Copyright © 2010 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. Managing Operational Risk to Ensure Business Continuity DuPont Sustainable Solutions July, 2011

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 2 Objective To provide an understanding of the DuPont Process Safety Management System and why the system works for successful companies

3 Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. Defining Risk Risk is the potential for loss, calculated by combining possible or foreseeable consequences with realistic probability (or frequency) of occurrence. Operational risk is a portion of a business’s total risk profile, specifically the operations or process related aspects—potential losses resulting directly from the business’s operations.

4 Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. Unsafe Acts and Conditions First Aid Incidents Major Incident Fatality Quasi incidente Catastrofe Incidente con grosse perdite Incidente con perdite minori Unsafe Acts and Conditions First Aid Incidents Major Incident Fatality Near Miss Catastrophic Incident Major Technical Incident Minor Loss Incident Behavioural Incident Pyramid Technical Incident Pyramid Operational Risks

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates Management Leadership & Commitment How DuPont Manages Safety and Risk - Step 1 Establish Policy Commit Resources Provide for and Encourage Employee Involvement Establish Clear Accountability Verify Compliance Participate Personally Management Leadership and Commitment - Responsibilities

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates Management Leadership & Commitment 2. Build a Safety Culture How DuPont Manages Safety and Risk - Step 2

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates Management Leadership & Commitment 2. Build a Safety Culture How DuPont Manages Safety and Risk - Step 3 3. Implement PSM Program

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates Management Leadership & Commitment 2. Build a Safety Culture 4. Operational Discipline How DuPont Manages Safety and Risk - Step 4 3. Implement PSM Program Leadership by Example Functioning Capability/Sufficient Resources Employee Involvement Active Lines of Communication Strong Teamwork Common Shared Values Up to date Documentation Practice Consistent with Procedures Absence of Shortcuts Excellent Housekeeping Pride in the Organization Operational Discipline Characteristics

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 9 Typical Operational Risks Employee / Public Health and Safety Environmental Damage Physical Assets Business Interruption Regulatory Compliance Reputation, Public Support and Right to Operate Employee Retention / Morale Product Liability Business Value / Market Capitalization Community Economic Impact

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 10 Top Operational Risk Factors Inadequate identification / evaluation of operational risks Integrity of facilities Competing priorities, i.e., production, quality, costs Insufficient resources, both quantity and capabilities Poor training of employees and contractors Inadequate management of change Weak compliance-to-procedures culture Failure to manage process safety risks differently from workplace safety Weak audit function Ineffective leadership

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 11 What Is Operational Risk Management? An integrated management system that identifies, evaluates, and controls a manufacturing process’ operational risks in a way that catastrophic incidents are prevented that could impact: People – the public, employees and contractors The Environment – local community / work sites Business – lost assets, business opportunities, loss of customers, loss of shareholders

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 12 DuPont Process Safety Management Model

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 13 Why the model works for Successful Companies  Management Leadership and Commitment is in the center of the wheel “Safety is a line management responsibility. If we can’t do it safely - we won’t do it at all” E.I. DuPont (circa 1817) “Management must demonstrate their commitment by articulating a clear message on the importance of process safety and matching that message both with the policies they adopt and the actions they take.” Baker Panel Report (January 2007)

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 14 Leadership Responsibilities Leaders must have a clear vision of the ultimate goal of the company’s process safety management efforts Leaders must set the goals and strategic objectives Leaders must insure sufficient, quality resources are dedicated to PSM system requirements Leaders must hold their line organization accountable for PSM implementation and results. Leaders must recognize and reward PSM accomplishments Leaders must drive continuous improvement through the use of metrics and audits Leaders must lead…felt leadership

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 15 Leadership Accountability Leaders must have a clear vision of the ultimate goal of the company’s operational risk management efforts Leaders must set the goals and strategic objectives Leaders delegate specific responsibilities and tasks to individuals in the organization Leaders must hold their line organization accountable for implementation and results Leaders must recognize and reward accomplishments

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 16 Why the model works for Successful Companies  Operational Discipline encircles all the technical elements  Everyone doing the job right…every time  A strong culture of following procedures

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 17 Operational Discipline Characteristics OPERATIONALEXCELLENCE Leadership by Example ExcellentHousekeeping EmployeeInvolvement PSRMResources OrganizationalPride NoShortcuts ActiveCommunications Practices=Procedures Up-To-DateDocumentation StrongTeamwork SharedValues

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 18 Performance is a function of the Management Systems and the Level of Execution = Management Standards Operational Discipline Operational Effectiveness x State of Implementation State of Operational Effectiveness State of Safety Standards 60% 30% 18%

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 19 Why the model works for Successful Companies  A single governance process  Common corporate metrics  Common risk classification protocol  Common audit protocol  Common incident investigation / classification approach  Continuously upgraded via global networks  A common goal of Operational Incidents

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 20 PSM Metrics PRINCIPLE What you don’t measure, will not improve. What you don’t audit, will not be sustained ●Metrics need to developed at all levels  Strategic / Corporate  Leadership / Site  By Element ●Metrics should be tracked/reviewed at least monthly ●Leaders must establish what is acceptable performance and how it will respond when it is or is not acceptable ●Metrics drive Continuous Improvement

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 21 DuPont Metrics Approach All operating units report Quarterly to Corporate 10 PSM Metrics 1.# of Process Safety Incidents, including severity 2.# of open and overdue Incident Recommendations 3.# of scheduled, open and overdue PHA’s 4.# of open and overdue PHA Recommendations 5.# of open and overdue 1 st Party PSM Audit Recommendations 6.# of open and overdue 2 nd Party PSM Audit Recommendations 7.# of OP’s and SWP’s (Procedures) overdue for review/revision 8.# of overdue MI Tests/Inspections for PSM critical components 9.# of scheduled, open and completed Emergency Drills 10.# of Approved Extensions to PSM Action Items

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 22 Why the model works for Successful Companies  Integrated into all business processes  Resource allocation / prioritization  Capital projects planning and execution  Personnel succession planning  Performance management  Training and development  Contractor selection / retention  Acquisition due diligence

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 23 Why the model works for Successful Companies  Flexible and adaptable to many industries  Currently in use in industries as diverse as Chemicals, Upstream and Downstream Oil & Gas, Power Generation, Food Processing, Mining (Surface and Sub-surface), Metals Processing (Alumina, Steel, Gold, Nickel, Coal) and Pipelines/Storage.  Also, is being incorporated in Major Projects processes that construct these same facilities

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. The DuPont Approach to Improving Process Safety Performance

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 25 To assist clients to achieve sustainable results, we use a structured approach for culture and process change Plan Transition Plan Transition Assess Current State Assess Current State Implement Changes Implement Changes Envision Future State Envision Future State Develop the change plan What must be done? When must it be done? By whom? How? Assign accountability Develop the change plan What must be done? When must it be done? By whom? How? Assign accountability Make the changes Guide process teams in design and development Craft appropriate training Rollout changes Train staff Measure Results Make the changes Guide process teams in design and development Craft appropriate training Rollout changes Train staff Measure Results Get management commitment to change Understand current state and performance reasons Gain a common perspective of what change is necessary Prioritize change actions Mobilize the organization Get management commitment to change Understand current state and performance reasons Gain a common perspective of what change is necessary Prioritize change actions Mobilize the organization Examine culture and safety processes & systems Perception Organization & Structure Policies & Processes Performance analysis How work gets done - Execution Examine culture and safety processes & systems Perception Organization & Structure Policies & Processes Performance analysis How work gets done - Execution Sustain Changes Sustain Changes Sustain the change Sustain the change Keep it current Audit to maintain progress Create a learning and development curriculum Sustain the change Sustain the change Keep it current Audit to maintain progress Create a learning and development curriculum 3-5 years

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 26 About assessment of current state What? ●A broad-based, data and hypothesis-driven, process-oriented assessment of the client based on 22 elements, looks at how client currently does things and what opportunities exist for us to help them improve. How? ●Follow a rigorous method to gather information from data and safety perception surveys and form (several) initial hypotheses 1 about the client, then ●Gather more detailed information in the field to prove, disprove, revise, and/or create new hypotheses, then ●Pull all that information together to identify and prioritize their issues/problems, then ●Develop recommendations to solve the “critical few” problem(s), and finally ●Present the business case to implement these changes with DuPont assistance Outputs ●Assessment report that identifies strengths, opportunities and recommendations ●Element wise benchmarking against world class ●Safety perception survey results

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 27 Example of PSM Assessment Results Based on PSM elements for a mining and chemical company Leadership PSI PHA MOC-P MCO-T,F QA Training PSSR MI EPR INC INV Auditing OP&SWP CSM Fundamentals Awareness Skills Excellence World Class Low Site Score Composite Score High Site Score NOTE: Multiple sites were involved. The range and average of the results are shown.

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 28 Envision future state What? ●Facilitate leadership aligned thinking on desired future state that can be clearly and visually articulated to the broader organization How? ●Interact one-one with top management to gain individual insights and expectations ●Collate and analyze the leadership expectations versus current state as established from the assessment ●Prepare and facilitate a workshop that includes brainstorming with the top management including the board if possible. ●Contents of the workshop will include where are now? Why? Where do we want to be? By When? Outputs ●Leadership that understands current state ●Aligned leadership on future vision and direction ●Communication package that can be used consistently articulate leadership vision

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 29 Plan the transition What? ●Developing a phased roll out plan that is practical in achieving the desired future state as articulated by top management. How? ●Form a cross functional team ●Develop an overall roadmap to move from current state to the desired future state ●Quantify the resources required to move from current state to the desired future state in terms of financial, human and technological resources ●Gain alignment and commitment on resourcing the plan ●Communicate to the broader organization Outputs ●Roadmap that represents a phased plan to achieve desired state in the time-frame that has been agreed by the top management

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 30 Implementing the plan What? ●Facilitating the execution of the transition plan through continuous support from consultants who have hands-on operational experience to achieve desired state of safety culture and performance. How? ●Coaching leadership, managers and supervision in defining expectations, monitoring performance and demonstrating desired behaviours at corporate and site Levels (e.g. one-one coaching) ●Consulting in establishing/upgrading standards/procedures tools and processes for effective PSM management in critical areas (e.g. PSM Committee structure, PSM standards development) ●Training and skill building for leaders, managers and supervisors to managing PSM as an integral part of their daily routines (e.g. accountability for process safety, communication, etc) ●Implementation Assistance to ensure that established standards/procedures and tools are implemented successfully and effectively. (e.g. troubleshooting with respect to implementing work permit systems) Outputs ●Depends on the scoping with the client

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 31 Recommended Approach to Effective Implementation Coaching Practical Application Client lead & Expert review Practical Application Expert lead Content Finalization through task teams Workshop 1Workshop 2Workshop 3 Practical Application Client lead & Expert support Performance metrics to sustain change Deliver Top management involvement Transformation Practical Application: Skills transfer is tested and coaching is provided in the field Experiential workshops: Formal classroom sessions focused on knowledge transfer & skill development related to skills needed to drive the change program. Sessions provide the conviction and motivation for the change program. Performance metrics to sustain change: Selecting and implementing performance metrics with a focus on leading metrics to sustain the improvement initiatives. Expert and Experiential coaching: On-the-job coaching to build capabilities and confidence to drive the change. Content finalization through task teams: Development of best practice Management System content.

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 32 Sustaining PSM Performance and Culture What? ●To facilitate sustaining the gains from transition and ensure continual improvement. How? ●Develop a process for auditing and driving continuous improvement ●Develop a learning and development curriculum to ensure that all levels of the organization have knowledge and skills that are current and relevant to perform their roles ●Benchmark with external agencies to maintain the momentum Outputs ●Tools to facilitate sustenance of PSM performance and culture

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 33 Features of a Well-Implemented PSM System PSM is integrated into the other business processes There is a full understanding of one’s process hazards Everyone’s roles and responsibilities are well defined and executed well Sufficient commitment of resources; people and money Facility is designed, operated, and maintained at a world-class level Continuous improvement is achieved via the use of metrics, audits and ever strengthening standards A goal of zero process incidents is pursued by all

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 34 Avoidance of catastrophic events that injure people, facilities, business and the environment Improved Sustainability Improved productivity and reduced downtime Improved quality and customer satisfaction Sustained “right to operate” Improved employee morale Improved credibility in the investment community Business Benefits of PSM CCPS Benchmarking Study 2 Qualitative Benefits  Corporate Responsibility  Business Flexibility 2 Quantitative Benefits  Risk Reduction  Sustained Value

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 35 DuPont Process Incident Performance

36 Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. DuPont PSM Leadership Model Trained, Knowledgeable, Capable People in all roles Adequate resources Financial Support Knowledge Management Cat A PSM Incidents Cat C PSM Incidents/Near misses/ Key Learnings Metrics & Recommendations from Incidents, PHA & Audits Leadership Safety Culture, Commitment, Accountability, Resources, Involvement Foundational Cat B PSM Incidents Lagging Indicators Leading Metrics

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 37 Conclusion Successful leaders identify, evaluate and mitigate operational risks through: Implementing comprehensive, integrated management systems Fostering a positive, trusting and open culture Pursuing and achieving the goal of zero significant operational incidents “It is imperative that leadership set the ‘tone at the top’ of the organization and establish appropriate expectations regarding process safety performance.” Baker Panel Report (January 2007 )

Copyright © 2011 DuPont. All rights reserved. The DuPont Oval Logo, DuPont™, and The miracles of science™ are registered trademarks or trademarks of DuPont or its affiliates. 38