Dynamic Risk Management

The management of risk is essential for companies to ensure long-term sustainable growth and profit performance. History is full of examples in the chemical process industry that clearly show the consequences of not properly managing risk. Some incidents like BP Texas City, Bhopal, Flixborough and Piper Alpha have affected not only the company, but the entire industry. Effective risk management processes balance the desire for risk minimization with the business need for profits. The authors, having worked with several companies, will describe an approach utilized to develop more robust risk management processes. The approach involves identifying attributes that the desired process should have, clarifying risk management goals, reviewing the existing process, identifying gaps, and implementing solutions to close the gaps. The resulting process has been repeatedly shown to gain broad acceptance throughout the organization, thus achieving long-term risk management performance goals. A case study of a U.S. company that was struggling with consistent risk management application at their facilities due to significant expansion is also presented to illustrate how the approach is utilized. The authors worked with this company over a 2½-year period to review and modify the way risk is managed within the organization. The resulting dynamic risk management process allowed them to prioritize their resources in an efficient, consistent and transparent/auditable manner.