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1.0 Introduction 2

2.0 Objectives of the study 3

3.0 Need of the project 4

4.0 Scope of the project 5

5.0 Research methodology 5

6.0 Limitations of the project 6

          

7.0 Company Profile 8

8.0 Organization Chart 9

        

9.0 Concept of risk 12-13

10.0Concept of Risk management 14

11.1 Determination of objectives 15

11.2 Risk identification 15

11.3 Risk analysis 16

11.4 Risk assessment 17

11.5 Implementation of the Decision 18

11.6 Evaluation & review 19

12.0 Importance of risk management 19

13.0 Activities in Risk Management 21

13.1 Risk Identification 22

13.2 Risk analysis 29

14.0 Risk Assessment 30

14.1 Activities to Risk Assessment 30

14.1.1 Activity One: Look for the hazards 31

14.1.2 Activity Two: Decide who might be harmed and how? 31

14.1.3 Activity Three: Evaluate the risk 32

14.1.4 Activity Four: Record your findings 32

14.1.5 Activity Five: Review your assessment 33

15.0 Risk management in chemical manufacturing unit 34

16.0 Data Analysis 35

17.0 Risk management Process in the Chemical manufacturing Unit 37

            

18.0 Findings & suggestions 42

19.0 Final recommendations 43

20.0 Bibliography 44

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Risk management embraces the efforts taken to minimize the impact of uncertain events. Risk
management can be defined as ³c
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The definition has focused three fold nature of risk management; firstly risk must be identified before
measured; only after their impact has been evaluated, one can decide on the most effective method of
control. Cost of control of risk must be commensurate with the benefit expected to be derived.

It also mentions the assets and the earning capacity of the organization. These assets can be human or
physical; they are both important and risk management must be seen to have a part to play in both.
However, risks do not strike at assets directly and for this reason the definition also mentions the
earning capacity of an enterprise.

The emphasis of the risk management is on reducing the cost of handling risk by whatever means
that are considered most appropriate and insurance is viewed as simply one of the several approaches
for minimizing the pure risks the firm faces.

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Objective of this report is to study concepts of risk management and its importance. It also includes
different activities involved in risk management as well as risk management process for Industrial
manufacturing plant.

Additionally, report will include Potential risk analysis, controlling aspects of risk exposure key
features of to be addressed in changing environment.

This report will be containing suggestions & recommendations
























#. 

Risk management is relatively new and its precise boundaries are still debated. Some basic concepts
of risk to analyze the nature & the cost associated with it & to see how the risk can be managed.
Insurance company can perform much better if there are no claims or few claims. In order to
minimize the claims company should accept the premium by proper analysis of the risks associated
with the proposal.

Chemicals have become a part of our life, they sustain many of our day-to-day activities, preventing
and controlling diseases, and increasing agricultural productivity. At least one thousand new
chemicals enter the market every year, and about 100000 chemical substances are used on a global
scale. These chemicals are mostly found as mixtures in commercial products. Over one million such
products or trade names are available.


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The study reveals all the major aspects of risk management and their implications. Study entangles
possible factor for identifying a risk and its type. Research provides metrics to summarize specific
activities in risk management which in-turn helps an organization to identify mitigate and avoid risk.
Study covers all the major aspect of risk management in Chemical Industries.



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The information upon which the report has been based has mainly been collected from secondary
sources. Most of the facts and figures originate from desk research of publicly available data.
These sources were:

1. Books of Insurance Institute of India

y| Risk Management -(IC-86)
y| Principles of Insurance -(IC-01)
y| eneral Insurance -(IC-36)

2. The Public liability Insurance act 1991

3.| The Public liability Insurance act 1991.

4.| Survey of the NUS business school under title ³Singapore companies recognize
importance of the risk management but many not matching this with action´.
5.| Survey of Ernst & Young ³ Risk management in India ´ in 2008-09

| 2 '#. 

The project is based purely on the literature survey and does not include any practical experiences of
chemical company. I could not visit any chemical company and was unable to get in touch with plant
specific risks to which chemical plants are subjected to. Another major limitation of this project is
that the author has reviewed publically available material and author could only peep through
published materials.
Results of the project could be biased towards the chemical manufacturing plants and since risk
management is a universal phenomenon across all industries, generalization of results might become
slightly difficult. Also, the risk analysis is based purely from the Insurance company point of view
and does not involve any intangible risks. Study could not involve any technical analysis and was
purely based on statistics.
   ! 

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3 /'% 0 4 % c '"   & 2
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private partnership in "-%  /  ' c
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capatilization of 235 cr. including share premium.

The company has received license from Insurance regulatory & Development Authority (IRDA)
in November 2007.

Three of the Indian partners are leading banks with a combined asset base of Rs. 2, 46,088
crores and over 4800 branches and distribution centers. Plus the 4th largest FMC Company in
India with over 15 million retail outlets. The JV partners will extend their vast distribution reach
and customer base for soliciting our bouquet of non-life insurance business. In addition, the
company's distribution network will also consist of brokers, agents and focused below the line
direct marketing promotions.
Shareholding Pattern :
Allahabad Bank (National) - 30%
 Indian Overseas Bank (National) - 19%
Karnataka Bank (Private) - 15%
Dabur Investment - 10%
Sompo Japan Inc. - 26%
Sompo Japan Insurance Inc. Headquartered in Tokyo, is a Fortune 500 Company with a capital
of 70 billion yen, is present in 27 countries - has over 16,905 employees and 54,282 agents and
its total premium income for 2008 - 2009 was in excess of (equivalent to) US$17.9 bn twice that
of the Indian eneral insurance industry.
Company have further plan to open up 21 branches by the end of FY 2010-11 there by giving
rise to the total number of branches to 61 including existing network of 40 operating
corporate/regional/branch offices.

The company is present across almost all product lines, classified into five major classes:
Property, Marine, eneral Accident, Workmen Compensation and Motor.
Company has filed 18 products for approval to IRDA in 2010-11.

Company clientele base include Airport authority of India Airports Authority of India
,DaburIndia,DOW Chemical, Hitachi roup, Honda Motorcycles &Scooters India Pvt.
Ltd,Honda SielCars India Ltd,Jaquar&Co. Ltd.,JindalSteel & Power Ltd,MarutiSuzuki India
Ltd.,Reliance Industries Ltd,Renault Nissan Technology, Suzuki Motor Cycle India
PvtLtd,Unison Hotels Ltd (Hotel rand),Yutaka Auto parts India

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Risk can be defined as the combination of the probability of an event and its consequences (ISO/IEC
uide 73). In all types of undertaking, there is the potential for events and consequences that
constitute opportunities for benefit (upside) or threats to success (downside)
OR
Uncertainty event at future that not only influence the income of a business entity but also can
determine the alive or die it entity

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y| Uncertainty
 y| Concerning Loss
y| %''#  #!')1
y| "')1 It is used to designate those situations that involve the chance of loss
Or no loss e.g. - Fire, Robbery & disaster
y| 0 "%/')1 It is the situation where there is possibility of gain
e.g. - gambling, investment & decision
y| ±"
 %')1 These involve losses that are impersonal in origin .They are group risks,
these risks leads to many consequences e.g.- unemployment , Inflation, Earthquake
y|  "% ') 1 These include losses that are arise out of individual events & are felt by
rather than individuals rather than by entire group e.g. - burning of house & robbery of a
bank.
y| K&   '): Dynamic risks are those resulting from the changes in the economy. These
dynamic risks normally benefit society over a long period of time since they are result of
adjustments to the misallocation of resources.
y| 0  ')'1 It involves those losses that occur even if there is no change in the economy.
Static losses tend to occur with degree of regularity over time & are predictable. Unlike
dynamic risk, static risk is not a source of gain to the society. Some individuals suffer
financial loss due to perils of nature & dishonesty of the individuals.
y|  '#-%')1These include all the risks which can be transferred to another person
or entity e.g. Pure risks
y|
  '#-%')1 These include all the risks which cannot be transferred to another
person or entity e.g. Speculative Risks
y| c  %')1It includes all the risks within organization e.g. - In 2006 July Associated Press
reported that a secretary working at Coke's head office in Atlanta." is accused of helping two
men steal trade secrets from her employer and try to sell them to rival PepsiCo Inc."
y|  %')1 These include all the risks that are produced by a non human source and are
beyond human control.
(Source - iddens, Anthony (1999). ³Risk and Responsibility´. Modern Law Journal, Vol. 62 No. 1, p. 4)

y| %
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%: A Peril is a cause of loss or a situation of serious and immediate danger. e.g. - fire, windstorm,
theft.

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1 It is a chance of suffering from danger or peril which may increase profitability of loss.
There are two types of hazard:

1.| &' %7
: It consists of those physical conditions that increase the chance of loss from
any Peril e.g.-

y| Sociological -crime, civil disorder

y| Technical - fire, structural collapse
y| Transportation ± Aviation, Rail, road disaster

2.| V%7
: This refers to increase in profitability of those results from the dishonesty in
the character of the insured person.

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Every Organization across the world is working with a goal to maximize profits & maximization of
Shareholder's wealth. Due to the advanced technologies life is very comfortable now a day but at the
same time risk & uncertainties are increased in same or greater proportion.
Organizations can increase their profit margins by two ways:

y| By increasing profits & maintaining risk at the constant level

y| By reducing risk to a lower extent.

Risk management is a scientific approach to the problem of dealing with the pure risks faced by
individuals and business.
y| K#  #!')V  1

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Three folded nature of Risk Management is highlighted in the definition. Risk must be identified
before they can be measured, & only after their impact has been evaluated & at same time Cost of
control must be commensurate with the benefits to be derived.

It also mentions the assets & earning capacity of organization .These assets can be physical or
human. However, risk does not strike at assets directly & for this reason the definition also mentions
the earning capacity of an Enterprise.

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-"' ''. It deals with insurable & uninsurable risk & appropriate techniques for dealing with them.
Basic difference between insurance management & risk management is that insurance management
includes all the techniques other than insurance [e.g. non insurance, retention etc].

But insurance management is restricted to the area of those risks that are considered to be insurable.
!')       
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considered as appropriate.
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The primary objective of risk management is to preserve the operating effectiveness of the
organization, to make sure that it is not prevented from attaining its other goals by the losses arising
from pure risks. A second objective may be humanitarian goal of protecting employees from
accidents that might be result in death or serious injury. Other goals may focus on cost, use of
resources social responsibility & preservation of good public relations.

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Risk identification is the first step in the Risk management process. It gives answer to the question
'How can the assets be or earning capacity of an organization can be threatened?´ For this risk
manager must dig into the operations of the organization & discover the risks to which organization
is exposed. He must be armed with 'tools of trade ' & must make use of them.

These tools include insurance policy checklists; risk analysis questionnaires, analysis of financial
statements, hazard & operability studies, physical inspections of operations, flow charts and
organizational charts but no method can replace diligence & imagination of the risk manager in
discovering risk.
|

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It is defined as systematic use of available information to identify hazards and to estimate the risk
[ISO/IEC uide 51:1999, definition 3.10]

Once the risk is identified then the steps have to be taken to measure potential impact of that risk on
the organization. Hence, this step includes statistical analysis & measurement of risk. In practical
sense measurement starts with gathering of information, followed by analysis of past experience and
then move to look at what the data tells us about level of severity of risk & periodicity to which
organization is exposed.

|| ||

It is defined as overall process comprising a risk analysis and a risk evaluation [ISO/IEC uide
51:1999, definition 3.12]

The risk manager must evaluate the risk that are identified .This means that measuring the potential
size of loss associated with risk .The cost of risk can be looked from different perspectives like:

a) Frequency of risk
b) Monetary cost or financial harmfulness
c) Human cost in terms of pain & suffering
These risks may therefore be grouped as:

y|  % ')': All the risks in which possible losses are of magnitude that would result in
bankruptcy for e.g. - Bhopal (1984) Hillsborough, Mexico.
y| c ')'1 These include those exposures in which the possible losses would not lead
to bankruptcy, but would require the firm to borrow in order to continue operation.
y| 3  ')': These include those exposures in which the possible losses could be met
out of the existing assets or current income of the firm without imposing undue financial
strain. Also size of the organization would influences the above categorization for example a
risk which is important to a small organization may be reckoned as unimportant risk by a
large organization

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The decision for dealing with risk may be ±

a)| To retain risk ± this may be attained with or without a reserve or fund.
b)| To deal with the risk through loss prevention ± the proper loss prevention program must be
designed and implemented.
c)| To transfer risk through insurance and this must be followed by the selection of an insurer.

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This is an essential to the risk management program because of two reasons

1.| The risk management process does not tales place in vacuum. Things change, new risk arises
and old ones disappear. The techniques that were appropriate last year may not be most
advisable this year, and constant attention is required.
2.| Mistakes occur sometimes .Evaluation and review of risk management programs permits the
manager to review decisions and discover mistakes hopefully, before become costly. For this
purpose an independent risk management consultant may also be hired to evaluate the entire
risk management to provide an independent outside review.
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1.| Risk management suggests or provides a framework for an organization that enables future
activity to take place in consistent and controlled manner.

2.| Risk management helps to improve decision making, planning and prioritization by
comprehensive and structured understanding of business activity, volatility and project
opportunity/threat.

3.| Risk management contributes to efficient use/allocation of capital and resources within the
organization.

4.| It reduces volatility in the non essential areas of the business.

5.| Risk management helps in protecting and enhancing assets and company image

6.| Employee safety and protection is an important part of safety and risk management.

7.| Most warehouses use expensive equipment, including forklifts, conveyors, and transport
trucks, in their operations. Using strict license requirements and employee training will
protect this equipment from improper use

8.| Proper safety and risk management policies help companies keep their general and liability
insurance premiums low. Low overhead costs allow companies to employ more workers and
focus on profitable business operations.

9.| Companies may be sued if they are deemed liable for employee or third-party injuries from
negligent warehouse operations. Lawsuits arise when companies do not have strong safety
management policies or violate their current safety policies.

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Risk Identification ascertains which risks have the potential of affecting the project and documenting
the risks' characteristics. Risk Identification begins after the Risk Management Plan is constructed
and continues iteratively throughout the project execution. The Risk Identification process naturally
progresses into the Qualitative Risk Analysis or the Quantitative Risk Analysis Process. Sometimes it
is wise to include the identification of a risk and its response in order for it to be included in Risk
Response Planning.
At the beginning of the Risk Identification process it is a good idea to have gathered all of the inputs
you and your team will need. The inputs to the Risk Identification Process are:

y| The Project Management Plan - The Project Management Plan is used in gain an
understanding of the project's mission, scope, schedule, cost, Work Breakdown Structure
(WBS), quality criteria, and other elements.
y| Risk Management Plan - The Risk Management Plan provides the blueprint of overseeing
risk management throughout the project describing who, what, when, where, why, and how.
The Risk Management Plan provides the following four critical inputs to Risk Identification:
y| Assignment of roles and responsibilities - Identifying people for risk management by
assigning the handling of specific tasks and roles to specific individuals.
y| Budget provisions for risk-management activities - The approved funds available for risk-
management activities. You will need to track your actual costs against these approved
budget numbers.
y| Schedule for risk management - The revised schedule including the time needed for risk-
management activities over the duration of the project's life cycle.
y| Categories of risk - The risk categories are used during Risk Identification to organize and
prioritize risks as they are identified. Alternatively, the Risk Breakdown Structure (RBS) may
be the source of risk categories. .
y| Enterprise environmental factors - These factors include any and all external environmental
factors and internal organizational environmental factors that surround or influence the
project's success, such as organizational culture and structure, infrastructure, existing
resources, commercial databases, market conditions, and project management software. After
gathering all necessary inputs, it is to tie employ the recommended tools and techniques of
risk identification.

The tools and techniques used for risk analysis are:

y| Documentation reviews - Documentation reviews involve comprehensively reviewing the
project documents and assumptions from the project overview and detailed scope perspective
in order to identify areas of inconsistency or lack of clarity. Missing information and
inconsistencies are indicators of a hidden risk.
y| Information gathering techniques - Information gathering techniques are used to develop lists
of risks and risk characteristics. Each technique is helpful for collecting a particular kind of
information. The five techniques are:
 y| Brainstorming - Brainstorm is employed as a general data-gathering and creativity technique
which identifies risks, ideas, or solutions to issues. Brainstorming uses a group of team
members or subject-matter experts spring boarding off each others' ideas, to generate new
ideas.
y| Delphi technique - The Delphi technique gains information from experts, anonymously, about
the likelihood of future events (risks) occurring. The technique eliminates bias and prevents
any one expert from having undue influence on the others.
y| Interviewing - Interviewing in a face-to-face meeting comprised of project participants,
stakeholders, subject-matter experts, and individuals who may have participated in similar,
past projects is a technique for gaining first-hand information about and benefit of others'
experience and knowledge.
y| Root cause identification - Root cause identification is a technique for identifying essential
causes of risk. Using data from an actual risk event, the technique enables you to find out
what happened and how it happened, and understand why it happened, so that you can devise
responses to prevent recurrences.
y| Strengths, weaknesses, opportunities, and threats (SWOT) analysis - A SWOT analysis
examines the project from the perspective of each project's strengths, weaknesses,
opportunities, and threats to increase the breadth of the risks considered by risk management.
y| Checklist analysis - Checklists list all identified or potential risks in one place. Checklists are
commonly developed from historical information or lessons learned. The Risk Breakdown
Structure (RBS) can also be used as a checklist. Just keep in mind that checklists are never
comprehensive, so using another technique is still necessary.
y| System or process flow charts - Flow charts illustrate how elements and processes interrelate.
y| Influence diagrams - Influence diagrams depict causal influences, time ordering of events and
other relationships between input variables and output variables.

The tools and techniques used for the Risk Identification process are designed to help the project
manager gather information, analyze it, and identify risks to and opportunities for the project's
objectives, scope, cost, and budget. The information gathered is entered on the Risk Register, which
is the primary output of Risk Identification.

Risk Register - The Risk Register containing the results of the Qualitative Risk Analysis,
Quantitative Risk Analysis, and Risk Response Planning. The Risk Register illustrates all identified
risks, including description, category, and cause, probability of occurring, and impact on objectives,
proposed responses, owners, and current status. While the risk register will become the
comprehensive output.

Risk Identification process results in four entries in the Risk Register:

1.| Lists of identified risks - Identified Risks with their root causes and risk assumptions are
listed.
2.| List of potential responses - Potential responses identified here will serve as inputs to the
Risk Response Planning process.
3.| Root causes of risk - Root causes of risk are fundamental conditions which cause the
identified risk.
4.| Updated risk categories - The process of identifying risks can lead to new risk categories
being added.


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There may be some terminology and definition differences related to risk analysis, risk assessment
and business impact analysis. Although several definitions are possible and can overlap:

1. Risk analysis involves identifying the most probable threats to an organization and analyzing the
related vulnerabilities of the organization to these threats.

2. Risk assessment involves evaluating existing physical and environmental security and controls,
and assessing their adequacy relative to the potential threats of the organization.

3. Business impact analysis involves identifying the critical business functions within the
organization and determining the impact of not performing the business function beyond the
maximum acceptable outage. Types of criteria that can be used to evaluate the impact include:
customer service, internal operations, legal/statutory and financial.

Most businesses depend heavily on technology and automated systems, and their disruption for even
a few days could cause severe financial loss and threaten survival. The continued operations of an
organization depend on management¶s awareness of potential disasters, their ability to develop a plan
to minimize disruptions of mission critical functions, and the capability to recover operations
expediently and successfully. The risk analysis process provides the foundation for the entire
recovery planning effort. A primary objective of business recovery planning is to protect the
organization in the event that all or parts of its operations and/or computer services are rendered
unusable. Each functional area of the organization should be analyzed to determine the potential risk
and impact related to various disaster threats.




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Regardless of the prevention techniques employed, possible threats that could arise inside or outside
the organization need to be assessed. Although the exact nature of potential disasters or their resulting
consequences are difficult to determine, it is beneficial to perform a comprehensive risk assessment
of all threats that can realistically occur to the organization.
Regardless of the type of threat, the goals of business recovery planning are to ensure the safety of
customers, employees and other personnel during and following a disaster.
The relative probability of a disaster occurring should be determined.

Items to consider in determining the probability of a specific disaster should include, but not be
limited to: geographic location, topography of the area, proximity to major sources of power, bodies
of water and airports, degree of accessibility to facilities within the organization, history of local
utility companies in providing uninterrupted services, history of the area¶s susceptibility to natural
threats, proximity to major highways which transport hazardous waste and combustible products.

Potential exposures may be classified as natural, technical, or human threats. Examples include:

1.|
"% ': internal flooding, external flooding, internal fire, external fire, seismic
activity, high winds, snow and ice storms, volcanic eruption, tornado, hurricane, epidemic,
tidal wave, typhoon.
2.|    %': power failure/fluctuation, heating, ventilation or air conditioning failure,
malfunction or failure of CPU, failure of system software, failure of application software,
telecommunications failure, gas leaks, communications failure, nuclear fallout.
3.| " ': Robbery, bomb threats, embezzlement, extortion, burglary, vandalism,
terrorism, , hazardous waste, vehicle crash, airport proximity, work stoppage
(Internal/External), computer crime.
All locations and facilities should be included in the risk analysis. Rather than attempting to
determine exact probabilities of each disaster, a general relational rating system of high, medium and
low can be used initially to identify the probability of the threat occurring.
The risk analysis also should determine the impact of each type of potential threat on various
functions or departments within the organization. A Risk Analysis Form, found can facilitate the
process. The functions or departments will vary by type of organization.

The planning process should identify and measure the likelihood of all potential risks and the impact
on the organization if that threat occurred. To do this, each department should be analyzed separately.
Although the main computer system may be the single greatest risk, it is not the only important
concern. Even in the most automated organizations, some departments may not be computerized or
automated at all. In fully automated departments, important records remain outside the system, such
as legal files, PC data, software stored on diskettes, or supporting documentation for data entry. An
impact can be rated as:

y| 0= No impact or interruption in operations,

y| 1= Noticeable impact, interruption in operations for up to 8 hours,
y| 2= Damage to equipment and/or facilities, interruption in operations for 8 - 48 hours,
y| 3= Major damage to the equipment and/or facilities, interruption in operations for more than
48 hours.

All main office and/or computer center functions must be relocated.

Certain assumptions may be necessary to uniformly apply ratings to each potential threat. Following
are typical assumptions that can be used during the risk assessment process:

1.| Although impact ratings could range between 1 and 3 for any facility given a specific set of
circumstances, ratings applied should reflect anticipated, likely or expected impact on each
area.
2.| Each potential threat should be assumed to be ³localized´ to the facility being rated.
3.| Although one potential threat could lead to another potential threat (e.g., a hurricane could
spawn tornados), no domino effect should be assumed.
4.| If the result of the threat would not warrant movement to an alternate site(s), the impact
should be rated no higher than a ³2.´
5.| The risk assessment should be performed by facility.
To measure the potential risks, a weighted point rating system can be used. Each level of probability
can be assigned points as follows:

Probability Points
high - 10
Medium -5
Low -1

To obtain a weighted risk rating, probability points should be multiplied by the highest impact rating
for each facility. For example, if the probability of hurricanes is high (10 points) and the impact
rating to a facility is ³3´ (indicating that a move to alternate facilities would be required), then the
weighted risk factor is 30 (10 x 3). Based on this rating method, threats that pose the greatest risk
(e.g., 15 points and above) can be identified.
Considerations in analyzing risk include:

y| Investigating the frequency of particular types of disasters (often versus seldom).

y| Determining the degree of predictability of the disaster.
y| Analyzing the speed of onset of the disaster (sudden versus gradual).
y| Determining the amount of forewarning associated with the disaster.
y| Estimating the duration of the disaster.
1.| Considering the impact of a disaster based on two scenarios;
a. Vital records are destroyed
b. Vital records are not destroyed.
2.| Identifying the consequences of a disaster, such as;
a. Personnel availability
b. Personal injuries
c. Loss of operating capability
Determining the existing and required redundancy levels throughout the organization to
accommodate critical systems and functions, including;
a. Hardware
b. Information
e. Services.
3.| Estimating potential dollar loss;
a. Increased operating costs
 b. Loss of business opportunities
c. Loss of financial management capability
d. Loss of assets
e. Negative media coverage
f. Loss of stockholder confidence
g. Loss of goodwill
h. Loss of income
i. Loss of competitive edge
j. Legal actions.
4.| Estimating potential losses for each business function based on the financial and service
impact and the length of time the organization can operate without this business function. The
impact of a disaster related to a business function depends on the type of outage that occurs
and the time that elapses before normal operations can be resumed.
5.| Determining the cost of contingency planning.

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Because a goal of business recovery planning is to ensure the safety of personnel and assets during
and following a disaster, a critical aspect of the risk analysis process is to identify the preparedness
and preventive measures in place at any point in time. Once the potential areas of high exposure to
the organization are identified, additional preventative measures can be considered for
implementation.
Disaster prevention and preparedness begins at the top of an organization. The attitude of senior
management toward security and prevention should permeate the entire organization. Therefore,
management¶s support of disaster planning can focus attention on good security and prevention
techniques and better prepare the organization for the unwelcome and unwanted.

K''/    8"'

These include two categories: procedural prevention and physical prevention.

1.|  
"% /  relates to activities performed on a day-to-day, month-to-month, or

annual basis, relating to security and recovery. Procedural prevention begins with assigning
responsibility for overall security of the organization to an individual with adequate
 competence and authority to meet the challenges. The objective of procedural prevention is to
define activities necessary to prevent various types of disasters and ensure that these
activities are performed regularly.
2.| &' % /  and preparedness for disaster begins when a site is constructed. It
includes special requirements for building construction, as well as fire protection for various
equipment components. Special considerations include: computer area, fire detection and
extinguishing systems, record(s) protection, air conditioning, heating and ventilation,
electrical supply and UPS systems, emergency procedures, vault storage area(s), archival
systems.

c '"   '
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Adequate insurance coverage is a key consideration when developing a business recovery plan and
performing a risk analysis. Having a disaster plan and testing it regularly may not, in itself, lower
insurance rates in all circumstances. However, a good plan can reduce risks and address many
concerns of the underwriter, in addition to affecting the cost or availability of the insurance.

Most insurance agencies specializing in business interruption coverage can provide the organization
with an estimate of anticipated business interruption costs. Many organizations that have experienced
a disaster indicate that their costs were significantly higher than expected in sustaining temporary
operations during recovery. Most business interruption coverage includes lost revenues following a
disaster. Extra expense coverage includes all additional expenses until normal operations can be
resumed. However, coverage differs in the definition of resumption of services. As a part of the risk
analysis, coverage should be discussed in detail with the insurer to determine their adequacy.

To provide adequate proof of loss to an insurance company, the organization may need to contract
with a public adjuster who may charge between three and ten percent of recovered assets for the
adjustment fee. Asset records become extremely important as the adjustment process takes place.
|
|


|$
 

The risk analysis process is an important aspect of business recovery planning. The probability of a
disaster occurring in an organization is highly uncertain. Organizations should also develop written,
comprehensive business recovery plans that address all the critical operations and functions of the
business.

The plan should include documented and tested procedures, which, if followed, will ensure the
ongoing availability of critical resources and continuity of operations.

A business recovery plan, however, is similar to liability insurance. It provides a certain level of
comfort in knowing that if a major catastrophe occurs, it will not result in financial disaster for the
organization.

Insurance, by itself, does not provide the means to ensure continuity of the organization¶s operations,
and may not compensate for the incalculable loss of business during the interruption or the business

!')'''' :

In the many activities we can offer, we provide challenges that seek to encourage the development of
young people. These are often challenges they do not face every day and young people can
experience a great sense of achievement in completing them. Some degree of risk is unavoidable if
the sense of adventure and excitement is to be achieved, but it is - and should be - much less than the
participant perceives.

Accordingly we need to assess and control the risks associated with activities in order to minimize
the chance of injury.


It is not that difficult. A risk assessment is simply a look at what could go wrong - both before and
during the activity - and then deciding on ways to prevent - or minimize - these potential problems.

7
'
!')'two terms are frequently used during a risk assessment:

y| A 7
is anything that could cause harm. In the context of adventurous activities, a hazard
could be extreme cold, a fall from a height or hypothermia.
y| A ') is the chance - high or low - that someone will be harmed by a hazard. The most
important part of a risk assessment, is to decide whether a hazard is ' #  
 
This determines what measures you can take to minimizethe risk   -%%/%. It could be
considered that hypothermia is a significant risk when taking part in mountain activities, canoeing or
sailing. However the risk can be reduced, for example, by wearing appropriate windproof clothing or
wet suits -depending upon the activity!


|%|
||%|

 /&, 12)#7
'1

It is necessary for you to stand back from the activity, and look afresh at what could cause harm. It is
important to concentrate on the significant hazards. These are hazards which harm or affect several
people. It might be a good idea to ask others what they think; they may have noted things that were
not immediately obvious to you.

 /&*1K 
*-

*9

These could be young people taking part (or waiting to do so), the instructors, others supervising the
activity, those in the area of the activity or casual observers. In identifying the hazards (Step One)
you have already identified the potential of how these people might be harmed.

 /&1 /%"')

 
*'  " '

8"*'"%
-
 1
You have already identified the hazards. Now consider the likelihood of each of these hazards
causing harm. This will determine whether or not you need to do more to reduce the risk. It is
possible that even after all reasonable precautions have been taken some degree of risk will remain.
What you have to decide, for each significant hazard, is whether the remaining risk is high, medium,
or low.

For some activities you have to ask yourself if everything has been done to comply with the law -
and, in our context, the requirements also of 
 !
"
#$%. Everything reasonably
practicable must be done to reduce and control the risk. Your aim is to minimize risks by adding such
precautions as may be necessary. Likewise, the competence of instructors/leaders and adherence to
good practice play a vital role in the provision of safe activities. There are many ways in which risks
can be minimized. This might be a change in venue, additional training, an increased staff/participant
ratio and properly equipped participants. Likewise, plans may have to be modified during the
activity, based on an on-going risk assessment. Later in this fact sheet, we will relate this to typical
Scout activities.

 /&±"1! 
&"#
 '1

You must inform those who will be taking part in the activity of your findings and what action should
be taken. The recording of your findings might vary depending upon circumstances. A risk
assessment for the use of a permanent climbing tower on a campsite should be a document that each
instructor has to read (and sign) prior to the start of each session. It should cover the points you have
identified in Steps one-three above. The risk assessment must be suitable and effective and must
show that

y| A proper check was made.

y| You decided who might be affected.
y| You dealt with all the significant hazards, taking into account potential users.
y| The precautions are reasonable, and the remaining risk is judged acceptable.

The recording of the assessment should be in a format which is easily read - don¶t write a book! Risk
assessments are not operating procedures -they inform and determine key aspects of the operating
procedures. At the campsite your risk assessment may have determined that no more than 30 people
may be admitted to the swimming pool at any one time due to the size of the pool and the need to
avoid overcrowding.

This assessment will then be reflected in the pool¶s operating procedure and a requirement placed on
the lifeguard and those controlling bookings for the pool to count. A risk assessment for a day in the
hills or on water that you have not visited before cannot be formalized in exactly the same way. In
these cases, refer to the examples later in the fact sheet
.

 /&±/1!/*&"'''' 
/'#  ''&1

In all cases, it is good practice to review your risk assessments from time to time, to ensure that the
precautions are still working effectively. If there are any significant changes, review and revise the
assessments to take account of the new hazard. For those risk assessments for a
Composite, and activities on site, it is important to ensure that when carrying out a risk assessment
the date is also set for the next review. Make sure that all relevant documentation is changed.



!')'''' c    So far we have looked at theory, with a few examples to illustrate the
key points. There has sometimes been a tendency to useµstandard¶ risk assessments for outdoor
activities. We must remember however that as the environments we explore are constantly changing,
such assessments cannot be set in stone. Also, although you may have visited the area before, the
chosen route on land or water may be a new one. Or the weather conditions may be dramatically
different. So how do we start?
0%')'''' '1


| 

|
| As there are many industrial units are in existence right from chemical, Plastic,
Steel, Cement etc. but among all the industries exists chemical industry is one of
the growing industry. Therefore we will concentrate on Chemical Manufacturing
unit.

| !')     % "# " " 

Chemical industry is one of the world¶s largest manufacturing industries, producing more than
50,000 chemicals and formulations. Starting from raw materials such as oil, coal, gas, water, air and
minerals, the chemical industry produces a vast array of substances that form the basis for almost
every other manufacturing activity. It operates on a global scale; it exists in nearly every country in
the world, and contributes 7% of global income and accounts for 9% of international trade. Supply
chains in the electronics, automobile and other industries have received much attention in literature.
Although some of these lessons can be partly extended to the chemical industry, supply chains in the
chemical and process industry have distinctive features and require special attention. Risk
management is needed in chemical manufacturing unit.

'&#
'''
"  %" '

y| 1932-1968: The McNamara disaster was caused by the dumping of mercury compounds in
McNamara Bay, Japan. The Chisso Corporation, a fertilizer and later petrochemical company,
was found responsible for polluting the bay for 37 years. It is estimated that over 3,000
people suffered various deformities, severe mercury poisoning symptoms or death from what
became known as McNamara disease.
y| April 16, 1947: Texas City Disaster, Texas.
y| 1948: The explosion of a tank wagon within a BASF site loaded with chemicals, in
Ludwigshafen, ermany causes 207 fatalities.
y| June 1, 1974: Flixborough disaster, England. An explosion at a chemical plant near the
village of Flixborough kills 28 people and seriously injures another 36.
y| July 10, 1976: Seveso disaster in Seveso, Italy
y| December 3, 1984: The Bhopal disaster in India is the largest industrial disaster on record. A
faulty tank containing poisonous methyl isocyanides leaked at a Union Carbide plant. About
20,000 people died and about 570,000 suffered bodily damage. The disaster caused the
region's human and animal populations severe health problems to the present.
 y| October 23, 1989: Phillips Disaster. Explosion and fire killed 23 and injured 314 in Pasadena,
Texas. Registered 3.5 on the Richter scale.

:%4'
&

The Bhopal disaster, also known as the Union Carbide disaster or the :%'
&, was an
industrial catastrophe that took place at a Union Carbide pesticide plant in the Indian city of Bhopal,
Madhya Pradesh on K -$h

Thousands died immediately from the effects of the gas and many were trampled in the panic. The
government of Madhya Pradesh confirmed a total of 3787 deaths related to the gas release. Another
source says that a few days later the death toll had doubled. Over the next few years, the lingering
effects of the poison nearly doubled the toll again, to about 15,000, according to government
estimates.
Factors leading to this huge gas leak include:
‡ The use of hazardous chemicals (MIC) instead of less dangerous ones
‡ Storing these chemicals in large tanks instead of over 200 steel drums.
‡ Possible corroding material in pipelines
‡ Poor maintenance after the plant ceased production in the early 1980s
‡ Failure of several safety systems (due to poor maintenance and regulations).
‡ Safety systems shut down to save money ± including the MIC tank refrigeration system which
alone would have prevented the disaster.



K  %&''1


 

!')    ''  % "# " 3 

|
Risk management
 |

The chemical industrial sector is highly heterogeneous encompassing many sectors like organic,
inorganic chemicals, dyestuffs, paints, pesticides, specialty chemicals, etc. Some of the prominent
individual chemical industries are caustic soda, soda ash, carbon black, phenol, acetic acid, methanol
and ago dyes. Chemical manufacturing sector in India is well established and has recorded a steady
growth in the overall Indian industrial scenario. The Chemical and allied industries have been
amongst the faster growing segments of the Indian industry. It ±

1.| Contributes to 3% of DP in the same report*.

2.| One of the fastest growing sectors of Indian economy.
3.| Chemical Industry in India is fragmented and dispersed - multi product and multi faceted.
4.| Chemicals sold directly to large customers and through distribution channels. Distribution
channels mostly consist of stockiest and dealers spread all over India addressing small
segments and retail market.

Chemical Industry is highly heterogeneous with following major sectors:

 ë| Petrochemicals
ë| Inorganic Chemicals
ë| Organic Chemicals
ë| Fine and specialties
ë| Bulk Drugs
ë| Agrochemicals
ë| Paints and Dyes

1.  '''#&  1

ë| Hazard & Operability (HAZOP) studies
ë| Failure Tree Analysis (FTA)
ë| Event Tree Analysis (ETA)
ë| Primary Hazard Analysis (PHA) using Dow Index
ë| Risk Assessment (with risk ranking technique)

 %  %')'''' 1

ë| Review of Hazardous Area Classification
ë| Lightning Protection Risk Assessment
ë| Identification & Control of Electro-Static Hazards
ë| Review of electrical Preventive Maintenance System
ë| Electrical Risk Assessment (fire, shock explosion) using Semi-Quantitative Risk Ranking
(SQRR) technique

±')'''' 1

ë| Identification & assessment of fire risks during operations in receipt, storage, transfer and
handling of chemicals (raw materials and finished products)
ë| Identification & control of ignition sources in areas where flammable chemicals are stored /
handled / transferred
y| Review of chemical compatibility in storage areas and to suggest appropriate fire loss
control measures
y| Review of fire detection measures adopted in the plant & to suggest suitable
improvement measures
y| Review of the various active (fire hydrant, sprinkler, portable fire extinguishers) and
passive fire protection requirements for chemical storage and handling areas and to
suggest improvements as necessary
 y| Review of contractor safety awareness (chemical spill, fire fighting, emergency
communication, knowledge of plant hazards & safety regulations) and to recommend
suitable improvement measures to enhance contractor safety
y| Review of safety awareness and safety training requirements ( training identification and
efficacy) of plant employees with respect to hazards present in the plant

Fire risk assessment will be carried out based on techniques like

1.| Matrix method,
2.| Hani Arafat Risk Calculator.
The consequence, likelihood and exposure of each hazard are arrived using a systematic approach
and will help to determine the relative importance of hazard and focus on significant risks.

!') %&''( &% 1

ë| Identification of scenarios of potential disasters / emergencies leading to loss of life, property
damage etc. and qualitative assessment of their likelihood.
ë| Quantitative risk assessment for selected scenarios of major credible events.
ë| Recommendations for risk control measures wherever applicable.
ë| Preparation of onsite emergency preparedness plan

!')V  (c '" %  1

ë| Identification of all major internal and external pure risks including the natural risks and
analysis of the impact of above risks
ë| Review of existing risk control measures and offering comments
ë| Scrutiny of all existing major insurance policies in respect of:

y| Rationalization of basic rate of premium and widening of covers

y| Applicability / eligibility of discounts in premium
y| Application of suitable clauses, warranties and conditions
ë| Identification of possible areas for refund of premium and suggestions regarding procedure
for the same
ë| Selection of insurance coverage on the basis of risk analysis
ë| Providing guidelines for fixation of sum insured and illustrate the same on a selected
equipment
 ë| Evaluation of business interruption exposure due to identified risks
ë| Providing guidelines on documentation requirements, procedures for claims under various
policies, evaluation of insurers

!')V    

Specialized and focused training, if imparted effectively, can contribute significantly to Risk
Management. Expert faculty carefully selected training module, interactive and participate approach,
useful training material, case studies and syndicate exercises could help in having effective risk
management system in place. The training topics for bulk drug industry could be:

ë| Chemical Safety
ë| Safety with Compressed gases
ë| Solvent Safety
ë| Hazard Identification Techniques
ë| Industrial Risk Management
ë| Fire Prevention and Protection
ë| Electrical Risk Management
ë| Emergency Preparedness
ë| Safety Management system
ë| Accident Prevention
ë| Personal Protective Equipment

 %') %&''1

Risk manager should be continuously working on the potential risk analysis as these risks have
capacity to affect organization to considerable extent. Also things change; new risk arises and old
ones disappear. The techniques that were appropriate last year may not be most advisable this year,
and constant attention is required
Potential Risk can be divided into 4 types:
| ±  %')1
Credit plays an important role in financing of the businesses, and a firm may find it in
difficulties owing to factors affecting either credit received or credit extended. An increased
rate of interest on borrowing will cut the profit margin but more important is availability of
credit. A firm that is heavily dependent upon bank credit to finance its working may be forced
to curtail its activities severely if its overdraft facilities are cut for any reason.
 | 2%')1
Legal aspects are important for enterprises as legal issue can raised by government, public,
employee, stakeholders in the form of Public litigation.
| &' %')1
It is also important risk that should be addressed by risk manager because it will take charge
of life many individuals if not treated properly. Also it may reduce the productivity of the
workforce over the period of time.
4. /  %')1
Risk manager should take necessary actions for the waste treatment or other environment
issue so that government bodies such as Pollution control board of that state.



  ! 




h±
 '(0"' '1

1.| It has been found that 85% companies recognized importance of risk management.

2.| Only 60% companies have enterprise wide risk management.

3.| Only 66% Companies describe the risk faced by their company in their annual report.

4.| It has been found that companies believe in Insurance brokers for risk management advice.

5.| It has been discovered that most of the enterprises are showing great concern about
competitive risk or risk associated with the managing of business.

6.| This survey also reveals that primary goal of the chemical companies is growth at a faster
rate which is causing intense rivalry within industry.

7.| It is found that there is room for improvement in risk information which will facilitate
management in decision making.

8.| Companies in India have documented risk management strategies in place, but there is
substantial room for improvement.

9.| It has been found that near about 1000 chemicals are added to the market every year from all
the sectors like petrochemical, inorganic, organic, paint& dyes and agrochemicals.

10.|It is found that Chemical sector is one of the fastest growing sectors of Indian economy.

11.|It is found that Chemical Industry in India is fragmented and dispersed - multi product and
multi faceted.


± % 
 '

|

y| There should be sound co-operation between industries, overnment and other interested
stakeholders of the industry.

y| There should be scientifically sound risk assessment methods.

y| There should be transparency in the review and utilization of risk assessment data.

y| There should be support for the precautionary approach.

y| There should be proper maintenance of plant.

y| There should be separate section in the company for risk management.

y| There is need of standardization of risk assessment principles and methodologies.

|
:-%&1
1.| Risk Management -(IC-86)

2.| Principles of Insurance -(IC-01)

3.| eneral Insurance -(IC-36)

(All above books are of Insurance Institute of India)

4.| The Public liability Insurance act 1991

5.| Survey of the NUS business school under title ³Singapore companies recognize importance
of the risk management but many not matching this with action´

6.| Survey of Ernst & Young ³ Risk management in India ´ in 2008-09

7.| Policy, Organization and Rules - current edition.

8.| Disaster Recovery World© 1997, and Disaster Recovery Journal© 1997, are copyrighted by
Systems Support, Inc. All rights reserved. Reproduction in whole or part is prohibited without
the express written permission form Systems Support, Inc.

9.| Interoperability Montana by NORTHROP RUMMAN

;---%&1
2 | |http://www.businesschemistry.org/article/?article=95|
 — | http://en.wikipedia.org/wiki/Risk_management|

| http://www.indianchemicalportal.com/chemical-industry-overview/|

 | http://www.oracle.com/us/industries/oil-and-gas/019366.pdf|

 | http://www.nasa.gov/pdf/293261main_62868main_1_pmchallenge_stamatelatos.pdf|

 | http://www.usaid.gov/oig/public/fy04rpts/5-391-04-001-s.pdf|

 | http://www.scoutbase.org.uk/library/hqdocs/facts/pdfs/fs120000|

 | http://en.wikipedia.org/wiki/List_of_industrial_disasters#Chemical_industry|

 | http://en.wikipedia.org/wiki/Work_breakdown_structure|

2 | http://en.wikipedia.org/wiki/Risk_breakdown_structure |


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