Process Safety and Risk Management - VI , Risk Management and Sustainable Operation

This article was published in IIChE News letter Volume 12 Issue 1, 2020

# Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted. - Albert Einstein #

 This is the last paper in this series of Process safety and Risk management. I have addressed most critical areas of Process safety and risk management in series of six articles for achieving safe and sustainable operation. Chemical and Hydrocarbon manufacturing facilities are high hazards locations and in short, every activity carries risk. The risk can be limited to the boundary of the organisation or may extend beyond boundaries and can not only damage assets and reputation but can wipe off organisation. e.g. recent explosion in Phillips 66 Refinery at Texas and Philadelphia Energy Solutions at South Philadelphia.

  In order to assess Business risk and reduce to tolerable level, one of the board member of any such organisation to be Risk expert who is chairing the Business Risk and Assurance Committee to discuss and assess risks, assign owners to the risk as well as facilitate to reduce risk to tolerable level. The committee is linked to various site subcommittees for ease of communication and execution of action plan. One of the leg of this committee is safety and operational risk which shall be addressed in this article. Risk Management is very vast subject and I shall try to give brief outline of the same.

 Definition of Risk:

 In simple term, Risk is an uncertain future event that if it occurs, will impact the sustainability of operation and safety of people. It is defined as a function of Probability of occurrence of any incident and consequence of the incident. Every organisation have the criteria of classifying the risk in to acceptable and non-acceptable level. The risk can be reduced by providing safeguards. Therefore, by additional safe guard, non-acceptable risk can be brought to acceptable level. We have discussed many methods of Hazards and risk analysis in article no.4 on Process Hazards analysis and Facility siting.

 Risk assessment.

Risk taking is fundamental to business, and exposure to risk is essential to gain economic profit. The challenge is to recognize which risks differentially impact the safe and sustainable operation. For sustainable operations of any high hazards plant, following 7 elements are considered for Risk assessment of manufacturing operations. viz.

1.    Personal safety

2.    Process Safety

3.    Health and industrial Hygiene

4.    Security

5.    Environment and

6.    Transportation

7.    Natural calamities

It is essential that workforce at all levels of the organization understands, assess and manages operating risk to prevent accidents and harm to people, to reduce damage to the environment and to achieve competitive performance.

Following are the methodology for Risk assessment.

1.    Define potential sequences of events based on hazard identification. Attached flow diagram can be used to source hazards identification.

2.    Evaluate incident outcomes based on energy released, material released, downwind vapour concentration, radiant heat flux, or explosion overpressure. Assess requirement of dispersion analysis or simulation of incident to identify area of impact.

3.    Estimate impact of incident on plant, people, and profit as well as environment and number of individuals affected with in site and beyond site.

4.    Estimate the potential incident frequencies based on generic data with in site or similar incident happened other locations, other countries.

5.    Estimate the risk by combining consequence with event frequency.

6.    Identify sources of risk, analyse the system and determine if there are cost-effective addition of barrier in terms of process or modifications which can reduce risk.

7.    Again evaluate risk against required risk criteria.

8.    If the risk is considered to be excessive, identify and prioritise risk reduction measures and inform site and board level committee.

Criteria for acceptability of Risk

We are concerned with loss prevention, sustainability of operation and safety of plant personnel and of general public. Criteria of acceptability of risk are clearly required for each main area of risk, viz

1.    Loss to plant equipment

2.    Loss to employees life

3.    Loss to environment

4.    Loss to general public

Convert all these to overall business loss for each risk criteria and define it as a tolerable or Intolerable risk. Consider both direct and indirect losses.

Alternatively, prepare Risk assessment matrix (RAM) as given below and position incident in the right block. Benefits and drawbacks of RAM are as follows.

1.    Risk assessment Matrix (RAM) enables consistent approach to qualitative risk assessment.

2.    It establishes a common terminology to support communication about Risk.

3.    RAM shall be used in accordance with certain fundamental principles:

a.    RAM assessment refers only to the specific risks to determine how to categorise.

b.    RAM assessment does not generate decision about action that should be taken

No two company’s have same risk tolerance. Every company has to develop their own based on their Business tolerance. Experts can help to develop such matrix based on risk tolerance capabilities. Typical RAM matrix is attached herewith.

Here,

IV. Green – Tolerable as is; Consider an improvement opportunity.

III. Blue – Manage for continuous improvement.

II. Yellow – Incorporate risk reduction measures. Control to reduce to tolerable level.

I. Red – incorporate risk reduction measures. Control to reduce. Tolerability of Risk to be endorsed by the line manager directly accountable for the site.

e.g. If similar incident is heard in industry and lead to single LWC is blue (F2C3-Tolerable with improvement proposals) but if it is repeated at same location, it becomes Red (F4C3) and Intolerable risk. It is to be reported to line manager directly accountable for site. Organisation have to find action plan to reduce it to tolerable level, i.e. to avoid such incidence.

The above mentioned is very basic matrix. Now more and more complex matrix with different type of consequences e.g. environment, financial loss, reputation are developed.

Risk Management:

Risk Management is present day buzz word for safe and sustainable operation. For effective risk management, organisation need to make team from Board level to execution level, train all team members, carry out risk assessment, prepare risk and control register, establish assessment and audit protocol as well as create culture of risk based decision making process. These elements are briefly described below.

Team formation: Plant level Risk assessment team is always cross functional including Risk expert, Design, Process, Operation, Maintenance (Mech, Ele, Inst, Civil etc), safety and business expert. This reports to site level management team and all site level risk management teams reports to corporate / board level team. Plant level team is not only responsible to execution but for creating culture amongst staff members for risk based decision making processes. All team members are trained by external expert and rest of staff members are trained by site level risk management team.

Risk and control register preparation: Risk and control register is prepared for every unit, plant, site as well as organisation as a whole. It consists of name of unit, purpose of risk register, Type and name of risk, risk owner, risk category, Risk source, Causes and its category as well as consequences and its category, worst credible scenario, Risk response and mitigation plan, Details of loss, Control attributes of risk as well as details of residual risk, its remediation measures and its future impact. From various criteria, it will pop up whether it is controllable or un controllable risk as well as tolerable and intolerable risk. Based on risk register, residual risk heat map can be prepared for visualisation of risk tolerance of the site or organisation.

Establishing Assessment and Audit process: There are three level of Assessment, viz.

1.    Self-verification by executor or his/her peers. It is line verification.

2.     Functional assurance by subject matter expert and

3.    Third party audit by external party not conversant with the people.

It is essential that all three levels are aligned for Integrated assurance.

Creating culture for risk based decision making process:

As a story of “blind men and elephant”, each employee perceives risk management differently. When every employee perceives it same, it becomes their belief and thereby a culture. It becomes deeply held assumptions, belief and values with respect to risk management shared by an organisation’s employees. Risk culture is required to nudge employees towards right behaviour, prevent bad things from happening as well as fulfil regulatory obligations.

Development of culture starts with policy, procedure and systems. Proper training and association of right team members make it smooth sailing. Demanding risk assessment and risk based decision by authority will make employees to think in that direction. Once all such elements are in place, we can say that Risk Management process is evolving.

To achieve maturity in Risk management framework, following parameters are evaluated for its status in organisation, viz, Basic, Developing, Established, Advanced and Optimised:

1.    Risk Governance

2.    Risk management capability and competency

3.    Risk Integration

4.    Risk Identification and Assessment

5.    Risk Responses

6.    Risk response – Compliances

7.    Risk Monitoring – Self verification

8.    Risk monitoring- Functional assurance

9.    Risk Monitoring – Independent assurance

The criteria for each parameter are well defined and gap analysis can be done for continuous improvement. Once Risk management and Risk based decision making culture is matured, it is expected to achieve safe and sustainable operation.

# Safety is not expensive but it is priceless. Always ask, when in doubt.- Unknown #

1 The author is Founder and Chief Consultant, Innov8 ProTech Solutions, Sustainability and Management Consultant. Formerly, he was Sr. Vice President (Head- Technical) at Reliance Industries Ltd. He is also a member of the IIChE Chemical Process Safety Committee of 2018, 2019 and 2020 as well as member of IISC at CCPS/AIChE for guideline for Investigating Process Safety Incidents, 3rd edition, Email: shahjoym@hotmail.com; Mob: +919374715109