The Risk Management Workshop & Brainstorming for PT. Berau Coal Operations

1. A risk management workshop PT. Berau Coal

2. Workshop Overview Objectives Why the need for Risk Management? Introduction of Risk Management Terms Hazard Identification & Awareness Overview of Risk Assessment Methodologies PT. Berau Coal Risk Assessment Procedure

3. Objectives To introduce risk management terms & methodologies. To provide an understanding of the need for risk management. Refresh hazard identification principles. To introduce a Risk Assessment Methodology to be adopted at PT. Berau Coal [PTBC]. To ensure key personnel are familiar with risk assessment methodologies & can perform/assist in conducting team based risk assessments for the operations.

4. Why need formal Risk Management? Duty of Care Greater Community Care Legal Requirement Company or International Standard Requirement Good Business Process Sense

5. Duty of Care Risk Assessment is a basic management tool & a fundamental process in meet to PTBC - Duty of Care; To provide safe systems of work & a working environment whereby employees are not exposed to hazards & risk. Expected of “reasonable” employers and employees

6. Greater Community Care No Accidents/Disasters No Damage to the Environment No Impact on Natural Aesthetics Solid Citizenship Community Confidence & Longevity of Support

7. Legal Compliance Risk Assessments are a statutory requirement in Indonesia, as inferred in the Minister of Mines & Energy Decree No. 555.K/26/M.PE/1995 regarding Occupational Health & Safety in General Mining. The Minister of Manpower Decree No.PER.05/MEN/1996 [regarding Occupational Health & Safety Management System]. Indonesian Act No.1/1970, Article 9.

8. Comply to Internal & International Standards OHSAS 18001: Clause 4.3.1- Hazard Identification, Risk Assessment & Risk Control The organization shall establish and maintain procedures for the ongoing identification of hazards, the assessment of risks, and the implementation of necessary control measures. The organization shall ensure that the results of these assessments and the effects of these controls are considered when setting its OH&S objectives. The organization shall document and keep this information up to date.

10. Reduction in Loss (personnel, property, health, environment).

11. Maximizing Profit and to Prevent the Loss.

12. Increased Community Perception.

14. Incident Ratio Major [LTI/Fatal] 1 Minor [FA/MA] 10 Property Damaged 30 Near Miss 600 At Risk Behavior & At Risk Conditions 20.000 Year of 2008, 1 2 [3] 285 2145 ≈ 2000 Dec ‘09 – Jan ‘10, 0 2 64 1128 ??? Frank E. Bird ratio; 1982

15. “Focused”VS “Shot-gun” approach What are the Benefits of Risk Management?

17. Efficient allocation of resources

18. Increased standard of accountability

19. Creativity & innovation in management

20. Increased capacity to manage competing issues

21. Flexibility in meeting objectives

23. Risk Management Terms Risk Management Risk Assessment Hazard Risk

24. Risk Management The systematic application of management policies, procedures & practices to the tasks of identifying, analyzing, assessing, treating & monitoring risk. The process of dealing with Risk associated with PTBC operations, which includes: Risk Assessment, Risk Decision Making, Implementation of Risk Controls.

25. Risk Management Process

26. THE RISK MANAGEMENT PROCESS AS/NZ 4360:1999 Establish the Context Identify Risks Communicate & Consult Monitor & Review Analyse Risks Assess Risks Evaluate Risks Treat Risks

27. Risk Assessment Risk Assessment is an element of the risk management process & is conducted as part of an effective way to manage risks encountered in daily operations. Using sound concepts to detect Hazards and eliminate the Risk they pose.

31. Hazard & Risk Risk Exposure to danger E.g. Uncontrolled fire & loss of assets, personal injury, air & water pollution Hazard Source of Danger E.g. Chemical, Flammable Liquid CAUSE EFFECT

32. Hazard & Risk CAUSE EFFECT

33. Hazard & Risk CAUSE EFFECT

35. Chemical, e.g. toxic substances, dust particles, fire/fumes. Biological, e.g. viruses, micro biological organisms. Mechanical, e.g. machinery, equipment, tools, conveyors. Physical, e.g. noise, ionising radiation, lighting, thermal stresses, vibration. Type of Hazards

36. Type of Hazards Electrical-Shock; electrical burns, static electricity. Fire & Explosion-Flammables; reactive substances, explosive substance, stored pressure. Gravitational-Lifting; falling objects, fall from height.

37. Ergonomic, e.g. restricted space, manual handling, repetitive handling. Psycho-social, e.g. shift patterns, job organisation, intimidation. Behavioural, e.g. non-compliance to standards, lack of skills, new or unusual tasks. Environmental, e.g. uncontrolled emissions, contamination of air, ground or water. Some Forgotten Hazards

38. HAZID Workshop

45. Any Question?

46. Overview Methodologies Different types & when they are used Behavioural Team based Qualitative Quantitative Time Trouble Cost Physical Difficulty Assessment of the Risk

48. it should be defensible & appropriate to the system/risk under consideration;

49. it should provide results which enhance the understanding of the risk & how it can be controlled;

52. Applicable to tasks/situations at any level of risk.

53. Supports & compliments more formal techniques.

55. Identifies potential hazards arising from the step, and,

58. Infrequent tasks where no SOP exists e.g., Shutdown

59. Where a task or work environment has changedUnacceptable risk [or inadequate control] may trigger a more formal risk assessment.

60. Qualitative Risk Assessment More formal & structured risk analysis, Need consider that everything within the scope is considered Otherwise “you don’t know what you don’t know” Demonstration of Duty of Care obligation Provides basis for, Control Management Plans Risk reduction [Control Improvement] plans I.e., an understanding of the things that can save/cost a lot of incidents/injuries/business disruption /money/negative community disruption

61. Qualitative Risk Assessment Most commonly used form of formal risk assessment. Team Based-Brainstorming. More user friendly for participants than quantitative assessment techniques Process is subjective Some semi-quantitative data e.g., incident rates Multitude of techniques & hybrids developed & used by industry Easy to develop customized/company tool More formally based Less subjective based on technical data

63. Take 5

64. Safety Huddles

65. Hazard Cards

66. HIRA

67. WRAC

68. WARA

69. HAZID

70. HAZAN

71. Fault Trees/Event Trees

72. HAZOP

73. FMEASubjective Objective Perception Based Information Based Soft Hard

74. PTBC Risk Assessment Procedure Scoping/Establishing Context Select Risk Assessment Team Conduct Workplace Inspection Conduct the Risk Assessment Ongoing Management Review Consultation & Communication

75. THE RISK MANAGEMENT PROCESS AS/NZ 4360:1999 Establish the Context Identify Risks Communicate & Consult Monitor & Review Analyse Risks Assess Risks Evaluate Risks Treat Risks

76. Scoping/Established Context What, Objectives of risk assessment Boundaries of risk assessment; equipment, operation & systems Nature of hazards or associated risks Why, Define the purpose & the expected outcomes; risk registers, action plans Who, Define requirements for the team; technical expertise, experience Identify & notify participants in the team Allocate & define roles; Team Leader, Team Members, Facilitator How, Define risk assessment method; HIRA When, Define timetable, venue & final presentation deadline

77. The Risk Assessment team should be a combination of the following: -Operational personnel; e.g., Fitters, Maintenance Technicians; - Technical; e.g., Engineers, Specialist; and - Management; e.g., Supervisor, Superintendent, Manager. Selecting Risk Assessment Team

78. Facilitator Set up the exercise based on the scoping; Introduce the team to the scope and risk assessment methodology; Keep the process on track; Promote creative thinking in determining applicable controls; Resolve any conflicts and help reach consensus; Ensure the objectives of the risk assessment are met. Team Roles

79. Team Roles Team Leader Act as the Client liaison; Provide support where necessary to the Facilitator; Make any logistical arrangements; Assign tasks for collection of relevant information to Team Members' Resolve any conflicts within the Team; Assist the Client in the review of the risk assessment results.

80. Team Roles Team Member Input skills & experience into the exercise; Understand the potential & actual hazards of the area concerned; Have an understanding of current controls in place to prevent/reduce risk; Contribute their knowledge to achieve a successful outcome.

81. Ideally, the nominated Risk Assessment Team should conduct a site visit prior to the commencement of the formal risk assessment. The purpose of this visit is to familiarize all members of the team with the physical aspects and to assist in identifying hazards. It is important to consider all types of hazards & not just the obvious physical ones. Conduct a Work Place Inspection

82. Any Question?

83. STEP 1. Introduce the scope STEP 2. Analyse the Subject. Breakdown into Components (Process, Activities, Products, Services etc.) STEP 3. Identify Hazards & “unwanted events” STEP 4. Determine Inherent Risk Value. ‘Maximum Reasonable’ consequences & likelihood STEP 5. Determine Existing Controls & Assess Adequacy STEP 6. Determine Residual Risk Value. (Re-assess Consequence & Likelihood based on existing controls) STEP 7. Propose additional controls if level of risk is not reduced to acceptable level. STEP 8. Develop Risk Reduction Action Plans STEP 9. Compile Risk Assessment Report

84. Risk Control Injury Incident Occurred Identifying Risk Basic Caused Losses Domino theory by Peter Drucker & ILCI; 1985

85. STEP 1. Introduced the Scope The Facilitator should start the Risk Assessment Process off by reviewing the Scope, confirming it is fully understood by all Team Members. The roles of the Team Members, Team Leader & Facilitator should be reiterated. The method to be used should then be discussed in as much detail as is needed for the Team Members to reach a common understanding of the process.

86. STEP 2. Analysed the Subject The process, system, plant/equipment, operation or work area that is the “subject” of the assessment should be analyzed & broken down into definable sections, components or functional groups [processes, operating areas, activities, products etc.]. If a visit to the workplace has been conducted, it will assist the team in recalling a mental picture of the subject. Any information collated prior to the risk assessment should also be available for reference.

87. STEP 3. Identify Hazards & “unwanted events” The Facilitator should assist the Team to identify all the possible hazards [energy sources] associated with the individual sections, components or functional groups. Prompts may be used to assist in focusing attention, such as hazard/energy guides. It is not essential that every single hazard or resulting incident be identified for a successful risk assessment. However it is crucial that significant impacts are identified.

89. Ergonomic;e.g. restricted space, manual handling, repetitive handling.

90. Psychosocial;e.g. shift patterns, job organisation, intimidation.

91. Behavioural; e.g. non-compliance to standards, lack of skills, new or unusual tasks.

93. Chemical; e.g. toxic substances, dust particles, fire/fumes.

94. Biological; e.g. viruses, micro biological organisms.

95. Mechanical; e.g. machinery, equipment, tools, conveyors.

96. Electrical; e.g. shock, electrical burns, static electricity

98. Checklists

99. Personal & organizational experience [Incident Reports];

100. Audits or physical inspections;

101. Benchmarking industry experience [local or overseas];

102. Judgmental-consensus, speculative/conjectural, intuitive;

103. History, failure analysis;The potential unwanted incidents or events can then be recorded in a Risk Register.

104. STEP 4. Determine Inherent Risk Value. “Risk” is the combination of the likelihood of a hazard occurring & the potential consequences if it occurs. For each potential incident/event, the likelihood of the incident occurring & the maximum reasonable consequences must be determined to identify the “risk”. This must be done without consideration of any controls that might be in place or that are being considered as the focus here is on the hazard itself. This is called the Inherent Risk Value.

105. STEP 4. Determine Inherent Risk Value. Determine Likelihood

106. STEP 4. Determine Inherent Risk Value. Determine Consequence

109. Engineering,

110. Substitution,

111. Administrative/Procedural,

112. and PPE. STEP 5.Determine Existing Controls & AssessAdequacy

114. Substitute[using less hazardous alternative]

116. Emergency Response[required for high consequence risks]BEST Safety Management System LEAST EFFECTIVE

117. STEP 5.Determine Existing Controls & AssessAdequacy The team must also consider if these existing controls are effective in controlling the risks. If any “extreme” risks have been identified which have ineffective controls & are considered to pose an immediate threat to personnel it may be necessary to immediately notify the responsible manager so that he or she is made aware of the situation. The existing controls should then be recorded in the risk register.

118. STEP 6. Determine Residual Risk Value. After identifying & assessing the effectiveness of the Existing Controls, the Team should determine the consequence & likelihood of the unwanted event with the current controls in place. This is required to determine the “Residual Risk” [the risk that remains after the existing or current risk treatment measures or controls have been considered]. The same process should be used as detailed before, using the Risk Criteria. The Residual Risk should then be recorded in the Risk Register.

119. STEP 6. Determine Residual Risk Value.

120. STEP 6. Determine Residual Risk Value. By recording both the inherent & residual risk values, it assists to demonstrate the reduction of risk. This can also be used to measure whether Duty of Care obligations have been met in regard to exposure of hazards. When the Residual Risk has been determined as being either “Extreme” or “High”, the Team must further review the controls to identify what actions are required to improve their level of effectiveness or develop additional controls to further reduce risk.

122. Refer to preliminary Hazard Analysis CausesDoes Benefit Outweigh Risk Communicate with Senior management if required Integrate Into Planning Accept No Unnecessary Risks Make Risk Decisions at the Proper Level Accept Risk if Benefits Outweigh the Cost

123. STEP 8. Develop Risk Reduction Action Plans Once the risk assessment is completed the Team should review the risk assessment [both process & results] against the scope to ensure the expected outcomes have been achieved. This should include a final check that all of the recommended controls have been recorded. The final part of the risk assessment process is to develop a Plan for Residual Risks determined to be unacceptable. If required by the Client, the Team should also develop an action plan that may include responsibilities & time frames for the implementation & monitoring of the actions required.

125. Overview of process

126. Copy of scope

127. Dates & venue

128. Risk Assessment Record form

129. Recommendations for new or amended controls

130. Draft action plan (if required)It is the responsibility of the Team Leader to finalize the report & present it to the users. All changes resulting from the risk assessment process must be notified & communicated to the workforce.

131. Risk Control

133. Everyone is responsible & accountable for managing the risks in their work.

134. Employees should be encouraged & supported by their managers to manage risks.

135. ASDAM provides a framework or systematic approach for making decisions about how best to manage risks.

136. Legislative requirements & the political, social & economic environment need to be taken into account when managing risks.

137. Action taken to manage risks should be integrated with (not be separate from) existing systems & processes.

138. Effective risk management depends on good quality information.

139. Risk Management is everyone’s business; is part of business as usual;

141. Walk the Talk; Trust the Worthy; and Living Example. Thank you and Have a Safe Work