Advanced Risk Management- EHS should embrace it.

Advanced risk management techniques are the need of the day because the world is becoming increasingly complex and interconnected, and traditional risk management methods are not always able to keep pace with the changing risk landscape.

Here are some of the reasons why advanced risk management techniques are needed:

• Increased complexity: Businesses are operating in increasingly complex environments, with global supply chains, complex financial products, and new technologies. This complexity makes it more difficult to identify and assess risks.
• Interconnectedness: The world is becoming increasingly interconnected, and risks can cascade across borders and industries. This makes it more important to have a comprehensive understanding of risks and to be able to manage them effectively.
• New risks: New technologies and business models are creating new risks. For example, the rise of the internet has created new cyber risks, and the growing use of social media has created new reputational risks.
• Rapid change: The risk landscape is constantly changing, and traditional risk management methods can be slow to adapt. Advanced risk management techniques are more agile and can be adapted more quickly to changing conditions.

Here are some examples of how traditional risk management methods have not been able to keep pace with the change in risk evolutions:

• The global financial crisis of 2008: Traditional risk management methods failed to identify and assess the risks associated with complex financial products, such as subprime mortgages and credit default swaps. This led to a global financial crisis that caused trillions of dollars in losses.
• The COVID-19 pandemic: Traditional risk management methods were not able to predict or assess the risks associated with a global pandemic. This led to widespread disruption and economic losses.
• The rise of cyber-attacks: Traditional risk management methods have not been able to keep pace with the increasing sophistication of cyber attacks. This has led to a number of high-profile data breaches and other cyber security incidents.

Advanced risk management techniques, can help organizations to identify, assess, and manage risks more effectively. These techniques can be used to:

• Identify risks that are not easily identifiable using traditional risk assessment techniques.
• Develop and implement more effective risk controls.
• Prioritize risks more effectively.
• Improve communication and collaboration between different stakeholders.
• Make more informed decisions about risk management.

Overall, advanced risk management techniques are essential for organizations that want to protect themselves from the complex and evolving risks of the 21st century.

Below are some specific examples of how advanced risk assessment techniques can be used to improve EHS management: (See Below for expansions).

• A chemical plant can use QRA to assess the risks associated with a new process that is being developed. This information can be used to design the process safely and to develop appropriate risk controls.
• A construction company can use LOPA to assess the risks associated with a new construction project. This information can be used to develop a safety plan and to identify the areas where the greatest attention needs to be paid to risk control.
• A transportation company can use Bowtie analysis to assess the risks associated with the transportation of hazardous materials. This information can be used to develop a risk management plan that includes measures to prevent accidents and to mitigate the consequences of accidents if they do occur.
• A manufacturing plant can use HAZOP to identify and evaluate potential hazards associated with a new production line. This information can be used to design the production line safely and to develop appropriate risk controls.
• An oil and gas company can use FTA and ETA to assess the risks associated with a new offshore drilling operation. This information can be used to develop a risk management plan that includes measures to prevent accidents and to mitigate the consequences of accidents if they do occur.

Advanced risk assessment techniques can be used to improve EHS management in any organization, regardless of size or industry. By identifying and evaluating risks more effectively, organizations can develop and implement more effective risk controls and improve their overall EHS performance.

Following Advanced Risk Management Techniques/  methods can help improve an organisation / business’ environmental, health, and safety efforts:

1. Bowtie Analysis: This technique visualizes potential hazards, their causes, and the consequences in a diagram resembling a bowtie. It helps in understanding and managing risks effectively.
2. Failure Mode and Effects Analysis (FMEA): FMEA is a systematic approach to identify potential failure modes of a process, system, or product and assess their impact on safety and the environment.
3. Event Tree Analysis (ETA) Event trees are graphical tools used to analyze the possible outcomes of a specific initiating event. They’re particularly useful in high-consequence scenarios.
4. Fault Tree Analysis (FTA): FTA is the reverse of event tree analysis. It starts with an undesired event and works backward to identify the root causes and contributing factors.
5. Human Reliability Analysis (HRA): This assesses the potential for human error in complex systems, helping in designing interventions to reduce risks associated with human actions.
6. Quantitative Risk Assessment (QRA): QRA involves numerical analysis of risks by considering probabilities, consequences, and uncertainties. It’s especially valuable when dealing with high-risk processes or facilities.
7. Safety Instrumented Systems (SIS): Implementing SIS involves using protective systems to mitigate risks by taking action when predetermined conditions are met.
8. Layer of Protection Analysis (LOPA): LOPA helps in determining the effectiveness of various layers of protection in mitigating risks and setting the Safety Integrity Level (SIL) for each layer.
9. Scenario-Based Risk Assessment: Analysing various real-life scenarios and their potential impact on EHS can provide a practical approach to risk management.
10. Cybersecurity Risk Assessment: In an increasingly digital world, assessing risks related to cybersecurity is crucial to protect sensitive EHS data and processes.

Remember, the choice of technique depends on the specific situation and industry. Always consider a combination of these methods to comprehensively assess and manage risks as an EHS Professional.

Advanced Risk Management Techniques have become the need of the day:

Advanced risk management techniques have become a need of the day for several reasons, and it’s not that traditional methods are entirely ineffective, but they may not always keep pace with the changing landscape of risks. As briefed in initial para of this blog, Here’s why advanced techniques are increasingly important:

1. Complexity of Modern Systems: In today’s world, systems and processes have become more complex. Traditional methods may not adequately address the intricacies of modern systems, especially in industries like technology, healthcare, and finance.
2. Emerging Risks: New risks continuously emerge, such as cybersecurity threats, climate change-related risks, and global supply chain disruptions. Advanced techniques are better equipped to assess and manage these evolving threats.
3. Data Availability: With the advent of big data and advanced analytics, organizations have access to a wealth of data that can be leveraged for more precise risk assessments. Advanced techniques harness this data effectively.
4. Globalization: Companies operate in a globalized world with supply chains and operations spread across multiple countries. Traditional methods may struggle to address the international nature of risks and regulations.
5. Regulatory Changes: Regulations and compliance requirements are constantly evolving. Advanced techniques can help organizations stay in compliance and adapt to regulatory changes more effectively.
6. Human Factors: The role of human behavior in risk management is better understood today. Advanced methods like Human Reliability Analysis (HRA) can provide insights into potential human errors and their mitigation.
7. Real-time Assessment: Traditional methods often rely on periodic assessments. Advanced techniques can provide real-time or near-real-time risk assessments, allowing for quicker responses to emerging risks.
8. Integration of Technology: Advanced risk management often involves the integration of technology, such as predictive analytics, artificial intelligence, and machine learning, which can provide early warnings and predictive insights.
9. Market Volatility: In financial and investment sectors, market volatility can change rapidly. Advanced quantitative models can better predict and respond to market fluctuations.
10. Tailored Risk Management: Advanced techniques allow for more tailored risk management strategies, addressing specific risks that an organization faces, rather than a one-size-fits-all approach.

In summary, traditional risk management methods are still valuable, but they may not fully address the dynamic and evolving nature of risks in today’s world. Advanced techniques offer more precision, adaptability, and the ability to incorporate new sources of information, making them essential in managing modern risks effectively.

HRA and Scenario Based Assessment Details:-

Human Reliability Analysis (HRA): HRA is a critical component of risk assessment in many industries, especially where human error can lead to significant safety or environmental consequences. It involves assessing the potential for human errors and their impact on safety and environmental processes. Here are key elements of HRA:

1. Identification of Human Errors: The first step is to identify potential human errors that can occur during a task or operation. These errors can range from slips and lapses to more serious mistakes.
2. Error Likelihood: Assessing the likelihood of these errors is the next step. This involves understanding the factors that can influence human behavior, such as fatigue, stress, and training.
3. Consequence Analysis: Once errors are identified and their likelihood is estimated, you need to evaluate the consequences of these errors. What could happen if a specific error occurs? This could include safety incidents, environmental damage, or production losses.
4. Risk Reduction Measures: Based on the analysis, you can then develop risk reduction measures to minimize the likelihood of errors or mitigate their consequences. This might involve improving procedures, providing better training, or implementing safety controls.

Scenario-Based Risk Assessment: Scenario-based risk assessment is a practical approach to risk management that involves considering various real-life scenarios to understand and prepare for potential risks. Here’s how it works:

1. Scenario Identification: Start by identifying a range of scenarios that could occur in your specific industry or workplace. These scenarios should cover a spectrum of events, from the mundane to the extreme.
2. Consequence Analysis: For each scenario, analyze the potential consequences on the environment, health, and safety. Consider both the immediate and long-term impacts.
3. Likelihood Assessment: Estimate the likelihood of each scenario occurring. This can involve historical data, expert judgment, and probabilistic analysis.
4. Risk Prioritization: Once you have assessed consequences and likelihood, prioritize the scenarios based on their risk level. High-risk scenarios require more attention and mitigation efforts.
5. Mitigation Strategies: Develop and implement mitigation strategies for high-risk scenarios. These could include process changes, safety protocols, or emergency response plans.
6. Continuous Improvement: Scenario-based risk assessment is an ongoing process. Regularly review and update the scenarios and your risk mitigation strategies as new information becomes available or as the work environment evolves.

Both HRA and scenario-based risk assessment are valuable tools in the EHS field. HRA focuses on human error, while scenario-based risk assessment considers a broader range of potential events and their consequences. Integrating both approaches can provide a comprehensive view of risk and help in developing effective risk management strategies.

HRA Practical Example:-

Here’s a practical example of Human Reliability Analysis (HRA) in an industrial setting:

Scenario: In a chemical manufacturing facility, operators are responsible for transferring a highly reactive chemical from one storage tank to another. The chemical is corrosive and poses significant safety and environmental risks if handled incorrectly.

HRA Steps:

1. Identification of Human Errors:
   • Slip: An operator accidentally steps on a spilled liquid on the floor.
   • Lapse: An operator forgets to wear the appropriate personal protective equipment (PPE).
   • Mistake: An operator misinterprets a gauge and opens the wrong valve.
2. Error Likelihood:
   • Slip: The likelihood of a slip is relatively low with proper housekeeping measures in place.
   • Lapse: Depending on the effectiveness of training and reminders, the likelihood of lapses can vary.
   • Mistake: The likelihood of a mistake depends on the clarity of instructions and the operator’s training and experience.
3. Consequence Analysis:
   • Slip: A slip might result in a minor spill, which can be cleaned up without significant consequences.
   • Lapse: Forgetting to wear PPE could lead to potential chemical exposure, which could result in health issues.
   • Mistake: Misinterpreting a gauge and opening the wrong valve could lead to a chemical release, resulting in a safety incident and environmental damage.
4. Risk Reduction Measures:
   • For slips, maintaining a clean work environment and proper signage can reduce the likelihood.
   • To prevent lapses, regular training, checklists, and reminders can be implemented.
   • To reduce mistakes, clear labeling of equipment, additional training, and double-check procedures can be introduced.
5. Overall Risk Assessment:
   • After assessing all potential human errors and their consequences, the facility can prioritize the most critical areas for improvement.
   • High-risk areas might require enhanced training, procedural changes, or the implementation of safety interlocks to prevent critical mistakes.

By conducting HRA in this scenario, the facility can proactively identify and mitigate the risks associated with human error in handling a hazardous chemical, ultimately improving safety and environmental protection. It’s a practical approach to ensure that the human element is considered in risk management processes.

B Karthik

4th Nov 2023, Bangalore.