introduction to risk based approch

8/12/2019 Introduction to Risk Based Approch

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A Risk-based Approach

to Process RiskManagement


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In Todays Operating

Environment

Management must make tougher decisionson risks:Acceptable risk - how safe is safe enough?

Due diligence - what price for safety?

Risk management - what are the options toreduce risk?

Managing smart - what is the optimal solutionconsidering costs?

Regulatory-driven minimal efforts are notenough


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Underlying Critical Issues and

Trends Facing Corporations:Challenging economic situation given new

world economy

More competitive business situation in afaster moving economy

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

environment, health, and qualityRegulations are not always specific as to

requirements leading to challenging decisions


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Public Interest in Safety Is

EmergingHealth, 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 higherstandards 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

LesseningThe public and workers seem less

tolerant of risk

Past practices may be unacceptable today

The public expects minimal risk or evendemands 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 safetymanagement system established

Integration of a risk managementprocess into the companys decision

process


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Goals:

Reduce risk to acceptable levelsconsidering all stakeholders

Who are the stakeholders?

What is acceptable?

How is risk to be measured?

Provide a sound basis for making thesedecisions


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Hazard Analysis and Risk

AssessmentFoundation of risk management

How can you manage risks that are either

not known or not well understood?

Provides an assessment of acceptability

Provides an assessment of alternatives

Provides consistency of analysis anddecisions


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Traditional Measures of

AcceptabilityRegulations

Industry practice

Company practice

Engineering judgement


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Modern Measures of

AcceptabilityRegulations

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 riskmanagement

Train employees in risk principlesAddress key risks using these methods

Make risk management a way of doing

businessimbedded in the culture ofthe company as a standard work

process


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Hazard Analysis Definition A hazard analysis (HA) is a comprehensive 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

ReleaseFrom

Tank

High Level

Alarm

Fails

Operator

Fails to

Control

Personnel

in 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 & operabilitystudy (HAZOP)

Checklist analysis

What-if

What-if /checklist

Failure modes & effectsanalysis (FMEA)

Other techniques:

Event tree analysis

Fault tree analysisHuman reliability

analysis

Job safety analysis


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Benefits of Hazard Analysis

More complete awareness of hazards

Provides a structured and systematic examinationof the hazards of a process

Attempts to recognize all hazards

Employee participation

Gathers real input from the employees

Concerns are discussed and documentedTeam is more informed about hazards

Paramount to management/employee relationship


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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 effectivestrategy to reduce or eliminate risks

Provides a means to compare risks of

different designs or operationsWorst firstrisks can be defined and

addressed


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Benefits of HA (Contd)

Ultimate outcomes

Improved safety performance resulting in

less risk to the public, employees, propertyand the environment

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 forknowledge:

chemical hazards they are exposed to

programs in place to prevent releases

emergency plans and proceduresThe 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 Slide 21


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Example of Risk ManagementChallenge - Dilemma of EPARMP

Described the hazard, not the risk

Public may be misled by the presentation of worst

case and alternative case scenariosNot a risk assessment only one or two cases

No assessment of likelihood

Subjective rules for alternative cases

Recommended to prepare to understand riskmore exactly and to prepare for further

communications with the public


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23Slide 23

How Industry Sees Their Worst Case Scenario


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24Slide 24

You are here

How The Community Sees Their Worst Case Scenario


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25Slide 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 thathave:

The appearance of high exposure to the public

Actual high incident frequencies (includingnuisance problems)

Multiple fatality or serious injury accidents

Incident which result in actual exposure to

communityNo or poor detection, mitigation, and emergency

planning for worst case scenarios Slide 26


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RMP Issues and Solutions:

Develop a risk-based (vs. only minimumregulatory 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 bestsolution

Make more consistent and justified decisions

Manage public concerns

Slide 27


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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 uncertaintyCompanies need to be prepared for a greater

demand for better risk information

introduction to risk based approch

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