The Reality of Risk

At the frontline of any hazardous industry, production happens, activities occur, and operational risk and human interaction collide. In the midst of this instability sits hazard identification and risk analysis. Getting it right, making it operational, is critical.

Organisations are tirelessly working to redefine their approach to risk management. The real challenge is arming everyone in the organisation with the right information at the right time so everyone can make the most effective operational decisions. McKinsey and Co. reports, profound technological advancements are disrupting old ways of working in oil & gas and are enabling step changes in safety and productivity. In fact, Accenture reports that companies that understand digital transformation earn 26% more profit than others. The hazard identification and risk analysis of tomorrow will experience massive disruption from digital innovation.

To enable better decision making, people need to be better informed and connected. What’s required is a simpler approach that connects disparate processes and people in a way that allows everyone to visualise and manage risk and operations in a new way.

In this paper, we will explore an operational excellence software platform implemented by several major oil companies which has at its core a unique Hazard Identification & Risk Analysis capability. By connecting, translating, aggregating, and visualising disparate systems and data through a common currency we can unlock the potential in data that’s typically hidden away in silos. We can see and understand the meaningful relationships between previously unrelated data sources. Connecting this information to operational reality will expose the actionable insights that have been lacking in risk management. The result will be reduced risk, improved productivity and lower costs.

Putting Risk in Context

Your operational risk landscape changes as fast as your operational reality. Frontline operations is where process safety management (PSM) happens. It’s where your people are operating the plant, doing maintenance work, introducing new hazards and potentially impacting the state of the plant. By its very nature, it’s a dynamic and inherently hazardous place to work and manage.

In order to improve risk decision making, we need to understand what is happening, why it is happening, and be able to predict reliably when it will happen. The key is data – connecting everyone with the correct data, in the right context, and using commonly understood language.

Conceptual models like James T. Reason’s Swiss Cheese and the process safety Bow-Tie methodology have been developed, in an attempt to describe the inter-related nature of operational risk. These work well in a design phase, but the industry has yet to develop operational systems that enable routine management of operational risk on a day-to-day basis for anything other than major, single-source risk scenarios. Attempts to do so fall into the trap of complexity, or result in generalized historical performance indicators - which do not help inform decisions on current or future risks. What is required is an approach that enables hazardous industry operators focus on the elements of risk that are most important.

Any simple risk management system needs to manage major accident hazards, barriers and barrier health.

- Major Accident Hazard (MAH) - The source of a threat of SERIOUS danger, eg. a fire or explosion on an oil and gas facility.

- Barrier - A means of preventing the communication or progress of a MAH.

- Barrier Health - A measure of barrier effectiveness.

A New Leading Indicator of Operational Risk

Although the effectiveness of a barrier (barrier health), is an important indicator, it does not tell the whole story. What is required is a means of measuring how failures in barriers can connect to allow a hazard to become a serious incident. These connections are hazard pathways, a major accident hazard (MAH) pathway, is a potential route a MAH could progress through a series of barriers towards becoming a serious incident.

The ability to monitor MAH pathways is the key that relates the collective performance of a company’s risk control systems to the real cumulative risk in the operation at any one point in time. This creates a common currency, allowing us to create a holistic view of operational risk irrespective of the source of these risks. This provides the insight executives are looking for by making available a new leading indicator of operational risk that reflects the operational reality of their plants. This approach answers the question of how organisations can gain visibility into the control of operational risk. Incorporating a simple elegant risk model into an operational excellence platform is key to engaging the whole organisation.

It is true that when most major incidents occur, there is a concurrent failure of several barriers. The degree of impairment, and the number of successive barriers compromised, represents a level of risk. But that risk only matters if it is set to occur at a certain time, in a certain area. That is why the approach to operational risk management must be dynamic. Key to the solution’s effectiveness is the unique visualization of data in real time, which did not exist before. This distils to effectively three different views of the data—time, space and risk.

- In space, an operator can see the facility layout with icons indicating how activities and impairments align, changing the risk levels. Highlighted areas represent high risk for current and future shifts.

- In time, traditional Gantt charts display sequenced activities, deviations and scheduling conflicts. Indicators of high or medium levels of risk are shown for current and future shifts.

- In risk, for each shift, the areas where high or medium risk is predicted are shown, along with a picture of the specific barriers impaired. Tools to “simulate fix” enable quick testing to see the impact of deciding to repair specific impairments or to defer activities.

All are examples of actionable insights, where data is presented in a way that supports decisions on activity commencement, and schedule priorities and facility operations across the business. And there’s value for all.

- Frontline operations are provided easy-to-read, data-rich status of equipment and activities, with context to make better-informed, risk-dependent decisions during the shift.

- Site management and planners looking further ahead have access to tools that show the risk implications of scheduling decisions, protracted deviations and planned activities, as well as “what-if ” scenarios.

- Asset leadership can see, for the first time, risk levels, facility productivity and plan-attainment trends. They can compare asset performance and, where necessary, dive into the data, to see what is generating the highest levels of risk.

- Executives can look across the enterprise and compare asset performance, gaining greater insight into how risk is managed across the whole organization.

A Practical Walkthrough

Work activities are planned and stored in Maintenance Management Systems (ie SAP, MAXIMO, PRIMAVERA). By employing proven integration methods, these activities are imported into the operational excellence platform. Work activities fall into several scenarios; a typical example would be “Hot Work”, which can take place at grade, at height or within a confined space. When defining the hazards associated with an activity, the platform requires analysis of risk associated with the task itself, those related to the location and those relating to any process safety deviations; all building to a cumulative risk. The key here is the risk assessment template – the onus is no longer on the work director to try and remember what hazards are likely to affect this activity. The template has already been prepared and approved and embedded in the software and the selection of location highlights hazards pre-programmed for that location. Finally, a risk assessment is performed (using a configurable risk matrix) to show the impact on the risk level. No progress is possible unless mitigation controls are applied bring the risk level to ALARP. The platform allows previous Risk Assessments/Job Safety Analysis to be reused for improved efficiency but requires a review and acceptance before it is valid for use.

Additionally the provision of Management and Risk Control Systems that have associated KPI’s to show senior managers how well the organisation is performing are available. These are used to measure system health and traditionally illustrate whether elements of the programme achieve or exceed the targeted performance. This allows resources and budget allocation to be changed to impact performance in the next quarter by helping senior leaders focus resources on the areas of the business most exposed.

Conclusion

An operational excellence platform can connect disparate systems and data to harness the potential of people, process and technology to produce actionable insights that can improve risk decision making across the organisation. This is a 21st century approach to hazard identification and risk analysis in industrial operations to reduce risk, improve productivity and lower costs.

Making risk mitigation an integral part of efficient and effective daily operations allows everyone to both visualise and manage risk and activity in virtually real time. With this empowered approach, the dynamic reality can be managed by Space, Time and Risk views to achieve excellence in Hazard Identification & Risk Analysis.