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A Risk-Based Approachto Process Risk Management

David A. Moore, PE, CSP

AcuTech Consulting, Inc.

100 Pine Street, Suite 2240

San Francisco, CA 94111

(415)772-5972

www.acutech-consulting.com

American Society of Safety Engineers

Bakersfield, California,ChapterAugust 4, 1999

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In Todays Operating Environment

Management must make tougher decisions on

risks:

Acceptable risk - how safe is safe enough?

Due diligence - what price for safety?Risk management - what are the options to reduce risk?

Managing smart - what is the optimal solution

considering costs?

Regulatory-driven minimal efforts are not enough

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Underlying Critical Issues and Trends

Facing Corporations: Challenging economic situation given new world

economy

More competitive business situation in a fastermoving economy

More regulations and performance-basedrequirements to comply with for safety,

environment, health, and quality Regulations are not always specific as to

requirements leading to challenging decisions

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Public Interest in Safety is Emerging

Health, Safety, and Environment are more

of concern to the public than ever before

More news coverage than ever and increasing

This is shaping public opinion and is setting

higher standards of care

It is an indicator of the new awareness of safety

More public involvement in risk decisions

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Risk Tolerance Appears to be

Lessening The public and workers seem less tolerant

of risk

Past practices may be unacceptable today

The public expects minimal risk or even

demands zero risk

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Liabilities

Liabilities are increasing:

Higher potential for legal action

Higher jury awards for punitive damages

Measured against higher standard of care

More regulations to reference as precedent

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What is Needed:

More sophisticated management of risk

A risk-based foundation for the safety

management system established

Integration of a risk management process

into the companys decision process

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Goals:

Reduce risk to acceptable levels considering

all stakeholders

Who are the stakeholders?

What is acceptable?

How is risk to be measured?

Provide a sound basis for making these

decisions

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Traditional Measures of Acceptability

Regulations

Industry practice

Company practice

Engineering judgement

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Consulting,

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Modern Measures of Acceptability

Regulations

Industry practice

Company practice

Engineering judgement

Risk-based decision making based onsystematic methods and risk criteria

including consideration of costs

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From Reactive to Proactive

Develop a program for risk management

Train employees in risk principles

Address key risks using these methods

Make risk management a way of doing

businessimbedded in the culture of thecompany as a standard work process

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Hazard Analysis Definition

A Hazard Analysis (HA) is acomprehensive study that:

identifies, and,

analyzes

the hazards of a process.

It is the front end of a risk assessment

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Sequence of a Hazard Scenario

Initiating

Event

Intermediate

Events

Final

Event

Dependent Events

Operator

Overfills

Tank

Level

IncreasesInjury from

Release

Release

From

Tank

High LevelAlarm

Fails

OperatorFails to

Control

Personnelin the

Area

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Risk Assessment Process Flow

Diagram

System

Description

Accident

Severity

Estimation

ModifySystem

Accident

Likelihood

Estimation

Risk

Determination

Operate

System

Risk

Acceptance

Hazard

Identification

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Techniques Commonly Used in

Hazard EvaluationCommonly Used Techs.:

Hazard & Operability

Study (HAZOP) Checklist Analysis

What-If

What-If /Checklist

Failure Modes &Effects Analysis(FMEA)

Other Techniques:

Event Tree Analysis

Fault Tree Analysis

Human Reliability

Analysis

Job Safety Analysis

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Benefits of Hazard Analysis

More complete awareness of hazards

Provides a structured and systematic examination of the

hazards of a process

Attempts to recognize all hazards

Employee participation

Gathers real input from the employees

Concerns are discussed and documented Team is more informed about hazards

Paramount to management/employee relationship

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One Indicator of a Division

Between Employees and Management

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Benefits of Hazard Analysis

Assists management in risk decisions

Basis to assess if risks are acceptable

Can be used to develop the most effective

strategy to reduce or eliminate risks

Provides a means to compare risks of different

designs or operationsWorst First risks can be defined and

addressed

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Consulting,

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Benefits of HA (contd)

Ultimate outcomes

Improved safety performance resulting in less

risk to the public, employees, property and theenvironment

Assists with regulatory compliance

Minimizes business interruptionImproves relations with the public and

employees

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EPAs Premise

The public has a right and need for knowledge:

chemical hazards they are exposed to

programs in place to prevent releases

emergency plans and procedures

The public needs to have:open and honest information from industry

reasonable levels of risk

Industry has a need to have:

the public informed of these hazards

a cooperative effort of emergency planning

trust of the community

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Example of Risk Management

Challenge - Dilemma of EPA RMP Described the hazard, not the risk

Public may be misled by the presentation of worst case

and alternative case scenariosNot a risk assessmentonly one or two cases

No assessment of likelihood

Subjective rules for alternative cases

Recommended to prepare to understand risk moreexactly and to prepare for further communications

with the public

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Slide 23

How Industry Sees Their Worst Case Scenario

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Slide 24

You are here

How The Community Sees Their Worst Case Scenario

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Slide 25

Its everywhere!!

How The Community Sees All Worst Case Scenarios

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RMP Issues and Solutions:

Pressure will likely be put on companies that have:

The appearance of high exposure to the public

Actual high incident frequencies (including nuisanceproblems)

Multiple fatality or serious injury accidents

Incident which result in actual exposure to community

No or poor detection, mitigation, and emergencyplanning for worst case scenarios

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RMP Issues and Solutions:

Develop a risk-based (vs. only minimum

regulatory based) risk management program

Risk-Based Decision-Making processes can beemployed to:

Determine the risk

Identify and evaluate the risk reduction options

Help management with the decision on best solution

Make more consistent and justified decisions

Manage public concerns

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Conclusions

Risk Based Decision-Making is required intodays business environment

It involves a multitude of issues including:

A full evaluation of risk

The identification of options

The evaluation of the cost-effectiveness of options

Decision-making under uncertainty

Companies need to be prepared for a greaterdemand for better risk information

Slide 28

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Contact Us...

Eastern Consulting Group116 Village Blvd, Suite 200Princeton, NJ 08540-5799

Tel: (609) 951-2211Fax: (609) 951-2281

Corporate Headquarters &Western Consulting Group

AcuTech Consulting, Inc.

100 Pine Street, Suite 2240San Francisco, CA 94111

Tel: 415-772-5972Fax: 415-772-5975

Canadian Consulting GroupAcuTech Consulting, Inc.

300-1055 West Hastings St.

Vancouver, BC V6E 2E9Tel: 604-609-6168Fax: 604-608-9880

http://www.acutech-consulting.com