using qualitative methods to manage risk

Reliability Engineering and System Safety 29 (1990) 15-25

Using Qualitative Methods to Manage Risk

P. F. M c G r a t h

Olin Corporation, PO Box 248, Charleston, Tennessee 37310, USA

A BSTRA C T

Managing risks in the chemical process industry requires a concerted effort throughout the design and operation of a facility to identify, evaluate and safeguard against the risks inherent to the facility. By systematically performing risk evaluations on their processes, companies can substantially improve their safety performance while cost-effectively reducing their incident-related outages. This paper describes Olin Corporation's approach to risk management.

I N T R O D U C T I O N

As the chemical process industry (CPI) has grown, more and more emphasis has been placed on risk management. Corporations in the CPI can manage their risks using an approach such as that of Olin Corporation. Olin's safety program began early in the history of the corporation. This concern for safety was necessary since the first product manufactured was gun powder. As the company grew and more plants and products were added, a formal program using qualitative methods to reduce risk was developed.

CPI companies have recognized that to have a successful safety program, it cannot just be an afterthought. That is, safety must be an integral part of each person's job and it must be considered at the inception of any new plant or process. Recognizing this, many CPI companies design, build and operate facilities in such a way as to safeguard their employees from injury and from occupational hazards to health. Furthermore, these companies (as does

15 © 1990 Olin Corporation

16 P. F. McGrath

Olin) regard existing laws and regulations concerning occupational safety and health as a minimum standard for their operations.

The thrust of Olin's risk management is a two-pronged approach. The first approach concentrates primarily on the inherent hazards of the chemicals handled, the process, and the equipment designed into the plant. The second approach concentrates on the personnel in the work place and their activities. However, it must be noted that there is considerable overlap and that one should not spend much time trying to draw a line between the two approaches.

This paper concentrates on the first approach, but it is absolutely necessary that both approaches be required for a successful safety program.

Facing every company in their efforts to have a successful safety program are competing demands for the time and resources of the organization. Successful safety programs in industry require clear corporate direction and the commitment of company resources to implement the required activities. Once these basic criteria are in place, a company can prioritize its activities to best utilize its resources. Emphasis on early identification of safety hazards is essential. Early identification maximizes the time for corrective action and minimizes the economic impact. The identification process is a multiple step review program that begins at the conceptual stage of a project and continues through active operation.

However, setting priorities in a world with competing and conflicting demands requires a multitude of interacting judgements. To successfully handle this, it is first necessary to recognize that these demands (e.g. environmental, safety, or production-related) will occur and then to be organized to give them their proper recognition. In this arena, a large organization usually differs from a small one. A large organization may have separate departments responsible for these different disciplines, while in a small organization these functions often reside in only a few people. Thus, the challenge in the large organization is to bring together all the knowledge that is dispersed in the firm, while in the small company it is to insure that all views are included.

Ideally, the separate functional inputs to a risk review would be environmental, safety, loss prevention (insurance), process hazard reviews, health, technology, manufacturing and engineering. While every organization has different names for the departments where these functions are performed, they should be separate and distinct. While corporate policy sets the stage, implementation is left up to the individuals directly responsible for the respective functions. This can only be done if all levels of management support the policy.

An example illustrating why all the necessary inputs are required was

Using qualitative methods to manage risk 17

highlighted as a result of a recent fire at a small packaging plant in which a recent investment had been made. Although the building was less than 2 years old, the original owner did not deem it necessary to have input from a loss prevention perspective. As a result, the building did not have a sprinkler system or other fire prevention features. When an electrical short circuit in a piece of equipment initiated a fire during a weekend, considerable damage occurred.

Similarly, a newly designed piece of equipment was started up without the practical input of manufacturing and engineering. While the equipment had good yields and energy consumption, it had considerable leaks that led to an overall unsatisfactory performance. Additional examples of failure to utilize other inputs have led to other undesirable results.

RISK M A N A G E M E N T REVIEWS

Once the proper corporate direction and organization are in place, priority must then be given to the necessary programs. The first and foremost program is one to identify unforeseen potential hazards. The techniques for this include: hazard and operability studies, fault trees, checklists, 'what if' questions, failure mode and effect analysis, etc. Since no method of identification is guaranteed to discover every hazard, a successful system would incorporate a combination of the aforementioned techniques.

Without systematic identification, prevention then becomes a matter of luck. First, the analyst selects among various techniques of hazard and operability studies, checklists, fault trees, etc., to use to identify potential hazards. The second step involves the timing on when to use these techniques. The actual production and handling of a material that can be emitted is the result of a long chain of events. This chain begins when the concept of manufacturing or handling the material is first originated. Once the idea is originated, then the implementation of it begins. First the technology must be developed, followed by design of a process or plant, then construction, start-up, and finally operation. Even after a process is up and running, changes continue to occur.

A series of six separate and distinct hazard reviews are performed during this chain of events. Early identification of potential hazards will allow preventive measures to be incorporated with minimal impact on cost and timing. These reviews are intended to be thorough and include safety issues, environmental concerns, reliability, upset conditions, etc., all of which are interrelated and can lead to undesirable results including spills and releases.

18 P. F. McGrath

When reviewing a process early in the design, priority can be given to the following considerations:

• substitution of less hazardous materials; • dilution of a hazardous material; • minimization of hazardous material inventory levels; • material of construction alternatives.

In order to assure the success of these reviews, it is necessary that the review team members be knowledgeable and experienced with the process or area being reviewed. Additionally, all members of the team should know that it is an integral part of their job to participate (and often conduct) safety reviews and that they are responsible for the success of the review. The primary team members' functions represented are:

Research or Technology Specialist Safety Department Safety and Hazard Review Engineer Project Engineer Process Engineer Manufacturing Department: Superintendent

Supervisor/Foreman Chief Operator Maintenance

Other members knowledgeable in environmental regulations, industrial hygiene, instrumentation, materials, etc., are called upon as the situation warrants.

Participation in the early reviews is weighed heavily towards Research and Development personnel. As the process is being designed, the review team has a preponderance of design engineers. Then, as the plant nears operation, manufacturing personnel take the lead.

The following describes the focus of each of the six reviews in Olin's risk management program. The reviews are generally performed sequentially through the design, construction, and operation process (Table 1). 1

Review 1: Technology

The first review is a technology review. This concentrates on the inherent risks of the raw materials, intermediates, process, chemistry and inter- actions. At this stage alternate processes or substitute chemicals can be considered. Any unique handling characteristics are also noted.

Using qualitative methods to manage risk

TABLE 1 Timetable of Risk Reviews

19

TYPE OF REVIEW

TECHNOLOGY

SCALE-UP

DESIGN

START-UP

OPERATIONS

MODIFICATIONS

RELATIVE TIMING DURING

I I I I I I

Laboratory or pilot units

Design and Construction

m

Start-up

Production

LIFE CYCLE

I I

m

Review 2: Scale-up

The next review identifies special considerations or potential scale-up problems, highlighting unproven or new company applications of equipment needed for the development of the plant. This step is done before a request for capital funds is completed, insuring that adequate funds will be provided for all safety and environmental considerations.

Review 3: Design

We then conduct at least one design review. This is scheduled after the design of a new plant is finalized, but prior to construction. The objectives of this review are:

(1) To ensure that the final detailed design satisfactorily resolves the safety, reliability and hazard problems identified in previous reviews.

(2) To identify and review any modifications and/or hazards which have been added since the previous reviews.

(3) To perform a final review of equipment, ventilation, containment, and environmental safeguards, including instrumentation, inter- locks, fail-safe decisions, detailed layouts and fire protection provisions.

20 P. F. McGrath

Review 4: Startup

The next stage requiring a review is the time period just prior to start-up of a new facility. The manufacturing organization has the responsibility to determine the state of readiness of new plants for start-up and operation and to develop operating procedures that include safety and environmental consideration. The objectives of a review at this stage are:

(1) To review and evaluate equipment, process or layout changes made during construction, ensuring that no new hazards have been added since the last hazard review.

(2) To review the final constructed physical plant, verifying that key equipment is properly installed to minimize hazards.

(3) To review start-up, operating and emergency procedures, ensuring maximum safety during start-up and minimizing start-up problems and costs.

(4) To update previous hazard reviews to be certain that all previous recommendations have been resolved.

Most of the items in the previous reviews will have been given thorough consideration during their respective safety and hazard reviews, and will have been eliminated or adequately controlled by this stage. However, this review is:

(1) To ensure full understanding of recognized and existing hazards. (2) To ensure the procedures for avoiding and controlling them are

transmitted to operating personnel.

High priority is given to detecting details which may have been overlooked, and to concentrating on the adequacies of plans to cope with operating emergencies that might arise.

Review 5: Operations

The next two reviews are for existing units. The first of these is the 'operating' (manufacturing) review. For existing processes and plants, the 'operating' hazard review is designed to:

(1) Identify unsuspected hazards and minimize them. (2) Increase on-stream reliability. (3) Reduce environmental vulnerability during normal operations,

emergencies and shutdowns. (4) Develop a program for upgrading existing operations to current

safety standards.


Specific objectives are:

• Ensure that operating and emergency procedures are current. • Review and inspect existing plant to identify and minimize hazards. • Review major upsets and malfunctions which have occurred since

the previous reviews and identify any requirements for improving safety and reliability.

• Identify areas where the existing plant should be upgraded to meet current and projected safety and reliability standards.

Operating reviews are held on a regular schedule of 2-7 years, based on the relative hazard ranking of the operation.

Review 6: Modifications

The last review is designed to identify unsuspected hazards associated with any modification or change to an existing operation. This review is held whenever a process change is proposed for an operating unit. Examples of process change or modifications are:

(1) Addition or elimination of control instruments. (2) Change in size or material of construction of integral components of

the plant. (3) Addition to ventilation system, etc.

Additional reviews

Existing process units also have other concurrent programs occurring. Briefly stated, the most detailed begins with an inventory of chemicals handled in the unit. Then the list of chemicals is reduced to those regulated by CERCLA, SARA, EPA (list of 403 acutely toxic chemicals) and TSCA. Following this, possible release locations are identified. Depending on factors of volatility, quantity handled, potential exposure to the public, etc., quantification of potential release amounts may be determined. Finally, an action item list is generated and corrective actions taken.

EXAMPLE RISK REVIEWS

Examples of implementation of the steps were recently demonstrated. During this period, a research group conducted a technology review on a new process for a particular bleach chemical. This review led to the establishment of safety limits to help ensure the safety of the chemist conducting the original experiments.

22 P. t~: M c G r a t h

Also during this time frame, a group conducted a scale-up review for a new process to manufacture a liquid propellent for the Army. While the risks of the final product were well documented, this review identified the need for increased attention to the development and implementation of safe handling procedures for the new materials.

Concurrently, another group was conducting a design review of a microelectronics chemical plant. The finished products of this plant required an extreme level of purity to go along with the more normal safety and reliability issues.

A more unusual item was highlighted at a start-up review held at a foreign affiliate. While the professional staff were very fluent in English, the hourly personnel were not. It became readily apparent that to ensure operators fully understood the process instrument readouts, operating procedures and emergency procedures, additional efforts to translate instructions and information were required.

An operating review held during the same time frame of another facility indicated that additional over-pressurization protection was required on a vessel and this led to a satisfactory solution.

Simultaneously with the above examples, a modification to a small packaging line to include bulk shipments required a review. This review revealed methods to eliminate contaminants that would result in undesirable side effects if they were present.

I M P L E M E N T I N G RISK REVIEW RESULTS

Throughout all the reviews, action item lists are generated and prioritized. Major factors considered in the prioritization are: quantity of hazardous chemicals handled, volatility, distance to the public, population density, explosivity, etc. The items are then prioritized on a scale of 1-4 with the most urgent and critical items having a ranking of 1 and the least serious a ranking of 4. Priority 1 items are of major concern and corrective action must be taken immediately. Priority 2 items are singled out for special attention and acted upon expeditiously. Generally, well under 10% of the items are in this category. Receiving a priority 3 are key action items that can be handled on a routinely scheduled basis. Priority 4 action items are the least critical and are usually verification of inputs to the team.

It is often possible to complete priority 3 and 4 action items immediately with little or no cost. This should be done, even though the urgency is less than some other higher priority action items which may take longer to complete.

The review teams are responsible for setting the priority ranking based on


their expert knowledge of the process. In addition, a procedure exists that allows for disagreements in handling of action items to be appealed.

Supporting these programs is a complete follow-up system. Minutes of all reviews are recorded, including lists of action items. Progress reports of action item status are issued monthly. Furthermore, it was earlier mentioned that at each step of the review cycle previous action items are reviewed and a determination made if the corrective action was satisfactory. Summary reports on the reviews held and action item status are generated monthly for management review.

CONCLUSION

The success of these programs depends on allocating the time required to perform a complete and thorough review. Generally, a review can be anywhere from a few hours to several days---depending on the complexity and magnitude of the process being reviewed.

While the program outlined here implies that it must begin with the first stages of a project, it can actually be implemented at any phase of a plant's history. When Olin started this program, existing plants began with a review of their ongoing activities while new production processes had the luxury of using the entire program. Additionally, when we have purchased an operating plant, we started with a review appropriate for an active plant.

Besides being very systematic, the layered structure also has other benefits. While any one review may not reveal a hazard, additional opportunities exist to identify potential problems in subsequent reviews.

This program has been very effective. Lending credence to this has been a recent study conducted by independent risk consultants. They reviewed a critical chemical process unit in depth using Failure Mode and Effect Analyses (FMEA) and failure rate quantification techniques. Their review indicated no apparent weaknesses in the systems analyzed. Also, supporting this conclusion is the decline in the accident incidence rate of the chemicals division (Fig. l) and the reduction in property damage and business interruption costs (absolute dollars, not inflation adjusted) versus time (Fig. 2).

Lessons learned over the years while using this program are:

(a) For best results, use the most experienced and knowledgeable personnel.

(b) The review team leader must be from the function corresponding to the review (i.e. a member of the engineering group would conduct the design review, manufacturing the start-up and operating review).

24 P. F. McGrath

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(c) A formal systematic program assures management that there is thoroughness and consistency within the entire organization on this vital subject.

The benefits of a comprehensive safety assessment program are many. The most obvious one is a reduction of personal injuries. However, concomitant with that is improved plant onstream time and reliability. This increases production and provides reliable service to customers. Fewer and shorter outages also reduce emergency maintenance costs and the inefficiencies that occur because of emergency conditions.

Establishing a successful safety program is always a compromise between such criteria as risk, exposure, time and cost. Experience shows that a successful hazard prevention program can be devised to handle these conflicting criteria. This will happen when;

(a) it is clearly a corporate goal; (b) the organization is established to support this objective; (c) a formal systematic program is established to identify the hazards

and risks that will allow time to minimize cost for prevention; and (d) personnel are held accountable for safety.

REFERENCE

1. Olin SETCO Manual, Olin Corporation, Stamford, Connecticut, 1986.

using qualitative methods to manage risk

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