Risk Management

Introduction

Course Pre-requisite

Engineering
Statistics

System
Reliability
Engineering

Risk
Management

Course Topics
Introduction
Risk Assessment Concepts
Risk Assessment Methodology
Hazard Identification
Frequency Modeling
Consequence Modeling
Risk Acceptance
Risk Mitigation
Risk Management
Case Studies
3

Course Materials/References
1. Textbook Penilaian Risiko Pipa Gas Bawah Laut
2. Standards, particularly:
1. DNV-RP-F107 (Risk Assessment of Pipeline Protection)
2. DNV-OS-F101 (Submarine Pipeline Design and
Construction)
3. API 581 (Risk Based Inspection)
4. ASME B 38.1 (Gas Transmission & Distribution Piping
Systems)
5. ABS guidelines in risk assessment
3. Related Papers and Journals
4. Course Handouts
4

References

Course methods
Lectures
Group discussions and presentations
Paper-based examination
Homework and case study

Course evaluation
Final examination
Midterm examination
Assignment 1/Quiz1
Assignment 2/Quiz 2
Weekly attendance

: 30%
: 30%
: 20%
:20%
: 0%

Risk is a curious and complex concept. In a sense it is

unreal in that it is always concerned with future, with
possibilities, with what has not yet happened
Elms (1992)

Definitions
Risk
A measure of the potential for loss in terms of both the
likelihood (events/year) of the incident and the
consequences (effects/event) of the incident

Risk Analysis
Systematic use of available information to identify hazards
and to estimate the risk to individuals, property, and the
environment (IEC 60300-3-9,1995)
A risk analysis is always a proactive approach in the sense that it
deals exclusively with potential accidents. This is opposed to
accident investigation, which is a reactive approach that seeks
to determine the causes and circumstances of accidents that
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have already happened.

Risk analysis three main questions

A risk analysis is carried out to provide answers to
the following three main questions (Kaplan and
Garrick, 1981 ):
Q 1. What can go wrong?
To answer this question, we must identify the
possible hazardous events that may lead to harm to
some assets that we want to keep and protect.
These assets may be people, animals, the
environment, buildings, technical installations,
infrastructure, cultural heritage, our reputation,
information, data, and many more.
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Risk analysis three main questions

Q2. What is the likelihood of that happening!
The answer can be given as a qualitative statement or as
probabilities or frequencies. We consider the hazardous events
that were identified in Q 1, one by one.
To determine their likelihood, we often have to carry out a
causal analysis to identify the basic causes (hazards or threats)
that may lead to the hazardous event.

Q3. What are the consequences?

For each hazardous event, we must identify the potential harm
or adverse consequences to the assets mentioned in Q I.
Most systems have barriers that are installed to prevent or
mitigate harm. The harm to the assets is dependent on
whether or not these barriers function when the hazardous
event takes place.
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Risk analysis three main steps

Hazard identification. In this step, the hazards and
threats related to the system are identified together with
the potential hazardous events. As part of this process,
assets that may be harmed are also identified.
Frequency analysis. This step will usually involve a
deductive analysis to identify the causes of each
hazardous event and to estimate the frequency of the
hazardous event based on experience data and/or expert
judgments.
Consequence analysis. Here, an inductive analysis is
carried out to identify all potential sequences of events
that can emerge from the hazardous event. The objective
of the inductive analysis is usually to identify all potential
end consequences and also their probability of
occurrence.
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Qualitative Quantitative risk analysis

Qualitative risk analysis: A risk analysis where
probabilities and consequences are determined
purely qualitatively.
Quantitative risk analysis (QRA): A risk analysis that
provides numerical estimates for probabilities and/or
consequences-sometimes along with associated
uncertainties.

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Definitions
Risk Evaluation
Process in which judgments are made on the
tolerability of the risk on the basis of a risk
analysis and taking into account factors such as
socioeconomic and environmental aspects (IEC
60300-3-9, 1995).

Risk assessment
Overall process of risk analysis and risk evaluation
(IEC 60300-3-9, 1995).

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Definitions
Risk Management
A continuous management process with the objective to
identify, analyze, and assess potential hazards in a system or
related to an activity, and to identify and introduce risk control
measures to eliminate or reduce potential harms to people, the
environment, or other assets.

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Risk analysis, assessment, management processes

Risk
Analysis
Risk
Assessment

Risk
Management
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Risk representation
-6

< 10

10

-4

-6

- 10

Could occur but

Could occur but
very doubtful
doubtful
(almost impossible)
Has occurred in
E&P industry
People/Health
Very short term health
effect/injury
(First Aid case)

Minor injury
(RIC)

Major injury (DAFWC)

Production/Assets
Minor or negligible
disruption, easily
recovered or
replaced or
< $10 K
> 1 MMSCF, or
> 100 BBLS, or
> $10 K

>10 MMSCF, or
> 1000 BBLS, or
> $100 K

Permanent debilitating injury o>100 MMSCF, or

> 10,000 BBLS, or
> $1 MM

Fatality

>1000 MMSCF
>100,000 BBLS
> $10 MM

Environment
Any spill inside secondary containment
Uncontained oil or chemical spill <10
L retained on VICO property
Remediation/clean-up cost is minimal, no
liquid recovery, soil removal only
Uncontained oil or chemical spill (10L
- 1bbl) retained on VICO property
Requires liquid oil recovery efforts
(absorbent)
Remediation/clean-up cost <$10k
Uncontained oil or chemical spill (1bbl 15bbls) retained on VICO property
Uncontained spill outside boundary with
minor off-site impact
Remediation/clean-up cost $10K
$100K.
Any oil or chemical spill 15bbls 50 bbls
Any spill on water, clean up only using
internal resources
Remediation/clean-up cost > $100 K.
Requires immediate statutory reporting*
Oversight from environmental authority
Any oil or chemical spill > 50 bbls
Any spill, clean up requiring assistance
outside VICO
Remediation/clean-up cost
> $1 MM
Community evacuation.
Environmental law violations

Reputation
Internal VICO exposure or re

-2

10

- 10

-4

Might occur at
some time in the
future

Has never occurred Has occurred in

in VICO
VICO

10

-1

- 10

-2

Will probably occur

>10

-1

Is expected to occur
in most circum-stances

Has Occurred several Happens several times

times in VICO
per year in a location

25

24

22

19

15

23

21

18

14

10

20

17

13

16

12

11

Exposure in Badak area

LMI

Regional newspaper
exposure (KALTIM)
IIT
Public claim for damage

National newspaper
exposure
BOI
Legal class action
from NGO/community
International Exposure
Other significant
community impact.
Government/ criminal
investigation

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Risk representation
Risk Matrix According to DNV-RP-F107

Frequency Ranking According to DNV-RP-F107

FREQUENT
PROBABLE

VERY LOW

LOW

MODERATE

HIGH

MAJOR

Consequence Ranking According to DNV-RP-F107

REMOTE
IMPROBABLE

OCCASIONAL

5
4
3
2
1

FREQUENCY RANKING

CONSEQUENCE RANKING

Not Acceptable

Denting/Diameter

ALARP Region

D
Acceptable

19

20