Managing Health, Safety, and Risk in Organizations - Essay Example

Report on Managing Health, Safety and Risk in Organizations Contents Introduction 3 Health and Safety 3 Risk 5 Requirements of risk identification 5 Types of risks 5 Risk Management Policy 6 Risk Management Planning 8 Risk Reporting Code 10 Conclusion 12 References 14 Introduction Health and safety is an important part of any industry, particularly so in the offshore sector, which is classed as a major hazards industry. Reflecting the priority that safety must take in the sector's operations, industry leaders gave an undertaking in 2002 to ensure, "that UK is the safest place to work in the worldwide oil and gas industry". Health and Safety Safety is the very foundation of world-class drilling and well operations performance. Working safely is a condition of employment for everyone who works for oil industry. The health of employees and others who work with drilling and well operations worldwide is a key consideration. A strong health and safety culture for offshore means everyone taking responsibility for their actions and playing their part (http://www.hse.gov.uk/offshore/priorities.htm) For safety of the employees and their health, following regulation came into existence: 1. The Offshore Installations (Safety Case) Regulations came into force in 1992. 2. The Safety Case Regulations require the operator/owner of every fixed and mobile installation operating in UK waters to submit to the HSE, for their acceptance, a safety case. The safety case must give full details of the arrangements for managing health and safety and show that the company has safety management systems in place, has identified risks and reduced them to as low as reasonably practicable, has introduced management controls, provided a temporary safe refuge on the installation and has made provisions for safe evacuation and rescue. The detailed regulations are as such: The Offshore Installation and Pipeline Works (Management and Administration) Regulations 1995 - these set out requirements for the safe management of offshore installations such as the appointment of offshore installation managers (OIMs) and the use of permit-to-work systems The Offshore Installations (Prevention of Fire and Explosion, and Emergency Response) Regulations 1995 (PFEER) - these provide for the protection of offshore workers from fire and explosion, and for securing effective emergency response The Offshore Installations and Wells (Design and Construction, etc) Regulations 1996 - these are aimed at ensuring the integrity of installations, the safety of offshore and onshore wells, and the safety of the workplace environment offshore. The Management of Health and Safety at Work Regulations 1992 The Control of Substances Hazardous to Health Regulations updated in1999 The Noise at Work Regulations 1989 The Health and Safety at Work Act (1974) The Provision and Use of Work Equipment Regulations (PUWER) The Lifting Operations and Lifting Equipment Regulations (LOLER) The Dangerous Substances and Explosive Atmosphere Regulations (DSEAR) First-aid, safety representatives and safety committees, personal protective equipment (PPE), display screen equipment, manual handling and safety zones. 3. In the UK, the legislation sets out the objectives that must be achieved, but allows flexibility in the choice of methods or equipment that may be used by companies to meet their statutory obligations. Health and Safety Executive's (HSE) Offshore Safety Division employs a team of inspectors who are responsible for enforcing both the offshore specific regulations and the general safety legislation common to all industries. One of examples of hazards in oil industry are gases and easily vaporizable liquids which require utmost care and precautions (P. Waterhouse and revised by Ray Chalklen). All the time that these are contained within the equipment that is designed to hold them, whether it be pipeline, storage tank, reaction vessel, portable container, cylinder, etc., they do not present a fire risk. It is only when they are released to atmosphere either because their use requires it or inadvertently that they become a fire risk. The possibility of inadvertent release can be reduced by careful design of the equipment and training in strict systems of work. The prevention of accidental releases from leaking joints or pipe failure requires high standards of design, installation and maintenance of the equipment. As part of their efforts to ensure a safe working environment, employers are required by the Management of Health and Safety at Work Regulations 1992 (MHSW) to make suitable and sufficient assessments of the health and safety risks arising from their operations as they may affect their employees and others. Risk Risk is defined as the combination of the probability of occurrence of loss and the severity of that loss. Risk maybe expressed mathematically as the combination of the likelihood of a harmful event and its associated harm or consequence. Risk = Likelihood x Consequence Requirements of risk identification To reduce the risk to minimum, it is of utmost importance to identify the key requirements, principles of risk management, policies developed and responsibilities undertaken by the management group. Also, there is necessity of evaluation and reporting of risks to improve the prevailing conditions within a company. Taking the example of one of the oil industries we can assess the requirement of stressing on the health, safety and risk profile of the oil industry. Subsea 7 is one such company in UK. The company's global offshore operations are supported out of the UK, Africa, Brazil, North America, Norway and Asia-Pacific. Types of risks The oil industry poses following risks in different forms and at different levels: To personnel To assets To Project Financial risk Risk to reputation of the company To environment RISK MANAGEMENT in Subsea 7 Risk management is defined as the identification, analysis, and control of those internal and external risks that prevent a company from achieving its business goals and financial objectives. Risk management focuses on the identification and management of an acceptable level of risk (Manual of risk management rev - 2007). Subsea 7 understands that business risk is strategic in nature and includes all forms of risks in its business activities related to market, operational, financial, health and safety environmental. Final decision is taken by the Board of Directors and Executive Management about the degree or level of risk. Subsequently, the decisions are communicated to those responsible for managing risk or risk areas. Subsea considers the risk and its influence upon various activities on an operational basis as part of the project delivery and includes it in the fundamental management of the Company's risk profile. It requires a systematic process and structure to ensure proper implementation of all policies related to risk profile of the company. Three important components of risk management are to define and understand the risk profile, measure acceptability and reduction and tracking the reports and control. These components are applied for risk assessment process, and expanding it to a region, division, function, and associated projects and departments. Risk Management Policy The risk management policy defines the company's intentions with respect to risk and the relative exposures faced by the company. Subsea 7's policy is to: Develop and implement a comprehensive global risk management framework to ensure that risks are positively managed in an efficient, effective and economic manner at every level in the Company. To pro-actively manage the risks and review the processes and operations and consider the risks in strategic planning. Integration of risk management in all management systems and business processes so as to ensure continuous improvement in the quality and resultant success of the projects of the company Assess global corporate risks on a continual basis at the Executive Management level and review the effectiveness of the implementation of the risk management controls and procedures on an annual basis at the Board level. Devise appropriate action plans to eliminate risk if practical or to mitigate risk to an acceptable level to ensure the protection, health and safety of all employees (personnel) involved in our operations and to give due care to protecting the environment. To use an effective management system so as to comply with the company's corporate governance obligations and listed company regulatory requirements The policy statement and requirements are applicable for risk management within the operations and the risk management system of the company. These requirements are applicable to Regional, Divisional and Functional Groups and the Risk Management Department. Management group and system of Subsea 7: 1. Board of Directors Board holds the overall responsibility of company's effective risk management system and to review this system regularly. 2. Chief Executive Officer The 'CEO' of the company holds the responsibility for identification and reporting to the Board. 3. Risk management committee (whose members form Executive management team) has been formed by CEO for executing the responsibility of implementation and operation of company's Risk Management Policy .The responsibility of this team is :- To assess and review the effectiveness of the risk management systems and internal controls To update company's risk profile To communicate the results annually to the Board. 4. Regional, Divisional and Functional Leads are responsible for: The pro-active management and mitigation of risks For ensuring the execution of actions planned and proper implementation of company's strategies Ensuring that exposure is evaluated and maintained at an acceptable level Identification of accurate action plans to manage the risk to an acceptable level Ensuring compliance with the Company's corporate governance obligations. 5. Employees Like all other staff of the management committee, employees are also given trainings and regular updates to keep them informed about company's policies regarding risk identification and management. They are encouraged to actively participate in the risk management. 6. Risk Management Department Is responsible for processing the documentation of the regional, divisional and functional risk registers Provides assessment of the key global risks on a regular basis Supports the Executive Management team for the management of risk. Reviews the implementation and effectiveness of risk management controls and procedures Ensures that company's compliance obligations as a listed company are met. Source: Risk Management Manual No. BP-GL-RM-001 Risk Management Planning The risk management plan is defined as a live document, requiring regular review and update to ensure that variations and the effects of review findings are incorporated. Vice president of the company is responsible for maintenance of the plan. The risk management plan consists of: Terms of Reference of the plan Schedule of activity - either annual or planned duration Scope of activity Planned Risk Management activities - Terms of reference and schedule Reporting lines and schedule It has following essential elements: Commencement of Planning during the formative phase of any work activity or business plan. Regional risk management plan ensures that the regions risks At both project and functional levels are addressed. The plan should be able to identify report and manage risks through its activities. Tender Risk Planning entails that the manager does overall monitoring of all risks associated with all elements of the tender or definition phase. Project risk plan is a formal live document, detailing the requirements of risk management activities and is developed from the Tender documentation and detailed to address specifics of timing and content as appropriate to the project and contractual demands. It contains formal planned activities which include scope limits and interfaces, and linkage to schedule. For this, following requirements are met:- HAZID and HIRA meetings (Hazard identification, Hazard identification and risk assessment) Design Reviews and Design Risk Assessment HAZOP Studies Reliability Activities Functional Risk Plan is applied at global and regional level and presents the functions risk management activities to identify the risk issues that may impede the function of the key issues Divisional Risk Plan Identification of hazards is equally important. A hazard represents the potential for a risk to the activity or enterprise. Hazards are not risks but can give rise to many risks each with their own unique outcome and risk values. Hazard represents a potential condition which should be reviewed in order to allow development of its associated risks, if any. Risk analysis comprises of understanding development of a hazard into a defined risk and an estimate of both the likelihood and consequence of each potential outcome Consequences in terms of financial costs and impacts to schedule are determined Likelihood - Selection of the Likelihood is set against either project duration or the financial year as appropriate. The likelihood is based upon the probable outcome and determines the Likelihood Profile to be used in both financial and schedule risk analysis. Risk Reporting Code Risk reporting has been defined under four codes 1, 2, 3or 4. 1. Executive Management team via the Regional or Functional Management, Financial risk analysis should include the contingency provision and action plan 2. Regional and functional Management Teams, financial risk analysis should include contingency provision and action plan. 3. Retained within the project and evaluated. For financial risk analysis, review is required, and should include contingency provision and action plan. 4. Shall be recorded and monitored in the Risk Register with no financial analysis required. For financial risk analysis, no action is required, unless the status of the issue changes and requires evaluation Risk treatment components are: Risk Avoidance Risk Reduction Risk Transfer Risk Retention Risk Treatment Costs Contingency Sums Cost benefit analysis is the key to many risk decisions and determines the relative benefit in terms of cost of reduction measures and the benefits achieved through the reduction in risk value achieved by the risk treatment. Cost benefit Value ($) = Benefit - Cost Where Benefit = Risk Initial value ($) - Risk Residual value ($) Cost = Actual Cost of Measure ($) Cost benefit analysis is a tool which should be utilised to gain guidance on the provisions to be made. Risk Reporting - Reporting and documenting the risks being faced and managed through any region, function, department, or project is essential to the understanding of the overall risk profile of the Company. Risk Register is an essential tool for evaluation and action tracking and an approach to data. Risk Reports are generated to enable reporting at Regional and Function Levels and ultimately to the Risk Committee. Project management report includes risk management summary report, graphical representation of all risks values, the cumulative risk profile, contingency profile and risk registers. Conclusion To be successful, an organization needs a dedicated workforce and this involves not only the effective management of systems and activities, but also the management of change as it requires a clear understanding of human behaviour at work. Site leaders are the most visible safety leaders. The most visible site leader in drilling and well operations is the well site leader. Another critical site leader is the drilling and wells team leader, who has the opportunity to make a significant impact through investment in planning, equipment and time and a focus on safety. The working relationship between the drilling and wells team leader and well site leader is critical (Managing chemicals safe, John Adamson). Subsea has an inherent, deep-rooted health, safety, environmental and quality culture that has made strong foundations of performance in the organization. One of the strongest strategies of Subsea 7 is Assessment of the risk which follows a series of logical steps to: 1. Define the task or process to be assessed and identify the boundaries. 2. Identify the hazards and eliminate or reduce them as far as possible. 3. Evaluate the risks from the residual hazards by: a) Assessing the extent of the hazard b) Estimating the probability of harm occurring c) Assessing likely extent of the harm or injury. 4. Decide on precautions or control measures to be taken, 5. Train local operators. 6. Implement precautionary measures. 7. Monitor the effectiveness of the measures and adjust as necessary. While nothing can be absolutely and unequivocally safe and free from risk, the aim must be to achieve, so far as is reasonably practicable, a standard that reduces risks to a minimum whilst maintaining the viability of the process (Edwards v. National Coal Boardb12). This is done with precise planning by Subsea 7. Risk assessment is probably the most powerful 'tool' in Subsea 7 for guiding decision-making standards and procedures and the physical work environment. The quality of management is central to organization development and improved performance. Through very effective management group system, Subsea 7 has been able to successfully achieve that goal. It imparts trainings to its managers at different levels so that they understand the importance of improving the overall performance and effectiveness of the organization. Subsea 7's experienced and skilled project managers and experienced engineers offer all the disciplines that make subsea oil & gas development and operation possible, including complete engineering, procurement, installation and construction (EPIC) services and life of field (LOF) services. Subsea 7 has a fleet of offshore vessels which ranks amongst the largest, most modern and technically advanced in the world. These vessels provide the full array of capabilities and are supported by diving services, ROV services and remote intervention tooling and solutions. Onshore, the company has an extensive infrastructure of project management and engineering centres, pipeline spoolbases and fabrication yards. These strategically-positioned assets, in conjunction with a network of local partners, are central to their objective of developing and maintaining high quality work, high safety networks and minimizing the risk. Subsea has implemented the policy of building organizational competence through optimum use of their resources and in the ratio of outputs to inputs. Subsea' approach to risk management is very dynamic involving risk identification, awareness and reporting at all levels and throughout the company while placing considerable reliance on the skill, experience and judgment of its employees Subsea provides a pro-active method to identify, evaluate and devise suitable strategies for transferring or sharing, eliminating, minimizing and accepting risks. Risk management process is very flexible and dynamic in order to address the issues that arise in the constantly changing business environment. Risk management techniques are included with the companies training systems to enable employees to implement and encourage effective risk management practices In order to ensure a consistent approach and application of a risk management system, a single integrated Risk Management System is utilized providing: The procedures required for planning and application The work methods for each technique and when they should be applied The recording, monitoring and reporting systems Above all clear and concise interfaces Subsea has formed a risk committee which comprises of: The Executive Management Team - no less than 2 representatives of the executive team: CEO CFO COO Senior Vice President Commercial VP BA and Risk Management Invited Vice-Presidents Regional and Functional - to review and present risk position. Global Risk Manager An essential feature of management development is performance review (Chapter 19 MANAGEMENT DEVELOPMENT AND ORGANISATIONAL EFFECTIVENESS 971) Subsea 7 does biannual reviews for continuous supervision and to make changes as per requirement Subsea plays a big role in providing on-the-job-training and off-the-job-learning for technical competence, social and human skills, and conceptual ability. Lifelong learning should be the concern of all employees in the organization. The importance of management education, training and development was highlighted by two major reports, sponsored by British Institute of Management, published in 1987; "The Constable and McCormick Report" and the "Handy Report". Subsea 7 has competent performance review at three levels: 1. The organisational level - which comprises of basic 'skeleton' of the major functions which comprise the organization, its strategies, goals, measures, structure and deployment of resources. 2. The process level - examining the workflow and how work actually gets done and processes are installed which satisfy customer needs. 3. The performer level - involving performance variables such as recruitment, promotion, job responsibilities and standards, feedback, rewards and training. Overall performance of the organization and how well it meets the expectations of its customers are the result of goals, structures and management at all three levels (Rummler and Brache). With as large an organization as Subsea 7, benchmarking can be undertaken internally with a comparison between different divisions, units or locations to improve the performance levels. Benchmarking remains a vital first step in evaluating and measuring performance but its real value comes when it is applied in a consistent and ongoing way.(Bishop), whereas,(Prowle) discusses the use of performance indicators to measure the three 'Es' of effectiveness, economy and efficiency. The extent to which the goals of the organization are pursued in accordance with an underlying ideology, codes of behaviour, sets of principles, and ethical and organizational foundation. The effectiveness of an organisation might be assessed against Drucker's eight key areas in which objectives need to be set in terms of business performance and results: market standing; innovation; productivity; physical and financial resources; profitability; manager performance and development; worker performance and attitude; and public responsibility. To conclude, although Subsea business faces many risks to their personnel, assets, the success of their projects and reputation of the company, but at no time is the safety of individuals considered of lesser importance than financial success and in the process making it a successful organization. References Health & Safety In The UK Oil And Gas Industry http://Www.Oilandgas.Org.Uk/Issues/Health/Index.Cfm Risk Management Manual (2008) International Journal Of Risk Assessment And Management (IJRAM) 2007 Manual Of Risk Management Rev Date: 03.10.2007 Managing Chemicals Safe, John Adamson Risk Policy Manual, Chapter 19 Management Development and Organisational Effectiveness http://Www.Subsea.Com Management And Organisational Behaviour, Laurie J. Mullins Workplace Safety Ridley, J.; Channing, J Read More