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The risk management cycle and its

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Physical dangers have been a feature of life since the beginning of Human history. In the
initial days of Human history there are many natural hazards such as earthquakes,
weather, and other living organisms diseases. As now a days we see a drastic change in
increasing technology hazards and they have also become manmade- fire, explosions,
chemical spills, drugs, pollution etc.
It was one of the doom's day in the history of India when on December 3, 1984, MIC
(methyl isocyanate) gas leaked from the UCIL(Union Carbide India Limited) plant in
Bhopal,Madhaya Pradesh ,India. According to the figures provided by state government
of Madhya Pradesh, approximately 3,800 people died and a large number of other
persons experienced permanent or partial disabilities. Shortly after the gas release,
UCIL launched a serious effort to find the reason. In the Initial investigation of UCIL
experts disclosed that a large volume of water had actually been introduced into the
methyl isocyanate tank which caused a chemical reaction that enforced the chemical
release valve to open and allowed the MIC gas to leak. All the experts, sent to Bhopal by
Indian government, conducted their own investigation and concluded the same. Arthur
D Little of engineering consulting firm launched an independent investigation and
found that the water could only have been purposely introduced into the MIC tank, since
all safety systems were operational and placed at the plant that would have stopped
water from entering the MIC tank by accident.

Later in this assignment we will look forward to the Risk management cycle and also
some strategies placed in relation with the corporate risk management.

Risk Management

It is an approach to minimizing any company's exposure to risk. It is a system which

includes a large number of policies, procedures and practices which work place in
context to classify. Along with corporate information's we introduce risk management
information's. Risk management -information's such as feasibility. If we are able to
transfer risk to another party or creating some efforts to reduce the risk or avoiding the
risk are considered as the risk management strategies.
Generally, risk management identifies and analysis the problem of an organisation and
put forwards the steps to reduce or eliminate the loss of company. This thing is made be
possible by using practice risk management. Insurance, security system installation, to
maintain cash reserves are the examples of risk management practices. In business
there are mainly two types of risks possible predictable and unpredictable. For a small
business theft, fire, flood, injury or disability are the things which can causes a large
harm to business. This harm may be in the form of financial hardship -reduce of profit
or bankrupt. These small companies do not have risk managers so responsibility of risk
management in these companies falls on the owner. Instead large companies have their
risk manager who identify the future risk and perform the task to protect the company
from such possibility.

Background Study
It was one of saddest day in the human history when leakage of MIC gas causes the
death of thousands of people on December 3, 1984 in a plant of UCIL at Bhopal,
can be considered as the world's worst industrial and environment disaster can
understand its dangerous face that even after the 26 years of this accident there appears
to be no end of woe of victims. In order to know the facts of this accident we look at the
T perspective on the accident. The T perspective was created by the information's
provided by the technical reports of risk analysts, safety specialists and UCIL engineers.
According to T perspective there were many of casual factors which include Human
error at large. For examples cast iron pipes were used in place of specified stainless steel
pipes; the entry of the water into the tank couldn't be identified and the biggest loose
point was failure to pass information of gas leakage to near surroundings even after of
three hours.

Chiefly the tragedy caused as a result of accidental chemical reaction which took place in
the plant of UCLI at the midnight when whole of the city was sleeping, leakage
of MIC gas started and soon this poisonous gas spread into the city which turned almost
whole of the city into a deathly gas chamber.
It took a long time for government as well as people of Bhopal to recover from the effects
of this tragedy. All the tasks to help the victims of Bhopal gas tragedy were performed by
chief minister office. The government of Madhya Pradesh created a department of
Bhopal gas tragedy relief and rehabilitation in the year of 1985.
A large number of non-government organizations came up to support the victims. With
the help of these organizations, government successfully come out from such a difficult
Bhopal Gas Tragedy is remembered as one of the ugliest and worst industrial disasters
which have ever taken place in human history.

Risk management Cycle

Source: Ayling, 2009
Risk management cycle
The risk management cycle shows that how the possible risk can be reduced. In case of
industrial disaster like Bhopal gas tragedy the risk could be determined and further
measures are determined so that such types of disaster cannot take place in future.
Although the risk of natural hazards cannot be stagnated completely but we can
safeguard in order to minimize them and try to reduce the impact. As a matter of fact
the alleviation is a part of broad element leads to sustainable developments while
commencing on different communities and other social networks.

Risk Identification
To identify the risk is first step in the risk management cycle. This cycle aims to identify
what can go wrong and what might be reasons that may cause wrong. In simple words
we say that risk identification are the instructions that should be followed to avoid any

miss happening. According to Harrington, 2004. Risk identification includes the

liability risks, resource risks, assets risks and earning risks.

All the experts concludes If risk would had been measured properly in case of Bhopal
gas tragedy than such a huge dangerous disaster would had not taken place.

After risk identification stage the measurement is second stage of risk management
cycle. According to Harrington, 2004. risk measuring experts should provide the
information's loss distribution probability. The method which measures probability of
distribution is also expected to inform. These measurements help risk measuring
experts to conclude the benefits and cost of loss control.
According to Williams, et al 1998 there are two types of approaches for risk
measurement. These are qualitative and quantitative. Qualitative risk verifies the
possible risk which an organization might face. Quantitative approach calculates
accurate probability of mistakes and its harshness. These two approaches can be related
to the Disaster made by the Bhopal Gas tragedy

Analysis of risk is the third important stage of this this stage there are four
things we should be kept in mind to analysis the risk. These are risk can be avoided,
retained, controlled or transferred. (Crook frod 1991).
In case of Bhopal gas tragedy the risk could be avoided if risk managers at UCIL would
have taken proper steps before.
In order to reduce the risk experts should had a very keen eye at the plant. To reduce the
risk state government of Madhya Pradesh should had taken proper investigatory steps.
Transferring the risk means State government transferred risk by giving responsibilities
to different non-government organizations and other departments of government. In
order to cope up with the aftermath of the tragedy rehabilitation was made by the

Bhopal government to ascertain different tasks. Proper administrations are introduced

formulating a medical district for the victims of the tragedy. There are many voluntary
agencies joining hands providing reliefs. Some amendments have made under the
factories act as the top level of the management will be legally responsible for the health
and medical safety of the workers at a particular workplace.

Decision making is fourth stage of risk management cycle. Investigations have shown
that this whole incident was caused by the entry of the water to the MIC tank through a
hose connected to the tank directly. During the mid-night when MIC operator came to
know that there was some problem in the tank. They ran to the tank and found that
water hose connected to the tank. Immediately they called supervisor and tried to find
out some alternative. They decided to transfer one ton of the tanks content to other unit
which was only possible way to get out water from the tank at the moment.

Risk implementation is the fifth stage of the risk management cycle. It is important to
stress the limitations of the available procedures, as well as implement risk analysis in
order to achieve the target of policy Hertz, 1993. For example proper training and
development techniques are introduced towards the chemical process safety by the
Indian authorities helps undertaking latest technology so, they can handle the
preventive measures and stagnates the risk of chemical accidents after working on such

Monitoring is the sixth important stage of risk management cycle. As different experts
have shown that the Bhopal gas disaster was caused due to lack of attention or in in
simple words it could have been avoided if proper steps had been taken by UCIL staff.
Just after this dangerous disaster, state government took the rapid actions to over-come
the problem. Union government of India immediately stood with state government and
announced to help with every possible regard. A large number of non-government
organizations came forward to support victims of this disaster. Their task made the state
government to monitor all the relief works easy.

The government of Madhya Pradesh created a department of Bhopal gas tragedy relief
and rehabilitation in the year of 1985.
One of the most important steps towards monitoring after this disaster state
government of Madhya Pradesh has recently announced 750 million rupees
compensation for the 5.25 lakh victims of this disaster. PTI, 2010

Risk management strategy

Risk management strategy means all the functions and activities which aim to identify
the mission of any government or organization to achieve their goals that are associated
with their strategic plans. Effects can be seen even after of 26 years of this disaster
.According to a very recent serve of state government of Madhya Pradesh more than
5.25 lakhs people have become the victim of this disaster till date.PTI, 2010 Government
of Madhya Pradesh has set up a group of ministers from the state government to look
into the matter of Bhopal gas tragedy and to enact all the underlying issues that are
almost buried during that span of time. Government of Madhya Pradesh has come out
with a well organised structure which aims to help victims of Bhopal gas tragedy.
Present chief minister of Madhya Pradesh and Bhopal gas tragedy relief and
rehabilitation minister of his government have announced a relief of 750 million rupees
help for the victims of this dangerous disaster. Implementation of all the strategies is
one of the most important aspects so for this purpose government involved a group of
government ministers to look after all the activities carrying out. Government of
Madhya Pradesh has set up a large number of schools and college for the victims of this
disaster. To ensure that the right person is approaching, Government has asked to show
any proof of been a victims. If a person is not able to provide any documentary proof of
being a victim, he is treated according to his condition.

Overall, government of Madhya Pradesh is now more energetic to support and help
victims of Bhopal gas tragedy. It is trying to do justice with the victims of this disaster at
every possible way. It is now more sincere that such a disaster might not happen in


Through the detailed analysis of the risk management cycle and with the help of
secondary data the government can estimates the degree of risk and can help reducing
or stagnating the risk. As the management cycle works on the process of gathering data
and therefore one can figure out up to what degree they can overcome the risk factors.
The identification, measure, analyse, decision-making, implementing and monitoring
the factors giving rise to risk. The risk management cycle can hinder the possibility of
risk emergence in a particular sector. Monitoring policy plays a vital role as in case of
Bhopal gas tragedy the government have to monitor the technology and development
while training people towards health-safety measure schemes. As the Risk management
cycle of Bhopal gas tragedy. However, some strategies have applied to manage risk in
best possible way. Now a day's government and the people make joint efforts to fight
against the tragedy.
This is recommended through this analysis that the disasters like Bhopal gas tragedy
could be avoided if risk would have been measured and proper steps had been taken at
the right time. Government should now try to setup a body responsible for governing
risk measuring department of all the industries regularly so that such a disaster could
not repeat in future. Further, government of Madhya Pradesh should be more sincere
towards providing health and medical services to the victims, as the effects of disaster
are seen even today.