introduction to risk based approch
TRANSCRIPT
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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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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
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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