Engineering risk stands as an important business management risk owing to the magnitude of the risk. Engineering risk results from various engineering operations or engineering products. This can also be described based on the area of risk and the potential factors of the risk occurring within the organization. An example of engineering risk that occurred was Tianjin explosion that occurred in 2015 killing a number of people, massive injury, and destruction of property. The accident resulted from fire explosion caused by chemicals within the containers handled with the warehouse at the Tianjin port. Such accidents require risk management strategy that includes risk identification, characterization and risk management strategies. In addition, the risk assessment is an important risk management procedure that is useful for the decision-making process in an organization. The risk communication is another risk management component that involves communicating the risk preparedness, response strategy and risk recovery. The following report explores the engineering risk management components with reference to Tianjin accident case study.
Risk management entails a various process that can be used to identify, characterize, analyze and manage the risk. Risk management works to identify and analyze the risk of the accident that occurred at Tianjin, China in 2015.
There are some key issues that are important in identification of the risk that lead to the explosion. Identification of risk is the first step in risk management process and include continue risk identification within and outside the business as an effort to manage to reduce the likelihood of the risk occurring within an organization. Some of the issues that can be observed on the accident and gives the general nature of the engineering risk at the time of accident (Leveson, 2011). Firstly, the root cause of the risk is one of the identification steps that have impact on the explosion forms the basis of the risk management. For instance, the case of explosion, the root cause of the explosion can be viewed as laxity on inspection. Other causal factors for the risk may have been on the flammability of the chemicals that were involved in the explosion. Chemicals such as calcium carbide, potassium nitrate and ammonium nitrate are very reactive and easily catch fire. Moreover, the capability of the facility to handle these chemicals may have been comprised at the time of the risk. Secondly, risk characterization is another aspect of risk management that focuses on risk classification and analysis to bring a better understanding of the risk. At the time of the accident fires was the main observable injury factor that killed many people and destroyed property. Lastly, risk planning is another aspect of risk where planning for the risk assessment, response and risk recovery. The company shows limited planning and preparedness as response team was among those casualties (Chapman & Ward, 2008).
According to various analysis there are some identified risk factor that can be deduce from the accident. Firstly, according to Huang and Zhang (2015), lax inspection leading to high amount of chemicals that was specified by the operation license is one cause of the accident. The high amount of chemical was evidenced by the magnitude of the explosion that was witnessed during the accident. Secondly, limited monitoring of the facility than expected was another factor that contributed to the accident that occurred at the Tianjin, China. The monitory of the facility would have resulted in identification of potential risk especially given that the explosive chemicals were highly flammable and require monitoring of fire sources (Rostami, 2016). Thirdly, lack of preparedness within the warehouse was another aspect of the casual factor that leads to the explosion at Tianjin, China. It was reported that among the causalities of the explosion were the firefighters showing that there was no preparedness for the disaster (Ma, 2011).
The second accident involved petrochemical company and a number of factors can be deduced form the explosion. The contributing factor was cited as the gas leak that was reported previous night before the explosion. It can be understood that the explosion resulted from inability of the company and emergency response team to contain the situation after reporting leak of the petrochemicals. The accident resulted in the death of 33 people with more than 300 people injured (Huang, Hsiao & Chen, 2014).
West Fertilizer Company in Texas is another accident that occurred in 2013 following explosion of ammonium nitrate. The fertilizer company explosion resulted in a number of death and injuries leading to high loses for the country. In addition, the company was reported to have stored many fertilizer chemicals (ammonium nitrate) in a more risk environment triggering explosion (Texas Commission on Environmental Quality, 2013).
The overall financial analysis of the warehouse explosion risk viewed from massive destruction caused by the explosion. It is evidence that the explosion destroyed many good and infrastructure within the facility and around the facility. One of the basis of financial analysis of the risk is based on the number of cars that were destroyed by the explosion that took place. In addition, the infrastructure was destroyed with high cost. For instance, many buildings around the company were destroyed at the risk event. The explosion hazards pose further financial risk aspect of the property destroyed by the risk (Zeng, 2015). Secondly, West Fertilizer Company on the other hand lead to destruction of more than 19 buildings completely leaving a huge financial loss to the property owners.
Secondly, environmental risk associated by the explosion can be analyzed base on the extent of the pollution that resulted from the explosion. The explosion has impact on the environment due to release of pollutants or chemicals into the atmosphere. Engineering risk of explosion as was the case of the China’s warehouse explosion involved chemical that has high amount of pollution into the environment. Moreover, these chemicals are threat to both life of living things and environment (Koger & Deborah, 2010).
Lastly, analysis of the legal basis of the risk can be viewed from the perspective of legal framework that minimizes the risk. For instance, health and safety workplace framework gives the requirement for various engineering construction of facilities with minimal risk. This also includes the qualifications that are required for those staffs working on the facilities since they need to be trained on potential risk associated with the warehouse facilities. In addition, the legal basis of the risk analysis is also based on the emergency strategy of the company that can minimize risk such as explosion (Ryan, 2015).
The magnitude of the risk can also be felt on the casualties that occurred at the time of the explosion. It was reported that more than 800 injuries were sustained during the event. In addition, many people died as a result of the accident with more than 50 people reported dead at the time of the explosion. This indicates that there was a massive loss of human resources within the company and many people also died outside the facility (BBC News, 2015). Secondly, the petrochemical factory resulted in death and injury that reduces the number of human resources. The human resources analysis shows the casualties and death was mostly drawn from both workers and people living around the factory (Huang, Hsiao & Chen 2014). Thirdly, West Fertilizer Company explosion also killed 19 people and many injuries. This is viewed in terms of the human resources that were lost particularly on the company employees and injuries (Texas Commission on Environmental Quality 2013).
Risk assessment refers to the process of determining the magnitude, and probability based on qualitative and quantitative analysis of the risk. Risk assessment can be explored base on its usefulness, applicability, and limitation in the decision-making process.
Risk assessment is useful in ensuring safe and healthy work environment, useful in legal compliance. The risk assessment ensures that accidents are prevented or there are minimal accidents. For instance, risk assessment allows the company to identify potential health risks like the explosion. Minimal risk environment is an ideal working place that ensures that workers are protected from any potential risk. Secondly, risk assessment enables the company to comply with the legal requirement for operation of the company. This, therefore, is required by the regulatory agencies to approve the operation of the company (Jianwei, Xixi & Apurna, 2016).
Risk assessment is used in the organization for the various decision-making process. The management uses the data from the risk assessment department for analysis of the state of the emergency of the company. In addition, the company applies risk assessment procedures to improve the company risk management strategies. Risk assessment enables the company management to respond in the event of risk within the organization. This is an important aspect of company risk management that also allows the company to recover from the impact of the risk. For instance, the chemical explosion requires the companies involved to recover both financially and in terms of infrastructure (Lisi, Milazzo & Giuseppe, 2010).
Despite the usefulness of the risk assessment in the decision-making process, the risk assessment has some limitation. Firstly, determination of the magnitude of risk is not easy in some risk parameters such as the extent of environmental pollution and contamination. This is based on the complication of some risk assessment procedures that make it difficult to manage the risk. Secondly, lack of necessary data is another difficulty that limits the application of the risk assessment within an organization (Mumtaz, Hansen & Pohl, 2011). Risk assessment usefulness in the determination of magnitude and probabilities of the risk requires some complex data sets that are not easy to obtain. In addition, the necessary equipment and machines that can be used to determine the risk severity or magnitude are limited. Thirdly, the legal requirement framework is another limitation of the risk assessment tool. Lastly, insufficient expertise that specializes in the risk assessment is another limitation that makes risk assessment not useful decision support tool. Despite the importance of risk assessment within an organization, risk assessment still lack the expertise that can provide necessary and accurate data on the exact risk magnitude and probability (Hubbard, 2009).
Risk perception can be described as the general judgment and severity of risk by the people. There are many different approaches to the perception of people about the risk especially when it occurs. Firstly, some people view risk perceives the risk based on the cognitive approach to risk management (Megan, 2015). This implies that majority rely on the scientific community for the assessment of risk to recommend management strategy. Secondly, another perception approach of people on the risk can also be categorized as a psychological approach. This approach view risk based on some factors such as dread, stigma, and newness of the risk. This defines the impact of the risk on the mind of individuals making a judgment on the risk. Thirdly, interdisciplinary approach to risk perception that built the risk perception based on various approach and this is also connected to risk communication (Chileshe & Kikwasi, 2013).
The risk management can be described as those risk management strategies that aim to assess the situation of the risk, impact and the likelihood of a similar event occurring in future. There are many principles that can assist the business to reduce risk associated with warehouse explosions (Mihaela, Sorin, Mihai & Moldovan, 2017). Firstly, structural risk mitigation plan involves developing the facility with safety standards as this help in meeting the risk requirement. For instance, there are standard of the facility construction that needs to be applied when constructing the facility to reduce the likelihood and impact of the risk associated with the explosive. Warehouses that handle chemicals should be constructed with a plan that allows loading and offloading of chemicals containers without risk of explosion from chemicals (Conformance Ltd, 2018).
Secondly, the facility risk inspection is another risk mitigation plan. The risk inspection of the facility needs to be conducted periodically by risk assessment trained staff to ensure that any potential risk factors are address before the occurrence. Moreover, the inspection will give the risk assessment department of the company areas with potential risk for faster risk management plan. According to Cheng and Yang (2011), risk inspection plan has the time frame that allows periodic inspection of the facility. This implies that inspection needs to be done following a specific period of time like twice a month to ensures that risk status of the organization is up to date (House and Safety Executive, 2018).
Based on the risk that has been identified within the case study, there are some risk management strategies that can help manage the explosion risk. Risk management strategies include risk avoidance, risk control, risk transfer and spread exposure.
Avoidance is risk management strategy involves avoiding a high amount of chemicals and other dangerous goods. This strategy reduces the likelihood of the risk occurring given the effect of the high amount of these goods. The company can handle a limited amount of chemical that is within government requirement. This is also important for various warehouse operations that require specific materials for loading and offloading containers with these chemicals (Jianwei, Xixi & Apurna, 2016).
Risk control strategy involves proactive procedures that are required to manage the risk associated with chemicals. Risk control strategy also involves the formulation of the procedures and steps required to minimize or reduce the likelihood of explosion occurring in future. Moreover, the risk control strategy may also involve safety measures to reduce the risk. This also requires calculation and informed risk-taking steps (Peter & Hillson, 2012).
Risk can be transferred to another organization within the similar value chain. Tianjin could have been avoided through the transfer of excess chemical to another warehouse to reduce the number of flammable chemicals. Analysis of the accident indicates that there was more chemical at the facility more than the required amount. This would have been transferred to another company to avoid the legal risk of handling chemicals (Megan, 2015).
Low reduction strategy is another risk management strategy that entails post-accident response strategies. The warehouse post-accident response plant that reduces the impact or loss of the organization is important for managing the risk associated with risk. The accident was so massive that response procedure to reduce further losses and impact of the risk (Toth, Stranjik & Branko, 2011).
Segregation of exposure to risk is another risk management strategy that is required to reduce the exposure to risk. The segregation of risk entails reducing flammable chemicals that are stored together as this will spread the risk. In addition, storing chemicals within a warehousing facility where there is electricity as this can start flame or explosion. This makes the chemical exposure to risk minimal hence reducing the risk (Conformance Ltd, 2018).
Self-retentions is a risk management strategy that requires the organization to high-risk factors to be managed through insurance. The company deducts some funds monthly insurance that helps in reducing the risk in the event of a loss occurring within the organization. This assists the company to claim the payment to help manage the risk in the event of an explosion. Moreover, the strategy is important since the warehouse was dealing in dangerous chemicals with high risk. The strategy works with other insurance companies to insures the company for any risk that may occur in the event of an explosion occurring within the organization (Toth, Stranjik & Branko, 2011).
Risk communication can be described as the process followed when informing people for the potential risk on their lives, property, and environment. Risk communication is a progressive scientific approach to communicating potential risk to people. For instance, in the case of China Warehouse explosion, communication of the risk was deemed poor as many organizations specifically media reported the risk on their own. This creates a negative picture of the risk and its impacts on the people (CDC, 2018).
Risk communication plan involves the framework needed for risk communication within an organization. Risk communication can be divided into risk communication phases, risk communication plan components, and risk communication tools. Some of the stages of the risk communication plan include risk preparedness, risk response, and risk recovery. Components of the risk communication plan are role, procedures, agreements, contact information and communication channel (Ontario School Boards’ Insurance Exchange, 2018).
The three phases of the risk communication plans include risk preparedness, risk responses, and risk recovery. Firstly, preparedness defines the strategies that are used to prepare for a potential risk as a risk management strategy. This involves communicating the potential risk within the company and the state of preparedness of the company to handle this risk (Mäder, Jones, Zhang & Cleland-Huang, 2013). The company communicates with risk manager to the public the lay down structural and resource preparedness to risk. Secondly, risk response is the risk communication phase where risk manager informs the public in the event of an explosion. For instance when the explosion occurred the risk manager comes out and speaks on the state of the risk and what is done to manage the situation. Lastly, is the recovery phase of communication that entails giving the way forward to recover from the risk. This enables various stakeholders to understand the state of the risk and the strategy to recover from the explosion (Lundgren & Andrea, 2013).
Staff role includes risk manager and staffs working under the manager that facilitates communication of the potential risk. A vital staff is a spokesman for the risk management department or the manager can also be the spokesperson for communicating risk. Some of the common staffs include risk manager, risk expert, risk information managers and other staffs (the United States Environmental Protection Agency, 2018).
Under procedures
Agreement on who releases the information on the explosion, the information and when to communicate the explosion to the public is discussed under the agreement.
Channel of communication involves various channels of communication that are used by the risk management department for communicating the risk to the public (Peter & Hillson, 2012).
Conclusion
In conclusion, engineering risk remains one of the most important risks due to its severity and magnitude. There are many engineering risk management components that include risk identification, risk mitigation, and management strategies. Risk assessment is another risk management tools that enable safe and healthy work environment and fulfills the legal requirement for business operation. In addition, risk assessment is used to predict the probability of the risk hence a good decision support tool. Risk communication requires comprehensive risk information system that is used to inform the public on the risk preparedness, response strategy and recovery strategy from risk.
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