and the effects of different risks resulting from varying levels of
damage. A project team could map out risks of each damage state in order to determine the
impact(s) on objective, cost, time, scope and quality (PMI, 2013, p.318). For example, a damage
state category Insignificant (I) that is a level 2 with a 1% damage factor will only require minor
repairs for aesthetic purposes. As a result, there will be minor expenses associated with labor and
material but the structure will still be completely usable. This type of situation will not rank high
in priority and in an emergency situation, will not be handled immediately. It will make more
sense to use any available resources (time, labor, materials) for the purpose of repairing a
structure with damage category Heavy (H), level 5 and 60% damage factor.
Table 2: Damage states MANAGING RISKS 10 Table 3: Damage state & ranges Delphi Technique
The Delphi Technique is an estimation process that uses input from a group of people to
determine a numerical average. The Delphi method, commonly used to estimate task duration
when identifying the project schedule and risk planning, is similar to brainstorming in which
subject-matter-experts (SMEs) provide individual estimates based on anecdotal historical
knowledge (Kendrick, 2015). Participants can make their contributions anonymously thus
reducing biases that may arise in a group setting in which contributors may unduly influence the
response of others (Heldman, 2013). The philosophy behind this method is that “although no MANAGING RISKS 11 one person may be able to confidently provide reliable estimates, a population of stakeholders
[collectively] can frequently provide a realistic prediction” (Kendrick, 2015).
In Table 4 below, each member of Team Weekend Warriors contributed a duration
estimate to mitigate risks during a post-earthquake crisis. The individual inputs were then
summed and an average calculated. Results of the Delphi exercise indicate that infrastructure
repair (in red) will take the longest amount of time, while two tasks (in green) will take the least:
notifying residents of water advisories and advising residents of methods to prevent food
contamination.
Table 4: Mitigation techniques Risk Area 1. Widespread
cellular outages
following downed
towers. 2. Damaged
homes 3. Pipes or levees
burst 4. Water pollution Mitigation Technique
1. Use emergency broadcast system
2. Use information tents
3. Use billboards
4. Create/use a locally built messaging/mailing
system to become a communications hub
5. Provide communications to news
organizations to communication to outside
towns/cities/families, etc.
1. Relocating civilians to a safe shelter
2. Provide fresh water supplies
3. Provide temporary housing
4. Establishing emergency sanitation provisions
for civilians
5. Providing food and provisions
1. Dispose of damaged items.
2. Prevent spread of mold.
3. Remove water where possible.
4. Repair buildings and/or enforce damaged
structures
5. Provide means of reporting damage
1. Monitor and sample water quality
2. Notify residents/customers of any water
advisories
3. Set up temporary sites for emergency stored
water
4. Coordinate local volunteer groups to
distribute supplies Estimate to Complete Each Task
Ashley
Louise
Mat
Virginia
7
8
5
1
1
2
2
3
4
5
1
7 Total Average 21
8
17 5.25
2
4.25 6 2 4 4 16 4 7 2 5 2 16 4 3
16
4 2
10
0 4
15
1 4
8
3 13
49
8 3.25
12.25
2 3 0 1 2 6 1.5 6
5
8
10 10
2
5
12 15
3
5
15 8
8
4
16 39
18
22
53 9.75
4.5
5.5
13.25 21 18 20 30 89 22.25 1
3 2
0 1
1 1
4 5
8 1.25
2 1 0 1 1 3 0.75 8 12 15 10 45 11.25 15 12 10 8 45 11.25 MANAGING RISKS 5. Food
Contamination 6. Power outages
at hospitals 5. Airdrop emergency water supplies
1. Monitor and sample food quality
2. Advise residents of methods to prevent food
contamination
3. Set up temporary sites for emergency stored
food
4. Coordinate local volunteer groups to
distribute supplies
5. Airdrop emergency food supplies
1. Ensure backups are available and functional
2. Set up an emergency communications
system between medical staff and
administration
3. Coordinate medivac to other hospitals in
vicinity by road or air
4. Set up mobile units outside of hospital
5. Coordinate mobile blood drives 12
10
3 0
0 5
1 8
4 23
8 5.75
2 1 0 1 1 3 0.75 8 12 15 10 45 11.25 15 12 10 8 45 11.25 10
6 0
10 5
5 8
4 23
25 5.75
6.25 6 7 10 4 27 6.75 4 10 12 2 28 7 8
8 10
10 5
5 12
10 35
33 8.75
8.25 Risk Categorization
Arguably, one of the most important tasks during the risk identification stage of risk
management is correct risk categorization. Proper categorization enables timely responses later
on, as it could be one of the factors used to determine how risks are rated and/or prioritized.
While this is true of any project, it is especially true of post-earthquake activities, where time is
of the essence, life and well-being are on the line, and the margin for error with decisions is quite
narrow. The PMI state that another benefit of risk categorization is that it “may assist in ensuring
that as many sources of risk as practical have been addressed” (PMI, 2013, p. 28).
There are numerous ways to categorize risks. One is to focus on areas which can
experience a loss, also known as an exposure (Baranoff, Brockett, & Kahane, 2012, p. 32). A
high-level example by Baranoff, Brockett, and Kahane has the following as categories: risks of
nature, risks associated with data and knowledge, risks related to systems, intellectual property,
etc. (Baranoff, Brockett, & Kahane, 2012, p. 32). Another means of categorizing risks, according
to the PMI, is to categorize risks “according to their source or causes” as this can guide an
organization to the root cause, and “risk responses may be more effective when they focus on
addressing this root cause (PMI, 2013, p. 31).
A mixture of these two techniques would best be used for an earthquake relief project,
assuming a few caveats. The root cause of all of the risks could be taken to an unnecessarily high MANAGING RISKS 13 level, and simply be deemed the earthquake itself. This would be extremely detrimental to the
risk management endeavor, as having too few categories would be as ineffective as having too
many. This is where the use of exposures will come into play. Although there are many risks after
an earthquake, many of them may share the root cause. For example, buildings may collapse,
roads may be impassable, and so on. These share the same common category of being structural
risks. Likewise, people may be injured or they may need to be evacuated. These are both
examples of health related risks. Thus, for this project, the high-level categories to be used are:
communications, structural, health, nature, and well-being. While each risk will be prioritized in
its own right, these categories can be leveraged to provide a rough estimate of priority and/or
impact/probability. Health risks may be considered the highest impact since those directly affect
livelihood and survival, for example.
Expert Judgement
Expert judgment is repeatedly mentioned in the PMBOK as a tool and technique for
many processes, including risk analysis. Within qualitative risk analysis, expert judgment can be
used to determine where risks should be place on the probability and impact matrix. Expert
judgment utilizes the skill of subject matter experts, project managers, and others that have
experience with similar projects or subject areas (PMI, 2013, p.333). The information can be
gathered via workshops or interviews.
Although expert judgment can be extremely helpful in risk analysis, as humans we are
innately biased. There are many types of bias which include Structural Bias – individual
responds a certain way because of how something is presented to them, Motivational Bias –
individual responds a certain way because have a stake in the response and Availability Bias–
individual makes a judgment based on how quickly something can be retrieved from their
memory (Skjong, R., Wentworth, B., & Veritas, D, 2011).
Risk Analysis methods can definitely be biased even if it is from "expert judgement". One
expert’s opinion could be different than the next expert. This comes from their experiences and
what they have learned over time. Like any other human we have our own "bias" because of our MANAGING RISKS 14 knowledge base which is built on the foundation of experience. Bias also comes from risks not
occurring over a long period of time, underestimation, and even observations of strategies to gain
a better knowledge of the risk. These observations are qualitative and quantitative.
The quantitative observations are used to identify risks in more of a statistical matter. By
using numbers, percentages, frequency etc., different numerical measurements to come to the
best mitigation. The bias can only be mitigated by providing and gaining the most accurate
information that is trying to be assessed. Defining the best and worst case scenarios and the
numbers to go along with them. Quantitative data is helpful in mitigating these biases because it
is based more on numbers and observation rather than opinions and personal experience.
Quantitative analysis may require special tools to perform simulations, but the results are more
realistic and helpful when estimating time and cost.
Qualitative on the other hand uses words to describe these observations and assessments.
The mitigation of the qualitative observation is to have multiple people’s observations. The
conclusion of these observations can different from person to person giving their background and
personal experiences.
Quantitative Project Risk Management Methods
Probability distributions
It can be quite difficult to fully assess the probability and impact of certain events after an
earthquake. Earthquakes themselves are such massively unpredictable events in terms of damage
and there are numerous variables which may need to be considered: the physical area impacted
determines what types of issues are faced, the population of the area determines the number of
people affected, the type of area affects how support can be provided, etc.
One of the most important pieces of information for these estimates will be the use of
high quality data. Data collection leads directly into determining the best response as the
frequency and severity amongst the most important measures to be obtained. While there are
many variables with regards to the full impact of an earthquake, having high quality data to make MANAGING RISKS 15 estimates can still be used to model future cases. For instance, it may not be known how many
people were affected, but by having data about the location demographics (such as population),
reliable estimates can begin to be formed and placed into simulations. These estimates are a
necessity, as the USGS states that “There is no scientifically plausible way of predicting the
occurrence of a particular earthquake” (USGS, n.d.). Although extreme situations differ in terms
of what may or may not be needed, there are also core areas which must be addressed, such as
ensuring that people have food, water, shelter, transportation, communication, and emergency
care, to name a few.
As described in the “Practice Standard for Project Risk Management”, the “collection of
risk data requires resources and time as well as management support” (PMI, 2009, p. 39). This
support is aided by an organization using data which is more readily available: historical data.
Some data is much more reliable for decision making than other data. For instance, the USGS
states that on average there are around 100 earthquakes a year which cause damage (USGS,
n.d.). Focusing on the United States alone, according to information garnered in Robert
Johnston’s “Number of Earthquakes by Year”, between 2000 and 2012, there were around 150 of
this level (Johnston, 2012). These figures can be used to plot distributions to estimate how many
situations may need to addressed per year, as well as rough estimates of where could be
impacted. Other statistics are far less useful; the graphic provided by Statista shows the global
death toll caused by earthquakes between 2000 and 2015 (Statista, n.d). The variance is
incredibly high, as the range goes from a few hundred to a few hundred thousand. This
information in mind, an organization planning for risks after an earthquake will be best served to
make use of the reliable data available to them which can be used to prepare for the most likely
events.
One tool which can aid in this would be charts which use frequency and distribution, such as
Pareto chart, which groups objects measured and adds in the cumulative frequency so that an MANAGING RISKS 16 organization can be aware of the running totals. A chart such as this could be extremely useful in
planning resource allocations for quickest delivery to the highest risk areas, for example. True
probability may not be available, but real data can be used to analyze the risk properly.
Expected Monetary Value Analysis
Expected monetary value analysis is a mathematical concept that “calculates the average
outcome when the future includes...

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