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Risk Management  A. S. Chaubal
Risk & Risk Management Why Pick on Insurers ?
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Risk & Uncertainity : Risks :   Those for which the probability  of occurrence can be calculated  either on a rational basis or on  the basis of the statistical analysis of a number of similar events that  have occurred in the past.
Uncertainity :   Those for which analysis is impossible by virtue of the fact that  they are either a “one-off” event or  because their occurrence does not  follow an apparent pattern of events.
Risk   is, therefore defined as the  variation in the outcomes that occur  over a specified period in a given  situation. The Probability of Occurrence is  measured in the range of  Zero  to One.   ‘ Zero’  indicates state of intrinsic  impossibility &  ‘ One’  indicates state of absolute  certainity.
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Risk is something or some happening  that can cause harm or loss. But risk is not always loss causing and some  Risks may cause both loss and gain  ( usually to different people as with  the extra work a repairer gets after  a bad Storm or Flood).
Behaviour of those involved is also an equally important factor as the physical circumstances.  There are many aspects of human  behaviour which directly influence the outcome of a risk situation.
Companies are also subject to changes in social, political and economical factors. Modern economies are highly  interdependent and changes in one  section of economy may change the risk situation for other sections.
Risks can be of different types : Physical,   causing direct harm or damage, or   Social,   causing loss of reputation or damage to  self esteem.   In simple terms Risk can be expressed for a  business as  uncertainty that will not allow the business targets to be achieved  and the  degree of the effects on targets will depend upon the degree of risk.
The Risk Iceberg …  Risks that are clearly visible and quantifiable are relatively easier to manage
Risk Classification :  Personal:  Potential loss to the persons  Property:  Potential loss to the property Liability  : Potential liability for any individual or institution. 1.  Personal, Property or Liability Risk
Market :  The price reduction or the purchase and sale constraints are involved. Social :  Riot, Strike, Civil Commotion, Burglary, Theft etc. Physical :  Storm, Tempest, Flood, Hurricane and such other natural phenomena. 2.  Physical, Social or Market Risk
Pure Risk:  is considered in the context of the existence of a chance of loss only, but not the chance of gain at all. Speculative Risk:  When there is a chance of gain as well a chance of loss. 3.  Pure or Speculative Risk
Static Risk:   Which are connected with losses caused by the irregular action of the forces of the nature or the mistakes and misdeeds of human beings. Dyanamic Risk:   Which are associated with changes in human wants and improvements in Machinery or Technological innovations . 4.  Static or Dynamic Risk
Fundamental Risk:  Risks associated with groups, impersonal in original and effect.  These fundamental risks are in the form of Political or Economic changes happening to a group. Particular Risk:  Which are associated with individuals. 5.  Fundamental or Particular Risk
Fire,explosion,collapse Machinery breakdown Electrical/ electronic damage Negligence of employees Strike Transport accident Criminal acts Accidents Effects of fire or explosion from outside Lightning Environmental damage Criminal acts Political risks Insolvency of debtors Defective products Natural hazards Internal fire Explosion Impact of vechicles, falling aircraft Risk  Threats Damage to property or health of third party
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Financial Exch. Rate Credit Foreign Exch. Trading Market Negat. Eqty Counterparty Reputation Operational Fire/Expl M/C Brkdwn Computer/IT Contigency H S & E Theft Fraud SRCC BI Regulatory Legal Compliance Publ.Relation Contract Settlement Insurance RISKS
Management of Risks
Risk Concepts Risks can be  This is the fundamental principle of the discipline of  ‘Risk Management’.   ,[object Object],[object Object],[object Object],[object Object]
A S CAT MAJOR MEDIUM MODERATE MINOR DEGREE OF RISKS A : INCIDENCE OF LOSS EVENTS  S :  SIZE OF LOSS IMPOSSIBLE TO ACHIEVE  ANY  TARGETS IMPOSSIBLE TO ACHIEVE SOME  TARGETS PARTIAL EFFECTS  ON TARGETS NO  TARGETS AFFECTED BUT  MODIFICATION  NECESSARY NO EFFECT ON  TARGETS
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It’ll Never Happen to Me Risks – General  Attitude
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Organization needs to build an enabling risk management framework that ... Identify Measure Manage Monitor ,[object Object],[object Object],[object Object]
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Risk Management :  Essentially a Multi-disciplinary Process:  Where Different Skills Are Brought  Together in Risk Problem Solving.
Role of  Risk Management Specialist
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Having seen the Rationale for Risk Mgt & Targets against which Risk Management Performance Can be Measured, Let us Look at What is already Happening. An Industry may have many Specialists in the Areas of Manufacturing, Finance,  Fire Fighting, Safety, Legal Control etc. However, priorities of Line Managers are much different & under considerable work pressure.  =>
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Risk Management Specialist   must be capable of dealing with these shortcomings in a practical way without seriously disrupting the company’s operations or adding substantially to cost.
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Managing Risks Three-Fold Approach
Risk Management Approaches Traditional Integreted Enterprise
Risk management Traditional  Approach Risks  Detection :   Ad-hoc  Dept.wise  Measurement :   Often not Done  Finance :   Separate  Consideration :   Not in Decision Making
Risk management  Integrated  Approach Risks  Detection  :   Partially Integrated Across  Depts. Measurement  :   Mostly Done but  Co-relation & Concentration not examined Finance  :   Integrated Across Some  Risks  Consideration :  I n Some Decisions but not  Formally
Risk management  Enterprise  Approach Annual Comprehensive Risk Detection Including Scenario Planning, Total Risk Profile is Examined, Including Concentration & Co-relation between Risks, Risk financing is Integrated Across Depts. ( e.g. Integrated Financing of HAZARD & FINANCIAL Risks ) Risks Are Formally Incorporated into Strategic Planning,  Performance Measurement & Pricing
Risk Management The Emerging Environment Strategic Risk Management Enterprise Risk Management
Strategic Risk Management ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Enterprise Risk Management The discipline of systematically and comprehensively identifying, quantifying and addressing the collective impact of critical business risks to maximize shareholder value.
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[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Enterprise Risk Management
Benefits of Enterprise Risk Management ,[object Object],[object Object],[object Object],[object Object],[object Object]
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[object Object],[object Object],[object Object],[object Object],[object Object],Safety + Loss Prevention Improved Risk Features =
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Risk Management is Simply a Practice Of Systematically Selecting Cost Effective Approaches for Minimising the Effect of  Threat Realisation to the Organisation. All Risks can never be fully avoided or  Mitigated simply because of Financial &  Practical Limitations of the Real World. All Organisations have to Accept some  level of Residual Risks which still may  realise despite their Efforts.
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Integrated Risk Management - aiming to reduce the total cost of risk. Multi-functional skills required  to manage risks better Brokers well placed to manage risks as they possess multifunctional skills Risk  Engineers Brokers / Underwriters Auditors Investment Bankers Financial Analysts Actuaries
Risk Analysis  Entire Task of Identifying & Measuring  Potential Impact of Risk ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Risk Analysis Chain  Every Risk is Caused by Some Factor(s) & Result in Some Effect   Cause Risk Effect
Is there a risk ? yes No Has it been measured? No yes Measure Significant? No Yes Can it be avoided or eliminated? Disregard Avoid/Eliminate Yes No Can it be Reduced? No Yes Yes Is residual risk significant? No Is it catastrophic? Disregard Yes Can it be retained? No Yes No TRANSFER Ignore Insure Others Ignore Interrelationship of  Risk analysis, Risk control and Risk financing
Task of Risk Analysis must be carried  out with Realism and Proper Perspective  of Risks & Costs involved in Analysis.
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[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Provides Basis to decide which  Categories of Hazard should be  Looked into more closely & which Analysis methods are most suitable
What is a HAZOP? HAZOP is an abbreviated term for  HAZ ard and  OP erability study.  Developed by ICI in1970 to Assess Effects of  Deviations  in Design Specifications. It is a technique that identifies the  potential hazards and operating issues with the design and construction of  equipment and plant and involves the interaction of a multi-disciplinary team.
HAZOP Objectives : The purpose and scope of the study  should be determined before a HAZOP.  Study objectives may be to: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
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HAZOP Information Required It is imperative that accurate information  associated with the project is sourced and  included in the study.  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
When to Perform a HAZOP  Traditionally, HAZOPs were incorporated in the design process of new facilities  within the petrochemical industry.  However, as employers take a more  performance-based approach to safety,  there has been significant interest in  applying  HAZOP as a Risk Management  Tool  for a diverse range of work  situations, across an array of industries.   
Simple HAZOP (HAZID) A simple HAZOP is conducted at the  preliminary design stage prior to the  development of detailed designs for a  small-scale rig, experimental set-up or  simple equipment.  It does not outline  detailed specifications and  modifications but rather identifies key  issues relating to the hazard and  operability that need to be considered  when developing the detailed designs.
Detailed HAZOP  A detailed HAZOP is the full application  of the HAZOP technique. It is conducted  as the final check when the detailed  design has been completed for more  complex engineered plants or equipment. It analyses the plant as a whole and  enables a detailed review of the reqd.  specifications.  A detailed HAZOP can  also be conducted on an existing facility by reviewing the modifications required to be implemented.
HAZOP Study Procedure The design drawings are to be divided into sections and each section is divided into study lines that are assessed by a combination of primary and secondary keywords. Questions for each keyword  must be asked in order to identify problems, e.g. : ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Divide Sections into  Study Lines  Select a Study Line  Apply all Appropriate  Primary & Secondary Keyword Combinations.  Any Hazards / Operating Problems Need More Info  Record Consequences & Causes  Suggest Remedies  NO Yes  Not Sure  HAZOP Procedure  Methodology
HAZOP Keywords An important feature of the HAZOP  methodology is the use of keywords.  (i) Primary Keywords (Parameters)  Primary Keywords focus the attention  upon a particular aspect of the design  Intent or a process parameter / condition.  FLOW, TEMPERATURE, PRESSURE,  LEVEL, REACT, MIX, ISOLATE, DRAIN,  INSPECT, MAINTAIN, START-UP,  SHUTDOWN  
(ii) Secondary Keywords (Guidewords) When Secondary Keywords are applied  in conjunction with a Primary Keyword,  potential deviation and problems are  identified.  HIGH, LOW, ZERO, EMPTY, REVERSE,  ALSO, OTHER, TESTING, PLANT ITEMS,  ELECTRICAL, COMPOSITION
Haz ard  &  Op erability Studies  (HAZOP)              A Process Flow Technique  PLAN   Select team, Examine  System, Keywords  TEAM   System  Assessment  Team  Activity REPORT   Action  List HAZOP report  TRACK ACTIONS HAZOP  Review meetings   CLOSE OUT Record/file completed actions  
Failure Mode and Effects Analysis ( FMEA/FMECA) This method was developed in the 1950s by  reliability engineers to determine problems  that could arise from malfunctions of military  system.  Failure mode and effects analys is a  procedure by which each potential failure  mode in a system is analysed to determine  its effect on the system and to classify it  according to its severity.
When the FMEA is extended by a  Criticality analysis, the technique is then  called  Failure Mode And Effects Criticality Analysis  (FMECA).   Failure mode and effects analysis has gained wide acceptance by the aerospace and the  military industries
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Symbols Used in FTA :  Transfer Point : To another Page or Analysis AND Gate : Failure occurs if ALL of the Input Event Occurs OR Gate : Failure occurs if ANY of the Input Event Occurs Cause :  Events that Drive the Failure  Event :  Primary Or Intermediate Failure or Event
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Fault Tree for Event – Fire Breaks Out
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Cause – Consequence Analysis (CCA) This Technique Combines  Cause Analysis (FTA)  - deductive, & Consequence Analysis (ETA) – inductive. Purpose is to Identify Chain of Events that  Can result in undesirable consequences Management Oversight Risk Tree (MORT) Primarily a FTA with Top Event as “ Damage, Destruction, Other Costs, Lost Production Or Reduced Credibility. The Tree gives an  Overview of the causes of Top Event from  Management Oversights & Omissions.
Safety Management Organisation Review  Technique (SMORT) Simplified modification of MORT. This Analysis is structured by means of  Analysis Levels with Check Lists while  MORT is based on Tree Structure.
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Case Study – FTA : Top Event Incorrect Patient Results Given To Physician Build FTA for This Event
 
Group Exercise
 
 
 
 
 
 
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Risk Inspections
Place of inspections in  Risk Management Process Predominant Place in *  Risk Identification, *  Risk Assessment, *  Risk Control.
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Inspections - Site Monitoring
Examination of & Discussions on Munich Re’s  Risk Assement Questionnaire  For Fire & Allied Perils
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All risk control and financing measures cost money  but some are more cost effective at minimising the  total cost of risk than others.  Risk control measures can be divided into :   (a) eliminate or reduce the risk; (b) prevent loss i.e. the risk exists but no loss occurs; (c)  detect and reduce the extent of the loss; (d) rehabilitate, restore and recover.
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[object Object],[object Object],[object Object],[object Object],Nature of the measure itself limits the loss or  facilitates recovery without any change in state  e.g. walls, automatic fire doors, curtain boards  and the contingency plan. the measure involves taking steps to limit the  loss or maximise the recovery e.g. sprinklers,  burglar alarms and salvage operations
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Education and Training :   The Human Factor is never absent & hence  education and training have a major role to play in  loss reduction programmes and should cover  everyone employed by or associated with the work  of an organisation.  Risk Reduction  Risk avoidance  Risk Spreading
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Risk Retentions :   Primarily based on the ability to afford financial  Consequences and not based on inability to afford suitable cover.  Monitoring the strategy :  Final but most important step to keep the whole  process going.  Overall objective  is to improve financial performance  By helping to reduce expenditure and avoid  potential loss situations.
Risk Management Application Analysis of Losses
Analysis of  Worldwide Losses  Over  Last 25 Years Risk Management Application Refinery/Petrochemical Losses
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Parameters of Analysis
Site / Facility Type ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
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Process Unit Type ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Status of Plant ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Loss Type ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Material Released ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Cause of Loss ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Sources of Ignition ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Conclusions Less Incidents  Bigger Loss per Incident. Half of Losses Occur at Refinery Sites. Losses Evenly Spread Between: Storage and Pipeline Equipt. Processing Plant. High Loss Frequency For: Furnaces/Heaters/Pipework/ Storage Tanks. Only Half of Losses During Normal Oprn.
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Illustrative Case Studies on  Risk Characteristics & Underwriting Criteria For Roads, Railways & Bridges
Next to Follow  Risk Management Policy, Self Insurance & Captives, PML Role & significance.
THANK YOU

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Risk Management Sir A. S. Chaubal

  • 1. Risk Management A. S. Chaubal
  • 2. Risk & Risk Management Why Pick on Insurers ?
  • 3.
  • 4.
  • 5. Risk & Uncertainity : Risks : Those for which the probability of occurrence can be calculated either on a rational basis or on the basis of the statistical analysis of a number of similar events that have occurred in the past.
  • 6. Uncertainity : Those for which analysis is impossible by virtue of the fact that they are either a “one-off” event or because their occurrence does not follow an apparent pattern of events.
  • 7. Risk is, therefore defined as the variation in the outcomes that occur over a specified period in a given situation. The Probability of Occurrence is measured in the range of Zero to One. ‘ Zero’ indicates state of intrinsic impossibility & ‘ One’ indicates state of absolute certainity.
  • 8.
  • 9. Risk is something or some happening that can cause harm or loss. But risk is not always loss causing and some Risks may cause both loss and gain ( usually to different people as with the extra work a repairer gets after a bad Storm or Flood).
  • 10. Behaviour of those involved is also an equally important factor as the physical circumstances. There are many aspects of human behaviour which directly influence the outcome of a risk situation.
  • 11. Companies are also subject to changes in social, political and economical factors. Modern economies are highly interdependent and changes in one section of economy may change the risk situation for other sections.
  • 12. Risks can be of different types : Physical, causing direct harm or damage, or Social, causing loss of reputation or damage to self esteem. In simple terms Risk can be expressed for a business as uncertainty that will not allow the business targets to be achieved and the degree of the effects on targets will depend upon the degree of risk.
  • 13. The Risk Iceberg … Risks that are clearly visible and quantifiable are relatively easier to manage
  • 14. Risk Classification : Personal: Potential loss to the persons Property: Potential loss to the property Liability : Potential liability for any individual or institution. 1. Personal, Property or Liability Risk
  • 15. Market : The price reduction or the purchase and sale constraints are involved. Social : Riot, Strike, Civil Commotion, Burglary, Theft etc. Physical : Storm, Tempest, Flood, Hurricane and such other natural phenomena. 2. Physical, Social or Market Risk
  • 16. Pure Risk: is considered in the context of the existence of a chance of loss only, but not the chance of gain at all. Speculative Risk: When there is a chance of gain as well a chance of loss. 3. Pure or Speculative Risk
  • 17. Static Risk: Which are connected with losses caused by the irregular action of the forces of the nature or the mistakes and misdeeds of human beings. Dyanamic Risk: Which are associated with changes in human wants and improvements in Machinery or Technological innovations . 4. Static or Dynamic Risk
  • 18. Fundamental Risk: Risks associated with groups, impersonal in original and effect. These fundamental risks are in the form of Political or Economic changes happening to a group. Particular Risk: Which are associated with individuals. 5. Fundamental or Particular Risk
  • 19. Fire,explosion,collapse Machinery breakdown Electrical/ electronic damage Negligence of employees Strike Transport accident Criminal acts Accidents Effects of fire or explosion from outside Lightning Environmental damage Criminal acts Political risks Insolvency of debtors Defective products Natural hazards Internal fire Explosion Impact of vechicles, falling aircraft Risk Threats Damage to property or health of third party
  • 20.
  • 21. Financial Exch. Rate Credit Foreign Exch. Trading Market Negat. Eqty Counterparty Reputation Operational Fire/Expl M/C Brkdwn Computer/IT Contigency H S & E Theft Fraud SRCC BI Regulatory Legal Compliance Publ.Relation Contract Settlement Insurance RISKS
  • 23.
  • 24. A S CAT MAJOR MEDIUM MODERATE MINOR DEGREE OF RISKS A : INCIDENCE OF LOSS EVENTS S : SIZE OF LOSS IMPOSSIBLE TO ACHIEVE ANY TARGETS IMPOSSIBLE TO ACHIEVE SOME TARGETS PARTIAL EFFECTS ON TARGETS NO TARGETS AFFECTED BUT MODIFICATION NECESSARY NO EFFECT ON TARGETS
  • 25.
  • 26. It’ll Never Happen to Me Risks – General Attitude
  • 27.
  • 28.
  • 29.
  • 30.
  • 31.
  • 32. Risk Management : Essentially a Multi-disciplinary Process: Where Different Skills Are Brought Together in Risk Problem Solving.
  • 33. Role of Risk Management Specialist
  • 34.
  • 35. Having seen the Rationale for Risk Mgt & Targets against which Risk Management Performance Can be Measured, Let us Look at What is already Happening. An Industry may have many Specialists in the Areas of Manufacturing, Finance, Fire Fighting, Safety, Legal Control etc. However, priorities of Line Managers are much different & under considerable work pressure. =>
  • 36.
  • 37. Risk Management Specialist must be capable of dealing with these shortcomings in a practical way without seriously disrupting the company’s operations or adding substantially to cost.
  • 38.
  • 40. Risk Management Approaches Traditional Integreted Enterprise
  • 41. Risk management Traditional Approach Risks Detection : Ad-hoc Dept.wise Measurement : Often not Done Finance : Separate Consideration : Not in Decision Making
  • 42. Risk management Integrated Approach Risks Detection : Partially Integrated Across Depts. Measurement : Mostly Done but Co-relation & Concentration not examined Finance : Integrated Across Some Risks Consideration : I n Some Decisions but not Formally
  • 43. Risk management Enterprise Approach Annual Comprehensive Risk Detection Including Scenario Planning, Total Risk Profile is Examined, Including Concentration & Co-relation between Risks, Risk financing is Integrated Across Depts. ( e.g. Integrated Financing of HAZARD & FINANCIAL Risks ) Risks Are Formally Incorporated into Strategic Planning, Performance Measurement & Pricing
  • 44. Risk Management The Emerging Environment Strategic Risk Management Enterprise Risk Management
  • 45.
  • 46. Enterprise Risk Management The discipline of systematically and comprehensively identifying, quantifying and addressing the collective impact of critical business risks to maximize shareholder value.
  • 47.
  • 48.
  • 49.
  • 50.
  • 51.
  • 52.
  • 53.
  • 54.
  • 55. Risk Management is Simply a Practice Of Systematically Selecting Cost Effective Approaches for Minimising the Effect of Threat Realisation to the Organisation. All Risks can never be fully avoided or Mitigated simply because of Financial & Practical Limitations of the Real World. All Organisations have to Accept some level of Residual Risks which still may realise despite their Efforts.
  • 56.
  • 57. Integrated Risk Management - aiming to reduce the total cost of risk. Multi-functional skills required to manage risks better Brokers well placed to manage risks as they possess multifunctional skills Risk Engineers Brokers / Underwriters Auditors Investment Bankers Financial Analysts Actuaries
  • 58.
  • 59. Risk Analysis Chain Every Risk is Caused by Some Factor(s) & Result in Some Effect Cause Risk Effect
  • 60. Is there a risk ? yes No Has it been measured? No yes Measure Significant? No Yes Can it be avoided or eliminated? Disregard Avoid/Eliminate Yes No Can it be Reduced? No Yes Yes Is residual risk significant? No Is it catastrophic? Disregard Yes Can it be retained? No Yes No TRANSFER Ignore Insure Others Ignore Interrelationship of Risk analysis, Risk control and Risk financing
  • 61. Task of Risk Analysis must be carried out with Realism and Proper Perspective of Risks & Costs involved in Analysis.
  • 62.
  • 63.
  • 64.
  • 65. What is a HAZOP? HAZOP is an abbreviated term for HAZ ard and OP erability study. Developed by ICI in1970 to Assess Effects of Deviations in Design Specifications. It is a technique that identifies the potential hazards and operating issues with the design and construction of equipment and plant and involves the interaction of a multi-disciplinary team.
  • 66.
  • 67.
  • 68.
  • 69.
  • 70. When to Perform a HAZOP Traditionally, HAZOPs were incorporated in the design process of new facilities within the petrochemical industry. However, as employers take a more performance-based approach to safety, there has been significant interest in applying HAZOP as a Risk Management Tool for a diverse range of work situations, across an array of industries.  
  • 71. Simple HAZOP (HAZID) A simple HAZOP is conducted at the preliminary design stage prior to the development of detailed designs for a small-scale rig, experimental set-up or simple equipment. It does not outline detailed specifications and modifications but rather identifies key issues relating to the hazard and operability that need to be considered when developing the detailed designs.
  • 72. Detailed HAZOP A detailed HAZOP is the full application of the HAZOP technique. It is conducted as the final check when the detailed design has been completed for more complex engineered plants or equipment. It analyses the plant as a whole and enables a detailed review of the reqd. specifications. A detailed HAZOP can also be conducted on an existing facility by reviewing the modifications required to be implemented.
  • 73.
  • 74. Divide Sections into Study Lines Select a Study Line Apply all Appropriate Primary & Secondary Keyword Combinations. Any Hazards / Operating Problems Need More Info Record Consequences & Causes Suggest Remedies NO Yes Not Sure HAZOP Procedure Methodology
  • 75. HAZOP Keywords An important feature of the HAZOP methodology is the use of keywords. (i) Primary Keywords (Parameters) Primary Keywords focus the attention upon a particular aspect of the design Intent or a process parameter / condition. FLOW, TEMPERATURE, PRESSURE, LEVEL, REACT, MIX, ISOLATE, DRAIN, INSPECT, MAINTAIN, START-UP, SHUTDOWN  
  • 76. (ii) Secondary Keywords (Guidewords) When Secondary Keywords are applied in conjunction with a Primary Keyword, potential deviation and problems are identified. HIGH, LOW, ZERO, EMPTY, REVERSE, ALSO, OTHER, TESTING, PLANT ITEMS, ELECTRICAL, COMPOSITION
  • 77. Haz ard & Op erability Studies (HAZOP)             A Process Flow Technique PLAN   Select team, Examine System, Keywords TEAM   System Assessment Team Activity REPORT   Action List HAZOP report TRACK ACTIONS HAZOP Review meetings   CLOSE OUT Record/file completed actions  
  • 78. Failure Mode and Effects Analysis ( FMEA/FMECA) This method was developed in the 1950s by reliability engineers to determine problems that could arise from malfunctions of military system. Failure mode and effects analys is a procedure by which each potential failure mode in a system is analysed to determine its effect on the system and to classify it according to its severity.
  • 79. When the FMEA is extended by a Criticality analysis, the technique is then called Failure Mode And Effects Criticality Analysis (FMECA). Failure mode and effects analysis has gained wide acceptance by the aerospace and the military industries
  • 80.
  • 81.
  • 82. Symbols Used in FTA : Transfer Point : To another Page or Analysis AND Gate : Failure occurs if ALL of the Input Event Occurs OR Gate : Failure occurs if ANY of the Input Event Occurs Cause : Events that Drive the Failure Event : Primary Or Intermediate Failure or Event
  • 83.
  • 84. Fault Tree for Event – Fire Breaks Out
  • 85.
  • 86.
  • 87. Cause – Consequence Analysis (CCA) This Technique Combines Cause Analysis (FTA) - deductive, & Consequence Analysis (ETA) – inductive. Purpose is to Identify Chain of Events that Can result in undesirable consequences Management Oversight Risk Tree (MORT) Primarily a FTA with Top Event as “ Damage, Destruction, Other Costs, Lost Production Or Reduced Credibility. The Tree gives an Overview of the causes of Top Event from Management Oversights & Omissions.
  • 88. Safety Management Organisation Review Technique (SMORT) Simplified modification of MORT. This Analysis is structured by means of Analysis Levels with Check Lists while MORT is based on Tree Structure.
  • 89.
  • 90. Case Study – FTA : Top Event Incorrect Patient Results Given To Physician Build FTA for This Event
  • 91.  
  • 93.  
  • 94.  
  • 95.  
  • 96.  
  • 97.  
  • 98.  
  • 99.
  • 101. Place of inspections in Risk Management Process Predominant Place in * Risk Identification, * Risk Assessment, * Risk Control.
  • 102.
  • 103.
  • 104.
  • 105.
  • 106.
  • 107.
  • 108.
  • 109. Inspections - Site Monitoring
  • 110. Examination of & Discussions on Munich Re’s Risk Assement Questionnaire For Fire & Allied Perils
  • 111.
  • 112.
  • 113.
  • 114.
  • 115. All risk control and financing measures cost money but some are more cost effective at minimising the total cost of risk than others. Risk control measures can be divided into : (a) eliminate or reduce the risk; (b) prevent loss i.e. the risk exists but no loss occurs; (c) detect and reduce the extent of the loss; (d) rehabilitate, restore and recover.
  • 116.
  • 117.
  • 118.
  • 119.
  • 120. Education and Training : The Human Factor is never absent & hence education and training have a major role to play in loss reduction programmes and should cover everyone employed by or associated with the work of an organisation. Risk Reduction Risk avoidance Risk Spreading
  • 121.
  • 122.
  • 123. Risk Retentions : Primarily based on the ability to afford financial Consequences and not based on inability to afford suitable cover. Monitoring the strategy : Final but most important step to keep the whole process going. Overall objective is to improve financial performance By helping to reduce expenditure and avoid potential loss situations.
  • 124. Risk Management Application Analysis of Losses
  • 125. Analysis of Worldwide Losses Over Last 25 Years Risk Management Application Refinery/Petrochemical Losses
  • 126.
  • 127.
  • 128.
  • 129.
  • 130.
  • 131.
  • 132.
  • 133.
  • 134.
  • 135. Conclusions Less Incidents Bigger Loss per Incident. Half of Losses Occur at Refinery Sites. Losses Evenly Spread Between: Storage and Pipeline Equipt. Processing Plant. High Loss Frequency For: Furnaces/Heaters/Pipework/ Storage Tanks. Only Half of Losses During Normal Oprn.
  • 136.
  • 137. Illustrative Case Studies on Risk Characteristics & Underwriting Criteria For Roads, Railways & Bridges
  • 138. Next to Follow Risk Management Policy, Self Insurance & Captives, PML Role & significance.