QRA article

QRA article

Does risk management help?

 http://www.govinfosecurity.com/whitepapers/does-risk-management-impact-business-success-w-2959

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2017 promises to be a ear of unprecedented risk - Huffington post

http://www.huffingtonpost.com/daniel-wagner/2017-promises-to-be-a-yea_b_13690632.html

 

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A non profit organisations view about Process Safety in the USA

The Center for Effective Governance in the USA (a non profit organisation) has published a report called "Blowing smoke" where they say that " Voluntary standards don’t work, and existing regulations are not effectively enforced"
Read about the report in this link.
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Safe in India - a new initiative

I came across the website www.safeinindia.org run by three IIM graduates. SafeInIndia is an initiative to address the issue of crush injuries in the Automotive Sector and work on win-win sustainable solutions.
Glad to see such initiatives springing up. Their report on the automobile sector is available for download from their website which can be accessed here www.safeinindia.org.
 
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The Volkswagen emission issue and risk management

I had posted this question to a group in Linkedin: "The ongoing Volkswagen emission issue raises a bigger issue of corporate risk management. From a reading of its annual report, the company did have in place all risk management controls, yet the issue took place. While only a deeper investigation will reveal the details, what is your take on improving risk management? We in the chemical Industry deal with process safety risks among other things and the incident does raise an alarm bell about corporate risk management and its effectiveness". 

Nigel Cann (Process Safety and Dangerous Goods Risk Specialist, Australia) responded with this very good reply:

"Karthikeyan - this is a good topic for this group. I wonder how many people in the PSM field have seen this incident playing out in the news and thought it doesn't apply to them. High profile cases like this need to be taken as the warning for the rest of us that they are. So like every incident that makes the headline, have you (and everyone else) thought about how things could go wrong in the plants and processes that I am responsible for.

Some thought provoking questions for people:

* Where have we met the letter of the law, rather than addressing the spirit of it?

* Have we had a problem that was causing issues at high level that seemed to magically disappear? Do we understand why?

* Do we have people checking the checkers?

And one that I had a concern for when a GM at an operating plant:
* Are the regulators technically competent to give me a critical assessment of my PSM system? (or in some cases...)

* Do they even turn up to review our operation?"
 
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MOVING PROCESS SAFETY INTO THE BOARD ROOM - ARTICLE IN CHEMICAL ENGINEERING PROGRESS

To all my readers,

My article "Moving process safety into the board room" has been published in the September 2015 issue of Chemical Engineering Progress of American Institute of Chemical Engineers.

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LNG tank leak incident

An incident at a a large LNG storage facility in Washington state in USA when an explosion in a "processing vessel" sent sharpnels into an LNG storage tank, puncturing it,has lessons in Quantitative RIsk Assessment and assumptions made.
The graphic leak of LNG from the tank ( which is similar to liquified ammonia tanks) but stores LNG at a temperature of -160 Deg C is shown in the video in a news report. The tank also appears leaking at two different places on the outer shell. The wind direction has helped in not igniting the vapour leak.

Link 1 - video
Link 2- news report


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Risk management - Financial Vs Process safety

An article about the recent financial issue in a leading company mentions that a shareholder group warned the management that risk management was not up to the mark. The group also mentioned that there was no person with adequate financial expertise in the risk management committee. Chemical manufacturing companies also need to have persons with expertise in manufacturing and process safety in their risk management committees. Risk cannot be managed unless it is understood. Read the article in this link.

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Risk management in CPI

A good article in the Business Standard highlights the importance of risk management. I know of a chemical industry where the Chief of safety has been designated as "Chief Risk Officer". For a chemical manufacturing facility, apart from the financial and other risks, the risk to reputation and business continuity if an incident occurs is much higher. The article in the Business Standard mentions the following:
'Even Mukesh Ambani in a way is striving to protect his revenue streams by diversifying into homeland security. “If you want a safe Jamnagar, or a safe Mumbai, you might as well offer the best security solutions to the nation’s top cities and its energy assets. It’s also linked to strategic energy security,” says a senior RIL executive, who did not wish to be quoted."
Read the article in this link.

 
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Process Safety and Risk management in the high speed age

A good article called "Black swans turn grey -The transformation of risk" by Price Waterhouse Coopers highlights the following:

1. The boards of big organisations do not fully understand the risks that they are running
2. In the Internet age, speed and prejudice are all
3. Checks and balances at board level are critical.
4. Leadership and culture shape an organisation’s attitude to risk.

I think in a chemical industry "operational risk" is of greater importance that financial and strategic risks. As long as there are human beings involved in making decisions, there is a possibility of a process safety incident that has serious implications for the business. That's why I agree totally with the Baker Panel report suggesting that a person competent to understand process safety be on the board of Directors for Chemical Industries.
Read the article by PWC in this link.

Managing risk in the chemical industry

With strategies of chemical companies always evolving to changing circumstances, I often find that "de-risking" strategies are often applied from a purely financial point of view rather than a combination of financial and process safety risks. In chemical industries, process safety risks need to be carefully studied and evaluated, as a single process incident could wipe out all the gains that you had obtained by de-risking purely from a financial point of view. Similarly, during mergers and acquisitions of chemical companies, process safety risks need to be carefully evaluated. It may cost you more if you do not heed process safety risks.
See BASF's approach to managing process safety risks in this link.

Catastrophic risk management

I read a nice article which succinctly summarizes how to identify and cover potential catastrophes their business might face. This is true for the Chemical industry also. I am quoting from the article below:
"1. Identify catastrophic events which could close your operations down in each of your business units and in each region/country in which you have set up shop. Every element of your product range and geographical footprint has its own set of unique risks.
Events can be classified as "internal" where a multiple failure of in-house systems can lead to catastrophe; or "external" where adverse political, economic or natural developments or shocks can cause premature extinction. For example, the range of events can include accidents, civil wars, state expropriation of assets, market collapse, massive disruption of supply chains and earthquakes/flooding.
2. Imaginatively play a scenario on each event highlighting the causal chain which can lead to the catastrophe and the impact on the business of the catastrophe itself. Where possible, select flags which may indicate a rise in the probability of the event occurring such as the abnormal withdrawal of a tide before a tsunami hits the beachfront.
3. With probability of occurrence on the vertical axis and seriousness of impact on the horizontal axis, locate each scenario on the chart so that you have a real feel for the ones you should prioritise in terms of response strategies and tactics. Which are the real catastrophes waiting to happen?
4. Make a list of all the organisations who have relevant roles to perform in the event of a catastrophic scenario materialising. In particular, work out where they fit in the decision-making structure and specifically the people in each organisation to contact as the disaster unfolds. Remember actions taken in the first 48 hours usually determine public perceptions about your competence in handling the event.
5. Just as a catastrophic fire scenario requires preventative measures as well as emergency procedures should it break out in a building or forest plantation, so each catastrophe scenario should carry its own sequence of pre-event and post-event drills. Each option should be subjected to a cost-benefit analysis so that you have the best drills in place to prevent the event happening and to contain it if it happens.
Simple, but very few companies – even among the top multinationals – practice catastrophic risk management. As for the example I quoted at the beginning on extreme weather events, the pieces that are missing are steps 4 and 5".

Read the full article in this link.

Risk management - the risk is in the management!

Many articles are written about corporate risk management and its statutory requirements. Risk management in a chemical manufacturing company must also take into account the technological, asset integrity and manpower competency risk. In the board's of chemical manufacturing companies, there must be someone to understand these specific risks that are inherent in chemical units. Risk matrices when presented to the board often do not really communicate the risks the company is facing. No board of directors want an incident to happen.It is the failure in communicating these risks to the board that is most worrisome. At the present rates of attrition of management personnel in chemical industries in India, there may be a gap in risk communication to the board, with the result that an incident happens later.
When I conduct process safety management audits, I often observe a huge gap between what is happening at the ground level and the board's perception of management of process safety. The Baker panel report after the BP incident specifically recommended that a member of the board in chemical units must be someone who understands the process safety issues and can communicate the risk to the rest of the members of the board. But this is yet to happen. It is not a question of culture. It is a question of commitment. Without commitment there is no culture.

Risk factors in the Chemical Industry

An article mentions the risk factors identified by the American Insurance Association after investigating incidents in chemical industries. Some of them are mentioned below:
1. Factory site
(1) vulnerable to earthquakes, floods, storms natural disasters
(2) water is not sufficient
(3) the lack of public Fire Facilities support
(4) high humidity, temperature and other climate change
(5) nearby hazardous impact of large industrial installations
(6) close to highways, railways, airports and other transportation facilities
(7) difficult to safely evacuate
2. Plant layout
(1) process equipment and storage equipment is too intensive
(2) have significant risk and risk-free process safety distance between devices is not enough
(3) expensive equipment too concentrated
(4) the absence of effective protection
(5) boiler, heaters and other sources of ignition too close
(6) with terrain obstacles
3. Structure
(1) supports, doors, walls and other structures are not fire proofed
(2) Electric Equipment without protective measures
(3) inadequate capacity of explosion-proof ventilation
(4) plant is weakened (corrosion)
4. The risk of lack of knowledge of processing material
(1) hazards of mixing raw materials and natural decomposition
(2) potential for gas and dust explosions
(3) not understanding the result of misuse, or poorly controlled process
5. Chemical Technology
(1) inadequate data on the chemical reaction kinetics
(2) lack of knowledgeof the dangerous side effects
(3) does not determine the decomposition energy according to thermodynamics
(4) detection of process abnormalities is not adequate.
6. Material handling
(1) incomplete labeling of products
(2) in adequate Explosion detection/suppression device
7. Maloperation
(1) ignoring maintenance
(2)lack of supervisory role of management
(3) driving and parking plan is inadequate
(4) the lack of emergency shutdown training
(5) not establishing collaboration between operation and security personnel
8. Device Defects
(1) caused by improper selection of equipment corrosion, damage
(2) inadequate equipment, such as the lack of reliable control instrumentation
(3) material fatigue
(4) the metal material is not adequate or no inspection by experts
(5) structural defects
(6) equipment operating above design limits
9. Disaster plan
(1) did not receive strong support from management
(2) the division of responsibilities is not clear
(3) no accident prevention program
Read the article in this link.

Process safety and societal risks in India

I was going through a risk assessment report prepared for an organization that was planning to increase production capacity using a toxic chemical as a raw material. This chemical is received through pipelines traversing through public areas. I found one thing startlingly out of place. The report used outdated population data in the vicinity of the pipelines. Unauthorized settlements were everywhere near the pipeline and this was not considered in the report. This is a peculiar problem in India. How can we rely on population statistics when the data itself is dynamic on a day to day basis! One other thing that always perturbs me is that I doubt if the user of the report understands the assumptions made and is really able to understand the report.
Just having a colorful report with a lot of drawings indicating toxic end points and red zones does not really mean you have identified the risks involved.While such reports are mandatory from a regulatory perspective, it is better that the organization revisit these reports periodically based on changes in population density.

Lord Tony Newton,independent chair of the Buncefield Investigation Board says "The system should in future consider the total population at risk – societal risk – at each new development application. We should not continue to allow surrounding populations to increase without considering the consequences". I really do not know how we can implement this in India unless there is strong enforcement by the regulatory agencies.