Risk Management

Benefit

Risk
 Company’s safety policy requires
to

 Provide for safe practices in vessel

operations, both in port and at sea.
 Provide a safe working environment.
 Establish safeguards against identified
risk

Risk Assessment program is needed to

assist the
officers achieve the above elements
Definitions
 Risk
 A measure of the potential for loss in terms
of both the likelihood (events/year) of the
incident and the consequences
(effects/event) of the incident. It has two
components: frequency and consequences

 Risk Analysis
 The development of a quantitative estimate of risk
based on engineering evaluation & mathematical
techniques for combining estimates of incident
likelihood and consequences
 Risk Assessment
 The process by which the results of a risk
analysis (i.e., risk estimates) are used to make
decisions, either through relative ranking of risk
reduction strategies or through comparison
with risk targets

 Risk Management
 The planning, organizing, leading and
controlling of an organization’s assets and
activities in ways, which minimize the
adverse operational and financial effects of
accidental losses upon the organization
 Four Fundamental Risk
Categories:
 Personnel
 Property
 Liability ( reputation, etc )
 Financially related risk

They can be used as basis for risk

assessment and managing risk. Both on
corporate level and on-board ships
 Property
The ship, equipment in your possession and
other ship’s property that “gets into your
way”

 Liability
Actions that can have an impact on the
companies’ total image, and trustworthiness
 Financially Related Aspects
Anything that can cause financial losses,
such as delays, accidents/total loss, loss of
contract ( also linked to liability ), etc.

 Personnel
Direct safety risk to people as a risk
factor due to the fact that 80% of all
accidents are caused by “human error” .
 RISK
ANALYSIS
 Risk Assessment is intended to be a careful
examination of what, in the nature of operations,
could cause harm, so that decisions can be made
as to whether enough precautions have been
taken or whether more should be done to
prevent harm.

 The assessment should first establish the

hazards that are present at the place of
work and then identify the significant
risks arising out of the work activity.
 Risk Assessment Key factors

 Hazard: is a source of potential harm or

damage or a situation with potential for
harm or damage

 Risk : has two elements

- The likelihood that a hazard may occur
(frequency).
- The consequences of the hazardous event
(severity). This is assessed on a scale of 1 to 5,
with 1 being negligible and 5 being intolerable.
 Risk Factor: the combination of the
frequency that a hazard can exist and the
severity of a hazard [frequency (f) x
severity (s)].

 Control Measures: are the measures

that are in place to reduce the Risk Factor
to an acceptable level.
 R is k D e s c r ip tio n
& D a ta In p u t Risk
Assessment
R is k Process
Id e n tific a tio n &
Q u a n tific a tio n

R is k R is k
L ik e lih o o d C o n s e q u e n c e
E s tim a tio n E s tim a tio n

R is k
P r o file
M a tr ix

A v o id a n c e ,
Is th e R is k N o
M itig a tio n o r
A c c e p ta b le
T ra n s fe r

Y e s

O p e r a te w ith
th e R is k
 Risk Peril Categories

 Natural Hazards

 Infrastructure

 Site Level
Natural hazards risk

 Freezing
Temperatures
 Lightning
 Snow & Ice
 Tornado
 Tropical Storms
 Hurricanes

 Typhoons

 Cyclones
Infrastructure risk

 Claims History
 Machineries
 Enclosed
spaces
 High pressure
lines
 Height
 Site level risk

 Presence of dangers such as toxic,

flammable vapors, lack of oxygen
content, hard hats area, noise, etc.
 Risk Assessment Data Inputs

 EH&S Policies  Manuals

 Policies &
 Equipment
Reliability Procedures
 Engineering Design
 Facility & Process
 Safety
Descriptions
 Maintenance
 Historical Accident  Material Usage
 Human Reliability
 Risk Identification &
Quantification
 Codes &
Standards

 Risk Analysis
Techniques

 Performance
Based Codes
 Risk Analysis Techniques

 Cause-Consequence Analysis
 Checklist
 Event Tree Analysis
 Failure Modes & Effects Analysis
(FMEA)
 Failure Modes, Effects and
Criticality Analysis (FMECA)
 Fault Tree Analysis (FTA)
 Risk Analysis Technique

 Hazard & Operability Analysis

(HAZOP)
 Human Reliability
 Preliminary Hazard Analysis (PHA)
 Relative Ranking
 Safety Review
 What-If / Checklist Analysis
 What-If Analysis
Checklists -A detailed list of questions
used to verify compliance with established
practices and standards

What-If Analysis - Brainstorming

approach in which a group of experienced
people ask questions or voice concerns
about possible undesired events
Failure Modes & Effects Analysis (FMEA)
 Tabulation of equipment and their associated
single point failure modes, consequences and
safeguard.

Fault Tree Analysis (FTA)

 Graphical model that displays the various
combinations of equipment failures and
human errors that can result in the main
system failure of interest
Fault Tree
Example
Event Tree Analysis - Graphically
shows the possible outcomes of an
accident that results from an initiating
event

Cause-Consequence Analysis -
Combination of fault and event trees used
to visualize accident causes and outcomes
Human reliability Analysis -
Systematic evaluation of the factors that
influence the performance of personnel /
seafarer
 Risk Likelihood Determination

 Incident History
 Industry Experience
 Site Experience
 Equipment Vendor Experience
 Expert Experience
 Fault Tree Analysis
 Qualitative Results
 Quantitative Results
Risk Profile Matrix

 Likelihood
 Events per year

 Consequences
 Effects per Event

 Graphical
Representation of
Risk
 LIKELIHOOD (Probability)
Frequent (1) Probable (2) Occasional (3) Remote (4) Very Remote (5) Impossible (6)
C
O Catastrophic (a)
N
S
E Critical (b)
Q
U
E Marginal (c)
N
C
E Negligible (d)
S

High Moderate Low Routine

Risk Risk Risk Risk
 Is the Risk Acceptable?
Risk Management Decision
Options
Avoidance
 Discontinue the
practice that creates
the risk
Mitigation
 Implement strategies
to reduce the impact
Transfer
 Purchase financial
relief (Insurance)
Acceptance
 Live with the risk
OPERATIONAL RISK
MANAGEMENT

?
 Basic Principles

1. Accept no unnecessary risks.

2. Make risk decisions at the
appropriate level
3. Accept risks when benefits
outweigh the costs.
4. Integrate ORM into doctrine and
planning at all levels.
Objective and Goals

Zero
Accident

Use resources
And personnel
Efficiently

PREVENT OR MITIGATE LOSSES

EVALUATE AND MINIMIZE RISKS

IDENTIFY, CONTROL, AND DOCUMENT HAZARDS

The ORM
6-Step
Process 6. Supervise
1. Identify
the Hazards
and Review

2. Assess
5. Risk Control
the Risks
Implementation

3. Analyze
4. Make
Risk Control
Control
Measures
Decisions
Step 1 - Identify the Hazards

Process: Use traditional procedures with

emphasis on hazard analysis. Adds rigor
and early detection.

Output: Significant increase in the

number of hazards identified.
Step 2 – Assess the risk

Process: All hazards evaluated for total

impact on work or activity. Root causes
determined and risk levels assigned

Output: Prioritization of major risk issues.

Example: Risk Assessment matrix

Step 3 - Analyze Risk
Control Measures

Process: Comprehensive risk control

options are developed for managing each
risk.

Output: Risk control options to be

considered by the decision maker.
 THE MACRO OPTIONS

Accep Reje
t ct

Reduce Avoid

Delay
Compensate

Spread Transfer
Step 4 –
Make Control Decisions

Process: Get risk decisions to the right

person, at the right time, with the right
support.

Output: Personnel know their decision-

making authority, limitations, and take
only necessary risks.
 Step 5 - Risk
Control
Implementation

Process: Implementation strategies are

developed which define Individual
Responsibility, Accountability, and
Involvement.
Output: Risk Controls tailored for positive
mission impact.
 Well supported risk control
TRAININ
G JOB AIDS & TOOLS
PACKAGE PACKAGE

A POLICY
PILLAR THE WELL A MEASUREMENT
SUPPORTED PACKAGE
CONTROL

COMMAND SUPPORT
PACKAGE A
MOTIVATIONA
L
PACKAGE
 Step 6 - Supervise
and Review

Process: Systematic assessment of

activity oriented results.

Output: ORM performance status

determined real time. Data available for
future applications.
 Review and Feedback:
Measure & Leverage ORM

 Supervise the Operation, not ORM

 Measure Risk Directly

 Use Statistics Accurately

 Improve the Effectiveness of Feedback

 How to Recognize Good
Assessments: The Process

 Right people

 Right Time

 Right Tools
 How to Recognize Good
Assessments: The Steps

Step 1
 Operations Analysis Included
 More than One Hazard ID Tool Used
 Lots of Hazards Identified

Step 2
 Risk Assessment Matrix Used
 Risks Prioritized from Greatest to
Least
 How to Recognize Good
Assessments: The Steps
Step 3
 Macro Control Options Explored
 Many Hazard Controls Identified

Step 4
 Correct Decision maker
Identified
 Data to Aid Decision maker
 How to Recognize Good
Assessments: The Steps

Step 5
 Implementation Plan Fits Unit
Culture
 Multiple Support Packages

Step 6
 Direct Measures of Risk
 Feedback Mechanism
Conclusion
Having established that there is an exposure
to risk, you top officer can be

faced with a number of different choices

and the most appropriate action will
depend upon the circumstances
A top officer is expected to do all he can to
reduce risk at any time.
He can suddenly get into complex and difficult
situation involving risk related to all factors at
the
same time and can easily get squeezed
between
conflict of interest such as commercial
interest on one side and safety
on the other side.
Making independent decision based on
total
judgement of situation can lead to rather
uncomfortable situation in the short
run, it
is one of the major duties of a top
officer to
do so.

Being a top officer requires both

strong
individual integrity and sometimes
courage
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