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A series of explosions occurred in 2005 at BP’s Texas City refinery, in Texas, USA when a hydrocarbon isomerization unit was restarted and a distillation tower flooded with hydrocarbons. This resulted in 15 deaths and 180 people injured. BP later admitted to the charges and accepted the fines, with BP America chairman Bob Malone admitting that the company was guilty of a felony "for failing to have adequate written procedures for maintaining the on-going mechanical integrity of process equipment at the Texas City refinery.”


"If our approach to process safety and risk management had been more disciplined and comprehensive, this tragedy could have been prevented," he said.


Failure to manage your risks appropriately can result in direct losses. Consequently the management of risk is becoming a more important
and focused topic to many organizations.  Risk to an organization comes from many areas ranging from noncompliance to government regulation, supply chain interruptions, improper operations, to climatic events, all which can impact people, the community, customers, the environment, and your bottom line and reputation. 


With all these areas of exposure it is necessary to have systems and procedures in place for the management, and reduction, of risk.  To properly manage risk, a framework for Governance, Planning, Visibility, Optimization, Integration, and Execution, must be established. Risk analysis and the mitigation strategies, along with the capability of recording, resolving, and managing incidents throughout the corporation are essential to the reduction of operational risk.

Since change is a constant in today’s environment, the management of change is a key part of the management of operational risk.  The importance of the controlling, documenting, and the management of activities that is needed to deal with any changes cannot be minimized.  Being unable to manage all the complexities involved in changes to process, materials, and equipment exposes the corporation to immense risk.

Being able to support all these activities with one standardized central solution is indispensible in managing the total risk exposure of a company, for without this capability, multiple solutions propagate and standardization with the consequent reduction risk and total cost of ownership is not possible.

This posting is the first of a series of blogs the will discuss various factors of operational risk management (ORM) as it pertains to manufacturing organizations.  Do you feel that your company is adequately managing risk, and can you prove it?