RISK MANAGEMENT - · PDF file innovative entrepreneurial global Risk Management Procedure 4...

innovative ● entrepreneurial ● global www.utm.my Arshad Ahmad

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RISK MANAGEMENT 1

innovative ● entrepreneurial ● global www.utm.my

Content

§  Risk Management Procedure§  Bow-Tie Concept

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innovative ● entrepreneurial ● global www.utm.my innovative ● entrepreneurial ● global www.utm.my

Risk Management Procedure


Risk Management Procedure

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Risk Analysis

Risk Evaluation

Risk Control & Risk Reduction


Risk analysisThe objectives of risk analysis are to: i.  Identify hazards and threats related to the study object (system). ii.  Identify potential hazardous events that may occur related to the study

object. iii.  Find the causes of each hazardous event. iv.  Identify barriers and safeguards that can prevent or reduce the

probability of hazardous events and/or the consequences of these events, and assess the reliability of these barriers.

v.  Identifyaccidentscenariosrelatedtoeachhazardouseventanddetermine the consequences and frequencies of these (i.e., establish the risk picture).

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Types of Risk Analysis§  Qualitative Risk Analysis: uses words and/or descriptive scales to describe

the frequency of the hazardous events identified and the severity of the potential consequences that may result from these events.

§  Semiquantitative Risk Analysis: qualitative scales are given values, but the numbers allocated to each description do not have to have any accurate relationship to the actual magnitude of the frequency or the severity. The objective is to produce a more detailed prioritization than may be achieved in a qualitative analysis, not to suggest any realistic values for the risk, as is attempted in a quantitative analysis.

§  Quantitative Risk Analysis: uses numerical values for frequencies, consequences, and severities.

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Risk Analysis : Step 1 & 2

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Step 1•  Define objectives and scope•  Clarify decision requirements•  Establish study team•  Provide background data

ObjectivesRules and regulationsStandardsPersonnel/competenceHistorical data

Agreed objectivesRisk acceptance criteriaStudy teamTime scheduleStakeholder list

Input Output

Step 2•  Define and delimit the system•  Provide data for the analysis•  Identify assets•  Identify barriers

DrawingsEnergy sources/amountPropertiesHazardous chemicalsOperational procedures

System delimitationAssets to be protectedData dossier


Risk Analysis : Step 3,4,5

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Step 3•  Identify Hazard and threats•  Identify hazardous events

Experience dataCheck listsAnalytical methods

•  List of Hazards and threats•  List of Hazardous events

Input Output

Step 4•  Determine causes of the the Hazardous events•  Determine Frequency of Hazardous events

Experience dataReliability dataAnalytical methods

•  Causal description for each Hazardous event•  Frequency estimates

Step 5•  Develop Accident Scenario•  Describe End Events•  Screen Insignificant

Scenario

Experience dataReliability dataAnalytical methods

•  List of accidents scenario•  Description of end events



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Input Output

Step 6Select relevant and typical accident scenario

Physiccal modelsConsequence modelsExposed models

•  List of relevant and typical •  accidents scenario

Step 7Determine the consequence of accident scenario

•  Consequence for each event

Step 8Determine frequencies of accident scenario

Reliability dataAnalytical methodsExpert judgment

•  Frequency estimate of each scenario



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Input Output

Step 9Assess the sensitivity wrt input parametersAssess uncertainty of results

Analytical methodsComputerized tool

•  Sensitivity assessment of input parameters•  Uncertainty assessment

Step 10Establish Risk Picture •  Risk picture description

Step 11Report the Analysis •  Risk Analysis report


Risk Evaluation

The objectives of risk evaluation are to: i.  Assess the risk as far as possible, compare the risk with

established risk acceptance criteria. ii.  Consider alternative system and/or operational solutions.

Describe the risk that is related to the study object. iii.  Propose risk reducing measures and assess the effect of the

risk reduction provided by each of them in relation to the cost of the measures.

iv.  Provide input to decision-making related to risk.

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Risk Evaluation

§  Evaluate the risk against risk acceptance criteria •  Is the risk determined by the risk analysis acceptable in relation to the

risk acceptance criteria? (if such criteria are established) •  Is the risk acceptable compared to the risk in similar systems and activi-

ties?

§  Suggest an devaluate potential risk-reducing measures •  What risk-reducing measures are relevant•  What is the potential risk reduction for each of these measures?

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Risk Control & Risk Reduction

i.  Make decisions regarding the introduction of new risk-reducing measures or the modification of existing measures.

ii.  Implement risk-reducing measures. iii.  Monitor the risk and propose and evaluate changes when

appropriate. iv.  Communicate risk issues to relevant stakeholders and the

general public. v.  Make other decisions related to risk, for example:

•  Is it acceptable to continue a particular activity at the current risk level? •  Will it be appropriate to implement a proposed risk-reducing measure? •  Which of several proposed measures will it be best to implement? •  How much must be invested to reduce the risk?

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Approaches in Risk Control & Mitigation§  Risk Avoidance – This strategy involves a conscious decision on the part

of the organisation to avoid completely a particular risk by discontinuing the operation producing the risk e.g. the replacing a hazardous chemical by one with less or no risk potential.

§  Risk Retention – The risk is retained in the organisation where any consequent loss is financed by the company. There are two aspects to consider here, risk retention with knowledge and risk retention without knowledge.

§  Risk Transfer – This refers to the legal assignment of the costs of certain potential losses from one party to another. The most common way is by insurance.

§  Risk Reduction – Here the risks are systematically reduced through preventive measures by reducing the frequency of one or more hazardous event, or mitigating measures by reducing the consequences of a potentially hazardous event


Bow-Tie Model


Bow-Tie Diagram

§  Maps the evolution of causes into a loss event, and how it progress further into consequences

§  Origin is not very clear but shell has been using since early 1990’s

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A loss Event: Ignition of Material

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Ignition of materials(Fire-1)

Hazard Scenario

1

Hazard Scenario

2

Hazard Scenario

3, etcHazard Scenario


Barriers

§  Barrier – to detect, diagnose, activate actions to prevent or mitigate impact of accidents

§  Types of Barrier•  Behavioral: e.g., double check, defensive driving•  Socio-Technical: e.g., calling fire brigade on alarm, activation of fire

fighting systems•  Active Hardware: e.g., sprinkler system, pressure relief valves,

ventilation system•  Passive Hardware: blast wall, dike, anti corrosion paint

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Examples of Control Barriers (Offshore Platform)


Preventive Measures

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Ignition of materials

(Loss Event)

Hazard Scenario

H1

Hazard Scenario

H2

Hazard Scenario

H3

Prevention P1-1 Prevention

1-2

Prevention P2-1

Prevention P3-1

Prevention 3-2

The chance of occurrence of the loss event is expected

to be lower


Recovery

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Ignition of Materials(Fire-1)

Consequence C1

Consequence C2

Consequence C3

MitigationM2-2

Mitigation M1-2

MitigationM1-2

MitigationM1-3

Mitigation to reduce the impact of the loss event


Putting it together - Bow Tie Diagram

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Loss Event

C1-1C1-2

C2-1

C3-1

M2-2

M1-2

M1-2

M1-3C2-3

C1

C2

C3

H1

H2

H2

Event that trigger the incident

PreventiveMeasures

MitigativeMeasures

Consequences


Bow-Tie (Accident with Domino Effect)

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Class Example: Loss of Control while Driving

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Car Lost of Control

Prevention

•  Behavioral

•  Active

•  Passive

Causes

Poor Visibility (Haze)Slippery Road (Rain)

Tire PuncturedDriver asleep

…


Class Example: Loss of Control while Driving

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Loss of Control of

a Car

C1

C2

C3

Airbags

Impact Bar


Class Workshop : Bow-Tie Diagram

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Develop a Bow-tie diagram for the following top events

1.  Bankruptcy of young executives due to NPL by Maybank2.  Seepage/leakage of Ammonia into Selangor river from landfill site3.  Fire at Petron PD refinery Crude Tower


Additional Reading§  Dependability Management-Application Guide: Risk Analysis of Technological Systems (IEC

60300-3-9, 1995) provides an overview of the various of a risk assessment and gives guidance to the choice of methods-and should be mandatory reading for all risk analysts.

§  Hazard identification, risk assessment, and risk control" (NSW, 2003) is well written and gives a good overview of the various phases and steps of a risk assessment.

§  Probabilistic risk assessment (PRA) procedures for NASA programs and pro- (NASA, 2010) is a comprehensive guide to quantitative (probabilistic) risk assessment in the space industry, but is also valuable in other application areas.

§  Guide for formal assessment (FSA) for use in the IMO rule-making process (IMO, 2002) is written for maritime applications, but gives valuable advice on other types of risk assessments.

§  Offshore Risk Assessment: Principles, Modeling, and Application of QRA Studies (Vinnem, 2007) is written for offshore oil and gas applications, but is also a valuable guide for other application areas.

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END OF LECTURE

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