Contents

Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................3
Reason of explosion....................................................................................................................................4
Risk Analysis...............................................................................................................................................4
Risk Perception and Communication.......................................................................................................6
Risk Management Strategy..........................................................................................................................7
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11
Executive Summary

Risk management made us prepare in advance about the probable issues a business can face,
while they are in operation and help organization to make plan in advance to avoid such
incidents. There was a incident in Tianjin which caused heavy physical and economical damage
This incident was a clear case of failure of implementation of risk management and risk strategy
and made us understand why risk strategy is so important. Be it any kind of operation, an
organization or any warehouse. We Should know what risk management strategies and process
we need to follow to avoid future consequences.
Introduction

On 12th of August 2015, Tianjin Port of China is shocked and rattled by the series of explosions.
The first 2 explosions happen, 30 seconds to each other. However second explosion was of high
capacity and it was equivalent to the explosion of around 20 Tons of TNT, which was deadly and
devastating in terms of damage it caused.

The series of event didn’t stopped here and on 15 th of August, there were 8 more explosions and
some random explosions were keep on happening throughout the month of August. The
explosion took almost 173 lives and around 800 people were injured and in addition to that some
8 people were went missing, there still no known update about them.

The major cause of the blast was the mismanagement culture followed by the warehouse
administration and careless attitude by the chemical regulators.
Reason of explosion

There was a committee, that was put in place to understand the cause of explosion and the impact
of the same in financial and environmental terms. The report submitted by the officials, which
has the members from Chinese cabinet, and state council members , explained that the explosion
was a clear case of human error and mismanagement of the chemical at the warehouse by the
employees at the warehouse and also negligence by the employees of the Rui Hai, the company
who used to manage the warehouse.

The investigation found out that the an overhead container that was having nitrocellulose, cause
the explosion, the employees was having the information about the container and also knowing
that there were some issue with the container and the material inside, but no one took
responsibility to check the issue and that ends up in causing the explosion which took the life of
almost 175 people and many went missing.

Risk Analysis
The explosion and the Tianjin port, not only took the life of people but also did the economical
and environmental damage which could have been very hazardous for the people around there
and used to work in and around the port.

Because of the explosion around 300 building in and around the port were severely damaged,
more than 7000 containers were destroyed and in addition to that 12000 plus cars were also
damaged to the unrecoverable extent. The total financial damage was more than $1 billion. The
environmental damage caused by the explosion is something which is worth considering very
seriously by the government and health department of the Chinese government, there were
around 320 tons of Sodium Cyanide were left in the environment because of explosion and that
amount can be really deadly.
View of the Tianjin port after explosion

View of Explosion from Space

Risk Perception and Communication
The disaster, the explosion however can be avoided is proper risk perception and risk
communication is being followed. If the people responsible for taking care of the warehouse,
should have understood their responsibility than the incident could have been avoided. The risk
perception is necessary in situation like this it improves the judgmental capabilities of the person
who are involved in job that includes critical tasks. A currently active research topic is
identifying the conditions under which judgment surrenders entirely to perception (Lowenstein et
al. 2001). A proper and timely communication is the integral part of the risk management and
risk analysis, it makes people aware of the situation they are involved in and how it can be taken
care of.

In the case of explosion at Tianjin port, employees are aware of the issue with the overhead
container, but no communication is done to the people responsible for the services and they
haven’t even anticipated the danger they may be in, if proper risk analysis is being followed then
the incident might have been avoided or the loss would have been controlled.
 Explosion crater, having diameter more than 100 Mtrs

Risk Management Strategy

Effective risk management strategy is the need of the day, and it should have been in place to
avoid or mitigate the effect of any misshaping. Effective risk management strategy if followed
can also help in the case of any disaster as measures are kept in place if something bad happens.

The effective risk management strategy can have following steps:

1) Identify
2) Evaluate
3) Avoidance
 4) Mitigation
5) Acceptance

Identify

This process is the primary and very important part of the risk management strategy, even in the
case of organizational point of view, when a new business is started, risk is identified first be it in
the form of internal related to the product performance or employee management or external
competing with other players in the market. Identifying the risk is must, same goes for the case
of Tianjin, while taking care of such an explosive and hazardous material the company and
people responsible should have identified the risk associated with the job and the process, that
helps prepare in advance in case of something happens.

Evaluate

Risk evaluation is integral part of business management, what impact an incident can cause, the
preparation for the same is done accordingly. Safety measures are put in place to avoid any
future impact cause by the risk. The risk might be evaluated by measures to tackle it were not put
in place by the management.

Avoidance

The best thing one can do in terms of risk management is avoiding the risk, it is tricky but not
impossible, it require proper planning and management and support from the people involved
with the task associated with the risk. If we look at the case of Tianjin, the risk avoidance plan
has to be put in place and it’s something which is something that is workable. We have the
example of nuclear power plants, which keep on working without any major issues and disaster
cause by human negligence. Even in the case of natural calamity or disaster these nuclear plan
are self-manageable and can negate the risk on their own.
Mitigation

The risk mitigation can only be done if proper evaluation of the risk is done and safety measures
are applied accordingly. If no safety measures are put in place than the risk can’t be mitigated.
Organizations also works on the same process, they evaluate the risk and plan for mitigations
accordingly

Acceptance

Acceptance of the risk is only valid, if risk is already determined and has checked the probability
of the impact and what potential damage the risk can cause to the functionality. If that process is
not followed than the risk acceptance cannot be applied and people only take responsibilities of
failure and negligence.

Outcome of the Explosion

What Tianjin explosion has made to understand the administration that there were no safety
measures and disaster management process were in place, and if people have done their work
efficiently than the disaster can be avoided and can save the state from the huge financial loss
and the lives lost because of the incident. One of the major reason of the blast was that two
containers carrying explosive were held together at the warehouse, and negligence is done in
identifying what impact these two can cause, so it made the organization and management learn
about the impact a very hard way and started taking the standard safety measures which can be
very helpful for the future and also government and state administration started keeping the eyes
on the warehouses who are storing such kind of material and if they are following the proper
safety measures.

In terms of management point of view what is clearly visible is the effect the negligence can
cause on the performance of the organization or the business. Proper study and safety measures
have to be applied properly to avoid any unwanted disaster.
Conclusion
Risk management is an integral part of the business operation, the success of the business or
organization depends on how effectively, risk analysis is done by the management. When we
look at the incident happen at the Tianjin is helps us to understand that there were no risk
management system was in place. They have not evaluated the risk and have not checked about
what kind of material they are keeping together. It’s a big no to keep two explosives together in
terms of warehouse storage as it increases the chances of incident. The incident forced the
country administrator to make standard policy and start taking strict measures to keep check on
the warehouses and ports if they are following the practices or not. If same practices are followed
from the beginning then the incident could have been avoided and many lives could have been
saved. In terms of management the Tianjin incident taught us a lot about the need of the risk
management at the organizational level.
References

Hernández, J.C. (2016, February 5th) Tianjin Explosions Were Result of Mismanagement,
China Finds retrieved at https://www.nytimes.com/2016/02/06/world/asia/tianjin-explosions-
were-result-of-mismanagement-china-finds.html

Loewenstein, G., Weber, E., Hsee, C. et al. (2001). Risk as feelings. Psychological Bulletin. 127,
267–86

Wehrstedt et al. 2015 Tianjin Explosions IGUS EOS Meeting, April 11th - 12th, 2016, Basle,
Switzerland