Impact of Risks

Risk assessment refers to the overall activities for identifying, managing or controlling the risk factors associated with an event. The process is associated with the identification of all the different types of risk factors associated with the concerned event, which is the finding, listing, and characterizing the risk factors. After that, there are other three steps such as analysis of the risk factors, evaluation of those factors and control of the risks. In this report, the risks assessment has been done based on a case study of a disaster. The concerned disaster affected the Northern city of Tianjin in China where 17 people died and hundreds of people were left injured. The main reason behind the disaster was an explosion in a warehouse “Ruihai Logistics”. The warehouse was used to for storing dangerous chemical goods. In this report, the different types of the risks factors associated with the incident, there impact over the whole situation have been analysed. In order to identifying the risk controlling process have been discussed and analysed by comparing the case study with relevant literature sources.

The risks that are associated with the safety management system generally consists of hazard identification and risk assessment. There are number of steps that are to be followed to reduce the risks that are not accepted. The sequential steps that can be followed are hazard identification, frequency assessment, hazard consequences, risk estimation that mainly controls as well as recommends to reduce risks (Titman, Keown & Martin, 2017). The Ruihai Logistics that dealt with hazardous chemicals should have introduced safety management system in the company in order to have mitigated such big explosion.

There are many objective that hazard identification and risk assessment management can provide. There can be systematic way of carrying out potential hazards and critical appraisal that involves personnel, services, operation methods, and plants. The hazard identification is also capable to identifying the safeguards that are available so that they can control the hazard related risks. Hazard identification also suggests control measures so that they can reduce the level of risk within the company (Rahman et al., 2016). A risk register is also prepared by the management group of hazard identification so that the risks can be monitored, any changes can be detected and the control measures that are taken should be effective. If Ruihai Logistics have maintained all such hazardous identification management and risk assessment management, then this big explosion would have not taken place.

Safety Management System

There are many areas that Hazard Identification and Risk Assessment can focus into. First of all the plant operations should be identified. The area that is prone to risk should be identified. There must be identification of all the individual tasks that are involved in carrying out the planting operation. There must also be a scope that identifies a potential health as well as safety hazard that are occurred with risk matrix (Imperiale et al., 2017). There should also analyzing of control measures that are available for the risk control. The scope of hazard identification also should recommends additional risks measure of controlling so that the risk can be mitigated to an acceptable level. There should also be a risk register for compilation.

While maintaining the safety management system, there should be scope of safety audit. The Ruihai Logistics should have maintained the scope of comprehensive safety audit within the company. The company should have carried out some systematic as well as critical appraisal for the potential hazards that involves services personnel, services, operation methods, and plants. The company should also have ensured occupational safety as well as health system that would satisfy legal requirements and policies, progress, and objectives that are involved in the company.  

The methodologies that are adopted to carry out Safety Audit are listed as follows:

• Pre-Audit data request
• Opens meeting for explaining objective, methodology, and scope of the study
• Sketch Walkthrough
• Site study
• Discussions
• Plant personnel
• Studying of records
• Salient Findings
• Submission of the final report.

The risk management is considered as a process that decides management of risks. Risk management involves how the risks are managed and whether the risk can be managed or not. There should be consideration of economic, behavioral factors, legal factors, as well as human health, welfare effects, as well as ecological effects of risk management. There may be involvement of regulatory as well as non-regulatory responses in the company. Risk assessment is a process that evaluates the protection of public health (Kit et al., 2014). There are many examples of risk management that includes how to handle hazardous chemicals, how to store them, or how to transport them. The risk management also involves standards for maintaining the air quality and lessen the contamination of drinking water. The company of Ruihai Logistics should have implemented the risk management to provide the information regarding potential or the ecological risks that rea involved in storing the dangerous chemicals.

The risk management is an action that is taken on consideration based as well as other information as well. The risk management involves scientific factors that provide the risk assessment such as information taken from toxicology, epidemiology, statistics, ecology, and chemistry. There should also be economic factors that informs the manager on risks cost and the benefits for reducing them (Fernandez & Garcia, 2016). The cost involved in risk mitigation or on remediation and distributional effects are also calculated in risk management. There are factors of law as well as legal decisions that are defined in risk assessment, management decisions, and the level of schedule or methods of risk reduction. Social factors includes income level, ethnic background, use of lands, community values, life styles, as well as psychological conditions for affected populations that may affect the susceptibility of individual or some defined risks group.

Environmental Management System

There are also technological factors that are involved in feasibility, range of risk, and impacts that are related with the management. There are political factors involved that are based on interactions in between all the branches of Federal Government, with some other Federal, local as well as state government. There may be public values included in risk assessment regarding the attitudes of the society related to environmental risks and the risk management.

The environmental risks that is to be considered by Ruihai Logistics are involved in every procedures that are involved in the company. The environmental risk involves discovery of management of all the hazardous waste involved with the factory, disruption of production, as well as affect the performance of overall business (Thomaidi, Matsoukas & Stasinakis, 2017). Ruihai Logistics should have implemented different types of strategies to manage the environmental risks that have occurred in Tianjin China explosion of 13 August 2015. The environmental risks that Ruihai Logistics needed to address was operational risks and the strategic levers. There are mainly four steps for managing the environmental risks related to its products.

There are different types of environmental risks that a company many deal with. Environmental risks related to health as well as safety including the personal protective of the equipment, chemical management, fire safety, waste water management and many more (Gollenia, 2016). Environment also involves compliance that includes hazardous waste, air emissions, wastewater effluent and nuisance. Environment risks also involves sustainability that involves events of extreme weather, land use, bio diversity, and watershed management. With the definition of environment, the environmental risks would have been mitigated in Ruihai Logistics.

 To know the environmental risk of a company, the company should be aware of the types of chemicals and products that are used by them. The environmental risk assessment of Ruihai Logistics could have been identified by prioritizing the suppliers who were engaged with the company and up to how much extent. If there is high probability of risks, then the company should have taken immediate steps to mitigate those risks.

From the definition of risk management tool, it can be defined that the tools of risk management supports implementation as well as execution of the program risk management in engineering program systems. There are many risk management tools and risk identification tools that Ruihai Logistics could have used to mitigate the explosion in Tianjin China.

Risk analysis and risk management tools are used for several different purposes and can come in many different shapes as well as sizes. The risk analysis and the tools that are used for management includes the following:

• Strategic and capability of risk analysis: The main focus is on identifying, analyzing, as well as prioritizing the risks so that they may achieve goals, capabilities, and objectives related with the company. If Ruihai Logistics would have followed the strategic as well as have analyzed the risk, such explosion would have not taken place.
• Threat Analysis: The focus should be mainly on identifying the threats, analyzing the threats as well as prioritizing the threats that are involved with the company so that the impact of national security is minimized.
• Investment analysis and portfolio risk analysis: The focus should be increasing the investments of the company and the alternatives that are related to the risk assessment.
• Program of Risk Management: The risks that are involved in the company should be identified, prioritized, managed, and analyzed so that the impact on the program’s objective and the probability of the success rate is minimized or eliminated.
• Cost risk Analysis: The main focus is on quantifying the economic as well as technological risks that can affect the cost of the system. The probability of applies method to model, manage, and measure the risk is cost of engineering in advanced systems.

Step 1- Defining what the company means by speaking about environment within the company.

All the risk analysis and the management area involves developed tools for supporting the objectives of the company with different maturity levels (Taylan et al., 2014). The tools that are involved in supporting the execution and implementation of the management of program risk are discussed below.

There are many tools that provides risk analysis and risk management. Selecting the right tool for the right risk analysis within the company is the main thing. The tool must be selected as per risk analysis and the process of management accordingly. All the processes that are involved within the system must be supported by the tools that is selected for risk assessment. The criteria that are to be kept in mind for selecting a risk assessment tool are:

• Aligned to objective of risk analysis: Before finalizing a tool, it should be noted weather the tools supports the objectives that the company wants to achieve. In the case of Ruihai Logistics with the Tianjin China Explosion should have firstly studied about a tool that could be capable of mitigating the risks that was faced by the company (McNeil, Frey & Embrechts, 2015). While selecting tool, it is also to be kept in mind that the tool will be used to mitigate the ongoing process of risk assessment or conduct risk analysis only one time.
• Supports decision making: It must be also kept in mind that weather the tool is capable to providing necessary information for supporting the decision making of the company.
• Accessibility: The tools that is selected by the company should be accessible to all the users and all the stakeholders of the company. The tool should have the facility so that all the employees can use it from different locations.
• Availability of data: The data that is to be involved in the company should be analyzed by the tools that is used.
• Level of detail: The tool that is to be selected should support the decision making of the system.
• Integration with other program management or with system engineering processes: The tool should be capable of supporting integration with other management or some other system of engineering processes.

Program Risk Management Tool: The tool that is to be selected for maintaining the risk management is to be selected very carefully. There are many tools that are used as a tool for mitigating the risk in a company. There are many program risk implementation available in many different tools that are available. Many tools helps to support management of enterprise, projects, and risks involved in the system.

The tool that could be used by Ruihai Logistics to maintain the risk assessment is the tool invented by MITRE Corporation. The tool is known as a RiskNAV tool that is registered by the MITRE Corporation (Burtonshaw-Gunn, 2017). This tool facilitate the risk process and also helps the program manager to handle their space of risk. RiskNav tool is used to collect, prioritize, visualize, and monitor the information risk that comes to the company in a collective way. To save China from this explosion, Ruihai Logistics could have introduced this tool of risk assessment to provide three dimension of information that includes risk priority, mitigation as well as management status, and probability.

The tool for analyzing risk is produced by the government of U.S., which is designed to analyze, capture as well as display the risks involved in a project or at an enterprise level. The tool of RiskNav is deployed over different as well as MITRE sponsors. The technology of RiskNav is mainly used by commercial companies to mitigate their risk in the companies (Utvik & Jahre-Nilsen, 2016). The licenses that is included in RiskNav is the KEYW Corporation and the NMR Consulting. The technology of transfer office will mainly support tool for the contractors as well as acquisition of other government. This technology will help to ensure the proper licensing forms to obtain and get signed by new users. For using this risk assessment tool, there is no cost of government usage. This is a formal procedure of the MITRE Corporation that is used for hosting the effort of risk management.

The tool of RiskNav presents the company with risk space in graphical as well as tabular form. The tabular form mainly presents the main information for all the risk that are associated with the company and then allows the risk space so that they ca be filtered and is sorted to focus the risks that are most important in the company. The information that are present in tables and figures is very artificial and are only used for illustrative purposes. The tables presented by RiskNav tool does not present real programs, or programs from present or past.

Usefulness- Risk Assessment is considered to be the most important part for securing the work environment of the company and to maintain a healthy environment within the company. The risk assessment is to be conducted even before the employees completes their work on the current process, or some unknown process or the materials involved with the company (Pritchard & PMP, 2014). The materials that can cause harm to the people and the environment are to be considered and the steps that are used to prevent the people and the environment are also to be considered. In Ruihai Logistics, the company should have introduced all such usefulness of risk assessment while storing such hazardous materials in the company. This would have mitigated the explosion in China. All the hazards and the control measures are to be considered while using the risk assessment factors.

Applicability- There should not be system failure or security breaches or some infrastructure problems that results in direct structural code and the application of the architecture. Structural analysis is mostly used for automated processes so that they can determine the complexity, reliability, potential system weakness, performance as well as assessments based on standard system code and system architecture (Brindley, 2017). The structural analysis also allows the organizations for monitoring the development efforts against the benchmarking measurements all the time the development team creates for new enhancement or new functionality. The automated analysis automatically decreases the time to complete the process of analysis to increase the accuracy of the supplied results.

Limitations of risk assessment- Risk is combined of both loss as well as harm including the realization. To make the risk assessment meaningful as well as valuable, there should be available knowledge of information and experience so that they can identify the potential hazards or threats involved within the company. There must be complex analysis and scenario modelling for achieving the estimate events that are best informed.

Risk perception involves subjective judgments of people regarding the negative occurrence that includes injury, disease, death, as well as illness (Burtonshaw-Gunn, 20117). The risk perception is very much important related to health and risk communication. This is because it determines the hazards that are faced by the people care about and how the hazards are dealt by them. Risk perception mainly has two dimensions that includes the cognitive dimension that relates about the understanding of people about the risks and the second is the emotional dimension that relates how the people feel about the hazards that are involved.

There are several theoretical models that can be developed about how to explain the risk perceive and the process of risk information is carried out (Kendrick, 2015). Theoretical model also states about how the decisions are made, the psychometric paradigm, the risk perception model, and mental noise model. There are laypeople that can be found to evaluate the risks according to the subjective perception, inferences, and the intuitive judgments of media coverage and the limited information that is available. Experts mainly tries to base their risks perceptions on research findings and the statistical evidence.

Risk communication is mainly a process to inform the people about the potential hazards to their person, community, and property. Scholars mainly defines the communication of risk as an approach of science based for communicating the situation of high stress, or high concern of controversy.

From the perspective of risk manager, the main reason for risk communication is helping the residents of the affected communities to understand all the processes of risk assessment as well as risk management so that valid perceptions are formed scientifically regarding the hazard as well as to participate the decision making related to managing of risk (Mangra, Cotoc & Dumitru, 2014). The tools for risk communication are verbal, written or can be of visual statements containing the information of risks.

Conclusion

This report shed lights on the risk assessment management of Tianjin China Explosion that was held in August 13, 2015. The explosion included the warehouse known as Ruihai Logistics that stores chemicals and dangerous materials. This report details the risk assessment of the case. This report consists of main issues that impact the risks associated with the explosion. This report also includes safety and the environmental; management systems related to the case. There is also risk management tools that are used to develop the strategies of risk management. The usefulness, applicability, and the limitations related to the risk assessment are also discussed clearly in this report. There is risk perception and the risk communication that are to be involved in risk communication plan and the skills.

Amores-Salvadó, J., Martin-de Castro, G., & Navas-López, J. E. (2015). The importance of the complementarity between environmental management systems and environmental innovation capabilities: A firm level approach to environmental and business performance benefits. Technological forecasting and social change, 96, 288-297.

Brindley, C. (Ed.). (2017). Supply chain risk. Taylor & Francis.

Burtonshaw-Gunn, S. A. (2017). Risk and financial management in construction. Routledge.

Burtonshaw-Gunn, S. A. (2017). Risk and financial management in construction. Routledge.

Chemweno, P., Pintelon, L., Van Horenbeek, A., & Muchiri, P. (2015). Development of a risk assessment selection methodology for asset maintenance decision making: An analytic network process (ANP) approach. International Journal of Production Economics, 170, 663-676.

Fernandez, A., & Garcia, D. F. (2016, August). Complex vs. simple asset modeling approaches for information security risk assessment: Evaluation with MAGERIT methodology. In Innovative Computing Technology (INTECH), 2016 Sixth International Conference on (pp. 542-549). IEEE.

Goldenberg, L., Pourmalek, F., Ho, K., Skeldon, S., & Patrick, D. M. (2017). Development and Case-Control Validation of the Canadian Men’s Health Foundation’s Self Risk Assessment Tool. Journal of Mens Health, 13(1), e9-e18.

Gollenia, L. A. (2016). Business transformation management methodology. Routledge.

Hillson, D., & Murray-Webster, R. (2017). Understanding and managing risk attitude. Routledge.

Hoffer, E., Shaw, G. B., Senge, P. M., & Drucker, P. F. (2015). CREATING A NEW SYSTEM MODEL OF MANAGING CHANGE BASED ON QUALITY MANAGEMENT PRINCIPLES AND RISK MANAGEMENT PRINCIPLES 2. Journal of Central Banking Theory and Practice, 4(3), 94.

Hopkin, P. (2017). Fundamentals of risk management: understanding, evaluating and implementing effective risk management. Kogan Page Publishers

Imperiale, T. F., Yu, M., Monahan, P. O., Stump, T. E., Tabbey, R., Glowinski, E., & Ransohoff, D. F. (2017). Risk of Advanced Neoplasia Using the National Cancer Institute’s Colorectal Cancer Risk Assessment Tool. JNCI: Journal of the National Cancer Institute, 109(1).

Kendrick, T. (2015). Identifying and managing project risk: essential tools for failure-proofing your project. AMACOM Div American Mgmt Assn.

Kit, R. I. S., Allen, K., Mazzotti, F. J., & Briggs-Gonzalez, V. (2014). Risk Assessment Methodology.

Mangra, M. G., Cotoc, E., & Dumitru, A. (2014). Sustainable Economic Development Through Environmental Management Systems Implementation.

McNeil, A. J., Frey, R., & Embrechts, P. (2015). Quantitative risk management: Concepts, techniques and tools. Princeton university press.

Pritchard, C. L., & PMP, P. R. (2014). Risk management: concepts and guidance. CRC Press.

Rahman, A., Hasan, R. M., Agarwala, R., Martin, C., Day, A. G., & Heyland, D. K. (2016). Identifying critically-ill patients who will benefit most from nutritional therapy: further validation of the “modified NUTRIC” nutritional risk assessment tool. Clinical nutrition, 35(1), 158-162.

Taylan, O., Bafail, A. O., Abdulaal, R. M., & Kabli, M. R. (2014). Construction projects selection and risk assessment by fuzzy AHP and fuzzy TOPSIS methodologies. Applied Soft Computing, 17, 105-116.

Thomaidi, V. S., Matsoukas, C., & Stasinakis, A. S. (2017). Risk assessment of triclosan released from sewage treatment plants in European rivers using a combination of risk quotient methodology and Monte Carlo simulation. Science of The Total Environment, 603, 487-494.

Titman, S., Keown, A. J., & Martin, J. D. (2017). Financial management: Principles and applications. Pearson.

Utvik, T. I. R., & Jahre-Nilsen, C. (2016, April). The Importance of Early Identification of Safety and Sustainability Related Risks in Arctic Oil and Gas Operations. In SPE International Conference and Exhibition on Health, Safety, Security, Environment, and Social Responsibility. Society of Petroleum Engineers.