Risk Management Principles And Plan For Disaster At Tianjin Port

Discussion

Two massive explosions on the port of Tianjin and north China have resulted in the death of a large number of people (Zhou et al., 2014). This particular incident in China resulted in the injury of around hundred people along with affecting the whole city. The incident was encountered at a warehouse which has stored various inflammable and hazardous materials. This explosion is considered to be one of the deadliest accident in China which has caused a huge economic loss.

The upcoming pages of the report mainly deal with a proper plan regarding the disaster at Tianjin port chain. Different risk management principles with respect to Tianjin port explosion have been discussed in brief. The risk management principles mainly comprise of objectives, potential loss, consequence, likelihood, and measure of risk. At the end of the report, a proper risk management plan with respect to matrix have been provided.

A DRP (Disaster recovery plan) is a well-known business plan which provides information regarding the fact that how fast the work can be resumed after a disaster. Disaster recovery plan can be considered to be a part of a business continuity plan which is generally applied to different aspects of the business(Ying & Yijun, 2016). In the year 2016, the administrative department of China has provided an idea regarding the explosion at Tianjin port China. The incident took place at the port just because of emission of nitrocellulose. The emission of harmful chemical was due to damage packing of material. Later on, the investigative team pointed out the fact that ammonium nitrate was responsible for the explosion. The explosion at Tianjin port took place due to illegal storage of ammonium nitrate.

The incident at the port created a serious concern to the general public regarding the use of various hazardous chemicals (Loucks & Van Beek, 2017). At the same time, it created a proper sense of warning to the insurance industry regarding the use and importance of identification of various risks. For proper risk control, the basic aspect is to properly the analyze the hazardous nature of various chemicals. After reviewing the incident at Tianjin port, it is expected that various insurance organization should stress risk management principles.

Risk management mainly comprises of five stages that are identifying, prioritizing and proper classification of risk (Nicholls et al., 2018). It is mainly done by making use of various aspects like control, monitoring and lastly overcoming various risk.

Risk management principles

The risk management objective mainly comprises of a series of steps like

• The adopted process or method should create a proper value at Tianjin port.
• It should be taken to an integrated part of the overall process for this Tianjin port.
• It should affect the overall process of decision making at this port.
• The plan should be transparent in nature so that it is understandable to various stakeholders of this port.
• The plan needs to properly check an analyzed so that it can provide benefit to a large number of people.

A large number of steps should be taken into consideration for properly performing risk management at this port like identification, planning, safeguarding and lastly properly monitoring.

Identification: In this phase, the various kinds of risk which are involved in this Tianjin port needs to be properly monitored or checked (Shao et al., 2014).

Planning: A proper planning is required to so that one can easily analyze the various kind of risk which are involved at Tianjin port.

Derive safeguard: In this stage, various kinds of risk are analyzed so that it can be considered to be helpful so analyzing various risk at Tianjin port.

Monitoring: Tianjin port needs to analyzed or monitored on a regular basis so it kind of risk which has been overlooked can be tracked or monitored.

The blast at Tianjin port has resulted in various kinds of consequences like a financial loss. Along with this, the blast at Tianjin port has resulted in the death of more than 170 people (Speece & Kawahara, 2015). The blast has resulted in a cost of asset and interruption of business at this port.

The blast at Tianjin port has occurred due to storage of huge explosive material like ammonium nitrate (Cao et al., 2014). The explosion at the port has resulted in a huge amount of financial loss. Ammonium nitrate is a useful chemical material which is used for the production of crops. For this reason, the harmful chemical cannot be easily replaced. Ammonium nitrate is also used as an explosive in the mining industry.

A large number of steps should be taken for measuring the risk at this Tianjin Port:

Avoiding risk: There are many situations or phases in which the blast at this port would have been avoided (Berkman, Cole, & Fu, 2015). If the various stored goods have been monitored on regular basis, then the blast at this particular port would have been avoided.

Minimizing risk: In many cases of disaster, it is noticed that risk cannot be neglected but could be reduced to a certain extent. It can be easily used for accomplishing the turning effect of the plan into a specific zone (Beresford et al., 2012). If the various hazardous material at the port is kept with safety measures, then the blast at Tianjin port would have been controlled at the beginning stage.

Risk management objectives

Sharing risk: If a particular risk needs to reduced or avoided then a series of steps should be taken which can be used for sharing of various kinds of risk.

Retaining risk: This particular stage is considered to be as a judgmental call as it is taken when all the other stages have been exhausted (Long et al., 2014). As the other steps have been exhausted then the in charge of the disaster at Tianjin port should take some steps which can be used for retaining the involved risk.

Risk Description	Impact	Reason	Important factors	Triggers	Risk Strategy	Mitigation  plan
Two massive explosions at north China and Tianjin port have resulted in the death of more than a hundred people (Hanson et al., 2016). The incident has resulted in devastating the whole city along with the death of mass people.	The impact of the incident is considered to be dangerous because it created huge financial loss along with the death of a large number of people.	The official at the port was considered to be responsible for this incident. They were mainly responsible for tagging the arrive product which appropriate threat level. A report claimed about the fact that nearly 14000 containers comprise deadly products which have resulted in various kinds of risk. Apart from this, improper storing and packaging of products have resulted in the blast. If some appropriate steps have been taken, then this particular blast would have been avoided.	The main factors responsible for the blast at the port are ü Unlabeled or unnamed container ü Improper inspection ü Non-considered packing of various products	Exposure of toxic products along with reactive components	The incident has mainly taken place due to the improper or inadequate functioning of various officials. The first thing which should be taken into account is properly avoiding various scenes from holding various officials into account. No container should be allowed on the port which is unlabeled. As it can contain a product which can cause the serious level of threat. Another measure which should be taken into account is to product packaging as per the labeling of the product. With the help of proper labeling, various products at the port would be safe and will not cost any kind of harm at the port. The security team at port hire expert which can provide assurance of the products and goods which are stored at the port.	The mitigation plan should be taken account for analyzing the fact that this type of incident in near future. A proper audit team should be there analyzing the various aspects of Tianjin port. The team should comprise of various members from different technical backgrounds’ that they can analyze the threat of each product.

 Cost benefit analysis 

Budget Plan – INPUT VALUES Hardware  $         50,000.00 Software  $           1,900.00 Development team salaries  $           8,000.00 Training  $           1,000.00 Total Development Cost  $         60,900.00 Hardware  $         12,000.00 Software  $              210.00 Operational Labor  $         16,000.00 Total Operational Cost  $         28,210.00 Approximate salary savings  $       110,000.00 Reduced operating cost  $         45,000.00 Total Benefit  $       155,000.00  Discount Rate Used 5.00% Project Cost-Benefit Analysis
Analysis Variables:	Enter values for the cost-benefit analysis in the INPUT_VALUES worksheet.
Discount Rate Used	5.00%
Annual Benefits	$   155,000.00
Annual Operational Costs	$     28,210.00
One-Time Development Cost	$     60,900.00
				Year of Project
		0	1	2	3	4	5	TOTALS
Economic Benefit		$0.00	$ 155,000.00	$ 155,000.00	$    155,000.00	$  155,000.00	$    155,000.00
Discount Rate		1.0000	0.9524	0.9070	0.8638	0.8227	0.7835
PV of Benefits		$0.00	$147,619.05	$140,589.57	$133,894.83	$127,518.88	$121,446.56
NPV of all BENEFITS		$0.00	$ 147,619.05	$ 288,208.62	$    422,103.44	$  549,622.33	$    671,068.88	$     671,068.88
One-Time COSTS		$(60,900.00)
Recurring Costs		$0.00	$  (28,210.00)	$  (28,210.00)	$     (28,210.00)	$  (28,210.00)	$     (28,210.00)
Discount Rate		1.0000	0.9524	0.9070	0.8638	0.8227	0.7835
PV of Recurring Costs		$0.00	$  (26,866.67)	$  (25,587.30)	$     (24,368.86)	$  (23,208.44)	$     (22,103.27)
NPV of all COSTS		$(60,900.00)	$  (87,766.67)	$(113,353.97)	$   (137,722.83)	$ (160,931.26)	$   (183,034.54)	$    (183,034.54)
Overall NPV								$     488,034.35
Overall ROI
								2.6664
Break-even Analysis
Yearly NPV Cash FLOW		$(60,900.00)	$ 120,752.38	$ 115,002.27	$    109,525.97	$  104,310.45	$      99,343.28
Overall NPV Cash FLOW		$(60,900.00)	$   59,852.38	$ 174,854.65	$    284,380.62	$  388,691.06	$    488,034.35

Conclusion

The above discussion focuses on the fact that this report is all about risk management plan for Tianjin port. Just before the blast at the port, various firefighters were there for controlling the fire which has resulted due to spreading of various chemicals on the Tianjin port. So a step like the appointment of audit team should be taken for stopping the blast at the port. The audit team will monitor the performance of various port officials and various associates. The various port officials were considered to be responsible for any kind of disaster at Tianjin port. The appointed team will follow a list of things like quantity and quality of goods at this particular port. After that, any kind of fake data regarding the goods can be minimized with the help of this appointed team members.

References 

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