Title slide PIPELINE QRA SEMINAR

PIPELINE RISK ASSESSMENT INTRODUCTION TO GENERAL RISK MANAGEMENT 2

Definition (ISO 3100:2009) “effect of uncertainty on objectives” where “effect is a deviation from the expected” “objectives can have different aspects (such as financial, health and safety and environmental) and can apply at different levels (such as strategic, organization-wide and project)” WHAT IS RISK? Content slide 3

Addition to definition (ISO 3100:2009) “risk is often characterized by reference to potential events and consequences, or a combination of these” and “risk is often expressed in terms of a combination of the consequences of an event (including changes in circumstances) and the associated likelihood of occurrence” WHAT IS RISK? Content slide 4

Definition (Wikipedia) “the potential of losing something of value, weighed against the potential to gain something of value” and Definition (Oxford Dictionary) “expose (someone or something valued) to danger, harm, or loss” 5 WHAT IS RISK? Content slide

Definition (popular) “opposite of chance” Definition (popular) “the possibility that something unpleasant or unwelcome will happen” WHAT IS RISK? 6

What is a risk in the everyday life? WHAT IS RISK? Content slide, two columns with image 7

WHAT IS RISK? Content slide, two columns with image What is actually a risk in the everyday life? 8

Definition (Wikipedia) “the subjective judgment that people make about the characteristics and severity of a risk” 19 per deaths from driving < 0.5 per deaths from flying 268 per deaths from cardiovascular diseases WHAT IS RISK PERCEPTION? 9

Harrisburg nuclear power accident (Three Mile Island, USA) in 1979 Swedish voting on nuclear power in 1981 The answer – no (phase out the nuclear power) Chernobyl nuclear power accident (Chernobyl, Ukraine) in 1986 Today – yes (build new nuclear power) RISK PERCEPTION 10

Definition (ISO 3100:2009) “systematic application of management policies, procedures and practices to the activities of communicating, consulting, establishing the context, and identifying, analysing, evaluating, treating, monitoring and reviewing risk” INTRODUCTION TO GENERAL RISK MANAGEMENT 11

Definition (Wikipedia) “risk management is an umbrella for the activities of systematic identifying, analysing and preventing different kind of risks” Definition (Oxford Dictionary) “the forecasting and evaluation of risks together with the identification of procedures to avoid or minimize their impact” INTRODUCTION TO GENERAL RISK MANAGEMENT 12

“by establishing the context, the organization articulates its objectives, defines the external and internal parameters to be taken into account when managing risk, and sets the scope and risk criteria for the remaining process” INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 13

Define the scope of work (i.e. purpose) Define the system (e.g. single pipeline, company or pipeline network) Collect data (i.e. detailed information) Divide responsibilities (e.g. stakeholders, organization and involvement) Establish risk acceptance criteria (i.e. what is tolerable) Identify the requirements (i.e. laws and standards) INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 14

“risk assessment is the overall process of risk identification, risk analysis and risk evaluation” INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 15

“identify sources of risk, areas of impacts, events (including changes in circumstances) and their causes and their potential consequences” INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 16

Qualitative exercise Starting-point of the risk assessment Thorough (i.e. what is missed is being left out) Risk of doing something – risk of not doing something Operational risk (frequent) – emergency risk (rare) Method depending on the situation (e.g. complexity, stage of project and time) Separate presentation on risk identification INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 17

“consideration of the causes and sources of risk, their positive and negative consequences, and the likelihood that those consequences can occur” INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 18

One step further – more thorough analyse of the risks that has been identified Understanding causes and consequences Analysing causes and consequences -Likelihood of the causes/consequences -Severity of the consequences INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 19

“comparing the level of risk found during the analysis process with risk criteria established” INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 20

End-point of the risk assessment To be able to say whether the risk is acceptable or not Risk acceptance criterion established by companies (internal), organizations (external) and/or authorities (external) Base for decision-making Separate presentation on risk acceptance criterion INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 21

Focus of the presentations and activities this week Qualitative versus quantitative risk assessment What is a QRA? Separate presentation on qualitative and quantitative risk assessment INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 22

23 QUESTIONS?

“selecting one or more options for modifying risks, and implementing those options” INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 24

Depending on the outcome of the risk evaluation Decision-making (i.e. to take mitigating actions or not - decision could also be to not proceed - showstopper) Mitigating actions (risk reducing measures) influencing the frequency or consequence of the risk Given the implementation of risk reducing measure – is the residual risk tolerable? Separate presentation on risk reducing measures INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 25

Throughout the risk management process communication and consultation with internal and external stakeholders are needed Stakeholder is someone with an interest or concern in the organization (e.g. authority for legal compliance, employee or board of the company) Understanding of the process and accountability for carrying out implementations or spreading the information from the risk management process Chain not stronger than the weakest link - common goal! 26 INTRODUCTION TO GENERAL RISK MANAGEMENT

Risk management should be a continuous process! Organizational learning (incident – accident) Identification of changes (e.g. introduction of new risks from operation and technical details or changes to context and/or legal requirements) 27 INTRODUCTION TO GENERAL RISK MANAGEMENT

Overall principles of risk management - Part of the organizational processes - Part of the decision making - Structured and systematic - Based on the best available information (e.g. statistics, experience and forecasts) - Transparent and inclusive (i.e. communication and consultation) - Dynamic and responsive to change (i.e. monitoring and review) - Facilitates continual improvement of the organization 28 INTRODUCTION TO GENERAL RISK MANAGEMENT

Why do we do risk management? - Establish a reliable base for decision making and planning - Effectively allocate resources for risk reducing measures - Improve loss prevention - Improve organizational learning (incident – accident) - Enhance health and safety performance - Encourage proactive management of risks - Introduce awareness of risk in the organization - Comply with relevant requirements (best practice and legal) 29 INTRODUCTION TO GENERAL RISK MANAGEMENT

Now that we understand what is included in the risk management process - where could the risk management process be applicable? -Projects -Investments -Design -Companies (enterprises) -Companies (production – supply chain) -Authorities (natural hazards and emergency response) INTRODUCTION TO GENERAL RISK MANAGEMENT Content slide 30

Paper-exercise (i.e. to achieve a standard) versus actually benefits (i.e. improvements) Similarities to overall safety culture (e.g. lack of safety culture and/or understanding of this) Not just one time - never-ending process INTRODUCTION TO GENERAL RISK MANAGEMENT 31

Paper-exercise (i.e. to achieve a standard) versus actually benefits (i.e. improvements) Similarities to overall safety culture (e.g. lack of safety culture and/or understanding of this) Not just one time - never-ending process INTRODUCTION TO GENERAL RISK MANAGEMENT 32

QUESTIONS? End slide 33