Cost Optimisation in Risk Reduction Management Based on Gross Disproportionation Concept

Gross Disproportionation concept is used as indicator once risk reduction measures are required. This indicator shows that a measure must be implemented if its cost (i.e. Capital Expenditure), is not grossly disproportionate if compared to benefits — represented by casualties suppression — reached by the measure. Due to this, a risk reduction measure is reasonable feasible unless its cost is highly disproportionate in comparison to its benefits. In hydrocarbon transportation industry, benefits represent the avoided cost if threats take place; on the other hand, for risk mitigation cost estimation, the cost per casualty averted must be accounted. The latter, provides a global cost of the mitigation measure adopted in relation to the direct cost of construction, with the reduction of the level of risk (i.e. social risk) and with the expected design period for that measure. In this last concept, the higher the reduction in the level of risk or the longer the design period of the mitigation measure, the lower the cost per casualty averted, a fact that reflects an effective mitigation measure in terms of risk reduction and its durability. This document shows, from a case study, how the application of the concept of grow disproportionation allows to select the type of optimal intervention over Ocensa’s pipeline, with the most favorable relation between cost and benefit, and the effective risk reduction level.