risk management lloyds register americas 16 th november 2005 risk management in the shipping...
TRANSCRIPT
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Risk Management in the Shipping Industry
Intertanko Vetting SeminarMiami, Florida
Ben PobleteHSE Manager / Senior Risk Management Specialist
Lloyd’s Register Americas
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Are Shipping Companies Managing Risks?
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Introduction / History
• The shipping industry is different from other modes of transportation due to the international nature of the industry (including the nationalities of the crew), the volume of hazardous material transported per shipment and the operation in a marine environment.
• Since the demand for ships are dictated by the international economic cycle it is apparent that a majority of the ships would be custom built, manned by crews with different nationalities, which can lead to difficulties in communications, and a management reluctance on incurring expenditures on safety.
• The international agreements or regulations have represented the lowest common denominator with regards to effective controls dealing with the health, safety and environment of the industry.
• Marine safety enforcement is performed by the state in which the vessel is registered; the flag state. The classification rules are intended to provide a proven basic design with some freedom for innovation using the principle of “equivalence”. - F.P. Lees “Loss Prevention in the Process Industries” 2nd Edition
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Current Risk Management Practice
• High levels of risk
• International regulatory framework
• National standards
• Enforcement regime
• Risk-based approach in its infancy
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Risk Assessment / Management “Mandatory”
• ISM Code – Implicit
• EU Regulations
• IMO
• Flag Requirements
• Industry Best Practice – TMSA (Tanker Management and Self Assessment) – Mandatory!
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ELEMENTS OF RISK MANAGEMENT
(a) Identification of undesired events
(b) Analysis of the mechanisms of the undesired events
(c) Consideration of the extent of any harmful events
(d) Consideration of the likelihood of the undesired events and specific consequences (probability/frequency).
(e) Judgement about the significance of the identified hazards and estimated risks.
(f) Developing and implementing decisions on the courses of action.
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ELEMENTS OF RISK MANAGEMENT
HAZARD IDENTIFICATIONHAZARD IDENTIFICATION
(a) Identification of undesired events
(b) Analysis of the mechanisms of the undesired events
(c) Consideration of the extent of any harmful events
(d) Consideration of the likelihood of the undesired events and specific consequences (probability/frequency).
(e) Judgement about the significance of the identified hazards and estimated risks.
(f) Developing and implementing decisions on the courses of action.
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ELEMENTS OF RISK MANAGEMENT
RISK ESTIMATIONRISK ESTIMATION
(a) Identification of undesired events
(b) Analysis of the mechanisms of the undesired events
(c) Consideration of the extent of any harmful events
(d) Consideration of the likelihood of the undesired events and specific consequences (probability/frequency).
(e) Judgement about the significance of the identified hazards and estimated risks.
(f) Developing and implementing decisions on the courses of action.
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ELEMENTS OF RISK MANAGEMENT
RISK (HAZARD) ANALYSISRISK (HAZARD) ANALYSIS
(a) Identification of undesired events
(b) Analysis of the mechanisms of the undesired events
(c) Consideration of the extent of any harmful events
(d) Consideration of the likelihood of the undesired events and specific consequences (probability/frequency).
(e) Judgement about the significance of the identified hazards and estimated risks.
(f) Developing and implementing decisions on the courses of action.
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ELEMENTS OF RISK MANAGEMENT
RISK ASSESSMENTRISK ASSESSMENT
(a) Identification of undesired events
(b) Analysis of the mechanisms of the undesired events
(c) Consideration of the extent of any harmful events
(d) Consideration of the likelihood of the undesired events and specific consequences (probability/frequency).
(e) Judgement about the significance of the identified hazards and estimated risks.
(f) Developing and implementing decisions on the courses of action.
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ELEMENTS OF RISK MANAGEMENT
RISK EVALUATIONRISK EVALUATION
(a) Identification of undesired events
(b) Analysis of the mechanisms of the undesired events
(c) Consideration of the extent of any harmful events
(d) Consideration of the likelihood of the undesired events and specific consequences (probability/frequency).
(e) Judgement about the significance of the identified hazards and estimated risks.
(f) Developing and implementing decisions on the courses of action.
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ELEMENTS OF RISK MANAGEMENT
RISK MANAGEMENTRISK MANAGEMENT
(a) Identification of undesired events
(b) Analysis of the mechanisms of the undesired events
(c) Consideration of the extent of any harmful events
(d) Consideration of the likelihood of the undesired events and specific consequences (probability/frequency).
(e) Judgement about the significance of the identified hazards and estimated risks.
(f) Developing and implementing decisions on the courses of action.
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Identify Assess Define means to reduce risk Establish priorities Allocate resources Communicate Monitor
ELEMENTS OF RISK MANAGEMENT
RISK MANAGEMENT
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Declaration of Goals and Objectives?
Authorities Domain Engineering Domain
Hazard Identification?
Hazard Assessment?
Hazard Evaluation?
Formulation of Acceptance Criteria?
Hazard Treatment –
Prescriptive Requirements?
Approval
Monitoring
Hazard Treatment –
Prescriptive Solution
CONVENTIONAL HAZARD MANAGEMENT PROCESSCONVENTIONAL HAZARD MANAGEMENT PROCESS
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Authorities Domain Engineering Domain
Hazard Identification?
Declaration of Goals and Objectives?
Hazard Assessment?
Risk Evaluation?Formulation of Acceptance Criteria (Life
Safety & Third Party)
Risk Treatment – Performance Based Options
Approval
Monitoring
Risk Treatment – Performance Based Solution
PERFORMANCE BASED HAZARD MANAGEMENT PROCESSPERFORMANCE BASED HAZARD MANAGEMENT PROCESS
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Reasons for development of Risk Assessment option
• Industry trends to Risk-based design
• Industry trends to Risk-based management of integrity in service
• Enables approval of novel arrangements
• Effort focused proportionately on critical areas
• Better “fit” with requirements of Safety Case / Formal Safety Assessment
• Perceived Industry preference
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Model-based
Data-basedKnowledge
based
Compliancebased
Decision based on increasing
amount of information
Decision includes projections and what-ifs
Incr
easi
ng
com
ple
xit
y
LEVELS OF RISK MANAGEMENT PROGRAMSLEVELS OF RISK MANAGEMENT PROGRAMS
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How Are Shipping Managing Risks?
• Re-active not Pro-active(After an inspection/audit or incident)
• Often not structured(based on experience of officers and crew)
• Specific assessments carried out independently not considering impacts on other areas of the Company
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How Successful are We in Managing Risk Effectively ?
• Still thinking about it!
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Definition of Risk Management (BS4778)
“…the process whereby decisions are made to accept a known or assessed risk and/or the implementation of actions to reduce the consequences or probability of occurrence”
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Principles of Risk Management
• What are the risks in shipboard operations?
• How often are you at risk?
• What are the consequences of an accident?
• What can you do about it?
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Business Management and Risk Management
• Business management is about maximising the chance of success
• Risk management is about minimizing the chance of failure
• Effective risk management requires structured risk assessment as an input
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Risk Management Model
Management of riskin shipboard operations
ControlProcedure, Equipment
Review
Reactive monitoring
Trends
Investigation &corrective action
Riskassessment
Trends
Inspection &corrective action
Active monitoring
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Risk Assessment in Simple Terms
• What are the criteria?
• What can go wrong?
• How likely is it to go wrong?
• What happens if it does go wrong?
• Does it matter?
• What do we do if it does go wrong?
Prevent it happening
Reduce its frequency
Mitigate its consequences
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Purpose of Risk Assessment
To ensure that a careful examination of shipboard operations is carried out to determine:
• what can cause an undesirable event
• whether existing controls are adequate
• if risk levels are tolerable
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Objective of Risk Assessment
Where risk levels are unacceptable, to identify and implement appropriate controls to reduce risk levels to as low as reasonably practicable.
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Expected Outputs of a Risk Assessment
• Minimisation of risk to people and the environment
• Improvement in operational performance
• Assist in establishing a responsible image within the marketplace
Risk Assessment should be managed as a key business activity (KPI)
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What Affects Operational Performance
Accidents
Near misses
Unsafe ships
Lack of a safety culture
Lack of shipboard teamwork
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Where to Spend the Money
• Effective risk management requires effective risk assessment
• Minimising risk improves operational performance
• Budgets are limited so need to know where to spend money to improve safety
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Hazards Identified using Different Approaches
0
100
%
Actual Total Hazards ID from Prescriptive
ID from Structured Risk ID from Unstructured Risk
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Risk Assessment Process
• Inventory of shipboard operations
• Identify hazards
• Identify existing controls
• Determine risk
• Decide if risk is tolerable
• Implement controls
• Review
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Stage 1 - Inventory of Shipboard Operations
Deck
Engine
Hotel
Cargo
Operation type
Vessel integrity
Routines
Mooring
Navigation
Operation group
Men on deck in heavy weather
Watchmen doing rounds in darkness
Lowering/launching of lifeboat/MOB boat
Entering cold weather
Operation
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Which Operations do You Assess First?
• Operations with the potential for loss which could most harm your business
• Operations where most accidents occur
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What Causes Accidents?
ROOTCAUSE LACK OF CONTROLS
CONSEQUENCES
Falling, slipping, fire, explosion, oil spill,collision, grounding, systems failure etc.
ACCIDENT
DIRECTCAUSES
Unsafe Acts
Unsafe Conditions
INDIRECTCAUSES
Job Factors
Personal Factors
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• To make operations safe, CONTROLS have to be in place
• Controls are put in place to minimise or negate against the effects of HAZARDS
• Therefore the first step in creating a safe working environment is HAZARDS identification
ROOTCAUSE LACK OF CONTROLS
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Reporting and Investigating Minor Incidents
1
10
30
600
1
3
50
40080
BIRD (1969) TYE / PEARSON (1974)
SERIOUS ORDISABLING
FATAL OR SERIOUS
MINOR INJURIES MINOR
PROPERTYDAMAGE
INCIDENTS(NO INJURY
OR DAMAGE)
FIRST AID CASES
PROPERTYDAMAGE
INCIDENTS
UNKNOWN NUMBER OF HAZARDS
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CATASTROPHIC EVENT
e.g.a gas leak
CAUSES CONSEQUENCES
DEDUCTIVE
REASONING
INDUCTIVE
REASONING
Jet Fire
Pool Fire
GasExplosion
Gascloud
FAULT TREE EVENT TREE
Fireball
Pump failure
Equipment failure
Operator error
Process failure
Environmentalextremeconditions
Control valvefailureInstrument air failure
Understanding Root Cause
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How do you make risk management effective?
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Link Risk Management to Performance (KPI’s)
• To time (man-days) lost due to accidents
• To days off-hire/breakdowns
• To non budgeted maintenance costs (mean time to repair)
• To PSC (Port State Control) results
• To financial results
• To insurance claims
• To crews! Retention / Satisfaction
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New ILO Regulations
What are the Risks? Good test maybe?
• Financial Costs to the Company
• Country of Ownership
• Flag
• Crew Nationality
• Crew Contracts
• New Requirements
• Ship Requirements
OverviewOf Company
PossibleScenarios
Known Changes“What If” Changes
Procedures
Shipboard Activities
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Summary
• Proactive
• Take an Overall / Global View (across project / operations groups and including life-cycle)
• Training / Guidance
• Commitment
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What do you think?