A cost-benefit analysis of investing in safety and risk engineering: The case of Oil & Gas transportation services by pipelines

Most decision frameworks regarding the implementation of activities to mitigate the risk of failure in pipelines are based on a screening process under a considerable degree of uncertainty, which is generally derived from a subjective judgment or lack of sufficient information. Since the screening process is designed mainly to prioritize the risk mitigation activities according to an acceptable level of risk, the risk index cannot be used to perform a cost benefit analysis. Therefore, the current challenge to pipeline operators concerning pipeline sustainability is implementing risk mitigation activities, such as environment protection initiatives or safety measures. This study attempts to introduce a framework to measure the benefits of the investment in safety measures for pipelines using fuzzy logic as a tool for dealing with uncertainty. Thus, this paper provides a way to determine the surplus between the value of mitigated risk and the costs of the activities associated with such mitigation, using the possibility theory from the fuzzy logic to determine the values of the risk. Therefore, it is possible to determine if the costs associated with these risk management activities are reasonable or not, dealing with a degree of uncertainty of the data. The proposed framework is considering variables such as threat and consequence scenarios, probability of adverse events, vulnerability, failure modes, percentages of risk reduction and mitigation costs.