New Century and Integrity Plus Blog

Establishing Risk Tolerance Criteria

Posted by Rupesh Muthyala on May 31, 2017 12:17:07 PM

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Integrity Management program requires pipeline operators to consider various elements, and out of those elements, risk assessment plays a crucial role. To achieve risk-tolerability.pngactionable risk results, it is vital to know how to validate the results, and we have also found, setting risk tolerance limits better facilitates achieving actionable risk results. So the question is: how do you go about establishing risk tolerance criteria?


What is Risk Tolerance

Risk tolerance can be defined as “the willingness to assume a level of risk commensurate with the benefits received from accepting that risk.” The key to this is knowing when risk is tolerable and intolerable. which requires a risk assessment for a frame of reference and comparison. This is can be determined by using one of these risk assessment methodologies, with each having its own pros and cons.

  • Matrix Model
  • Qualitative Model
  • Quantitative Model

Generally, quantitative models present the best opportunity to implement risk tolerance criteria. Likelihood is usually expressed in terms of failure frequency or probability of failure per mile per year, and consequences in dollars per mile per year, making it easier to set risk tolerance criteria. While there are various types of receptors to consider, most agencies focus on individual and societal risk tolerability criteria.

What are Others Doing

Spurred by process safety incidents, both the British and Dutch governments adopted risk tolerance criteria based on F-N curve calculations. Even though there is limited literature available on the societal risk of hazardous goods transported by pipeline, F-N curves and individual risk analyses have been applied on a per-length-of-pipeline basis.

Other industries such as the Air Force and NASA use a damage tolerance approach for determining risk criteria. This method is assumed to exist at an installation, but two inspections for damage are required before a predicted component failure. On the other hand, the Navy utilizes the safe life approach which estimates a predicted life and then simply retires the component at that time. These are just a couple of examples of several ways to determine tolerance criteria.


When looking to establish risk tolerance criteria, selection of appropriate criteria depends on the objective of the analysis. There is no “one size fits all” model or tool. Every implementation is unique, and we recommend better risk modeling, and believe in right-sizing the approach to meet a set of goals and objectives. To find out more on this topic view our webinar: A Guide to Risk Tolerance Criteria for Risk Results or contact us today.

Topics: Integrity Management, Risk Assessment, Risk Analysis, Risk Tolerance

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