A Risk-Based Approach to Process Risk Management

American Society of Safety Engineers Bakersfield, California, Chapter

August 4, 1999

AcuTech Consulting, Inc. 1999

David A. Moore, PE, CSP AcuTech Consulting, Inc. 100 Pine Street, Suite 2240 San Francisco, CA 94111 (415)772-5972 www.acutech-consulting.com

In Todays Operating Environment

Management Must Make Tougher Decisions on Risks:

Acceptable

risk - How safe is safe enough? Due diligence - What price for safety? Risk Management - What are the options to reduce risk? Managing smart - What is the optimal solution considering costs?

Regulatory-driven minimal efforts are not enough

AcuTech Consulting, Inc. 1999

Underlying Critical Issues and Trends Facing Corporations:

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Challenging economic situation given new world economy More competitive business situation in a faster moving economy More regulations and performance-based requirements to comply with for safety, environment, health, and quality Regulations are not always specific as to requirements leading to challenging decisions

Public Interest in Safety is Emerging

Health, Safety, and Environment are more of concern to the public than ever before
More This It

news coverage than ever and increasing

is shaping public opinion and is setting higher standards of care is an indicator of the new awareness of safety public involvement in risk decisions

More
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Risk Tolerance Appears to be Lessening

The public and workers seem less tolerant of risk

Past The

practices may be unacceptable today

public expects minimal risk or even demands zero risk

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Liabilities

Liabilities are increasing:

Higher Higher

potential for legal action jury awards for punitive damages against higher standard of care

Measured More

regulations to reference as precedent

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What is Needed:

More sophisticated management of risk

A risk-based foundation for the safety management system established Integration of a risk management process into the companys decision process

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Goals:

Reduce risk to acceptable levels considering all stakeholders

Who What How

are the stakeholders? is acceptable? is risk to be measured?

Provide a sound basis for making these decisions

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Hazard Analysis and Risk Assessment

Foundation 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 and decisions

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Traditional Measures of Acceptability

Regulations
Industry practice

Company practice
Engineering judgement

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Modern Measures of Acceptability

Regulations
Industry practice

Company practice
Engineering judgement Risk-based decision making based on systematic methods and risk criteria including consideration of costs

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From Reactive to Proactive

Develop a program for risk management

Train employees in risk principles

Address key risks using these methods

Make risk management a way of doing business imbedded in the culture of the company as a standard work process

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Hazard Analysis Definition

A Hazard Analysis (HA) is a comprehensive study that:

identifies, analyzes

and,

the hazards of a process.

AcuTech Consulting, Inc. 1999

It

is the front end of a risk assessment

Sequence of a Hazard Scenario

Initiating Event
Operator Overfills Tank

Intermediate Events
Release From Tank

Final Event

Level Increases

Injury from Release

High Level Alarm Fails

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Operator Fails to Control

Personnel in the Area

Dependent Events

Risk Assessment Process Flow Diagram

Accident Severity Estimation Modify System

System Description

Hazard Identification

Risk Determination

Risk Acceptance

Operate System

Accident Likelihood Estimation

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Techniques Commonly Used in Hazard Evaluation

Commonly Used Techs.: Hazard & Operability Study (HAZOP) Checklist Analysis What-If What-If /Checklist Failure Modes & Effects Analysis (FMEA)
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Other Techniques: Event Tree Analysis Fault Tree Analysis Human Reliability Analysis Job Safety Analysis

Benefits of Hazard Analysis

More complete awareness of hazards

Provides

a structured and systematic examination of the hazards of a process Attempts to recognize all hazards

Employee participation
Gathers

real input from the employees Concerns are discussed and documented Team is more informed about hazards Paramount to management/employee relationship
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One Indicator of a Division Between Employees and Management

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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 effective strategy to reduce or eliminate risks Provides a means to compare risks of different designs or operations Worst First risks 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, property and the environment Assists with regulatory compliance Minimizes business interruption Improves relations with the public and employees
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EPAs Premise

The public has a right and need for knowledge:

chemical

hazards they are exposed to programs in place to prevent releases emergency plans and procedures

The 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
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Example of Risk Management Challenge - Dilemma of EPA RMP

Described the hazard, not the risk

Public

may be misled by the presentation of worst case and alternative case scenarios Not a risk assessment only one or two cases No assessment of likelihood Subjective rules for alternative cases

Recommended to prepare to understand risk more exactly and to prepare for further communications with the public

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How Industry Sees Their Worst Case Scenario

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How The Community Sees Their Worst Case Scenario

You are here

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How The Community Sees All Worst Case Scenarios

Its everywhere!!

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RMP Issues and Solutions:

Pressure will likely be put on companies that have:

The

appearance of high exposure to the public Actual high incident frequencies (including nuisance problems) Multiple fatality or serious injury accidents Incident which result in actual exposure to community No or poor detection, mitigation, and emergency planning for worst case scenarios
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RMP Issues and Solutions:

Develop a risk-based (vs. only minimum regulatory based) risk management program Risk-Based Decision-Making processes can be employed to:
Determine

the risk Identify and evaluate the risk reduction options Help management with the decision on best solution Make more consistent and justified decisions Manage public concerns
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Conclusions

Risk Based Decision-Making is required in todays 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 uncertainty

Companies need to be prepared for a greater demand for better risk information

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Contact Us...

Eastern Consulting Group 116 Village Blvd, Suite 200 Princeton, NJ 08540-5799 Tel: (609) 951-2211 Fax: (609) 951-2281

Corporate Headquarters & Western Consulting Group AcuTech Consulting, Inc. 100 Pine Street, Suite 2240 San Francisco, CA 94111 Tel: 415-772-5972 Fax: 415-772-5975

Canadian Consulting Group AcuTech Consulting, Inc. 300-1055 West Hastings St. Vancouver, BC V6E 2E9 Tel: 604-609-6168 Fax: 604-608-9880

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http://www.acutech-consulting.com

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