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COURSE NAME: Enterprise Risk Management

(ERMT)

RMC Readymix, Manipal

Submitted by
Group SA_4
R Swetha
Jerrin James
Nikeeta Baliarsingh
Surabhi Garg
Trisha Das

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Contents
OBJECTIVES.......................................................................................................... 3
TYPE OF RISKS PLAGUING THE CEMENT INDUSTRY IN INDIA.................................3
ABOUT THE COMPANY........................................................................................... 4
RISKS FACED BY RMC READYMIX (Manipal)............................................................4
Based on Nature of Risk....................................................................................... 5
Based on Severity of Occurrence..........................................................................6
MECHANISM OF RISK COVERAGE..........................................................................6
PROPOSAL FOR COVERAGE OF UNCOVERED RISK................................................7
RISK MANAGEMENT PROGRAMME.......................................................................10
Risk Identification:............................................................................................. 10
Risk Analysis:.................................................................................................... 10
Risk Response Planning (MITIGATION):..............................................................11
Risk Monitoring Process:................................................................................... 11

OBJECTIVES
The goal of this project is to have a sound understanding of the following:
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Identification of the risks that RMC Readymix (Manipal) encounters on an operational


basis
Risks currently covered and mechanism of risk coverage used
Risks left uncovered or passively retained
Cost effectiveness of current arrangements

Based on the inputs received from Mr. Chetan Pujara, General Manager of RMC Readymix
(Manipal), the following needs to be conceived:

A proposal for coverage of the uncovered risks


Creation of a comprehensive risk management programme

TYPE OF RISKS PLAGUING THE CEMENT INDUSTRY IN INDIA


1. Routine and general hazards

Safe behaviour

Environment, work and passage areas

Work equipment

Safety labelling

Personal Protective Equipment (PPE)

Manual load handling

2. Special hazards during the cement production phases:

Quarrying

Crushing

Clinker production

Milling processes at raw mill and cement milling

Material transport

Refinement processes

Loading and delivery of final products

Fuel storage activities

Use of hazardous materials

3. Special hazards as a result of the work environment:


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Dust

Noise

Fire

Emergency response

ABOUT THE COMPANY


RMC Ready Mix is a division of Prism Cement Limited, which is an integrated Building
Materials Company, offering a wide range of building materials from cement, aggregates,
ready-mixed concrete, tiles, and bath products to kitchens. It is one of the largest readymixed concrete manufacturers in India. It was set up in1996 and currently operates a total of
88 ready-mixed concrete and aggregate crushing plants in 40 towns and cities across the
nation.

Products &
Services

Commercial
Concrete

Aggregates

Figure 1: Products and Services offered by RMC Readymix


RMC Readymix was conferred with the prestigious Prashansa Patra Award by National
Safety Council of India, Safety Awards- 2012 for implementing and following the best safety
practices at their plant.

RISKS FACED BY RMC READYMIX (Manipal)


RMC ReadyMix classifies risks broadly into 2 categories based on the origin of the risk:

Site locations: Involves risks associated with moving parts, machinery, transfer of
inventory and storage related conditions
Road Risk: It involves risks associated with raw materials, WIP and human capital in
transit from the procurement areas to the factory location

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OPERATIONAL RISKS

Risks related to operating machinery and moving


parts
Sharp and hazardous objects lying on the shop floor
Naked electrical wires and equipments without any
protective covering
Handling fuel and explosives
Carelessness on the part of the labourers and
employees while working on the site

ENVIRONMENTAL RISKS

Emission of toxic elements and green-house gas


emissions (CO2, NOx) resulting from the production of
cement
Industrial waste products such as fly ash, blastfurnace slag, silica fume
Resulting contaminated water from various processes
which could seep into the underground water levels

FINANCIAL RISKS

Changes in Local tax rates


Levy of additional taxes and duties on RMC(Entry Tax,
Excise duty)
Changes in current RMC regulations and ministry
requirements

HEALTH HAZARDS

Continous and prolonged exposure to dust and fumes


may lead to severe occupational hazards
Cement dust causes lung function impairment, chronic
obstructive lung disease, restrictive lung disease,
pneumoconiosis and carcinoma of the lungs, stomach
and colon
Continuous contact between skin and wet concrete
allows alkaline compounds to penetrate and burn the
skin

The kind of risks encountered by the company could be further classified into the following
categories based on the Nature of risk:
Based on Nature of Risk

Based on Severity of Occurrence


Also, based on the severity of the occurrence, the company classifies risks into the following:
Any unplanned risk that has the potential to occur, however a
fortunate break in the chain of events prevented an injury or
damage
Should be immediately reported, so it will avoid any
dangerous occurence to fellow employees

NEAR MISS

DANGEROUS
OCCURENCES

Any incident in a workplace that exposes a worker or any other


person to a serious risk to a person's health or safety

MINOR ACCIDENTS

Any incident which has been successfully controlled within the


site boundaries and does not involve the attendance of the
Local Authority Emergency Services and does not attract the
interest of media or neighbours.

MAJOR ACCIDENTS

Any incident where the environment outside the Works


boundary has been affected, or Local Authority Emergency
Service(s) have been involved, or neighbour or media interest
has been attracted.

The companys risk management team considers that For every 100 near misses
there might be 3 or 4 dangerous occurrences, 2 or 3 minor accidents and 1
major accident.
Hence, rather than taking actions after the occurrence of any incident, the company
goes for avoidance of risk before it occurs thus having a Cost- effective risk
management in place.
MECHANISM OF RISK COVERAGE
According to the management at RMC ReadyMix (Manipal), risks related to the Site
locations are completely covered while Road risk remains uncovered due to the uncertainty
and variety of risks that may occur on different occasions. Therefore, an approach of
Acceptance is taken towards Road Risks.
Risk mitigation strategy towards site location related risks is that of Avoidance. Its
achieved by taking the following measures:

Applying HSE (Health, Safety and Environmental) policy: Encouraging a healthy


attitude towards safety, management control, accident/incident reporting and
investigations, duties and responsibilities of personnel etc., is based on the
fundamental premise that all work-related injuries and illnesses are avoidable

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Training and awareness: To enhance competency knowledge base and skill base,
the Company conducts training of its employees throughout the year. It comprises of:
a. Induction training
b. Defensive driving techniques and road safety
c. Operational safety base training
d. Arrangement of first aid facilities at all work locations
e. Provision of Personnel Protective Equipment to all the employees
f. The Company publishes a bilingual HSE Bulletin Suraksha Sandesh at periodic
interval and circulates it amongst all personnel and associates. This has proved
to be an effective communication link which helps in sharing knowledge and good
practices initiated in different plants and locations
g. HSE promotional activities such as observance of Road Safety Day, National
Safety Week, Environment Day and RMC Lock-off and Machine Safety Day are
conducted on a regular basis at each location

Applying technology:
a. Employing Dust Collector systems and continuous sprinkling of water for
preventing air pollution at plants
b. Adopting suitable techniques to recover and recycle returned material and water
from truck washing
c. Provision of Personnel Protective Equipment to all the employees
d. Provision of fire-fighting arrangements at all the work locations

PROPOSAL FOR COVERAGE OF UNCOVERED RISK


Based on our discussion with the executives at RMC Readymix, it was found that Road
Risk is one area of risk that has not been covered by the company. In line with this
observation, we have enlisted below a proposal for coverage of road risk.
RMC Readymix can institute a MORR (Managing Occupational Road Risk) program to
ensure that the hazards associated with road risk are safely managed. It involves developing
a risk management plan, i.e. putting in place the policies, people, procedures to mitigate
occupational road risks.

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A simple guidance framework can be elaborated as follows:


Plan
Review
vehicles,
mileages, incidents
Consult workers and
develop policies
Simple risk assessment
at regular intervals

Do
Assess
and
deliver
training to personnel
Follow
road
safety
signage practices
Use,
servicing
and
sustained maintenance of
PPEs

Check
Road traffic offences
Insurance policies and
claims
Licenses
and
vehicle
documentation

Act
Review
progre
periodically
Develop a simple act
plan
Reward adherence
rules
and
spre
awareness

To begin implementation of a road risk policy, three crucial decision points must be taken into
consideration.
1. What is the current status of our risk mitigation policies?
Vehicles, drivers, miles, crashes, causes, costs
Management system policy, planning, delivery, monitoring, review
2. Set up a joint team of employees from cross-functional teams
Develop a comprehensive risk management and mitigation system
Seek support and assistance from external partners

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3. Develop an action plan to:


assess risks, prioritize interventions
set standards, targets, timescales etc.
implement regulations
monitor, review and feedback from lessons learned
The company must focus on using risk assessment to help managers and/or drivers
understand:

How, when, what, how bad are the risks, etc.?


Whether existing controls are adequate or new procedures need to be implemented?
Which risks to tackle first based on both priority and criticality?

The key road risk factors to be considered for this industry include:

Journey task speed, fatigue, routing, timing, distractions, weather


Vehicle - fit for purpose, properly maintained, additional safety features
Driver - age/experience, crashes/points, competence, eyesight, stress

The basic preventive measures for the reduction of the consequences from the above
hazards are:

The guards or other collective safety barriers should never be removed (barriers,
access doors)
The adherence to the special operating instructions
The adherence to the limited access rules as well as the road safety signage
The use of the appropriate Personal Protective Equipment (PPE) provided and
ensuring quality checks of:
o Safety belt harness
o Ventilation mask
o Work ware
o Safety shoes
o Special helmet equipped with eye protector

RISK MANAGEMENT PROGRAMME

Risk
Identificati
on
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Risk
Analysis

Risk
Response
Planning

Risk
Monitoring

Risk Identification:
The Risk identification phase involves the appropriate stakeholders and includes an
evaluation of environmental risks, operational risks, health hazards by using techniques such
as Brainstorming, Cause- Effect diagrams, Decision trees and In-depth interviews with
the management of the company as well as the workers on the shop floor. Based on their
inputs, the risks can be classified as Internal and External risks.
Risk Analysis:
All risks identified should be assessed to identify the range of possible outcomes. A
qualitative risk analysis will be used to determine which risks are the top risks to pursue and
respond to and which risks can be ignored. Qualitative risk analysis was done using six
point scales for Probability of occurrence and Impact. Only when both, the probability of
occurrence and the Impact are significant, the situation is considered risky. On the basis of
this concept, the risk acceptance criteria was defined and decided in the proposed study.
For example, Probability of occurrence of Health risks is very high in RMC plant and Impact
is also high considering the importance of human life. Hence exposure of this risk is
considered very high. This risk is thus considered for the further process in risk management
i.e. for risk quantification and quantitative risk analysis.
The following are the criteria for classification of risks:
Very High

Probability of occurrence
>90%

High

70 -90%

Medium

30- 70%

Low

<30%

Risks that fall within


zones will have risk
which may include
and
a
risk

Impact

VH

Impact
Risk that has the most hazardous impact on project
cost, project schedule or performance as well as
external factors
Risk that has the potential to greatly impact project
cost, project schedule or performance as well
external factors
Risk that has the potential to slightly impact project
cost, project schedule or performance
Risk that has relatively little impact on cost, schedule
or performance

the RED and YELLOW


response
planning
both a risk mitigation
contingency plan.

M
L
L

VH

Probability

Risk Response Planning (MITIGATION):


Each major risk (those falling in the Red & Yellow zones) will be assigned for monitoring
purposes to ensure that the risk will not fall through the cracks.

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For each major risk, one of the following approaches will be selected to address it:
Loss Avoidance Eliminate the threat by eliminating the cause
Loss Reduction Identify ways to reduce the probability or the impact of the risk
Loss Retention Retain part or full part of the risk
Non-Insurance Transfer- Pure risk transferred to a party other than insurer
Financial Risk Transfer Make another party responsible for the risk (buy
insurance,
outsourcing)
For each risk that will be mitigated, the management will identify ways to prevent the risk
from occurring or reduce its impact or probability of occurring. This may include prototyping,
adding tasks to the project schedule, adding resources and adopting effective risk mitigation
techniques.
For each major risk that is to be mitigated or that is accepted, a course of action will be
outlined for the event that the risk does materialize in order to minimize its impact.
Risk Monitoring Process:
Risk monitoring control is the process of keeping track of the identified risk, monitoring
residual risks and identifying new risk, ensuring the execution of risk plans, and evaluating
their effectiveness in reducing risk. Risk monitoring and control records risk metrics that are
associated with implementing contingency plans. Risk monitoring and control is an ongoing
process for the life of the project. The risks change as the project matures, new risks
develop, or anticipated risks disappear.
Good risk monitoring and control processes provide information that assists with making
effective decisions in advance of the risk's occurring. Communication to all project
stakeholders is needed to assess periodically the acceptability of the level of risk on the
project.

The purpose of risk monitoring is to determine if:


Risk responses have been implemented as planned.
Risk response actions are as effective as expected, or if new responses should be
developed.
Project assumptions are still valid.
Risk exposure has changed from its prior state, with analysis of trends.
A risk trigger has occurred.
Proper policies and procedures are followed.
Risks have occurred or arisen that were not previously identified.

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The risk response owner should report periodically to the Project manager and the risk team
leader on the effectiveness of the plan, any unanticipated effects and any mid-course
correction needed to mitigate the risk.
Based on the above framework of Risk Management, the identified risks were analysed and
the corresponding Risk Mitigation Approach is recommended in the following table:
Description
Risk

of Probability of Risk
Medium

Risks
related
to
operating machinery
and moving parts
Lack of technical
expertise/personnel
Sharp
and
hazardous objects
lying on the shop
floor
Naked
electrical
wires and equipment
without
any
protective covering
Handling fuel and
explosives
Carelessness on the
part of the labourers
and
employees
while working on the
site
Errors in mixing and
testing of materials
Damage to RMC
while transportation
of products
Improper
infrastructure,
scaffolding
&
platform
Emission of toxic
elements
and
green-house
gas
emissions
(CO2,
NOx) resulting from
the production of
cement
Industrial
waste
products such as fly
ash,
blast-furnace
slag, silica fume
Resulting
contaminated water
from
various
processes
which
could seep into the

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High

Very
High

Impact

Medium

High

Mitigation
Approach

Very
High

Medium

High

Insurance

Medium

High

High

Very High

Loss
Reduction
Loss
Reduction

Very High

Insurance

Very high

Insurance

Medium

Very high
High

High/Very High

Non
Insurance
Transfer

High

High/Very High

High

High

Medium

High

Loss
Reduction
Non
Insurance
Transfer
Loss
Reduction

High

Very High

Loss
Reduction

Very high

Very High

Loss
Reduction

High

Very high

Loss
Reduction

underground water
levels
Changes in Local tax
rates
Levy of additional
taxes and duties on
RMC (Entry Tax,
Excise duty)
Changes in current
RMC
regulations
and
ministry
requirements
Continuous
and
prolonged exposure
to dust & fumes may
lead
to
severe
occupational
hazards
Cement dust causes
lung
function
impairment, chronic
obstructive
lung
disease, restrictive
lung
disease,
pneumoconiosis and
carcinoma of the
lungs, stomach and
colon
Continuous contact
between skin and
wet concrete allows
alkaline compounds
to penetrate and
burn the skin

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Medium

High

Loss
Reduction
Non
Insurance
Transfer

High

High

Medium

High

Loss
Reduction

Very high

Very high

Loss
Reduction

Very high

Very high

Loss
Reduction

High

High

Loss
Reduction