OperationRisk: Bottom up model - Connectivity model

[simeonfishman]

Hello David,

Could you please explain connectivity models such as fishbone analysis and fault tree analysis.

Thank you,

Regards,

Simeon

 

[David Harper CFA FRM]

Hi Simeon,

We admittedly have never given this distinction great emphasis, as they are sub-classes of connectivity. Linda Allen presents the fault tree as a super-class of fishbone: "A fault tree integrates an event tree [i.e., emphasis on the chronology of cause-and-effect] with fishbone analysis in that it links errors to individual steps in the production process. Management specifies an operational risk event to trigger the analysis. Then errors are identified at each stage of the process."

These are interesting:

Fishbone (Ishikawa)
http://en.wikipedia.org/wiki/Ishikawa_diagram

Fault Tree
http://en.wikipedia.org/wiki/Fault_tree_analysis

The NASA doc on fault tree is fascinating: "Fault Tree Analysis can be simply described as an analytical technique, whereby an undesired state of the system is specified (usually a state that is critical from a safety or reliability standpoint)...The fault tree itself is a graphic model of the various parallel and sequential combinations of faults that will result in the occurrence of the predefined undesired event. The faults can be events that are associated with component hardware failures, human errors, software errors, or any other pertinent events which can lead to the undesired event. A fault tree thus depicts the logical interrelationships of basic events that lead to the undesired event, the top event of the fault tree....A fault tree is tailored to its top event that corresponds to some particular system failure mode, and the fault tree thus includes only those faults that contribute to this top event....Intrinsic to a fault tree is the concept that an outcome is a binary event i.e., to either success or failure."

So, here is what I gather regards the difference:

* Both start with a problem (e.g., the LFHS operational loss event) and work backward to identify causes.
* While the fishbone is not necessarily chronological, the fault tree tends to go further by attaching a CHRONOLOGY AND/OR PROBABILITIES to each cause-effect node

David