Risk Management Techniques Used In The Oil & Gas Industries

Risk Management Techniques Used In The Oil & Gas Industries

The management of risk is an essential part of any organization. From your local biscuit outlets to multinational organizations, every business owner needs a  defined strategy to identify and manage potential risks to ensure business survival. Risk has become so important within commerce that it is now a separate field of study. Employees qualified in risk management are highly paid and in demand. Recently i discussed Common Terms To Understand in Health and Safety(HSE), and i have received so many plus in relation to such important thread. you will love it if you read it,
Technically materials identified as hazards are given top priority.
You must understand that;

All hazards with the potential to cause a major accident have been identified. 
All major accident risks have been evaluated and Measures have been, or will be taken to control the major accident risks to
ensure compliance with the relevant statutory provisions.

Approaches to Risk Assessment

The risk assessment methodology applied should be efficient (cost-effective)
and of sufficient details to enable the ranking of risks in order, for subsequent
consideration of risk reduction.  The rate of assessment should be
proportionate to the complexity of the problem and the magnitude of  risk.
  It is expected that assessment would progress through the following
stages to provide an appropriate demonstration.

Quantitative (Q) in which frequency and severity are determined purely
Semi-quantitative (SQ), in which frequency and severity are approximately,
quantified with ranges.
Quantified risk assessment (QRA) in which full quantification occurs. 

The Choice of approach should take into account the following dimensions: 

  • The level of estimated risk (and its proximity to the limits of
  • The complexity of the problem and/or difficulty in answering the question of
    whether more needs to be done to reduce the risk.

Proportionate risk assessment 

In the risk dimension, the level of risk assessment used should be
proportionate to the magnitude of risk.  However, this may be modified
according to the complexity of the decision that risk assessment is being used
to inform.  For example, it may occasionally be possible to use
qualitative risk assessment in extremely high risk situations, where it is
obvious that the risk is so high that risk reduction is essential.  Great
care must also be when attempting to justify something that is a significant
deviation from existing code, standards or good practice. One approach to
deciding the appropriate level of detail would be to start with a qualitative
approach and to elect for more detail whenever it becomes apparent that the
current level is unable to offer.

  • The required understanding of the risks 
  • Discrimination between the risks of different events  or 

Assistance in deciding whether more need s to be done (making compliance judgments)

Before looking at risk mitigation during the process element of the hydrocarbon
cycle, it is important to identify the hazards to a specific location.  

HAZOP’S (Hazard Operability & Study)

HAZAN’S (Hazard Analysis ) and 

HAZID’s (Hazard Identification ) are used for this purpose

Quantitative data based on past experience are the most important means of
identifying hazards and assessing potential frequency.  Audits conducted
by experienced assessors, who consider past experience, near misses and
procedures for dealing with emergence and abnormal events, will identify
hazards effectively and produce a useful future records.
Checklist can also be useful but can result in limiting inquiries unless open
question are used such as how is the system protected against: rather than “is
the system protected against.

Is a structural technique, which may be applied typically to a hydrocarbon
production processes.  It is essentially a qualitative process.  A
HAZOP study would typically be undertaken by a multi –disciplinary team
involving engineers, production managers, designers and safety specialists etc
asking a series of “what if “ questions, using “guide words”  By
undertaking a HAZOP study at an early design stage, potential problems can be
avoided instead of having to make costly modifications after the process is built/operational.

HAZOP characteristics systematic Analysis Methodology driven by Guide words
  • Quantitative Analysis 
  • Analysis is done by Team with expertise 
  • Analysis is done Node by node .

Output  (Worksheet)

Deviation, potential cause, Potential Effect, Safeguard, Recommendation 

Benefit of HAZOP

Proactive   Hazard Identification enables the Owner to make rational
and cost effective decision in terms of Health, Safety and Environmental (HSE)

 HAZOP is used as a tool to identify potential hazard and operability

HAZOP    is one of the process Hazard Analysis Methodology
HAZOP is frequently used within the framework of Process Safety management
HAZOP may be used to provide management with knowledge of where potential
hazards may exist, and to provide information on how to easily mitigate and eliminate such potential hazard.

Risk Identification Techniques and Tools
Most risk management programs and risk managers begin by identifying the risks that threaten a particular organization or situation. Prevention is better than cure and this risk management technique is aimed at identifying risks before they materialize, with a view to minimizing the risk itself or seeking ways and means of reducing the potential outcome of the risks, should the identified risk scenarios materialize.
There are a number of common tools and techniques that are used by risk managers to help them identify possible risks to the organization or product. There tools and techniques are often used in combination to ensure that all potential risks are identified within the organization. Risk managers also try to ensure an environment where employees feel open about discussing potential risks without reprisal or consequences. Tools commonly used by risk managers to identify risks within an organization include creating and controlling:
·         Brainstorming sessions
·         Collection of event inventories and loss event data
·         Interviews with staff
·         Facilitated workshops
·         SWOT analysis
·         Risk questionnaires and surveys
·         Scenario analysis
Risks identified by a risk manager generally fall into four categories namely financial risks, strategic risks, operational risks and hazard risks.