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We have read a great number of articles related to the true cost of the failure of Samarco dam. However, only recently we saw the Samarco dam disaster cumulative damages effects actually detailed (see below). The dam failed in November 2015, killing at least 19 people, making 700 people homeless, and polluting hundreds of miles of Rio Doce river, all the way to the Atlantic Ocean.
In its annual report, just filed last week, BHP Billiton detailed what the true potential costs might be and the list goes, at this time, as follows:
Oftentimes we see FMEAs performed where the cost of consequences associated to each risks scenario are described with a single value. Furthermore it is common practice methodology (certainly not a recommended practice) to split the consequences in categories, for example reputational, environmental, cost and number of lives lost, then to ask the risk assessor to select the worst and use that “single-value” for the determination of the risk. Over the years we have shown to many of our clients why this approach is bogus, and always take care of explaining the reasons in our courses. The Samarco dam failure gives a perfect example.
Costs are additive once an hazard hits or a scenario occurs. Consequences are an additive function of at least the following costs:
As we can see in the Samarco list, the legal, the reparations (moral damages), etc.. have now indeed been added. BP are learning the lesson in the hard way with their 62 billions additive estimate for the Gulf disaster.
This is the reason why when we perform any risk assessment, even as simple as this one, we use the consequences category listed above in an additive way!