Tailings risk correlations, or lack thereof, refers to a phenomenon we oftentimes encounter in ORE enterprise risk management (ERM) deployments in various industries.
The Risk Bubble in the p-C Graph
The figure below shows a classic simplified result from an ERM. It shows the probability (p), the consequences (C), and the risk tolerance band. The band has a width corresponding to the divergent opinion between optimistic and pessimistic key stakeholders on tolerance.
A given hazard has uncertainties on both the likelihood of occurrence and its consequences. In this ERM, we display it as a blue bubble. We call these risk bubbles.
The risk bubbles are oftentimes long and thick, due to uncertainties. At Riskope, we like to be generally right rather than precisely wrong. When we display these risk bubbles on a p‑C graph, we oftentimes see that the risk bubbles tilt. The right end, depicting large consequences, is lower (less likely) than the smaller consequences.
ERM Risk Bubbles Generally Have a Slope
Oftentimes risks have significant inverse correlation between consequences and probability. A good example of this is car accidents: minor, fender-bender accidents are way more likely than full loss of the vehicle.
In other words, for a given hazard, small consequences have generally higher probabilities and larger consequences have smaller probabilities. But is this always true?
Tailings Risks Correlations or Lack Thereof
In the case of tailings, one can assume that the probability of catastrophic failure and their consequences are rather uncorrelated at least at the standard level of analysis that data generally allow. But why is that?
In general, the consequences of a catastrophic failure are not dependent on the probability of failure of the tailings dam. Indeed the quality of monitoring, design of the foundations etc. are independent from the consequence metric such as the population density downstream, land use, topography, etc.
One could say: “Wait a minute. If I was building a dam, I would apply codes and engineering in such a way to reduce that probability if the consequences are high(er).” That is true, but the discourse is more complex if the notion of time is included.
On the Probability of Failure and Tailings Risks Correlations
If we add the notion of time, the dam risk could even display a positive correlation. For the curious, in 2015, we published a paper called “Risk Assessment of the Long-Term Performance of Closed Tailings Facilities.” It showed the effect of time on a closed structure under different scenarios. One scenario looked at downstream population increase and possible lack of care and maintenance of the dam. In that case, probability of failure and consequence could have a positive correlation. Therefore, the risk bubble could be tilted higher to the right.
Similarly, in 2022, we published a paper titled “Impact of climate change projections on tailings dams survivability,” which led to the same conclusions on the risk bubble and risk correlation.
Tailings Risks Correlations Solutions
The observations above stress the need to optimize mitigative actions for single dams and entire portfolios. Rational and quantitative analyses are key to optimize actions needed to address risk mitigation. Indeed, mining companies need to make risk-informed decisions for their tailings storage facilities to ensure funds are used most effectively.
