MGMT6019– Engineering Risk Management

Introduction 

The Tianjin port has been viewed as one of the largest ports in northern china. For several years, it has been running a chemical warehouse on a piece of land of approximately 46000 m² at the economic zone of Binhai and that is adjacent to the Tianjin port. Some of the activities that are involve within the port include transfer, storage as well as distribution of chemicals that are hazardous in nature. Some of the major products that are stored in the warehouse are;

• Flammable liquids e.g. ethyl acetate
• Liquefied and compressed gases e.g. natural gas and argon
• Toxic chemicals e g sodium cyanide
• Corrosive products e.g. caustic soda, phosphoric acid
• Organic peroxides and oxidizers.
• Flammable solids e.g. Sulphur

An explosions occurred at the Ruihai Warehouse yard in Tianjin during the month of the august 2015. The explosion led to massive loss of both lives and property. 173 lives were lost, several homes destroyed and business within the area were closed.

Identification and analysis of risk

Legal issues: in reference to Chinese legislation, storage of chemicals do require appropriate permission from the government. Flammable chemicals equally require special authorization from the government.  It is not proper to store large amounts of flammable chemicals without correct authorization from the government. With all these restrictions, 800 tons of Ammonium nitrate were still stored in a common place without considering proper safety measures (Fu et al, 2016). Such illegal storage measures of flammable and hazardous chemicals have been the main causes of widespread fire. Given that the government was never aware of such illegal storage of chemicals, the strategies put forward by the fire fighters were not up to the task and thus led to more severe conditions caused by the hazardous and flammable chemicals. Risk is always an uncertain phenomenon which therefore indicates that risk management strategies should clearly outlay the uncertainties that may come up during the phases of the projects. Citing the Tianjin explosion, risk management dynamicity was limited and thus led to the fatal explosion. The explosion was greatly as a result of illegal storage of hazardous chemicals given that there was nitrogen stored at the Tianjin port (Hu et al, 2016).

Human resources:  human risk management techniques must alsoput into consideration the risks that could arise from the human factors as the project nears completion. Defects that could be caused by human factors must always be considered before a risk plan is initiated. Considering the Tianjin port explosion, they never considered the mistakes that were done by the employees at the stages when they were storing the Ammonium Nitrate (Zhao, 2016).  It is proper to setup a committee for human resource management to take care of how the employees carry out their duties. This will make sure that the employees carry out their duties efficiently. For a better job management, processing of data of employees must therefore be performed perfectly. This will therefore improve the efficiency of the ongoing project making it accurate on completion. Any organizational framework must maintain transparency.  The human resource committee should always outlay issues that could arise in case accuracy is not met when the project reaches completion.

Environment:give that the explosion led to pollution allover, the environment was adversely affected. The marine life cycle was equally affected. Water pollution was on a high and this greatly affected the health of those individuals who consumed the water. Outbreak of epidemic disease in Tianjin led to many people vacating the area (Li et al, 2015). Deformities in DNA equally affected generations over several decades.

Financial: the explosion led to close to $9 billion going to waste.  Further $50 billion was wasted due to destruction of a car factory situated close to Tianjin port.  A centralized computer center also located closer also became a victim of the explosion. Overall, a lot of money was spent in treating the patients who were victims of the explosion (Aitao & Lingpeng, 2017). The total verified direct economic loss was valued at a massive 6.866 billion Chinese Yuan (approximately $1.1 billion). A summary of the direct losses suffered during the explosion are as follows;

Deaths- 173

Hospitalized people- 798

Individuals receiving emergency treatment- 3000

Buildings destroyed- 304

Vehicles destroyed- 12428

Damaged homes of residents- 17000

Risk management plan: plan for monitoring performance

A risk management plan is a piece of document that is prepared by a project manager to help foresee all the possible risks, make an estimate of their resultant impacts and the outline how they can be responded to. Several organizations who would like to protect their institutions from great losses that are always sustained during the phases of performing project schedules always tend to undertake risk management plan (Huang & Zhang, 2015). The management of risks is a very important step that most organizations perform in order to uphold efficiency of their performance. Each organization must have a well laid out risk management plan in order to avoid the losses that would occur if the risk happen.

For the Tianjin port, the project could have performed the following four ways to deal with the risk.

• Avoid- this is regarded the simplest way to deal with the risk. Knowing that the warehouse deals with highly flammable and hazardous chemicals, the management had a choice of not storing the chemicals within the port. This could have completely done away with the risk (Yun-Sheng et al, 2014).
• Risk mitigation-this simply involves reduction. Reducing the amount of chemicals stored in the port could have helped reduce the negative impact in case the risk occurs.
• Transfer-involves transferring the risk away from the organization. This could have been done by making premiums to an insurance company to help cover up for the losses in case any facility is destroyed.
• Accept/retain-the project accepts up to a given level of risk regarding to the specific products being dealt with and the possible payoff (Shi-Wei, 2011).

A good risk management plan will assist in;

• Identifying control actions useful in preventing the risk from occurring
• Listing contingent plans that will help reduce the impact if the risk happens to occur.
• Make schedules of these plans within a timeframe that is acceptable
• Maintain a check of each risk all through the project.

Research principles

There are several ethical principles that have to be considered when carrying out a research. The principles basically need to do good and do no harm. The principles include;

• Minimizing risk of harm- it should not cause harm or any form of discomfort to any participant. The risk of harm should equally be minimized.
• Obtaining informed consent- the participants should understand that they are being involved in research and what the research needs from them. They should be just participants and not influenced or coerced in any way.
• Protecting anonymity and confidentiality- a participant will get involved if they are assured that the information will be held in confidence, especially that of sensitive or private nature.
• Avoiding deceptive practices- having an informed consent. Any form of deception will put the participants in the dark.
• Provide right to withdraw- participants should have the right to withdraw at any stage of a research process and should not be pressured in any way trying to revert their decision.

Strategic issue Analysis

This is a precarious challenge or basic policy question that affects an institutions mandates, structure, values, mission, stakeholder’s resources, processes and even management. It is therefore important to understand the critical issues that if not addressed, could turn to risks or problems that could affect the institutions activities. There are both external and internal strategic issues. Strategic analysis process involves carrying research on an organization and its operating environment in order to formulate a better strategy of performance (Shao et al, 2013). A strategy is considered as a plan of actions that project managers undertake in order to achieve or meet the organizations primary goals as well as other secondary goals. The common factors involved during this analysis include;

• Recognizing and making evaluations of the relevant data for the strategy of the company.
• Outlining the external and internal environments that should be analyzed.
• Carrying out analysis through common analytic methods such as value chain analysis, SWOT analysis and Porter’s five forces analysis.

The infographic below outlines the process of strategic analysis.

1. Carrying out an environmental analysis of the existing strategies.

To begin with, an organization requires to complete an environmental analysis of the already existing strategies. External environment strategies to be considered include economic shifts, political trends, as well as changes in customer tastes and preferences. Some of the internal environmental strategies that could be considered include employee morale, operational inefficiencies and financial constraints (Shao & Ju, 2012).

2. Finding out how effective the existing strategies are

This is a very vital factor in strategic analysis. It is important to determine whether the already existing strategy are very effective in the prevailing environment. Whether or not the strategy is going to succeed must be determined. It should also determine whether the strategy aligns itself with the organizations goals, mission, vision and values.

3. Carrying out formulation of plans

In case the assessment stage cannot be validated, then the organization undergoes a planning stage to seek strategic alternatives. Example of potential strategic alternatives are changes in management, changes in capital structure etc.

4. Recommendation and implementation of the most applicable strategy.

 Once all the alternatives and potential alternatives, a recommendation is reached. The most applicable and quantitative strategy is chosen. The strategies have to be implemented and continuously assessed (Gui & Chen, 2011).

Personal autonomy and accountability

This greatly involves the ability to decide for oneself and follow a given course pf action in an individual’s life. Autonomy is a component of developing engagement within an organization. Engaging and equally inspiring employees will spurs involvement and creativity. The most important counterweight to this is having strict accountability for results and also for the behaviors and actions that would yield results. A strategy has to be chosen that provides a context for the actions of the employees. The strategy should be materialized with measurable objectives and continuous measurement of progress in order to determine any consequences for meeting or not meeting the goals.

Conclusion

Based on the discussions above, it is very evident that Tianjin china explosion is one of the biggest explosion ever witnessed that is as a result of industrial mismanagement. One of the greatest highlight from this explosion was loss of life. There were also greater cases of physical damage of frameworks. An estimation of up to $9 billion got to waste as a result of this explosion. This report therefore was aimed at carrying out detailed risk mitigation analysis and it has been achieved. It was realized that having a better risk management plans as well as better plans to handle strategic issues in any given project will greatly help on reducing the chances of occurrence of a risk. Some of the mitigation strategies that have been pointed out here will help reduce the risk in case future incidences occurs again in industries (Guiyou et al, 2014).

References

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Fu, G., Wang, J., & Yan, M. (2016). Anatomy of Tianjin Port fire and explosion: Process and causes. Process Safety Progress, 35(3), 216-220.

GU, C. H., & CHEN, G. Z. (2011). The Study of Environmental Risk Assessment and Management [J]. Environmental Protection of Xinjiang, 4, 015.

Guiyou, L., Linyu, X., & Wei, L. (2014). Review of Environmental Risk Assessment [J]. Environmental Science and Management, 2, 033.

Hu, C., Ju, M., & Shao, C. (2016). Application of risk communication in port environmental risk management. Marine Environmental Science, 29(3), 440-445.

Huang, P., & Zhang, J. (2015). Facts related to August 12, 2015 explosion accident in T ianjin, C hina. Process Safety Progress, 34(4), 313-314.

Li, G. Q., Hou, S. K., Yu, X., Meng, X. T., Liu, L. L., Yan, P. B., ... & Han, H. J. (2015). A descriptive analysis of injury triage, surge of medical demand, and resource use in an university hospital after 8.12 Tianjin Port Explosion, China. Chinese journal of traumatology, 18(6), 314-319.

Shao, C. F., & JU, M. T. (2012). Study about environmental risk analysis and prevention measures of Tianjin Port. Marine Environmental Science, 2, 028.

Shao, C., Yang, J., Tian, X., Ju, M., & Huang, L. (2013). Integrated environmental risk assessment and whole-process management system in chemical industry parks. International journal of environmental research and public health, 10(4), 1609-1630.

Shi-wei, S. O. N. G. (2011). Discussion on Basic Construction Environment Risk Assessment of Chemical Industry Items [J]. Liaoning Chemical Industry, 2, 015.

Yun-sheng, Q. F. Q. Z., & Hua-gang, H. E. (2014). The Consequence Analysis of LPG Storage Tank Fire and Explosion [J]. Industrial Safety and Environmental Protection, 1, 012.

Zhao, B. (2016). Facts and lessons related to the explosion accident in Tianjin Port, China. Natural Hazards, 84(1), 707-713.