MANAGING RISK STANDARD MandatoryRisk Assessment Matrix Specification

RESTRICTED Document 0000-S-90-04-O-0006-00-E Appendix 5, Revision 04 Valid from 29.06.2010 to 29.06.2015 Document History Authorisor: T.Hake, Custodian: S.Lock Printed copy uncontrolled p1 of 2

Risk Assessment Matrix

Purpose

To establish a consistent process for assessing Risks to people, assets, environment and reputation (including social performance).

Who is this for?

• Managers; • Staff who are in HSE Critical Positions or who are required to implement Controls; • Technical Authorities; • Site Controllers, Area Authorities, Performing Authorities, Isolating Authorities; • Maintenance Planners; • Employees.

What situations are covered?

This document applies to all Sakhalin Energy Assets, Facilities, operations, Projects and activities, including activities undertaken by contractors on behalf of the Company. In particular, this document is applicable in Managing Risk, classification of Incidents and Audit Findings, and as the Maintenance Prioritization Tool.

Requirements

Managers are Accountable for implementing requirements 1 to 2:

1. Use the Risk Assessment Matrix (RAM), see Figure 1 below, for performing HSE Risk Assessments. a. In reporting to Lenders, use the RAM specified in the Methodology for Classifying and Remediating

Incidents And Breaches that additionally includes a Social consequences column.

2. Assure the competence of people applying the RAM to HSE management processes.

Figure 1: Sakhalin Energy Risk Assessment Matrix

Severity 

CONSEQUENCES  INCREASING LIKELIHOOD 

Peop

le 

Assets 

Environm

ent 

Repu

tation

 

A B C D  ENever heard of in the Industry 

Heard of in the Industry 

Has happened in the Company or more than once per year in the Industry

Has happened at the Location or more than once per year in Company 

Has happened more than once per year at the Location 

0  No injury or health effect 

No  damage 

No  effect 

No impact 

   

1  Slight injury or health effect 

Slight damage 

Slight  effect 

Slight impact 

     

2  Minor injury or health effect 

Minor damage 

Minor effect 

Minor impact 

   

3  Major injury or health effect 

Moderate damage 

Moderate effect 

Moderate impact 

    

4  PTD1 or up to 3 fatalities 

Major damage 

Major effect 

Major impact 

    

5  More than 3 fatalities 

Massive damage 

Massive effect 

Massiveimpact 

 

1 PTD is a Permanent Total Disability.

MANAGING RISK STANDARD MandatoryRisk Assessment Matrix Specification

RESTRICTED Document 0000-S-90-04-O-0006-00-E Appendix 5, Revision 04 Valid from 29.06.2010 to 29.06.2015 Document History Authorisor: T.Hake, Custodian: S.Lock Printed copy uncontrolled p2 of 2

Definitions Harm to People (P) Slight injury or health effect – not affecting work performance or Daily Life Activities. Minor injury or health effect – affecting work performance (restricted work case, or up to 5 days lost time), or reversible health effects (e.g. skin irritation, food poisoning). Major injury or health effect – lost time more than 5 days, or irreversible health damage (e.g. hearing). Permanent Total Disability or one to three fatalities – resulting from injury/ occupational illness. More than three fatalities – resulting from injury or occupational illness.

Asset Damage (A) Slight damage – no disruption to operation, costs less than $10,000. Minor damage – brief disruption to operation, costs less than $100,000. Local damage – partial shutdown, can be restarted but costs up to $1,000,000. Major damage – partial shutdown up to 2 weeks, costs up to $10,000,000. Extensive damage – Substantial or total loss of operation, costs greater than $10,000,000.

Environmental (E) Effect Slight effect – slight E damage, contained within the premises. Minor effect – minor E damage, no lasting effect, e.g. small spill offsite, onsite groundwater contamination, single exceedance of limit. Moderate effect – limited E damage that will persist or require cleaning up, e.g. spill that requires removal and disposal of a large quantity of soil/sand, or observed fish kill or damaged vegetation, frequent exceedance of limit with potential long term effect. Major effect – severe E damage that will require extensive measures to restore beneficial uses, e.g. spill on beach, extensive offsite groundwater contamination. Massive effect – persistent severe E damage that will lead to loss of commercial, recreational use or loss of natural resources over a wide area.

Impact on Reputation (R) Slight impact – Limited public awareness on local level but no discernible concern, no media coverage. Minor impact – Local public concern and media coverage. Moderate impact – High local public concern, extending to the level of the Sakhalin Region, media coverage on regional level. Major impact – Likely to escalate and affect reputation of Company, Shareholders and/or Lenders; National attention, extensive media coverage on national level, some international. Massive impact – Severe impact on reputation of Company, Shareholders and/or Lenders, international public /media attention, NGO action, high level of concern amongst governments.

The four colours in the application of the RAM mean the following: Managing Risk Incidents Audit Maintenance prioritization

Manage for continuous improvement, although Businesses may set lower priority for further Risk reduction. Low Risk

Incident

Low

Severity Zero: Review requirement to progress work

(A1) 7 Routine Priority, Latest Allowed Finish Date LAFD <=12m

(A2/B1) 6 Routine Priority, LAFD<=6 months

Manage for continuous improvement through the effective implementation of the HSSE Management System.

Medium

(A3/B2/C1) 5 Routine Priority, LAFD<=8 weeks

(A4/B3/C2/D1) 4 Routine Priority, LAFD<=4 weeks

Identify and implement Controls and Recovery Measures to reduce Risk to As Low As Reasonably Practicable (ALARP).

Medium Risk Incident High

(A5/B4/C3/D2/E1) 3 Routine Priority, LAFD<=2 weeks

(B5/C4/D3/E2) 2 Schedule Breaker Priority, LAFD<=1 week

Identify and implement Controls and Recovery Measures to reduce the Risk to ALARP and provide a Documented Demonstration Of ALARP by a Bow-Tie or equivalent methodology.

High Risk Incident Serious 1 Emergency Priority.

LAFD: ASAP + Overtime.

Actual Severity 4 or 5

Significant Incident