Risk Ranking:Essence of any Hazard Analysis

Recently, I was giving training on HAZOP and I got a question "Why do you say that our HAZOP is incomplete without risk ranking? We are doing the study since so long and no auditor or authorities have ever questioned us for the same." 

So this question has made me think about the situation Process Safety is facing. We know that oil & gas has developed more than other sectors including FMCG, Pharmaceutical, Chemical (Bulk & Speciality), etc. with far better standards for performing safety studies including PHAs. So, here I am writing this post to share the importance of risk ranking in any hazard analysis technique.



Many industrial facilities usually follow various Hazard Analysis techniques, such as Hazard Identification and Risk Assessment (HIRA), Hazard Identification (HAZID), Hazard and Operability (HAZOP), Failure Mode and Effects Analysis (FMEA), etc. which usually include identifying causes of deviations from design intent of a parameter, estimating consequences of the deviation, reviewing the existing safeguards in place to prevent the cause/ consequence or protect against the consequences and suggesting appropriate recommendations to make the operations safer.

In any hazard analysis study, we get multiple recommendations which have to be implemented, but the questions which most management and shareholders face are "In what order I should work on the recommendations? If some recommendation is high cost, can I reject that recommendation? How do I prioritise my work i.e. should I implement all low-cost recommendations first and I can delay high-cost recommendations till next budget approval?"

The answer to all these questions is "RISK RANKING".

Risk Ranking is the process of qualitatively determining the risk as a combination of severity and likelihood with the help of standard risk matrix. Based on this combination, risk prioritisation is carried out.

The severity should be determined for consequences related to Health & Safety, Environmental, Financial, Asset Damage and Reputation. The likelihood is basically the event frequency per year which should be based on the company as well as on historical databases. Different kinds of risk matrix are used within the industry with the most acceptable one being 5X5 Matrix. Some also use 6X6 matrix and 8X8 matrix. One example of a 5X4 matrix is shown below:

Companies usually differentiate various risk combinations into different zones (For Example, Red, Amber/Orange and Green as shown in the image above). Some of the zones definition being (Refer https://staub-ex.blogspot.com/2018/09/when-is-risk-low-enough-risk-acceptance.html for further guidance):

• Green: Broadly Acceptable - Manage existing safeguards/ barriers to ensure continuous risk reduction when required.
• Amber/Orange: Tolerable if ALARP - Risk measures shall be provided unless the costs of implementation of a recommendation are grossly disproportionate as compared to the benefits achieved or in other terms risk reduced.
• Red: Unacceptable Risk - Activities to be terminated immediately (Highest Priority)

For a management, risk ranking defines which scenarios have to be handled with priority and which of them can be delayed further. For Amber/ Orange zone, many companies do ask for ALARP demonstration (which is, of course, the right way), however, some of them just live with the risk and some of them actually implement the recommendation even after being disproportionate.

Hence, one can say that without having the risk ranking, any Hazard Analysis study is incomplete as we are not prioritizing implementation of recommended controls and we might be overlooking the high-risk scenarios.

Now the next question people ask me is "How many places in a hazard analysis should I give risk ranking?"

A company should determine "Inherent Risk" i.e. Risk without any controls; "Current Risk" i.e. Risk in presence of existing safeguards; and "Residual Risk" i.e. Estimated Risk after implementation of the recommendations. For Example:

I hope that the importance of risk ranking can now be understood in a better manner. Do like, share and comment on the blog post and keep following for new updates. In case you have any questions, you can direct them on himanshuchichra@gmail.com.