A RISK MANAGEMENT

WORKSHOPPT. Berau Coal

Workshop Overview1. Objectives2. Why the need for Risk Management?3. Introduction of Risk Management Terms4. Hazard Identification & Awareness 5. Overview of Risk Assessment Methodologies6. PT. Berau Coal Risk Assessment Procedure

Objectives

To introduce risk management terms & methodologies.

To provide an understanding of the need for risk management.

Refresh hazard identification principles. To introduce a Risk Assessment Methodology to be

adopted at PT. Berau Coal [PTBC]. To ensure key personnel are familiar with risk

assessment methodologies & can perform/assist in conducting team based risk assessments for the operations.

Why need formal Risk Management?

Duty of Care Greater Community Care Legal Requirement Company or International Standard

Requirement Good Business Process Sense

Duty of Care

Risk Assessment is a basic management tool & a fundamental process in meet to PTBC - Duty of Care;To provide safe systems of work & a working environment whereby employees are not exposed to hazards & risk.

Expected of “reasonable” employers and employees

Greater Community Care

No Accidents/Disasters No Damage to the Environment No Impact on Natural Aesthetics Solid Citizenship Community Confidence & Longevity of

Support

Legal Compliance

Risk Assessments are a statutory requirement in Indonesia, as inferred in the Minister of Mines & Energy Decree No. 555.K/26/M.PE/1995 regarding Occupational Health & Safety in General Mining.

The Minister of Manpower Decree No.PER.05/MEN/1996 [regarding Occupational Health & Safety Management System].

Indonesian Act No.1/1970, Article 9.

Comply to Internal & International Standards

OHSAS 18001: Clause 4.3.1- Hazard Identification, Risk Assessment & Risk Control The organization shall establish and maintain

procedures for the ongoing identification of hazards, the assessment of risks, and the implementation of necessary control measures.

The organization shall ensure that the results of these assessments and the effects of these controls are considered when setting its OH&S objectives.

The organization shall document and keep this information up to date.

Makes a good Business Sense

Demonstration of Corporate Governance and Due Diligence.

Reduction in Loss (personnel, property, health, environment).

Maximizing Profit and to Prevent the Loss.Increased Community Perception.Shareholder confidence.

The True Cost of Loss

Economic Aspect; Direct Costs & Indirect Costs

Insured Costs - Injury, Illness, Health, Damage, etc.

Uninsured Costs - Product & Material Damage, Plans & Building Damage, Legal Costs, Emergency Supplies, Cleaning Site, Production Delays, Temp Labour, Fines, etc.

$ 1

$8 - $36

Iceberg Theory by ILCI; 1985

Incident Ratio

At Risk Behavio

r & At Risk

Conditions

20.000

Near Miss600

Property Damaged30

Minor [FA/MA]

10

Major [LTI/Fatal]

1

Year of 2008,

1 2 [3] 285 2145 ≈

2000

Dec ‘09 – Jan ‘10,

0 2 64 1128 ???

Frank E. Bird ratio; 1982

What are the Benefits of Risk Management?

Point AIM and Shootw ith structured Risk

M anagem ent

“Focused” VS “Shot-gun” approach

Point and Shoot

VERSUS

More effective decisionsEfficient allocation of resourcesIncreased standard of accountabilityCreativity & innovation in management Increased capacity to manage competing issuesFlexibility in meeting objectivesTransparent decision making

What are the Benefits of Risk Management?

Any Question?

Risk Management Terms

Risk Management Risk Assessment Hazard Risk

Risk Management

The systematic application of management policies, procedures & practices to the tasks of identifying, analyzing, assessing, treating & monitoring risk.

The process of dealing with Risk associated with PTBC operations, which includes: Risk Assessment,Risk Decision Making,Implementation of Risk Controls.

Risk Management Process

Establish the Context

Identify Risks

Analyse Risks

Evaluate Risks

Treat Risks

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Assess Risks

THE RISK MANAGEMENT PROCESS AS/NZ 4360:1999

Risk Assessment

Risk Assessment is an element of the risk management process & is conducted as part of an effective way to manage risks encountered in daily operations.

Using sound concepts to detect Hazards and eliminate the Risk they pose.

HAZARD

A hazard is defined as any condition, activity, object, substance or force that exists within the working environment with the potential to cause injury, negatively affect health, or negatively impact on the environment.

Source of danger

RISK

The New Shorter Oxford Dictionary; 1993, defines risk as “[exposure to] the possibility of loss, injury or other adverse circumstances”.

Risk is the presence of uncertainty [chance] whether an event, incident, activity, condition or situation will happen, and is measured in terms of the likelihood & consequence.

Hazard Identification

HazardSource of Danger

E.g. Chemical, Flammable Liquid

RiskExposure to danger

E.g. Uncontrolled fire & loss of assets, personal injury, air &

water pollution

CAUSE

EFFECT

Hazard & Risk

Hazard & Risk

CAUSE

EFFECT

CAUSE

EFFECT

Hazard & Risk

Hazard & Risk

CAUSE

Effect???

Hazard & Risk

CAUSE

Effect???

Visible Hazard, Those readily seen, heard, smelt, tasted

or otherwise sensed.

Hidden Hazard, Those not readily seen without

prompting or more detailed searching.

Developing Hazard, Those which get worse over time, may

not be detected without measurement.

Characteristics of Hazards

Physical, e.g. noise, ionising radiation, lighting, thermal stresses, vibration.

Chemical, e.g. toxic substances, dust particles, fire/fumes.

Biological, e.g. viruses, micro biological organisms.

Mechanical, e.g. machinery, equipment,tools, conveyors.

Type of Hazards

Electrical-Shock; electrical burns, static electricity.

Fire & Explosion-Flammables; reactive substances, explosive substance, stored pressure.

Gravitational-Lifting; falling objects, fall from height.

Type of Hazards

Psycho-social, e.g. shift patterns, job organisation, intimidation.

Behavioural, e.g. non-compliance to standards, lack of skills, new or unusual tasks.

Environmental, e.g. uncontrolled emissions, contamination of air, ground or water.

Ergonomic, e.g. restricted space, manual handling, repetitive handling.

Some Forgotten Hazards

HAZID Workshop

Any Question?

Overview Methodologies

Different types & when they are used Behavioural Team based Qualitative Quantitative

Assessmentof theRisk

TimeTrouble

CostPhysical Difficulty

Risk Assessment

In general terms, a suitable method should exhibit the following characteristics: it should be defensible & appropriate to the system/risk

under consideration; it should provide results which enhance the understanding

of the risk & how it can be controlled; it should be capable of used by a variety of persons in a

manner that is traceable, repeatable & verifiable.

Behavioral JSA Qualitative Quantitative

Spectrum Risk Assessment

Behavioral Risk Assessment

Application of a risk based way of thinking to any task or situation [integrated in the culture]

Characteristics of these tools/techniques, Apply both on & off-the job. Applicable to tasks/situations at any level of risk. Supports & compliments more formal techniques. Are simple, paper work free & easy to maintain.

Behavioral Risk Assessment

Success Factors Simple process/framework - e.g.,

Thinksafe SAM [Spot the hazard, Assess the risk, Make the change]

Take 5 [WMC]

PASS [Positive Attitude Safety Systems]

STOP [Step Back, Think, Observe, Proceed]

Hazard Identification skills; physical & behavioral

Job Safety Assessment

Best known tool on workshop floor Also known as Critical Task Analysis,

Breaks a task into the discrete steps, Identifies potential hazards arising from the step, and, Determines the controls to remove/reduce the hazard.

Most JSA tools/techniques are very similar Some include a Risk Ranking Step Either,

Formal; paper based, one person or small group. Informal; effectively a behavioral tool.

Typical applications: Input for the development/review of Safe Work Procedures, SOP,

IK, etc. Infrequent tasks where no SOP exists e.g., Shutdown Where a task or work environment has changed

Unacceptable risk [or inadequate control] may trigger a more formal risk assessment.

Job Safety Assessment

Qualitative Risk Assessment

More formal & structured risk analysis, Need consider that everything within the scope is considered Otherwise “you don’t know what you don’t know” Demonstration of Duty of Care obligation

Provides basis for, Control Management Plans Risk reduction [Control Improvement] plans

I.e., an understanding of the things that can save/cost a lot of incidents/injuries/business disruption /money/negative community disruption

Most commonly used form of formal risk assessment. Team Based-Brainstorming.

More user friendly for participants than quantitative assessment techniques

Process is subjective Some semi-quantitative data e.g., incident rates Multitude of techniques & hybrids developed & used by

industry Easy to develop customized/company tool More formally based Less subjective based on technical data

Qualitative Risk Assessment

Behavioral JSA Qualitative Quantitative• Thinksafe• Take 5• Safety Huddles• Hazard Cards

• HIRA• WRAC• WARA

• HAZOP• FMEA

• HAZID• HAZAN• Fault Trees/Event Trees

Subjective

Perception Based

Soft

Objective

Information Based

Hard

Spectrum Risk Assessment

PTBC Risk Assessment Procedure

Scoping/Establishing Context Select Risk Assessment Team Conduct Workplace Inspection Conduct the Risk Assessment Ongoing Management Review Consultation & Communication

Establish the Context

Identify Risks

Analyse Risks

Evaluate Risks

Treat Risks

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Assess Risks

THE RISK MANAGEMENT PROCESS AS/NZ 4360:1999

What, Objectives of risk assessment Boundaries of risk assessment; equipment, operation & systems Nature of hazards or associated risks

Why, Define the purpose & the expected outcomes; risk registers, action

plans Who,

Define requirements for the team; technical expertise, experience Identify & notify participants in the team Allocate & define roles; Team Leader, Team Members, Facilitator

How, Define risk assessment method; HIRA

When, Define timetable, venue & final presentation deadline

Scoping/Established Context

The Risk Assessment team should be a combination of the following:- Operational personnel; e.g., Fitters, Maintenance Technicians;- Technical; e.g., Engineers, Specialist; and- Management; e.g., Supervisor, Superintendent, Manager.

Selecting Risk Assessment Team

Facilitator Set up the exercise based on the scoping; Introduce the team to the scope and risk

assessment methodology; Keep the process on track; Promote creative thinking in determining

applicable controls; Resolve any conflicts and help reach consensus; Ensure the objectives of the risk assessment

are met.

Team Roles

Team Leader Act as the Client liaison; Provide support where necessary to the Facilitator; Make any logistical arrangements; Assign tasks for collection of relevant information

to Team Members' Resolve any conflicts within the Team; Assist the Client in the review of the risk

assessment results.

Team Roles

Team Member Input skills & experience into the exercise; Understand the potential & actual hazards of the

area concerned; Have an understanding of current controls in place

to prevent/reduce risk; Contribute their knowledge to achieve a

successful outcome.

Team Roles

Ideally, the nominated Risk Assessment Team should conduct a site visit prior to the commencement of the formal risk assessment.

The purpose of this visit is to familiarize all members of the team with the physical aspects and to assist in identifying hazards. It is important to consider all types of hazards & not just the obvious physical ones.

Conduct a Work Place Inspection

Any Question?

STEP 1. Introduce the scope

STEP 2. Analyse the Subject. Breakdown intoComponents (Process, Activities, Products, Services etc.)

STEP 3. Identify Hazards & “unwanted events”

STEP 4. Determine Inherent Risk Value. ‘Maximum Reasonable’ consequences & likelihood

STEP 5. Determine Existing Controls & Assess Adequacy

STEP 6. Determine Residual Risk Value. (Re-assess Consequence & Likelihood based on existing controls)

STEP 7. Propose additional controls if level of risk is not reduced to acceptable level.

STEP 8. Develop Risk Reduction Action Plans

STEP 9. Compile Risk Assessment Report

Risk Control

Identifying Risk

Basic Caused

Incident Occurred

Injury Losses

Domino theory by Peter Drucker & ILCI; 1985

The Facilitator should start the Risk Assessment Process off by reviewing the Scope, confirming it is fully understood by all Team Members.

The roles of the Team Members, Team Leader & Facilitator should be reiterated.

The method to be used should then be discussed in as much detail as is needed for the Team Members to reach a common understanding of the process.

STEP 1. Introduced the Scope

The process, system, plant/equipment, operation or work area that is the “subject” of the assessment should be analyzed & broken down into definable sections, components or functional groups [processes, operating areas, activities, products etc.].

If a visit to the workplace has been conducted, it will assist the team in recalling a mental picture of the subject. Any information collated prior to the risk assessment should also be available for reference.

STEP 2. Analysed the Subject

STEP 3. Identify Hazards & “unwanted events”

The Facilitator should assist the Team to identify all the possible hazards [energy sources] associated with the individual sections, components or functional groups.

Prompts may be used to assist in focusing attention, such as hazard/energy guides.

It is not essential that every single hazard or resulting incident be identified for a successful risk assessment. However it is crucial that significant impacts are identified.

Hazard Types: Physical; e.g. noise, ionising radiation,

lighting, thermal stresses, vibration. Chemical; e.g. toxic substances, dust

particles, fire/fumes. Biological; e.g. viruses, micro biological

organisms. Mechanical; e.g. machinery, equipment,

tools, conveyors. Electrical; e.g. shock, electrical burns,

static electricity Fire & Explosion; e.g. flammables,

reactive substances, explosive substance, stored pressure

Gravitational; e.g. lifting, falling objects, fall from height, slip trip & fall.

Ergonomic; e.g. restricted space, manual handling, repetitive handling.

Psychosocial; e.g. shift patterns, job organisation, intimidation.

Behavioural; e.g. non-compliance to standards, lack of skills, new or unusual tasks.

Environmental; e.g. uncontrolled emissions, contamination of air, ground or water.

STEP 3. Identify Hazards & “unwanted events”

Once hazards are listed determine possible unwanted events. This can be done through: Brainstorming; Checklists Personal & organizational experience [Incident Reports]; Audits or physical inspections; Benchmarking industry experience [local or overseas]; Judgmental-consensus, speculative/conjectural, intuitive; History, failure analysis;

The potential unwanted incidents or events can then be recorded in a Risk Register.

STEP 3. Identify Hazards & “unwanted events”

“Risk” is the combination of the likelihood of a hazard occurring & the potential consequences if it occurs.

For each potential incident/event, the likelihood of the incident occurring & the maximum reasonable consequences must be determined to identify the “risk”.

This must be done without consideration of any controls that might be in place or that are being considered as the focus here is on the hazard itself. This is called the Inherent Risk Value.

STEP 4. Determine Inherent Risk Value.

A Almost Certain

Is expected to occur in most circumstances, e.g. once per shift/day.

B Likely Will probably occur in most circumstances, e.g. once per month.

C Possible Might occur at some time, e.g. once per year.

D Unlikely Could occur at some time, e.g. once every 5 to 10 years

E RareMay occur only in exceptional circumstances/have heard it happen in industry, e.g. may occur in life of mine.

Determine Likelihood

STEP 4. Determine Inherent Risk Value.

Severity Level

Health Consequence

Safety Consequence

Environmental Consequence

Property Damage

Consequence

Production/ Business

Interruption Consequence

5 CatastrophicLong term chronic health effects to workers or public with potential for death.

Fatality, Permanent Disability.

Large Scale & Long term environmental impact affecting public & neighbors offsite. Legal breach with prosecution likely.

More than $500k damage. Shutdown of company.

4 Major

Long term chronic health effects to workers or public with major impact on body function/lifestyle.

Partial disability /Serious Lost Time Injury (long term hospitalization & treatment).

Large scale & short term environmental impact regulation breach penalties likely.

Between $100 - 500k damage

Closure of essential services & Departments.

3 ModerateChronic health effects causing partial impact on body function of workers.

Lost Time Injury without disability (short term hospitalization & treatment).

Small scale & short term environmental impact on/offsite & reportable to regulators.

Between $50-100k damage

Closure of non-essential Departments and/or disruption of utility supply.

2 MinorReversible health impact requiring medical intervention/treatment.

Medical Treatment Injury, requiring out patient treatment with no further follow up.

Minor environmental impact restricted to lease area. Breach of internal requirement.

Between $5-50k damage

Momentarily minor interruption.

1 Negligible Short term reversible health impact.

Superficial and/or First Aid Injury no medication required.

Negligible impact immediate remediation possible.

Under $5k damage Minimal disruption to services.

Determine Consequence

STEP 4. Determine Inherent Risk Value.

PTBC Risk Rank Likelihood of Specified Consequences

Health Consequence

Safety Consequence

Environmental Consequence

Property Damage Consequence

Production/ Business Interruption Consequence

AAlmost Certain

Daily/ per shift

BLikely

Once per month

CPossibleOnce per

year

DUnlikely

Once per 5 -10 years

ERare

Within Life of mine

5Catastrophic

Long term chronic health effects to workers or public with potential for death.

Fatality, Permanent Disability.

Large Scale & Long term environmental impact affecting public & neighbors. Legal breach with prosecution likely.

More than $500k damage.

Shutdown of company.

25Extreme

24Extreme

22Extreme

19High

15 High

4Major

Long term chronic health effects to workers or public with major impact on body function/lifestyle.

Partial disability /Serious Lost Time Injury (long term hospitalization & treatment).

Large scale & short term environmental impact regulation breach, penalties likely.

Between $100 - 500k damage

Closure of essential services & Departments.

23Extreme

21Extreme

18 High

14 High

10 Medium

3Moderate

Chronic health effects causing partial impact on body function of workers.

Lost Time Injury without disability (short term hospitalization & treatment).

Small scale & short term environmental impact on/offsite & reportable to regulators.

Between $50-100k damage

Closure of non-essential Departments and/or disruption of utility supply.

20 Extreme

17 High

13 High

9 Medium

6 Medium

2Minor

Reversible health impact requiring medical intervention/treatment.

Medical Treatment Injury, requiring out patient treatment with no further follow up.

Minor environmental impact restricted to lease area. Breach of internal requirement.

Between $5-50k damage

Momentarily minor interruption.

16 High

12 High

8 Medium

5 Low

3 Low

1Negligible

Short term reversible health impact.

Superficial and/or First Aid Injury no medication required.

Negligible impact immediate remediation possible.

Under $5k damage

Minimal disruption to services. 11

High7

Medium4

Low2

Low1

Low

Identify all of the existing controls which are currently in place to prevent or reduce the likelihood and/or consequences of the unwanted event. These controls will consist of: Elimination, Engineering, Substitution, Administrative/Procedural, and PPE.

STEP 5.Determine Existing Controls & Assess Adequacy

Hierarchy of Controls

Eliminate [by good design, different method etc.]

Substitute [using less hazardous alternative]

Engineering controls [guards, barriers,

ventilation, fail-safes, alarms, shut-downs etc.]

Administrative controls [work procedures, rules,

training, management procedures, inspections etc]

Personal Protective Equipment

Emergency Response [required for high consequence risks]

BEST

Safety Management

System

LEAST EFFECTIVE

The team must also consider if these existing controls are effective in controlling the risks.

If any “extreme” risks have been identified which have ineffective controls & are considered to pose an immediate threat to personnel it may be necessary to immediately notify the responsible manager so that he or she is made aware of the situation.

The existing controls should then be recorded in the risk register.

STEP 5.Determine Existing Controls & Assess Adequacy

After identifying & assessing the effectiveness of the Existing Controls, the Team should determine the consequence & likelihood of the unwanted event with the current controls in place.

This is required to determine the “Residual Risk” [the risk that remains after the existing or current risk treatment measures or controls have been considered]. The same process should be used as detailed before, using the Risk Criteria.

The Residual Risk should then be recorded in the Risk Register.

STEP 6. Determine Residual Risk Value.

Risk Ranking

Risk Value Control

Extreme 25-20Cease activity & implement immediate controls. General Manager to review controls prior to activity re-commencing.

High 19-11Take corrective/preventative actions immediately. Manager to review controls as soon as practically possible.

Medium 10-6Take corrective & preventative actions within reasonable timeframe. Control measures to be reviewed through improvement plan.

Low 5-1 Review & control as part of ongoing operations.

STEP 6. Determine Residual Risk Value.

By recording both the inherent & residual risk values, it assists to demonstrate the reduction of risk. This can also be used to measure whether Duty of Care obligations have been met in regard to exposure of hazards.

When the Residual Risk has been determined as being either “Extreme” or “High”, the Team must further review the controls to identify what actions are required to improve their level of effectiveness or develop additional controls to further reduce risk.

STEP 6. Determine Residual Risk Value.

Consider Risk Control Options Start with Most Serious Risk First Refer to preliminary Hazard Analysis Causes

Does Benefit Outweigh Risk Communicate with Senior management if required Integrate Into Planning Accept No Unnecessary Risks Make Risk Decisions at the Proper Level Accept Risk if Benefits Outweigh the Cost

STEP 7. Additional controls if level of risk is not reduced to acceptable level.

Once the risk assessment is completed the Team should review the risk assessment [both process & results] against the scope to ensure the expected outcomes have been achieved. This should include a final check that all of the recommended controls have been recorded.

The final part of the risk assessment process is to develop a Plan for Residual Risks determined to be unacceptable.

If required by the Client, the Team should also develop an action plan that may include responsibilities & time frames for the implementation & monitoring of the actions required.

STEP 8. Develop Risk Reduction Action Plans

The Risk Assessment Report should contain all the details of the risk assessment & acts as a permanent record of the results.

A report on the risk assessment must be compiled & provided to the Client within the specified time. This report should include: List of Team Members Overview of process Copy of scope Dates & venue Risk Assessment Record form Recommendations for new or amended controls Draft action plan (if required)

It is the responsibility of the Team Leader to finalize the report & present it to the users.

All changes resulting from the risk assessment process must be notified & communicated to the workforce.

STEP 9. Compile Risk Assessment Report

Risk Control

Risk Management Summary There are risks to be managed in all work. Everyone is responsible & accountable for managing the risks in their

work. Employees should be encouraged & supported by their managers to

manage risks. ASDAM provides a framework or systematic approach for making

decisions about how best to manage risks. Legislative requirements & the political, social & economic environment

need to be taken into account when managing risks. Action taken to manage risks should be integrated with (not be separate

from) existing systems & processes. Effective risk management depends on good quality information. Risk Management is everyone’s business; is part of business as usual; The process for managing risk is logical & systematic & should become a

habit.

Walk the Talk;Trust the Worthy;

and Living Example.

Thank you and Have a Safe Work