Has risk management gone mainstream? One might think so given the June 13, 2011 article in the Chicago Tribune on using the game of poker to train stockbrokers in the nature of risk (1).
Lynn D. Torbeck
In the pharmaceutical industry, the reception of International Conference on Harmonization Guidelines Q8, Q9, and Q10 has
led to widespread discussion, if not implementation, of the Quality Trio guidelines, with ICH Q9 specifically addressing risk
While it is perhaps too early to say that risk management has gone mainstream, it has certainly had its fair share of news
coverage of late. Due to a rare 9.0 magnitude earthquake and an unprecedented 45-ft tsunami that washed over the nuclear power
plant in Fukushima, three out of six reactor cores melted down—the worst possible outcome. It will take decades and billions
of yen to clean up.
The world was stunned by that event. If a highly-regulated industry run by a detail-oriented and meticulous culture such
as Japan made this mistake, what chance do the rest of us have at risk management? Which raises the questions, what are the
risks in risk management and can we reduce them? First it is important to define terms.
In ICH Q9, risk to a patient equals probability times severity. What is probability? We can do little better than this observation
from Bernoulli in 1713:
"For it should be presumed that a particular thing will occur or not occur in the future as many times as it has been observed,
in similar circumstances, to have occurred or not occurred in the past." —D. Bernouilli
This definition has been refined since then. Here are the three common definitions given:
- An undefined subjective measure of belief from personal estimate, gut feeling or intuition
- The observed frequency of outcomes, as a fraction, percentage or a proportion
- A theoretical characteristic of the situation as determined by the limiting frequency of an infinite random series.
I note with concern and dismay that ICH Q9 does not include probability in the list of definitions. Perhaps the authors assume
that everyone has the same universal understanding of this complex topic, so a definition is not needed.
Severity is the second component of risk and is defined in ICH Q9 as "a measure of the possible consequences of a hazard"
(i.e., a meltdown). Now, let's turn to key steps for mitigating the risk in risk management.