Woodward Clyde has developed a risk assessment tool for the management of environmental financial risks. This method was initially developed in 1970, and has since been continually refined. ERMIS was developed in conjunction with a specific project. The software and services for liability costing are available to Woodward Clyde clients.
ERMIS uses a decision analytic approach to quantify environmental impacts, rather than environmental outputs alone. The purpose of ERMIS is to:
Environmental risk quantification is typically established through a team comprised of a decision analyst, an environmental engineer, and a lawyer. The decision analyst structures the problem set and uses techniques including event trees, probability distributions, level of confidence calculations, etc. The environmental engineer estimates the costs and time frames of environmental damage and remediation alternatives. The liability lawyer estimates the cost sand probabilities of compensatory damages, fines, and penalties. The process relies on available environmental data, and substitutes subjective expert opinions for hard environmental data, when that data is unavailable.
The environmental data and the probabilistic estimates collected through this process are fed into ERMIS, a relational database incorporating risk calculating algorithms and allowing flexibility in sorting and reporting. ERMIS calculates the probability of occurrence and ranks problems. Finally, estimates of the present cost of correction and the future liability from uncorrected problems are made. The present cost of correction and future liability are compared using varying timeframes and at varying levels of confidence. This helps in devising strategies and options for risk reduction. It is important that information derived be unbiased, as the initial data gathered is primarily subjective in nature.
Woodward Clyde feels that the expertise employed in liability assessment often more crucial that the software. Site specificity can make it difficult to make generic expert systems for environmental liability costing. This is because conditions are often unique and future outcomes cannot be determined from precedents.
The cost of the service will be over $25,000 with typical costs being$40,000 - 50,000 (they can be much higher). The service has primarily been used by large companies.
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