On how to manage uncertainty when considering regulatory HSE interventions

Regulatory health, safety, and environment (HSE) interventions have an impact on both costs and benefits for the industry. It is common for the regulators to evaluate such interventions by providing a comparison of costs and benefits as a basis for decision-making. Fulfilling an assignment for the Norwegian government, two consulting companies proposed a methodology for regulatory evaluation in the petroleum industry. This methodology acknowledges that uncertainty must have a higher weight than given through traditional cost–benefit analyses, but it is still to a great extent based on the use of expected values. We question this use of modified cost–benefit analyses for providing decision support in contexts where uncertainty is the dominating attribute. Furthermore, we argue that the decision-makers should be able to take a dynamic approach, where the chosen method should fit its context. As an example, we present a framework in line with such a dynamic approach. The article is an extended version of an ESREL conference article.