Small Chemical Plant Risk Assessment - Case Study Example

Managing Strategic Risks Small Chemical Plant Risk Assessment Table of Contents Contents 1 Introduction 3 1.1 Chemical Plant Overview 3 1.2 Important Site Considerations 4 2 Process Risk Assessment 4 2.1 Process Hazard 4 2.2 Formaldehyde 4 2.2.1 Formaldehyde Structure 4 2.2.2 Typical Storage Tank, Barrels, Transport Tanker for Formaldehyde 5 2.2.3 Formaldehyde Chemical Composition and Contaminants 6 2.2.4 Formaldehyde associated risks 6 2.3 Process Risks Assessment and Management 7 2.3.1 Objectives 7 2.3.2 Risk Identification 7 2.3.3 Risks Prioritization by Probability Ranking 13 2.3.4 Risks Treatment and Control using Accept, Transfer, Mitigate, Avoid Strategies 15 2.3.5 Risks Register for Chemical Plant 16 2.3.6 Risk Matrix of Likelihood and Severity 17 3 Strategic Risks Assessment 18 3.1 Strategic Risks Categories and Description 18 3.2 Strategic Risks Root Causes Identification 19 3.3 Strategic Risks Treatment Strategy (Accept, Transfer, Avoid, Mitigate) 20 3.4 Strategic Risks Management 21 3.4.1 Integrated Risk Management Approach 21 4 References 22 1 Introduction 1.1 Chemical Plant Overview The Chemical Company in this risks assessment is located outside the Industrial Centre of the City and surrounded by near three housing estates and a small village. Operating in this location for over 40 years, the plant is along River Ure, home for salmon and other wildlife. The small chemical company processed, transporting, and selling Formaldehyde to industrial customers in UK and Europe. Formaldehyde is the most profitable product of the company but the local community is worried about it because although it was contained, the Formaldehyde leaking tank accident that occurred 3 years ago may be repeated in the near future. However, the plant still operate and tolerated due to the immunity provided by planning law for such site and the significant number of local residents working in the Chemical Plant. 1.2 Important Site Considerations Chemical plant employs 1,250 people. Near a community with over 3,000 residents Near River Ure Community is concern over the risks of Formaldehyde production and transportation because there was a contained leaking incident three years ago, Plant is operating for over 40 years in this location. Formaldehyde is the company’s most profitable product. Exposure to Formaldehyde is dangerous. 2 Process Risk Assessment 2.1 Process Hazard 2.2 Formaldehyde 2.2.1 Formaldehyde Structure Figure 2.2‑A - Formaldehyde structure 2.2.2 Typical Storage Tank, Barrels, Transport Tanker for Formaldehyde Figure 2.2‑B – Common Formaldehyde storage tanks, barrels, and transport tanker 2.2.3 Formaldehyde Chemical Composition and Contaminants 1. Chemical Composition: Chemical Name Formaldehyde Formula HCHO Mol. Weight 30.3 CAS No. 50-00-0 Other name Formalin, Aldehyde Exposure Limit OSHA TWA -1 ppm OSHA STEL – 2 ppm Physical appearance Colourless liquid, pungent odor Boiling point 101 0C Specific gravity 1.08 (H2O=1 at 20 0C) 2. Components and Contaminants: 37% Formaldehyde, 63% Water 2.2.4 Formaldehyde associated risks 3. Fire and explosion Moderate fire and explosion hazard when exposed to heat or flame. Flash Point: 185 °F (85 °C) closed cup Lower Explosion Limit - 7 % Upper Explosion Limit- 73 %t Auto ignition Temperature - 806 °F (430 °C) Flammability (OSHA) Category 4 flammable liquid Extinguishing Media - Use dry chemical, “alcohol foam”, carbon dioxide, or water in flooding amounts as fog. 4. Harmful exposure Exposure greater than 0.1 percent. Airborne concentration exceeding 0.75 parts of formaldehyde per million parts of air (0.755 ppm) as an eight-hour time-weighted average. Short-term exposure limit (STEL) is about two parts formaldehyde per million parts of air (2 ppm) as a 15-minute STEL. It can enter the body by ingestion, inhalation, skin absorption, and eye contact 2.3 Process Risks Assessment and Management 2.3.1 Objectives Identify the hazards associated with Formaldehyde storage and transport. Conduct a risks analysis to determine their impact. List the risks by priority Conduct a risks treatment and control analysis Create a risk register for Formaldehyde processing, storage, and transport. Provide proof that the risks have been reduced to acceptable level. Initiate measures to monitoring the performance of applied control measures. 2.3.2 Risk Identification I. Objectives The objectives of this risk identification exercise are to know the risks associated with Formaldehyde on-site process, storage, and off-site transportation. 2. Risk Identification Using Root Cause Identification Method Root causes are the most basic causes that can be identified and corrected to reduce the probability of recurrence . Root cause identification according to include three important steps, determine events and causal factors, coding and documenting root causes, generate recommendations. See Table 2.3.2 below for determined events and causal factors. Table 2.3.2‑A – Formaldehyde Processing Requirements and Associated Risks Table 2.3.2‑B Root Causes and Causal factors of Formaldehyde Processing Risks 3. Risks Probability and Impact Analysis using Event Tree Method Similar Event Tree probability and impact analysis shown for R1 and R2 below is applied to risks R3 to R10. EVENT TREE 2.3.2‑A for R1 EVENT TREE 2.3.2‑B for R2 2.3.3 Risks Prioritization by Probability Ranking Table 2.3.3‑C Risk Probability Ranking / Rating and Criteria Risk Probability Ranking Rank Rating Probability Criteria 1 Very Low Very Unlikely (10%) Never occurred and will never occur in the next 10 years 2 Low Unlikely (30%) Will not likely occur during a 10 year period 3 Medium Likely (50%) Probably will occur during a 10 year period 4 High Very Likely (90%) Almost certain to occur anytime Table 2.3.3‑D – Process Risks Priority by Probability Ranking Code Risks Description Initiating Events Rank R1 Under ventilation, exposure to sunlight, ignition sources resulting to fire and explosion Poor safety management 3 R4 Incompatible chemicals and solutions mixing resulting to fire and explosion Inadequate knowledge / skills, poor safety management 3 R5 Corrosion in tank and barrels resulting to leak and exposure Error in tank design or inadequate maintenance 3 R2 Storage temperature setting error leading to leak or explosion Operator’s inadequate knowledge / skills 2 R3 Formaldehyde exposure to lack of respiratory equipment Poor safety planning & Inadequate safety equipment 2 R6 Poor work practices resulting to toxic gases exposure Poor work practices, poor safety culture, inadequate knowledge / skills 2 R7 Poor safety management resulting to off-site leak and pollution Poor safety management 2 R8 Error in tank design leading to leak and explosion Error in tank design 2 R9 Inadequate maintenance resulting to explosion Inadequate maintenance 2 R10 Improper installation resulting to electric shock and explosion Error in tank design or improper installation 2 Table 2.3.3‑E Process Risks Severity and Ranking Severity Rank Criteria High 5 Would prevent goals and objectives from being achieved Significant 4 Would cause significant problems or delays in objectives being achieved Medium Low 3 Would cause problems that can affect objectives Low 2 Would cause relatively minor problems or delays in objectives Insignificant 1 Would probably not affect project implementation Table 2.3.3‑F Process Risks Priority by Severity Code Risks Description Initiating Events Rank R1 Under ventilation, exposure to sunlight, ignition sources resulting to fire and explosion Poor safety management 5 R4 Incompatible chemicals and solutions mixing resulting to fire and explosion Inadequate knowledge / skills, poor safety management 4 R5 Corrosion in tank and barrels resulting to leak and exposure Error in tank design or inadequate maintenance 4 R2 Storage temperature setting error leading to leak or explosion Operator’s inadequate knowledge / skills 4 R8 Error in tank design leading to leak and explosion Error in tank design 4 R9 Inadequate maintenance resulting to explosion Inadequate maintenance 4 R3 Formaldehyde exposure to lack of respiratory equipment Poor safety planning & Inadequate safety equipment 3 R6 Poor work practices resulting to toxic gases exposure Poor work practices, poor safety culture, inadequate knowledge / skills 3 R7 Poor safety management resulting to off-site leak and pollution Poor safety management 3 R10 Improper installation resulting to electric shock and explosion Error in tank design or improper installation 3 2.3.4 Risks Treatment and Control using Accept, Transfer, Mitigate, Avoid Strategies Table 2.3.4‑G - Risk Treatment, Control, and Criteria Risk Treatment & Control Criteria Criteria TREATMENT Code CONTROL Code Organisation sees the risk acceptable and merely prepare a contingency plan in case it occurs. ACCEPT 1 Contingency Planning A Organisation see the need to apply control measures MITIGATE 2 Apply control measures, train staff, upgrading equipment, detailed planning, improve management & supervision, open communication, etc. B Organisation decided to undertake contingency planning, disaster recovery & business planning, REDUCE 3 Plan and prepare, allocate funds, train staff in emergency procedures C Organisation decided to share some part of the risk to another party TRANSFER 4 Contract provisions, outsourcing, insurance coverage, and so on D Organisation decided to cancel activities that are likely to generate the risk whenever possible AVOID 5 Cancel risk generating activities E Table 2.3.4‑H Process Risks Treatment and Control 2.3.5 Risks Register for Chemical Plant Chemical Plant Risks Register for Process No Risks Code Initiating Events Probability Severity Treatment Control 1 Under ventilation, exposure to sunlight, ignition sources resulting to fire and explosion R1 Poor safety management 3 5 2 & 4 B & D 2 Storage temperature setting error leading to leak or explosion R2 Operator’s inadequate knowledge / skills 2 4 2 B 3 Formaldehyde exposure to lack of respiratory equipment R3 Poor safety planning & Inadequate safety equipment 2 3 2 B 4 Incompatible chemicals and solutions mixing resulting to fire and explosion R4 Inadequate knowledge / skills, poor safety management 3 4 2 & 4 B & D 5 Corrosion in tank and barrels resulting to leak and exposure R5 Error in tank design or inadequate maintenance 3 4 2 & 4 B & D 6 Poor work practices resulting to toxic gases exposure R6 Poor work practices, poor safety culture, inadequate knowledge / skills 2 3 2 B 7 Poor safety management resulting to off-site leak and pollution R7 Poor safety management 2 3 2 B 8 Error in tank design leading to leak and explosion R8 Error in tank design 2 4 2 B 9 Inadequate maintenance resulting to explosion R9 Inadequate maintenance 2 4 2 B 10 Improper installation resulting to electric shock and explosion R10 Error in tank design or improper installation 2 3 2 B 2.3.6 Risk Matrix of Likelihood and Severity Figure 2.3‑C – Risks Likelihood and Severity Matrix for Chemical Plant Process 3 Strategic Risks Assessment 3.1 Strategic Risks Categories and Description Political – these risks are often influenced by the passage of laws , regulations, change of government or policy, political instability, law enforcement, restrictive legislations, destabilization, and others . Environmental – these include contamination of materials stored in the plant, climate change, weather, natural disaster, outbreak of disease, changes in the environment due to human activity . Social – these risks include public protest, large-scale or violent labour strikes, concealment of information, suspicion of hazard, public perception the possibility of accident . Technical - this risk is present wherever systems are operating in which technology and people interact and these include rapid changes in technology, over-dependence on technical expertise and inaccessible bodies of knowledge, risk associated to people operating machines and equipment, and others . Legal – these risks include legal dispute or court decisions imposing limitations, penalties, damages, and compensation, breach of contract, new laws threatening the interest of the chemical plant, and others . Economic – these include risks due to shortage of funding, underestimation of cost, exceeding operational expenses, low competitive advantage, decreasing customers, exchange rates, and other financial risks . 3.2 Strategic Risks Root Causes Identification Figure 3.2‑D – Root Causes Identification results Table 2.3.6‑I – Risks Root Causes by Category Code Risks Initiating Events Risk Category SR1 Change in Planning laws Political SR2 Change in Health & Safety Regulations SR3 New & more restrictive laws SR4 Contamination /Pollution Environmental SR5 Climate Change SR6 Natural Disaster SR7 Pressure from Environmental Groups SR8 Public protest Social SR9 Labour strikes SR10 Media suspicion of hazards SR11 Rapid change in technology Technical SR12 Over-reliant on expertise SR13 Inaccessible knowledge & skills SR14 Legal Actions or dispute Legal SR15 Court decisions imposing penalty & others SR16 Shortage of funds Economic SR17 Cost overrun SR18 Low competitive advantage SR19 Dissatisfied customers 3.3 Strategic Risks Treatment Strategy (Accept, Transfer, Avoid, Mitigate) Table 2.3.6‑J - Modified Strategic Risk Treatment & Control Criteria Strategic Risk Treatment & Control Criteria Criteria TREATMENT Code CONTROL Code Organisation sees the risk acceptable and merely prepare a contingency plan in case it occurs. ACCEPT 1 Create contingency plan A Organisation see the need to comply and apply control measures MITIGATE 2 Apply control measures and follow environmental pollution control standards, train staff on safety, upgrade equipment, enhance safety measures, conduct detailed planning, improve management & supervision, open communication, create emergency plans, develop effective HR, PR, Media, Employment strategies, R & D, B Organisation decided to share some part of the risk to another party TRANSFER 3 Contractors, outsourcing skills & expertise, acquire insurance coverage, and improve HR processes. C Organisation decided to cancel activities that are likely to generate the risk whenever possible AVOID 4 Cancel risk generating activities D Table 2.3.6‑K – Chemical Plant Strategic Risks Treatment and Control Code Risks Initiating Events Risk Category Treatment Control SR1 Change in Planning laws Political 1 A SR2 Change in Health & Safety Regulations SR3 New & more restrictive laws SR4 Contamination /Pollution Environmental 1 & 2 A & B SR5 Climate Change SR6 Natural Disaster SR7 Pressure from Environmental Groups SR8 Public protest Social 1 & 2 A & B SR9 Labour strikes SR10 Media suspicion of hazards SR11 Rapid change in technology Technical 2 & 3 B & C SR12 Over-reliant on expertise SR13 Inaccessible knowledge & skills SR14 Legal Actions or dispute Legal 2 & 3 B & C SR15 Court decisions imposing penalty & others SR16 Shortage of funds Economic 2 & 3 B & C SR17 Cost overrun SR18 Low competitive advantage SR19 Dissatisfied customers 3.4 Strategic Risks Management 3.4.1 Integrated Risk Management Approach Figure 3.4‑E Chemical Plant Integrated Risk Management Approach (Source: ) 4 References Ale, B. 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(2009). The Due Diligence Handbook: Corporate Governance, Risk Management and Business Planning, CIMA  Read More