An Introduction To Risk Management and Risk Assessment

Risk Management and Assessment
An Introduction to Risk Management and Risk Assessment
28 May 2005
Page 1
Agenda
Introduction/Background Hazard Identification Risk Assessment Risk Management An Example
Page 2
Purpose
Provide Risk Assessment Knowledge: Hazard Identification Risk Assessment - Determining Probability & Consequence Use of Risk Matrix Risk Management - Prevention and Mitigation
Page 3
What is Risk Assessment & Management ?

Identification Assessment Decision Making
SHE SHE Hazards/ Hazards/ Risks Risks
Identification Identification of ofProblems Problems

Potential Potentialthreats threats to tobusiness business objectives objectives
Risk RiskSignificance Significance

Evaluate Evaluateand and prioritize risks prioritize risks
Options Options
Develop Developand and evaluate evaluate risk-reducing risk-reducing options options
Identification and evaluation of potential alternatives: Good options
What can I do about it?
Prioritization Prioritization& & Budget Decisions Budget Decisions

Decide Decidewhat what to do to do
Identification and evaluation of biggest problems: Problems

I can only manage that which I know
Evaluate and identify the most cost effective resource allocations: Best decision
Which things should I do, and in what order?
Biggest problems
Some are worse than others...which ones? Page 4
Risk Assessment Survey - A Team Effort

The RA Team is key to a successful review Combination of technical knowledge and practical experience Mixed team brings different skills & perspectives Job knowledge from operations & mtce personnel (local/external) Objectivity from external personnel RA Process knowledge from SHE/HQ personnel Technical knowledge from Engineering/SHE/HQ personnel Core group of at least 3, max ~7 for working discussion
Page 5
Hazard Identification
Page 6
Hazard Identification
A Hazard is a property or condition that has the potential to cause harm to people, property or the environment, or other unwanted event, eg flammable product, poorly maintained equipment Key to effective risk assessment and risk management is hazard identification Hazards need to be recognized and controlled There are various approaches to hazard identification: HAZOP reviews Checklist based reviews Experience based reviews / Expert judgement
Page 7
What Hazards Exist ?

Some examples: Inherent Hazards - Large volumes of flammables - Vessel loading/discharge operations - Weather extremes - H2S, N2 - Moving equipment - Other vessels Avoidable Hazards - Inadequate training - lack of skill/awareness - Inadequate procedures / procedures not followed - Poorly maintained critical equipment - Inadequate monitoring of conditions - Poor/no emergency response capability
Page 8
Hazards can create the potential for:

A)Personal injuries and ill-health effects B)Fires and explosions C)Oil spills or other environmental damage D)Public disruption or adverse media attention E) Plant reliability F) Elevated losses from incidents
Page 9
A) Injuries or ill-Health
falls from height / overboard hit by / trapped between objects (wires, machinery, lifting equipment...) asphyxiation (low O2 or high N2) toxic gas exposure (H2S) burns (fire, steam, hot oil) electrocution ..............
Page 10
Hazards can be due to many factors.

B)Fires & Explosions Ignition Sources Hot Work Lightning Electrical Equipment Static Electricity Sometimes combustion may be unexpected: - High flash point material contaminated with traces of low flash Increased surface area: - Oil mists / oil soaked lagging - Hot work on cleaned surfaces i.e. material trapped behind linings C)Oil spills & Environmental Procedural Failure vessel collision tank overfill vessel grounding etc. Equipment Failure mooring line failure external / internal corrosion hose/loading arm failure seal leak from machinery improper materials gasket leak etc.
Page 11
D)Public disruption or adverse media attention Environmental / Community spills on land or water waste disposal air emissions odour / noise effluent water quality pipeline leaks
E)Plant Reliability accelerated fouling, corrosion, erosion utility failure equipment failure unscheduled shutdowns
Page 12
F)Potential for Elevated Losses from Incidents

Incidents can escalate through: Inadequate or inaccessible equipment isolation facilities Ineffective emergency response plans No gas or fire detection in critical cases Insufficient fire protection equipment Inadequate spacing Inadequate blast protection for occupied and critical buildings
Page 13
Risk Assessment
Page 14
What is RISK ?
A Hazard is a property or condition that has the potential to cause an unwanted event Risk is a measure of the likelihood and severity of that event
The magnitude of the Risk is a function of both the probability that the event will occur, and the severity of its consequences:
PROBABILITY CONSEQUENCE RISK
= measure of the frequency or likelihood of the event = measure of its adverse effects = probability x consequences of a scenario
The magnitude of a risk, however, is open to a degree of subjectivity
Page 15
How do we assess Risks ?

Using a Scenario Based process Determination of likelihood x consequence by Describing scenarios involving the hazard Analysis of probability of each event Analysis of consequence of each event Comparison against some predetermined criteria - the Matrix Provides a qualitative assessment result More quantitative methods can be used (using fault trees, consequence analysis, event trees, failure modes and effects analysis, data banks, etc) and these provide a more quantitative result, but process still open to subjective assessment.
Page 16
Scenario Based Risk Assessments and the EM Risk Matrix

Scenario based risk assessments can be used at any time, from inception through abandonment (most useful during operating stage) The matrix represents a simple, straightforward template to determine the magnitude of potential risks, thus establishing a basis for decision-making EM Scenario based risk assessment / Matrix technique is used because it:
provides rapid assessment of risk is relatively easy to use provides for consistency across different units / regions allows broad view of facilities with emphasis on community impact takes account of the outrage factor
Page 17
RISK MATRIX
Probability A B C D E Definitions * Possibility of Repeated Events Possibility of Isolated Incidents Possibility of Occurring Sometime Not Likely to Occur Probability Near Zero
IV CONSEQUENCES I II
FREQUENCY A B C D E
III
* Th e Prob ab ility d es crip tion s r efe r to the po ssib ility o f th e scen ar io occu rr ing * Th e Prob ab ility d es crip tion s r efe r to the po ssib ility o f th e scen ar io occu rr ing du rin g the life of the pr oc ess or pla nt. du rin g the life of the pr oc ess or pla nt.
X Evaluated Risk Before; Y Risk with implemented measures

Consequence I Health & Safety Fatalities / Serious Impact on Public Serious Injury / Limited Impact on Public Medical Treatment / No Impact on Public Minor Impact On Personnel Public Disruption Significant Disruption to Large Community (>20k People) Continuing National media attention Significant Disruption to Small Community (15-20k People) Brief National media mention Minor Disruption (5-15k People) Local media coverage Minimal or None (<5k People) Minimal to no media coverage Environmental Impact Major / Extended Duration / Full Scale Response (> 30 days) Serious / Significant Resources Committed (7-30 days) Moderate / Limited Response of Short Duration (1-7 days) Minor / Little or No Response Needed (1 day clean-up) Financial Impact Corporate (>$50m) Regional ($5-50m) Site ($1-5m) Other (<$1m)
II
III
IV
T o e xte nt po ssible , e stim at es o f Pr ob ab ility a nd Co nse qu enc es sho uld be de riv ed fro m exp er ien ce dur ing life cyc le o f sim ila r o pe ra tion s in Exxo nM ob il an d its T o e xte nt po ssible , e stim at es o f Pr ob ab ility a nd Co nse qu enc es sho uld be de riv ed fro m exp er ien ce dur ing life cyc le o f sim ila r o pe ra tion s in Exxo nM ob il an d its af filiat es. In dus try ex per ien ce sho uld be co nsid er ed wh en limit ed EM exp er ien ce is av aila ble af filiat es. In dus try ex per ien ce sho uld be co nsid er ed wh en limit ed EM exp er ien ce is av aila ble
Page 18
MATRIX IS DIVIDED INTO 3 LEVELS OF RISK Intolerable risk: continued operation reviewed by affiliate management; reviewed annually until corrective action reduces risk Tolerable risk: cost/benefit analysis to help decide if remedial action is taken or risk is accepted Negligence risk: no action required, but cost-effective improvements may be worthwhile
Page 19
Scenario Based RA / RISK Matrix Process

FREQUENCY
Identify a hazard
CONSEQUENCES I
II
DEFINE A SCENARIO
III
IV
Determine probability
Determine consequences
Define Preventative Measures
Place on matrix
Define Mitigation Measures
Page 20
Scenario Definition
Specific scenarios help focus the analysis
Provide credible description of the sequence of events leading to an incident Identify the initiating event Describe subsequent propagating events Identify failures of existing preventing, alerting and mitigating controls Define the type, quantity and conditions of released substance Estimate potential consequences
Be as precise as possible - try to keep event precise, not all encompassing. Developing incident scenarios is a key activity of the risk assessment process
Many marine related scenarios already developed from SMS
Page 21
Scenarios involving a Hazard

Incident Scenario: a realistic sequence of events in which the potential of the hazard could be released to cause harm:
grounding of a loaded vessel due to navigational error during Port passage, rupturing 2 cargo tanks releasing 2000 tonnes of fuel oil to water collision of loaded North Sea shuttle vessel with jetty whilst mooring, causing hull penetration of one cargo tank releasing 3500 tonnes crude oil to water tank overflow during cargo loading operation due to personnel error, releasing 1 tonne of product to water a stern spring line parts under sudden stress while berthing a vessel at a terminal with a strong tide/current. Parted wire strikes operative causing serious head injury. welding inside a cargo tank in dry-dock ignites vapours from nearby opened line, resulting flash fire causes serious burns to welder and another is killed by smoke inhalation
Page 22
FREQUENCY
Identify a hazard
CONSEQUENCES I
II
Define incident scenario
III
IV
DETERMINE PROBABILITY
Place on matrix
Page 23
Likelihood of the Incident Scenario

Factors to consider in estimating the likelihood are the existing hazard controls adequate? do the hazard controls function as intended or fail? how many events or conditions have to occur in the incident sequence and the probability of each? Techniques available: personal or site experience industry data ExxonMobil data fault tree analysis event tree analysis
Page 24
FREQUENCY
Identify a hazard
CONSEQUENCES I
II
Define a scenario
III
IV
DETERMINE CONSEQUENCES
Place on matrix
Page 25
Scenario Consequences
Evaluate the magnitude of consequences use experienced judgement, or quantitative method (eg models) consider all consequence categories: health & safety public disruption environmental impact financial impact remember outrage factor (public and media attention) impact can be greater than physical consequences
Page 26
Scenario Consequences
Assigned consequences must be realistic / credible. Usually the most likely consequences are selected, not the worst imaginable. If higher level consequences are, however, also considered realistic, they should be evaluated as a new scenario. Worst case events tend to be less frequent, and vice versa Consequence severities can be very different in the different categories, eg an oil spill with major environmental impact, but no personnel injuries The highest or most sever consequence category is the one that is used
Page 27
FREQUENCY
Identify a hazard
CONSEQUENCES I
II
III
IV
PLACE ON MATRIX
Page 28
Remember:
Nothing is absolutely safe But it can be tolerable Intolerably high risk can be reduced to a tolerable level by: improving prevention (reducing probability) improving mitigation (reducing consequence) In some countries, legislation may require risks to be reduced to levels As Low As Reasonably Practical, (ALARP)
Page 29
FREQUENCY
Identify a hazard
CONSEQUENCES I
II
III
IV
DEFINE PREVENTATIVE MEASURES
PLACE ON MATRIX
DEFINE MITIGATIVE MEASURES
Page 30
Prevention and Mitigation

INSUFFICIENT KNOWLEDGE DOCUMENTATION COMMUNICATION TRAINING
INCIDENT
protective devices inadequate procedures triggering event design deficiencies
emergency response
LOSS
Page 31
Reducing Risk by Prevention: Reducing Probability

Inherent safety (remove the hazard) Improved designs Provide redundancy in control systems Increased equipment inspections Establish/enforce operating procedures Improved training - basic and refresher Tighter control of ignition sources Testing of critical safety equipment Audit/survey programs Enhanced safety awareness, improved employee motivation, and better communications Impose limitations: weather, capacity, routes
Page 32
Re-routing of vessels to avoid navigation hazards Installation of Port VTS Dredging of channels to reduce groundings Use of escort tugs to protect against engine failure Installation of high level alarms to prevent overfilling Increased surveillance/Use of CCTV to identify incidents Establish mooring guidelines to protect against breakouts Training, training and more training
Reducing Risk by Mitigation: Reducing Consequence

Improved detection of leaks and fires Effective implementation of emergency response plans
frequent practice and simulated emergencies
Increased fixed fire fighting equipment Additional fireproofing Improved Spill containment
additional isolation valves improved secondary containment
Additional spacing Simulator training for hazardous port passages
Page 33
How about an Example

A concern has been expressed that if a vessel grounds during Port entry, considerable environmental pollution could occur: Is this really a problem? How big a problem? Should something be done? What? Is the solution worth the cost?
Page 34
Incident Scenario
A loaded North Sea Shuttle vessel grounds due to navigational error during Port entry. Grounding causes rupture of 2 forward centre cargo tanks, releasing 16000 tonnes crude oil to water. The Port area contains some environmentally sensitive habitats and an active fishing community No injuries are sustained and no fire ensues.
Page 35
FREQUENCY A I B C D E
What is the probability of the scenario?
CONSEQUENCES
II
III
A loaded North Sea Shuttle vessel grounds due to navigational error during Port entry.
IV
Probability A B C D E
Definition Possibility of Repeated Events Possibility of Isolated Incidents Possibility of Occurring Sometime Not Likely to Occur Probability Near Zero
Page 36

What are the consequences of the scenario? Grounding causes rupture of 2 forward centre cargo tanks, releasing 16000 tonnes crude oil to water. No injuries are sustained and no fire ensues.
Public Disruption Large Community Small Community Minor Minimal to None Environmental Impact Major/Extended duration Full Scale Response Serious/Significant Resource Commitment Moderate/Limited Response of Short Duration Minor/Little or No Response Needed Financial Impact Corporate Region or Affiliate Division or Site Other
CONSEQUENCES
II
III
IV
Consequences I II III IV
Health & Safety Fatalities/serious Impact on Public Serious Injury to Personnel Limited impact on Public Personnel Medical Treatment No Impact on Public Minor Impact on Personnel
Page 37
Identify a concern
A I B CONSEQUENCES
FREQUENCY C D E
II
III
IV
Define Preventive Measures
Place on matrix
Page 38
Potential preventive measures:

All deck officers to be trained in passage planning and radar simulation/bridge teamwork, and undergo refresher training every 5 years All Ships Masters to attend manned model or simulator course prior to appointment Introduce critical equipment checklist and checking procedures for navigational and engine room equipment Formalise in-Port passage planning Use of escort tugs Fit emergency towing equipment to all vessels Introduce and enforce D&A policy
Page 39
Suggested mitigation measures:

Introduce Oil Spill Response Plan for all vessels Train ships personnel in oil spill response, and refresh every 5 years Introduce regular oil spill drills / simulations
Page 40

Results of Second Pass Through Risk Matrix
CONSEQUENCES
Probability A B C D E
Health & Safety Fatalities/serious Impact on Public Serious Injury to Personnel Limited impact on Public Personnel Medical Treatment No Impact on Public Minor Impact on Personnel Public Disruption Large Community Small Community Minor Minimal to None
Definition Possibility of Repeated Events Possibility of Isolated Incidents Possibility of Occurring Sometime Not Likely to Occur Practically Near Zero
Environmental Impact Major/Extended duration Full Scale Response Serious/Significant Resource Commitment Moderate/Limited Response of Short Duration Minor/Little or No Response Needed Financial Impact Corporate Region or Affiliate Division or Site Other
II
III
IV
Consequences I II III IV
Page 41

CONSEQUENCES
X Y Y
Y
II
III
IV
Page 42
CONSEQUENCES
II
III
IV
Page 43

An Introduction To Risk Management and Risk Assessment

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