REFERENCE NOTES
ON RISK ASSESSMENT FOR
THE MARINE AND OFFSHORE
OIL AND GAS INDUSTRIES
EDITION 2012

Introduction
Purpose …………………………………………………………………………………………………….. 1 – 1
B. Background …………………………………………………………………………………… 1 – 1
C. Risk Assessment Definitions ………………………………………………………………………. 1 – 2
1. Hazard or Threats ………………………………………………………………………………… 1 – 2
2. Controls …………………………………………………………………………………………….. 1 – 2
3. Event …………………………………………………………………………………………… 1 – 2
4. Risk …………………………………………………………………………………………………… 1 – 2
5. Frequency …………………………………………………………………………………………… 1 – 2
6. Consequence ………………………………………………………………………………………. 1 – 2
D. The Basics of Risk Assessment ……………………………………………………………………… 1 – 3
Section 2
A.
Risk Assessment Methods
The Risk Assessment Process………………………………………………………………………… 2 – 1
B. Hazard Identification Methods ………………………………………………………………………. 2 – 3
1. Hazard Identification (HAZID) Technique ……………………………………………… 2 – 3
2. What-if Analysis …………………………………………………………………………… 2 – 3
3. Checklist Analysis …………………………………………………………………………. 2 – 4
4. Hazard and Operability (HAZOP) Analysis ……………………………………………. 2 – 5
5. Failure Modes and Effects Analysis ………………………………………………………. 2 – 6
6. Contribution of “Human Factors” Issues ………………………………………………… 2 – 7
C. Frequency Assessment Methods ………………………………………………………………………. 2 – 8
1. Analysis of Historical Data …………………………………………………………………… 2 – 8
2. Event Tree Analysis (ETA) …………………………………………………………….. 2 – 8
3. Fault Tree Analysis (FTA) ………………………………………………………………. 2 – 9
4. Common Cause Failure Analysis (CCFA) ………………………………………………. 2 – 10
5. Human Reliability Analysis ………………………………………………………………….. 2 – 11
D. Consequence Assessment Methods ………………………………………………………………….. 2 – 12
E. Risk Assessment and Presentation ……………………………………………………………………… 2 – 13
1. Subjective Prioritization ……………………………………………………………………….. 2 – 13
2. Risk Categorization/Risk Matrix ………………………………………………………. 2 – 14
3. Risk Sensivity ……………………………………………………………………………….. 2 – 15

Section 3
A.
Conducting a Risk Assessment
Set Up of a Risk Analysis……………………………………………………………………………… 3 – 1
1. Study Objective …………………………………………………………………………………… 3 – 1
2. Scope …………………………………………………………………………………………… 3 – 1
3. Technical Approach ……………………………………………………………………….. 3 – 2
4. Resources …………………………………………………………………………………………… 3 – 2
5. Review Requirements ………………………………………………………………………….. 3 – 2
6. Schedule and Deliverables ……………………………………………………………………. 3 – 2
iv Biro Klasifikasi Indonesia
7. Change Documentation ………………………………………………………………………… 3 – 3
B. Selecting the Right Approach ………………………………………………………………………… 3 – 3
1. Levels of Analysis ……………………………………………………………………………….. 3 – 3
2. Key Factors in Selecting Methods ……………………………………………………. 3 – 5
3. Selecting an Approach ……………………………………………………………………. 3 – 7
C. Conducting the Assessment and Follow-up ………………………………………………… 3 – 10
1. Conducting the Assessment ………………………………………………………………….. 3 – 10
2. Follow-up …………………………………………………………………………………….. 3 – 11
D. Risk Assessment Limitations and Potential Problems ………………………………….. 3 – 11
1. Limitations …………………………………………………………………………………………. 3 – 11
2. Potential Problems…………………………………………………………………………. 3 – 12
Section 4
A.
Marine System : Hazards and safety Regulations
Overview ………………………………………………………………………………………………….. 4 – 1
B. Major Hazards Related to Shipping ……………………………………………………………… 4 – 2
1. Exogenous Hazards ……………………………………………………………………………… 4 – 2
2. Endogenous Hazards ………………………………………………………………………. 4 – 2
C. Potential Consequences of Shipping Accidents …………………………………………… 4 – 3
D. Regulations Governing Safety of Shipping ………………………………………………… 4 – 3
1. Classification Societes ………………………………………………………………………….. 4 – 3
2. International Maritime Organization …………………………………………………. 4 – 4
3. National and Unilateral Requirements ……………………………………………….. 4 – 5
4. Non-government Organizations ……………………………………………………………… 4 – 5
5. Verification of Compliance …………………………………………………………………… 4 – 5
6. Fragmented Safety Regime ……………………………………………………………………. 4 – 6
E. Conclusions and Future Trends ………………………………………………………………………… 4 – 6
1. Winds of Change …………………………………………………………………………………. 4 – 6
2. Conclusions ………………………………………………………………………………….. 4 – 7
Section 5 Offshore Oil and Gas System : Hazards and Safety Regulations
A. Overview ………………………………………………………………………………………………….. 5 – 1
B. Major Hazards of Oil and Gas Production ……………………………………………………….. 5 – 1
1. Production Operations ………………………………………………………………………… 5 – 2
2. Drilling Operations ………………………………………………………………………. 5 – 3
3. Construction and Maintenance Operations ……………………………………….. 5 – 4
C. Historical Progression of Regulation Governing Offshore Oil and Gas
Development ……………………………………………………………………………………………….. 5

– 5
1. 1920’s – 1960’s ………………………………………………………………………………….. 5 – 6
2. 1970’s – 1980’s ……………………………………………………………………………. 5 – 6
3. 1990 – 2010+ ………………………………………………………………………………. 5 – 6
D. Key Nation’s Offshore oil and Gas Regulatory Development………………………… 5 – 6
E. Conclusions and Future Trends ………………………………………………………………… 5 – 8
Biro Klasifikasi Indonesia v
Section 6
A.
Benefits of Risk Assessment Applications
Overview………………………………………………………………………………………………….. 6 – 1
B. Identifying Hazards and Protecting Against Them ………………………………………….. 6 – 1
1. Hazard Identification During Project Development ………………………………… 6 – 1
2. Assessment of Safeguards ………………………………………………………………. 6 – 2
3. Management of Change ………………………………………………………………… 6 – 2
4. Root Cause Analysis ………………………………………………………………………….. 6 – 2
C. Improving Operations ………………………………………………………………………………… 6 – 3
1. Evaluating New Operating Modes ……………………………………………………….. 6 – 3
2. Improving Emergency and Operating Procedures ………………………………. 6 – 3
3. Improving Operations Through Better Understanding ………………………… 6 – 3
D. Efficient Use of resources (ALARP/Cost Benefit Analysis) …………………………….. 6 – 4
1. Design Option Comparisons ……………………………………………………………….. 6 – 4
2. Reliability of Critical Systems ……………………………………………………….. 6 4
E. Developing or Complying with Rules and Regulations …………………………………… 6 – 5
1. Risk-based Regulatory and Standards Development……………………………….. 6 – 5
2. Estimating Overall Facility Risks ……………………………………………………. 6 – 5
3. The Future : Providing the Framework for Regulatory Reform ……………. 6 – 5
Section 7 Risk Based Inspection
A. Introduction ……………………………………………………………………………………………….. 7 – 1
B. Qualitative Screening …………………………………………………………………………………….. 7 – 1
C. A Quantitative Model for Equipment with Measurable Damage Rate …………………… 7 – 1
1. Scope …………………………………………………………………………………………………. 7 – 1
2. Determine Damage Mechanisms, Damage Rates, Uncertainty in
Damage Rates Validity of Previously Performed or Future Planned
Inspections and Test………………………………………………………. 7 – 1
3. Structural Reliability ……………………………………………………………………… 7 – 2
4. Consequence of Failure ………………………………………………………………………… 7 – 3
5. Risk Assessment and Risk Management ………………………………………………….. 7 – 4
Section 8 Conclusion 8 – 1
Appendix A References A – 1

Section 1 – Introduction A,B 1 – 1
Section 1
Introduction
A. Purpose
,B
This document is intended to provide an overview of the risk assessment field for managers and
technical professionals in the Maritime and Offshore Oil and Gas industries. The risks addressed are
primarily those affecting the safety of a vessel, facility or operation, but the methods discussed can also
be applied to other types of risk. The concept of risk is defined, and the methods available to assess the
risks associated with an operation are described. Guidelines for setting up and conducting successful risk
studies are provided. Regulatory requirements that have prompted the development of modern risk
assessment practices are described, and future regulatory trends are discussed. And finally, examples of
risk assessment applications are discussed.
B. Background
The ability to make wise decisions is critical to a successful business enterprise. In today’s complex
world, business decisions are seldom simple or straightforward. Components of a good decision making
process include:
i) identification of a wide range of potential options (allowing for novel approaches),
ii) effectively evaluating each option’s relative merits,
iii) appropriate levels of input and review
iv) timely and fair decision-making methods, and
v) effective communication and implementation of the decision which is made.
Risk assessment is typically applied as an aid to the decision-making process. As options are evaluated,
it is critical to analyze the level of risk introduced with each option. The analysis can address financial
risks, health risks, safety risks, environmental risks and other types of business risks. An appropriate
analysis of these risks will provide information which is critical to good decision making, and will often
clarify the decision to be made. The information generated through risk assessment can often be
communicated to the organization to help impacted parties understand the factors which influenced the
decision.
Risk assessment is not a new field. Formal risk assessment techniques have their origins in the insurance
industry. As the industrial age progressed, and businesses began to make large capital investments, it
became a business necessity to understand the risks associated with the enterprises being undertaken and
to be able to manage the risk using control measures and insurance. For insurance companies to
survive, it became imperative that they be able to calculate the risks associated with the insured
activities.
As corporations have become more familiar with risk assessment techniques, these techniques are
applied more frequently to improve their decision-making processes, even when there is no regulatory
requirement to do so. As access to data and analytical techniques continues to improve, risk assessment
will continue to become easier to perform and more applications, both mandatory and voluntary, can be
expected.
1 – 2 Section 1 – Introduction C
C. Risk Assessment Definitions
,C
The term “risk” is used in a variety of ways in everyday speech. We frequently refer to activities such as
rock-climbing or day-trading stocks as “risky”; or discuss our “risk” of getting the flu this coming
winter. In the case of rock-climbing and day-trading, “risky” is used to mean hazardous or dangerous. In
the latter reference, “risk” refers to the probability of a defined outcome (the chance of contracting the
flu). Before beginning a discussion of risk assessment, it is important to provide a clear definition of the
term “risk” and some of the other terminology used in the risk assessment field.
For our purposes, we will limit our discussion to the risk of unintended incidents occurring which may
threaten the safety of individuals, the environment or a facility’s physical assets. In this setting, we can
define a number of terms:
1. Hazards or Threats
Hazards or threats are conditions which exist which may potentially lead to an undesirable event.
2. Controls
Controls are the measures taken to prevent hazards from causing undesirable events. Controls can be
physical (safety shutdowns, redundant controls, conservative designs, etc.), procedural (written operating
procedures), and can address human factors (employee selection, training, supervision).
3. Event
An event is an occurrence that has an associated outcome. There are typically a number of potential
outcomes from any one initial event which may range in severity from trivial to catastrophic, depending
upon other conditions and add-on events.
4. Risk
Now we are ready to provide a technical definition of the term risk. Risk is composed of two elements,
frequency and consequence.
Risk is defined as the product of the frequency with which an event is anticipated to occur and the consequence of the event’s outcome.
Risk = Frequency ×Consequence
5. Frequency
The frequency of a potential undesirable event is expressed as events per unit time, usually per year. The
frequency should be determined from historical data if a significant number of events have occurred in
the past. Often, however, risk analyses focus on events with more severe consequences (and low
frequencies) for which little historical data exist. In such cases, the event frequency is calculated using
risk assessment models.
6. Consequence
Consequence can be expressed as the number of people affected (injured or killed), property damaged,
amount of spill, area affected, outage time, mission delay, money lost, etc. Regardless of the measure
chosen, the consequences are expressed “per event”. Thus the above equation has the units “events/year”
times “consequences/event”, which equals “consequences/year”, the most typical quantitative risk
measure.
These terms, as defined, will be used throughout this document.
Section 1 – Introduction D 1- 3
D. The Basics of Risk Assessment
Risk assessment is the process of gathering data and synthesizing information to develop an understanding of the risk of a particular enterprise. To gain an understanding of the risk of an operation, one
must answer the following three questions:
i) What can go wrong?
ii) How likely is it?
iii) What are the impacts?
Qualitative answers to one or more of these questions are often sufficient for making good decisions.
However, as managers seek more detailed cost/benefit information upon which to base their decisions,
they may wish to use quantitative risk assessment (QRA) methods. Both qualitative and quantitative
methods are discussed in this document. Figure 1.1 below illustrates the elements of Risk Assessment.
Figure 1.1 Element of Risk Assessment

The remainder of this document provides more details about the tools and methods available for
conducting risk assessments, considerations for setting up an assessment, information about relevant
regulatory requirements and examples of risk assessment applications. Before initiating a risk assessment, all parties involved should have a common understanding of the goals of the exercise, the methods
to be used, the resources required, and how the results will be applied.
Foundation for Risk Assessment
 Historical
experience  Analytical
methods  Knowledge and
judgement
Risk Understanding
How likely
Is it?
What can go
Wrong?
What are
The impacts?

Section 2 – Risk Assessment Methods A 2 – 1
Section 2
Risk Assessment Methods
A. The Risk Assessment Process
,B
To use a systematic method to determine risk levels, the Risk Assessment Process is applied. This process
consists of four basic steps:
i) Hazard Identification
ii) Frequency Assessment
iii) Consequence Assessment, and
iv) Risk Assessment
The level of information needed to make a decision varies widely. In some cases, after identifying the
hazards, qualitative methods of assessing frequency and consequence are satisfactory to enable the risk
Assessment. In other cases, a more detailed quantitative analysis is required. The Risk Assessment Process
is illustrated in Figure 2.1, and the results possible from qualitative and quantitative approaches are
described.
There are many different analysis techniques and models that have been developed to aid in conducting
risk assessments. Some of these methods are summarized in Figure 2.2. A key to any successful risk
analysis is choosing the right method (or combination of methods) for the situation at hand. For each
step of the Risk Assessment Process, this Section provides a brief introduction to some of the analysis
methods available and suggests risk analysis approaches to support different types of decision making
within the maritime and offshore industries. For more information on applying a particular method or
tool, consult the references noted.
It should be noted that some of these methods (or slight variations) can be used for more than one step in
the risk assessment process. For example, every tree analysis can be used for frequency assessment as
well as for consequence assessment. Figure 2.2 lists the methods only under the most common step to
avoid repetitions.
2 – 2 Section 2 – Risk Assessment Methods A
Figure 2.1 The Risk Assessment Process
Figure 2.2 Overview of Risk Assessment Methods
 Absolute and
relative risks
 Major risk
contributors
 Comparisons
with other
risk
Estimate
Impacts
Qualitative ranking
of recommendations
Quantified benefits and cost
Of risk-reduction alternatives
Model
Effects
Hazard
Identification
Model
Causes
Estimate
Likelihoods
Estimate
Likelihoods
FREQUENCY ASSESSMENT
CONSEQUENCE ASSESSMENT
QUALITATIVE TECHNIQUES QUANTITATIVE TECHNIQUES
 Literature
Search
 What-if
review
 Safety audit
 Walk-through
 Checklist
 Brainstorming
 HAZOP
 FMEA
 HAZID
 Historical
records
 Fault tree
analysis
 Event tree
analysis
 Human
reliability
analysis
 Common
cause failure
analysis
 Source term
models
 Atmospheric
dispersion
models
 Blast and
thermal
radiation
models
 Aquatic
transport
models
 Effect models
 Mitigation
models
 Risk matrix
 F-N curve
 Risk profile
 Risk isopleth
 Risk density
curve
 Risk index
HAZARD
IDENTIFICATION
METHODS
FREQUENCY
ASSESSMENT
METHODS
CONSEQUENCE
ASSESSMENT
METHODS
RISK
Assessment
METHODS
RISK ASSESSMENT
METHODS
Section 2 – Risk Assessment Methods B 2 – 3
B. Hazard Identification Methods
Because hazards are the source of events that can lead to undesirable consequences, analyses to understand
risk exposures must begin by understanding the hazards present. Although hazard identification seldom
provides information directly needed for decision making, it is a critical step. Sometimes hazard identification
is explicitly performed using structured techniques. Other times (generally when the hazards of interest are
well known), hazard identification is more of an implicit step that is not systematically performed. Overall,
hazard identification focuses a risk analysis on key hazards of interest and the types of mishaps that these
hazards may create. The following are some of the commonly used techniques to identify hazards.
1. Hazard Identification (HAZID) Technique
HAZID is a general term used to describe an exercise whose goal is to identify hazards and associated events
that have the potential to result in a significant consequence. For example, a HAZID of an offshore petroleum
facility may be conducted to identify potential hazards which could result in consequences to personnel (e.g.,
injuries and fatalities), environmental (oil spills and pollution), and financial assets (e.g., production
loss/delay). The HAZID technique can be applied to all or part of a facility or vessel or it can be applied to
analyze operational procedures. Depending upon the system being evaluated and the resources available, the
process used to conduct a HAZID can vary. Typically, the system being evaluated is divided into manageable
parts, and a team is led through a brainstorming session (often with the use of checklists) to identify potential
hazards associated with each part of the system. This process is usually performed with a team experienced in
the design and operation of the facility, and the hazards that are considered significant are prioritized for
further Assessment.
2. What-if Analysis
What-if analysis is a brainstorming approach that uses broad, loosely structured questioning to (1) postulate
potential upsets that may result in mishaps or system performance problems and (2) ensure that appropriate
safeguards against those problems are in place. This technique relies upon a team of experts brainstorming to
generate a comprehensive review and can be used for any activity or system. What-if analysis generates
qualitative descriptions of potential problems (in the form of questions and responses) as well as lists of
recommendations for preventing problems. It is applicable for almost every type of analysis application,
especially those dominated by relatively simple failure scenarios. It can occasionally be used alone, but most
often is used to supplement other, more structured techniques (especially checklist analysis).
Table 2.1 is an example of a portion of a what-if analysis of a vessel’s compressed air system.
2 – 4 Section 2 – Risk Assessment Methods B
Table 2.1 What-if Assessment Example
Summary of the What-if Review of the Vessel’s Compressed Air System
What if …?
Immediate System
Condition Ultimate Consequences Safeguards Recommendations
1. The intake air
filter begins to
plug
Reduced air flow
through the
compressor
affecting its
performance
Inefficient compressor
operation, leading to
excessive energy use and
possible compressor
damage
Low/no air flow to
equipment, leading to
functional inefficiencies
and possibly outages
Pressure/vacuum
gauge between
the compressor
and the intake
filter
Annual
replacement of
the filter
Rain cap and
screen at the air
intake
Make checking the
pressure gauge
reading part of
someone’s daily
rounds
OR
Replace the local
gauge with a low
pressure switch that
alarms in a manned
area
2. Someone
leaves a drain
valve open on
the compressor
discharge
High air flow rate
through the open
valve to the
atmosphere
Low/no air flow to
equipment, leading to
functional inefficiencies
and possibly outages
Potential for personnel
injury from escaping air
and/or blown debris
Small drain line
would divert only
a portion of the
air flow, but
maintaining
pressure would be
difficult
—
3. Checklist Analysis
Checklist analysis is a systematic Assessment against pre-established criteria in the form of one or more
checklists. It is applicable for high-level or detailed-level analysis and is used primarily to provide structure for
interviews, documentation reviews and field inspections of the system being analyzed. The technique
generates qualitative lists of conformance and nonconformance determinations with recommendations for
correcting non-conformances. Checklist analysis is frequently used as a supplement to or integral part of
another method (especially what-if analysis) to address specific requirements.
Table 2.2 is an example of a portion of a checklist analysis of a vessel’s compressed air system.

Table 2.2 Checklist Analysis Example
Responses to Checklist Questions for the Vessel’s Compressed Air System
Questions Responses Recommendations
Piping
Have thermal relief valves been
installed in piping runs (e.g.,
cargo loading/unloading lines)
where thermal expansion of
trapped fluids would separate
flanges or damage gaskets?
•
•
•
Piping
Not applicable
•
•
•
Piping
—
•
•
•
Section 2 – Risk Assessment Methods B 2 – 5
Responses to Checklist Questions for the Vessel’s Compressed Air System
Questions Responses Recommendations
Cargo Tanks
Is a vacuum relief system needed
to protect the vessel’s cargo tanks
during liquid withdrawal?
•
•
•
Cargo Tanks
Yes, the cargo tanks will be damaged
if vacuum relief is not provided. A
vacuum relief system is installed on
each cargo tank
•
•
•
Cargo Tanks
—
•
•
•
Compressors
Are air compressor intakes
protected against contaminants
(rain, birds, flammable gases,
etc.)?
•
•
•
Compressors
Yes, except for intake of flammable
gases. There is a nearby cargo tank
vent
•
•
•
Compressors
Consider routing the cargo tank vent
to a different location
•
•
•
4. Hazard and Operability (HAZOP) Analysis
The HAZOP analysis technique uses special guidewords to prompt an experienced group of individuals to
identify potential hazards or operability concerns relating to pieces of equipment or systems. Guidewords
describing potential deviations from design intent are created by applying a pre-defined set of adjectives (i.e.
high, low, no, etc.) to a pre-defined set of process parameters (flow, pressure, composition, etc.). The group
then brainstorms potential consequences of these deviations and if a legitimate concern is identified, they
ensure that appropriate safeguards are in place to help prevent the deviation from occurring. This type of
analysis is generally used on a system level and generates primarily qualitative results, although some simple
quantification is possible. The primary use of the HAZOP methodology is identification of safety hazards and
operability problems of continuous process systems (especially fluid and thermal systems). For example, this
technique would be applicable for an oil transfer system consisting of multiple pumps, tanks, and process lines.
The HAZOP analysis can also be used to review procedures and sequential operations. Table 2.3 is an example
of a portion of a HAZOP analysis performed on a compressed air system onboard a vessel.
2 – 6 Section 2 – Risk Assessment Methods B
Table 2.3 Example of a HAZOP Analysis
Hazard and Operability Analysis of the Vessel’s Compressed Air System
Item Deviation Cause Mishap Safeguards Recommendations
1. Intel Line for the
1.1 High flow No mishaps of interest
1.2 Low/no flow Plugging of filter or
piping (especially at
air intake)
Rainwater
accumulation in the
line and potential
for freeze-up
Inefficient
compressor
operation, leading to
excessive energy use
and possible
compressor damage
Low/no air flow to
equipment and tools,
leading to production
inefficiencies and
possibly outages
Pressure/vacuum
gauge between the
compressor and
the intake filter
Periodic
replacement of the
filter
Rain cap and screen
at the air intake
Make checking the
pressure gauge reading
part of someone’s
daily rounds
OR
Replace the local
gauge with a low
pressure switch that
alarms in a manned
area
1.3 Misdirected flow No credible cause
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
5. Failure Modes and Effects Analysis (FMEA)
FMEA is an inductive reasoning approach that is best suited for reviews of mechanical and electrical hardware
systems. This technique is not appropriate to broader marine issues such as harbor transit or overall vessel
safety. The FMEA technique (1) considers how the failure mode of each system component can result in
system performance problems and (2) ensures that appropriate safeguards against such problems are in place.
This technique is applicable to any well-defined system, but the primary use is for reviews of mechanical and
electrical systems (e.g., fire suppression systems, vessel steering/propulsion systems). It also is used as the
basis for defining and optimizing planned maintenance for equipment because the method systematically
focuses directly and individually on equipment failure modes. FMEA generates qualitative descriptions of
potential performance problems (failure modes, root causes, effects, and safeguards) and can be expanded to
include quantitative failure frequency and/or consequence estimates.
Table 2.4 is an example of a portion of an FMEA performed on a compressed air system onboard a
vessel.
Section 2 – Risk Assessment Methods B 2 – 7
Example from a Hardware-based FMEA
Machine/Process: Onboard Compressed air system
Subject: 1.2.2 Compressor control loop
Description: Pressure-sensing control loop that automatically starts/stops the compressor
based on system pressure (starts at 95 psig and stops at 105 psig)
Next higher level: 1.2 Compressor subsystem
Table 2.4 FMEA Assessment Example
Failure
Mode
Effects
Causes Indications Safeguards
Recommendations
Local / Remarks
Higher
Level End
A. No start
signal
when
the
system
pressure
is low
Open
control
circuit
Low
pressure
and air flow
in the
system
Interruption
of the
systems
supported
by
compressed
air
Sensor
failure or
miscalibrated
Controller
failure or set
incorrectly
Wiring fault
Control circuit
relay failure
Loss of power
for the control
circuit
Low
pressure
indicated
on air
receiver
pressure
gauge
Compressor
not operating
(but has
power and no
other
obvious
failure)
Rapid
detection
because of
quick
interruption
of the
supported
systems
Consider a
redundant
compressor
with separate
controls
Calibrate sensors
periodically in
accordance with
written
procedure
B. No stop
signal
when
the
system
pressure
is high
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
6. Contribution of “Human Factors” Issues
In any effort to identify hazards and assess their associated risks, there must be full consideration of the
interface between the human operators and the systems they operate. Human Factors Engineering (HFE)
issues can be integrated into the methods used to identify hazards, assess risks, and determine the reliability of
safety measures. For instance, hazard identification guidewords have been developed to prompt a review team
to consider human factor design issues like access, control interfaces, etc. An understanding of human
psychology is essential in estimating the effectiveness of procedural controls and emergency response systems.
Persons performing risk assessments need to be aware of the human factors impact, and training for such
persons can improve their ability to spot the potential for human contributions to risk. Risk analysts can easily
learn to spot the potential for human error any time human interaction is an explicit mode of risk control.
However, it is equally important to recognize human contributions to risk when the human activity is implicit
in the risk control measure. For example, a risk assessment of a boiler would soon identify “overpressure” as
a hazard that can lead to risk of rupture and explosion. The risk assessment might conclude that the
2 – 8 Section 2 – Risk Assessment Methods B,C
combination of two pressure control measures will result in an acceptably low level of risk. The two measures
are: (1) have a high pressure alarm that will tell the operator to shut down the boiler and vent the steam, and (2)
provide an adequately sized pressure relief valve. The first risk control measure involves explicit human
interaction. Any such control measure should immediately trigger Assessment of human error scenarios that
could negate the effectiveness of the control measure. The second risk control measure involves implicit
human interaction (i.e., a functioning pressure relief valve does not appear on the boiler all by itself but must
be installed by maintenance personnel.)
A checklist of common errors or an audit of the management system for operator training are examples of
methods used to address the human error potential and ensure that it also is controlled. The purpose of any tool
would be to identify the potential for error and identify how the error is prevented. Does the operator know
what the alarm means? Does he know how to shut down the boiler? What if the overpressure event is one of a
series of events (e.g. what if the operator has five alarms sounding simultaneously)? Did the engineer properly
size and specify the relief valve? Was it installed correctly? Has it been tested or maintained to ensure its
function? A corollary to each of the above questions is required in the analysis: “How do you know?” The
answer to that last question is most often found in the management system, thus “Human Factors” is the glue
that ties risk assessment from a technology standpoint to risk assessment from an overall quality management
standpoint.
C. Frequency Assessment Methods
,C
After the hazards of a system or process have been identified, the next step in performing a risk assessment is
to estimate the frequency at which the hazardous events may occur. The following are some of the techniques
and tools available for frequency assessment.
1. Analysis of Historical Data
The best way to assign a frequency to an event is to research industry databases and locate good historical
frequency data which relates to the event being analyzed. Before applying historical frequency data, a
thoughtful analysis of the data should be performed to determine its applicability to the event being evaluated.
The analyst needs to consider the source of the data, the statistical quality of the data (reporting accuracy, size
of data set, etc.) and the relevance of the data to the event being analyzed. For example, transportation data
relating to helicopter crashes in the North Sea may not be directly applicable to Gulf of Mexico operations due
to significant differences in atmospheric conditions and the nature of helicopter operating practices. In another
case, frequency data for a certain type of vessel navigation equipment failure may be found to be based on a
very small sample of reported failures, resulting in a number which is not statistically valid.
When good, applicable frequency data cannot be found, it may be necessary to estimate the frequency of an
event using one of the analytical methods described below.
2. Event Tree Analysis (ETA)
Event tree analysis utilizes decision trees to graphically model the possible outcomes of an initiating event
capable of producing an end event of interest. This type of analysis can provide (1) qualitative descriptions of
potential problems (combinations of events producing various types of problems from initiating events) and
(2) quantitative estimates of event frequencies or likelihoods, which Help in demonstrating the relative
importance of various failure sequences. Event tree analysis may be used to analyze almost any sequence of
events, but is most effectively used to address possible outcomes of initiating events for which multiple
safeguards are in line as protective features.
The following example event tree (Figure 2.3) illustrates the range of outcomes for a tanker having redundant
steering and propulsion systems. In this particular example, the tanker can be steered using the redundant
propulsion systems even if the vessel loses both steering systems.
Section 2 – Risk Assessment Methods C 2 – 9
Figure 2.3 Example Event Tree Analysis
3. Fault Tree Analysis
Fault Tree Analysis (FTA) is a deductive analysis that graphically models (using Boolean logic) how logical
relationships among equipment failures, human errors and external events can combine to cause specific
mishaps of interest. Similar to event tree analysis, this type of analysis can provide (1) qualitative descriptions
of potential problems (combinations of events causing specific problems of interest) and (2) quantitative
estimates of failure frequencies/likelihoods and the relative importance of various failure sequences/
contributing events. This methodology can also be applied to many types of applications, but is most
effectively used to analyze system failures caused by relatively complex combinations of events.
The following example illustrates a very simple fault tree analysis of a loss of propulsion event for a
vessel (Figure 2.4).
Initiating event Both propulsion
system operate
Second propulsion
System operates
Both steering
system operate
Second steering
system operates
Outcomes
Tanker enters
waterway
Yes
No
OK
OK
OK
OK
OK, vessel is steered
Using engines
Vessel loses steering
Vessel loses
propulsion
2 – 10 Section 2 – Risk Assessment Methods C

Figure 2.4 Example Fault Tree Analysis
4. Common Cause Failure Analysis (CCFA)
CCFA is a systematic approach for examining sequences of events stemming from multiple failures that occur
due to the same root cause. Since these multiple failures or errors result from the same root causes, they can
defeat multiple layers of protection simultaneously. CCFA has the following characteristics:
i) Systematic, structured assessment relying on the analyst’s experience and guidelines for identifying
potential dependencies among failure events to generate a comprehensive review and ensure that
appropriate safeguards against common cause failure events are in place
ii) Used most commonly as a system-level analysis technique
iii) Primarily performed by an individual working with system experts through interviews and field
inspections
Fuel supply to
Engine is
contaminated
Engine fails to
operate
Engine stops
Vessel loses
propulsion
A
Basic failure
of the
propeller
(1)
B
C
Contaminated
fuel in bunker
tanks
(3)
Onboard fuel
Cleanup system
Fails
(4)
Basic failure
Of the engine
(stops)
(2)
Section 2 – Risk Assessment Methods C 2 – 11
Select Risk Scenarios to Analyze
Task Analysis
Error Identification
Determine Error Likelihoods
Develop Error Reduction Strategies
Documents Results
Integrate with Risk Assessment
iv) Generates:
– qualitative descriptions of possible dependencies among events
– quantitative estimates of dependent failure frequencies/likelihoods
– lists of recommendations for reducing dependencies among failure events
v) Quality of the Assessment depends on the quality of the system documentation, the training of the
analyst and the experience of the SMEs Helping the analyst
CCFA is used exclusively as a supplement to a broader analysis using another technique, especially fault tree
and event tree analyses. It is best suited for situations in which complex combinations of errors/equipment
failures are necessary for undesirable events to occur.
5. Human Reliability Analysis
Where human performance issues contribute to the likelihood of an end event occurring, methods for
estimating human reliability are needed. For instance, an event tree could be constructed which includes a
branch titled “Operator responds to alarm and takes appropriate corrective action”. In order to estimate a
numerical frequency with which this occurs, human reliability analysis can be applied.
One of the best known approaches for assessing human errors is Human Reliability Analysis. Human
reliability analysis is a general term for methods by which human errors can be identified, and their probability
estimated for those actions that can contribute to the scenario being studied, be it personnel safety, loss of the
system, environmental damage, etc. The estimate can be either qualitative or quantitative, depending on the
information available and the degree of detail required. Regardless of the approach used, the basic steps that an
assessor would undertake for a human reliability analysis would be the same. Figure 2.5, “Human Reliability
Analysis Process” graphically depicts the steps and their order.
Given that high-risk scenarios have been identified during the risk assessment, these scenarios would be reexamined as to the impact the individual could have while completing a task related to the scenario. The
assessor would then conduct some sort of task analysis to determine what an individual would do to
successfully complete the task.

Figure 2.5 Human Reliability Assessment Process
2 – 12 Section 2 – Risk Assessment Methods C,D
Once the successful steps were identified, then the assessor could determine what the person might do wrong
at each step to reach the undesirable result. Some examples of potential problems areas are:
i) Written procedures not complete or hard to understand
ii) Instrumentation inoperative or inadequate
iii) Lack of knowledge by the operator
iv) Conflicting priorities
v) Labeling inadequacies
vi) Policy versus practice discrepancies
vii) Equipment not operating according to design specifications
viii) Communication difficulties
ix) Poor ergonomics
x) Oral versus written procedures
xi) Making a repair or performing maintenance with a wrong tool
Each of the above situations increases the probability that an individual will err in the performance of a task.
This is important since the next stage in human reliability analysis is assigning likelihood estimates to human
errors. When examining each of the potential human errors in the context of a scenario, the analysis must
systematically look at each step and each potential error identified. If there are a large number of potential
errors, the assessor may decide to conduct a preliminary screening to determine which errors are less or
more likely to occur and then choose to only assign values to the more likely errors. For determining
likelihood, the assessor can produce qualitative estimates, (e.g., low, medium or high) or quantitative estimates
(e.g., 0.003) using existing human failure databases. From either, it can be determined what individual errors
are the most likely to cause an individual’s performance to fall short of the desired result. Upon reviewing the
estimates, error reduction strategies can be developed to minimize the frequency of human error. Minimizing
the human error will also reduce the likelihood of the overall scenario itself from occurring. After the human
reliability analysis is complete, the following information will be available:
i) List of tasks
ii) List of potential errors
iii) Human error probabilities
iv) Error reduction strategies
v) Information related to training and procedures
vi) Information related to safety management system
The listing of tasks relating to the scenario, the list of human errors and their probabilities, the error reduction
strategies and the other information generated as a part of the human reliability study can all be integrated into
the risk assessment study. The human reliability information should also be used for defining risk reduction
measures.
D. Consequence Assessment Methods
Consequence modeling typically involves the use of analytical models to predict the effect of a particular
event of concern. Examples of consequence models include source term models, atmospheric dispersion
models, blast and thermal radiation models, aquatic transport models and mitigation models. Most
consequence modeling today makes use of computerized analytical models. Use of these models in the
performance of a risk assessment typically involves four activities:
i) Characterizing the source of the material or energy associated with the hazard being analyzed
Section 2 – Risk Assessment Methods D,E 2 – 13
ii) Measuring (through costly experiments) or estimating (using models and correlations) the transport of
the material and/or the propagation of the energy in the environment to the target of interest
iii) Identifying the effects of the propagation of energy or material on the target of interest
iv) Quantifying the health, safety, environmental, or economic impacts on the target of interest
Many sophisticated models and correlations have been developed for consequence analysis. Millions of dollars
have been spent researching the effects of exposure to toxic materials on the health of animals. The effects are
extrapolated to predict effects on human health. A considerable empirical database exists on the effects of fires
and explosions on structures and equipment, and large, sophisticated experiments are sometimes performed to
validate computer algorithms for predicting the atmospheric dispersion of toxic materials. All of these
resources can be used to help predict the consequences of accidents. But, only those consequence assessment
steps needed to provide the information necessary for decision making should be performed.
The result from the consequence assessment step is an estimate of the statistically expected exposure of the
target population to the hazard of interest and the safety/health effects related to that level of exposure. For
example:
i) One hundred people will be exposed to air concentrations above the Emergency Response Planning
Guidelines (e.g., ERPG-2)
ii) Ten fatalities are expected if this explosion occurs
iii) If this event occurs, 1,200 lb. of material are expected to be released to the environment
The form of consequence estimate generated should be determined by the objectives and scope of the study.
Consequences are usually stated in the expected number of injuries or casualties or, in some cases, exposure to
certain levels of energy or material release. These estimates customarily account for average meteorological
conditions and population distribution and may include mitigating factors, such as evacuation and sheltering.
In some cases, simply assessing the quantity of material or energy released will provide an adequate basis for
decision making.
Like frequency estimates, consequence estimates may have very large uncertainties. Estimates that vary by a
factor of up to two orders of magnitude can result from (1) basic uncertainties in chemical/physical properties,
(2) differences in average versus time-dependent meteorological conditions, and/or (3) modeling uncertainties.
E. Risk Assessment and Presentation
Once the hazards and potential mishaps or events have been identified for a system or process, and the
frequencies and consequences associated with these events have been estimated, we are able to evaluate the
relative risks associated with the events. There are a variety of qualitative and quantitative techniques used to
do this.
1. Subjective Prioritization
Perhaps the simplest qualitative form of risk characterization is subjective prioritization. In this technique, the
analysis team identifies potential mishap scenarios using structured hazard analysis techniques (e.g., HAZOP,
FMEA). The analysis team subjectively assigns each scenario a priority category based on the perceived level
of risk. Priority categories can be:
i) Low, medium, high;
ii) Numerical assignments; or
iii) Priority levels.
2 – 14 Section 2 – Risk Assessment Methods E
2. Risk Categorization/Risk Matrix
Another method to characterize risk is categorization. In this case, the analyst must (1) define the likelihood
and consequence categories to be used in evaluating each scenario and (2) define the level of risk associated
with likelihood/consequence category combination. Frequency and consequence categories can be developed
in a qualitative or quantitative manner. Qualitative schemes (i.e., low, medium, or high) typically use
qualitative criteria and examples of each category to ensure consistent event classification.
Multiple consequence classification criteria may be required to address safety, environmental, operability and
other types of consequences. Table 2.5 and Table 2.6 provide examples of criteria for categorization of
consequences and likelihood.
Table 2.5 Consequence Criteria

Category Description Definition
1 Negligible Passenger inconvenience, minor damage
2 Marginal Marine injuries treated by first aid, significant damage not affecting
seaworthiness, less than 25K
3 Critical Reportable marine casualty (46 CFR 4.05-1)
Marine casualty (IMO Casualty Investigation Code)
4 Catastrophic Death, loss of vessel, serious marine incident (46 CFR 4.03-2)
Very serious marine casualty (IMO Casualty Investigation Code)
Table 2.6 Likelihood (i.e., Frequency) Criteria
Likelihood* Description
Low The mishap scenario is considered highly unlikely.
Low to Medium The mishap scenario is considered unlikely. It could happen, but it would be surprising if it did.
Medium to High The mishap scenario might occur. It would not be too surprising if it did.
High The mishap scenario has occurred in the past and/or is expected to occur in the future.
* Likelihood assessments are for the remaining life of the system, assuming normal maintenance and repair.
Once assignment of consequences and likelihoods is complete, a risk matrix can be used as a mechanism for
assigning risk (and making risk acceptance decisions), using a risk categorization approach. Each cell in the
matrix corresponds to a specific combination of likelihood and consequence and can be assigned a priority
number or some other risk descriptor (as shown in Figure 2.6). An organization must define the categories that
it will use to score risks and, more importantly, how it will prioritize and respond to the various levels of risks
associated with cells in the matrix.
Section 2 – Risk Assessment Methods E 2 – 15 Likelihood of occurrence
A M U U
A M U U
A A M U
A A A M Margina Catastrophic
l
Negligi
ble
Critical

Figure 2.6 Example Risk Matrix
3. Risk Sensitivity
When presenting quantitative risk assessment results, it is often desirable to demonstrate the sensitivity of
the risk estimates to changes in critical assumptions made within the analysis. This can help illustrate the
range of uncertainty associated with the exercise. Risk sensitivity analyses can also be used to
demonstrate the effectiveness of certain risk mitigation approaches. For example, if by increasing
inspection frequency on a piece of equipment, the failure rate could be reduced, a sensitivity analysis
could be used to demonstrate the difference in estimated risk levels when inspection frequencies are
varied.
A = Acceptable
M
U
=
=
Marginal
Unacceptable
High
Med
To
High
Low
To
Med
Low
Section 3 – Conducting a Risk Assessment A 3 – 1
Section 3
Conducting a Risk Assessment
A. Set Up of a Risk Analysis
If a risk or reliability assessment is to efficiently satisfy a particular need, the charter for the risk
assessment team must be well defined. Figure 3.1contains the various elements of a risk assessment
charter. Defining these elements requires a clear understanding of the reason for the study, a description
of management’s needs and an outline of the type of information required for the study. Sufficient
flexibility must be built into the analysis scope, technical approach, schedule and resources to
accommodate later refinement of any undefined charter element(s) based on knowledge gained during the
study. The risk assessment team must understand and support the analysis charter; otherwise a useless
product may result.

QRA Charter

STUDY OBJECTIVE SCOPE TECHNICAL APPROACH RESOURCES
 Level of risk  Physical bounds  Modeling  Personnel
 Design tradeoffs  Types of techniques  Contractors
 Plant siting consequences  Data sources  Funding
 Safety  Types of hazards  Factors of merit  Research
improvements  Accidents of  Desired accuracy  Schedule
 Process selection Interest or uncertainty  Peer/management
 Turnaround  Level of detail  Quality assurance review
scheduling  Excluded events  Documentation
Figure 3.1 Element of a QRA Charter
1. Study Objective
An important and difficult task is concisely translating requirements into study objectives. For
example, if a client needs to decide between two methods of storing a hazardous chemical on a vessel, the
analysis objective should precisely define that what is needed is the relative difference between the
methods, not the general “Determine the risk of these two storage methods.” Asking the risk assessment
team for more than is necessary to satisfy the particular need is counterproductive and can be expensive.
For any risk assessment to efficiently produce the necessary types of results, the requirements must be
clearly communicated through well-written objectives.
2. Scope
Establishing the physical and analytical boundaries for a risk assessment is also a difficult task. The scope
will often need to be proposed by the risk assessment team. Of the items listed in Figure 3.1, selection of
an appropriate level of detail is the scope element that is most crucial to performing an efficient risk
assessment. The risk assessment project team should be encouraged to use approximate data and gross
levels of resolution during the early stages of the risk assessment. Once the project team determines the
areas that are the large contributors to risk, they can selectively apply more detailed effort to specific
issues as the analysis progresses. This strategy will help conserve analysis resources by focusing
resources only on areas important to developing improved risk understanding. Management should

3 – 2 Section 3 – Conducting a Risk Assessment A
review the boundary conditions and assumptions with the risk assessment team during the course of the
study and revise them as more is learned about key sensitivities. In the end, the ability to effectively use
risk assessment estimates will largely be determined by the appreciation of important study assumptions
and limitations resulting from scope definition.
3. Technical Approach
The risk assessment project team can select the appropriate technical approach once the study objectives
are specified, and together management and the team can define the scope. The methodologies to be used
to identify hazards and to estimate frequencies and consequences should be defined. A variety of
modeling techniques and general data sources can be used to produce the desired results. Many computer
programs are now available to aid in calculating risk or reliability estimates, and many automatically give
more “answers” than needed. The planned output from the assessment activities should also be described.
The risk assessment team must take care to supply appropriate risk information that satisfies the study
objectives – and no more.
The client should consider conducting internal and external quality assurance reviews of the study (to
ferret out errors in modeling, data, etc.). Independent peer reviews of the risk assessment results can be
helpful by presenting alternate viewpoints, and one should include outside experts (either consultants or
personnel from another vessel or facility) on the risk assessment review panel. A mechanism should be
set up wherein disputes between the risk assessment team members (e.g., technical arguments about
safety issues) can be surfaced and reconciled. All of these factors play an essential role in producing a
defendable, high-quality risk assessment. Once the risk assessment is complete, it is important to formally
document responses to any recommendations the project team’s report contains.
4. Resources
Organizations can use risk assessments to study small-scale as well as large-scale problems. For example,
a risk assessment can be performed on a small part of a process, such as a storage vessel. Depending on
the study objectives, a complete risk assessment (both frequency and consequence estimates are made)
could require as little as a few days to a few weeks of technical effort. On the other hand, a major study to
identify the hazards associated with a large process unit (e.g., a unit with an associated capital investment
of 50 million dollars) may require 2 to 6 person-months of effort, and a complete risk assessment of that
same unit may require up to 1 to 3 person-years of effort.
If a risk assessment team is commissioned, it must be adequately staffed if it is to successfully perform
the work. An appropriate blend of engineering and scientific disciplines must be assigned to the project.
If the study involves an existing facility, operating and maintenance personnel will play a crucial role in
ensuring that the risk assessment models accurately represent the real system. In addition to the risk
analyst(s), a typical team may also require Helpance from a knowledgeable process engineer, a senior
operator, a design engineer, an instrumentation engineer, a chemist, a metallurgist, a maintenance
foreman and/or an inspector. Unless a company has significant in-house risk assessment experience, it
may be faced with selecting outside specialists to help perform the larger or more complex analyses. If
contractors are used extensively, the client should require that his knowledgeable technical personnel be
an integral part of the risk assessment team.
5. Review Requirements
Requirements for review by the client organization should be stipulated in the charter. Reviews should be
held to ensure that client input is being received, and that the assumptions and methods applied by those
conducting the risk assessment are valid. The intervals for interfacing with client management should also
be specified. In addition, quality assurance review practices to be applied within both the client and
analyst organizations should be described. More discussion about review requirements is included in
3.C.1. “Conducting the Assessment”.
6. Schedule and Deliverables
A proposed schedule should be agreed to during the chartering exercise. Also, the study deliverables
should be clearly defined. This will provide the basis of understanding needed for both the client and
Section 3 – Conducting a Risk Assessment B 3 – 3
analyst organizations to provide resources and plan impacted activities.
7. Change Documentation
After a study is underway, any changes to the requirements and boundaries set forth in the charter should
be documented and approved by all involved parties.
B. Selecting the Right Approach
There are literally hundreds of diverse risk analysis methods and tools, many of which are highly
applicable to the analysis of marine and offshore systems. Of course, a key to any successful risk analysis
is choosing the right method (or combination of methods) for the situation at hand. A number of factors
influence the choice of analysis approach. This section discusses the factors that strongly influence this
choice, provides a brief introduction to the various analysis methods, and then suggests risk analysis
approaches to support different types of decision making within the marine and offshore industries.
1. Levels of Analysis
The goal of any risk analysis is to provide information that helps stakeholders make more informed
decisions whenever the potential for losses (e.g., mishaps or shutdowns) is an important consideration.
Thus, the whole process of performing a risk assessment should focus on providing the type of loss
exposure information that decision-makers will need. The required types of information vary according to
many factors, including the following:
i) The types of issues being evaluated
ii) The different stakeholders involved
iii) The significance of the risks
iv) The costs associated with controlling the risks
v) The availability of information/data related to the issue being analyzed
Information needs determine how the analysis should be performed.
The goal is always to perform the minimum level of analysis necessary to provide information that is just
adequate for decision making. In other words, do as little analysis as possible to develop the information
that decision-makers need. Although not always obvious initially, decision-makers can often make their
decisions with risk information that is surprisingly limited in detail and/or uncertain. In other cases, very
detailed risk assessment models with complicated quantitative risk characterizations may be necessary.
The key is to always begin analyses at as high (i.e., general) a level as practical and to only perform more
detailed Assessments in areas where the additional analysis will significantly benefit the decision-makers.
More detailed analysis than is necessary not only does not benefit the decision-maker, but also in
appropriately uses time and financial resources that could have been spent implementing solutions or
analyzing other issues.
Figure 3.2 illustrates the concept of performing risk analyses through repetitious layers of analysis. Each
layer of analysis provides more detailed and certain loss exposure information, but the resources invested
in the analysis increase at each level. The filtering effect of each layer allows only key issues to move into
the next more detailed level of analysis. At any point, sufficient information for decision making may be
developed, and the analysis may end at that level. (All levels of analysis will not be performed for every
issue that arises). In fact, most issues will probably be resolved through risk/reliability screening analyses
or broadly focused, detailed analyses.
At each level of analysis, the analysis may involve qualitative or quantitative risk characterizations. The
following sections briefly describe each level of analysis.
3 – 4 Section 3 – Conducting a Risk Assessment B
Figure. 3.2 Levels of Risk/Reliability Analysis
1.1 Hazard Identification
Because hazards are the source of events that lead to losses, analyses to understand loss exposures must
begin by understanding the hazards. All risk/reliability analyses begin at this level (implicitly or
explicitly). Analysts with little risk/reliability analysis experience and some training can successfully
perform these types of analyses.
1.2 Risk Screening Analysis
In most situations, there are hundreds or even thousands of ways that losses may occur. Analyzing each of
these possibilities individually in detail is not practical in most instances. Risk screening analyses are
high-level (i.e., very general) analyses that broadly characterize risk levels and identify the most
significant areas for further investigation. Sometimes, this level of analysis is sufficient to provide all of
the information that decision makers need; however, more refined analysis of important issues identified
through the risk screening is most common.
Once the hazards are understood, risk screening should be the next step of any analysis. Generally,
analysts with a modest amount of risk analysis experience and some training can successfully perform
these types of analyses.
1.3 Broadly Focused, Detailed Analysis
When specific activities or systems are found to have particularly significant or uncertain risks, broadly
focused, detailed analyses are generally employed. These analyses use structured tools for identifying the
specific combinations of human errors, equipment failures and external events that lead to consequences
of interest. These analyses may also use qualitative and/or quantitative risk characterizations to help
identify the most appropriate risk management strategies.
Most risk analyses performed are broadly focused, detailed analyses that primarily use qualitative (or at
most, quantitative categorization) risk characterizations. These analyses require analysts with training and
experience to be most effective. This level of analysis is the most advanced that someone who does not
specialize in risk/reliability analyses should attempt.
More
Detailed
More
Certain
More
Cost
Hazard
Identification
Hazard/Risk
Screening Analysis
Broadly Focused
Detailed Analysis
Narrowly
Focused
Detailed
Analysis
Information for
Risk Based
Decisions
Less
Detailed
Less
Certain
Less
Cost
Section 3 – Conducting a Risk Assessment B 3 – 5
1.4 Narrowly Focused, Detailed Analysis
When the potential for specific human errors, equipment failures, or external events are particularly
significant or uncertain, more narrowly focused, detailed analyses are performed. These analyses are used
to dissect specific issues in great detail, often involving highly quantitative risk characterizations.
This level of analysis, particularly highly quantitative applications, should be reserved for only those
applications truly demanding this level of information. Only analysts with special training and some
supervised experience should attempt this level of analysis.
Table 3.1 lists specific risk/reliability analysis methods and indicates the level(s) of analysis for which
each method is most prominently used. Of course, many other risk/reliability analysis tools exist that
could be useful for particular applications, but the tools selected for inclusion in these Guidance Notes
should be suitable for most of the applications encountered.
2. Key Factors in Selecting Methods
The following sections discuss several key factors in selecting risk analysis methods.
2.1 Motivation for Analysis
This consideration should be the most important to every analyst. Performing a risk analysis without
understanding its motivation and without having a well-defined purpose is likely to waste valuable
resources. A number of issues can shape the purpose of a given analysis. For example:
i) What is the primary reason for performing the analysis?
ii) Is the analysis performed as a result of a required policy?
iii) Are insights needed to make risk-based decisions concerning the design or improvement of an
operation or system?
iv) Does the analysis satisfy a regulatory, legal or stakeholder requirement?
Individuals responsible for selecting the most appropriate technique and assembling the necessary human,
technical and physical resources must be provided with a well-defined, written purpose so that they can
efficiently execute the objectives of the analysis.
2.2 Types of Results Needed
The types of results needed are important factors in choosing an analysis technique. Depending on the
motivation for the risk analysis, a variety of results could be needed to satisfy the study’s charter.
Defining the specific type of information needed to satisfy the objective of the analysis is an important
part of selecting the most appropriate analysis technique. The following five categories of information can
be produced from most risk analyses:
i) List of potential problem areas
ii) List of how these problems occur (i.e., failure modes, causes, sequence)
iii) List of alternatives for reducing the potential for these problems
iv) List of areas needing further analysis and/or input for a quantitative risk analysis
v) Prioritization of results
3 – 6 Section 3 – Conducting a Risk Assessment B
Table. 3.1. List of Risk Analysis Methods
Hazard/Risk Analysis Method
Applicability to Various Levels of Hazard/Risk Analysis
Hazard
Identification
Hazard/Risk
Screening
Broadly
Focused,
Detailed
Analysis
Narrowly
Focused,
Detailed
Analysis
Preliminary hazard analysis (PrHA) √ √
Preliminary risk analysis (PRA) √
What-if/checklist analysis √ √ √ √
Failure modes and effects analysis (FMEA) √ √
Hazard and operability (HAZOP) analysis √
Fault tree analysis (FTA) √ √
Event tree analysis (ETA) √ √
Relative ranking √ √
Coarse risk analysis (CRA) √ √
Pareto analysis √
Change analysis √ √ √ √
Common cause failure analysis (CCFA) √
Human error analysis (HEA) √ √
Some risk analysis techniques are used solely to identify the critical problem areas associated with a
specific activity or system. If that is the only purpose of the analysis, select a technique that provides a list
or a screening of areas of the activity/system possessing the potential for some performance problems.
Nearly all of the analysis techniques provide lists of how these problems occur and possible riskreduction alternatives (i.e., action items). Several of the techniques also prioritize the action items based
on the team’s perception of the level of risk associated with the action item.
2.3 Types of Information Available
Two primary conditions define what information is available to the analysis team: (1) the current stage of
the activity or system at the time of the analysis and (2) the quality of the documentation and how current
it is.
The first condition is generally fixed for any analysis. The stage of life establishes the practical limit of
detailed information available to the analysis team. For example, if a risk analysis is to be performed on a
proposed marine activity, it is unlikely that an organization will have already produced detailed
descriptions of the activity and documented procedures and/or design drawings for the proposed activity.
Thus, if the analyst must choose between the HAZOP analysis and What-If analysis, this phase-of-life
factor would dictate a less-detailed analysis technique (What-If analysis).
The second condition deals with the quality of the existing documentation and how current it is. For a risk
analysis of an existing activity or system, analysts may find that the design drawings are not up to date or
do not exist in a suitable form. Using any analysis technique with out-of-date information is not only
futile, it is a waste of time and resources. Thus, if all other factors point to using a specific technique for
the proposed analysis that requires such information, then the analysts should request that the information
be updated before the analysis is performed.
2.4 Complexity and Size of Analysis
Some techniques get bogged down when used to analyze extremely complicated problems. The
complexity and size of a problem are functions of the number of activities or systems, the number of
pieces of equipment, the number of operating steps and the number and types of events being analyzed.
For most analysis techniques, considering a larger number of equipment items or operating steps will
linearly increase the time and effort needed to perform a study. For example, using the FMEA technique
will generally take five times more effort for a system containing 100 equipment items than for a system
Section 3 – Conducting a Risk Assessment B 3 – 7
containing 20 items. Thus, the types and number of events and effects being evaluated are proportional to
the effort required to perform a risk analysis.
2.5 Type of Activity/System
Many techniques can be used for almost any marine or offshore system, or combinations thereof.
However, certain techniques are better suited for particular systems than others. For example, the FMEA
approach has a well-deserved reputation for efficiently analyzing electronic and computer systems,
whereas the HAZOP analysis approach is typically applied to fluid transport or processing systems.
The type of operation, for example (1) a fixed facility (e.g., offshore production platform, marine loading
facility) or a transportation system (e.g., transiting vessel), (2) permanent, transient (e.g., one-time
operation) or temporary, or (3) continuous, semi-batch or batch, can also affect the selection of
techniques.
The permanency of the activity or system affects the methodology selected in the following way. If all
other factors are equal, analysts may use a more detailed, exhaustive approach if they know that the
subject process will operate continuously over a long period of time. The more detailed, and perhaps
better documented, analysis of a permanent operation could be used to support other needed activities
(e.g., safety programs, employee training programs). On the other hand, analysts may choose a less
extensive technique if the subject activity is a one-time operation. For instance, an analyst may be better
served using the checklist technique to evaluate a one-time maintenance activity.
2.6 Type of Loss Event Targeted
Organizations tend to use more systematic techniques for those systems that they believe pose higher risk
(or, at least, for situations in which failures are expected to have severe consequences). Thus, the greater
the perceived risk of the activity, the more important it is to use techniques that minimize the chance of
missing an important potential problem.
3 Selecting an Approach
Table 3.2 summarizes the risk analysis methods included in these Guidance Notes and key characteristics
that differentiate the various methods. The information is summarized in a format to Help in selecting the
appropriate techniques for specific applications.
When selecting an assessment method, the factors from 3.B.2 should be considered. Often, an assessment
is conducted in phases, and it is only necessary to specify the methods to be used for hazard identification
and high-level risk screening analysis to begin the study. As the scope of more detailed or focused
analyses identified during risk screening becomes clear, the methods for conducting these detailed
analyses can be selected.
3 – 8 Section 3 – Conducting a Risk Assessment B
Table. 3.2 Overview of Widely Recognized Risk Analysis Methods
Hazard Risk
Analysis Summary of Method More Common Uses
Preliminary
hazard analysis
(PrHA)
The PHA technique is a broad, initial study that
focuses on (1) identifying apparent hazards, (2)
assessing the severity of potential mishaps that
could occur involving the hazards, and (3)
identifying means (safeguard) for reducing the
risks associated with the hazards. This technique
focuses on identifying weaknesses early in the
life of a system, thus saving time and money
which might be required for major redesign if the
hazards are discovered at a later date.
• Most often conducted early in the
development of an activity or system where
there is little detailed information or
operating procedures, and is often a
precursor to further hazard/risk analyses.
• Primarily used for hazard identification
and ranking in any type system/process.
Preliminary
risk analysis
(PRA)
PRA is a streamlined mishap-based risk
assessment approach. The primary objective of
the technique is to characterize the risk associated
with significant loss scenarios. This team-based
approach relies on subject matter experts
systematically examining the issues. The team
postulates combinations of mishaps, most
significant contributors to losses and safeguards.
The analysis also characterizes the risk of the
mishaps and identifies recommendations for
reducing risk.
• Primarily used for generating risk profiles
across a broad range of activities (e.g., a
port- wide risk assessment).
Whatif/checklist
analysis
What-if analysis is a brainstorming approach
that uses loosely structured questioning to (1)
postulate potential upsets that may result in
mishaps or system performance problems and
(2) ensure that appropriate safeguards against
those problems are in place.
Checklist analysis is a systematic Assessment
against pre-established criteria in the form of one
or more checklists.
• Generally applicable to any type of system,
process or activity (especially when
pertinent checklists of loss prevention
requirements or best practices exist).
• Most often used when the use of other more
systematic methods (e.g., FMEA and
HAZOP analysis) is not practical.
Failure modes
and effects
analyses (FMEA)
FMEA is an inductive reasoning approach that
is best suited to reviews of mechanical and
electrical hardware systems. The FMEA
technique (1) considers how the failure modes
of each system component can result in system
performance problems and (2) ensures that
appropriate safeguards against such problems
are in place. A quantitative version of FMEA is
known as failure modes, effects and criticality
analysis (FMECA).
• Primarily used for reviews of mechanical
and electrical systems (e.g., fire
suppression systems, vessel
steering/propulsion systems).
• Often used to develop and optimize
planned maintenance and equipment
inspection plans.
• Sometimes used to gather information
for troubleshooting systems.
Hazard and
operability
(HAZOP) analysis
The HAZOP analysis technique is an inductive
approach that uses a systematic process (using
special guide words) for (1) postulating
deviations from design intents for sections of
systems and (2) ensuring that appropriate
safeguards are in place to help prevent system
performance problems.
• Primarily used for identifying safety hazards
and operability problems of continuous
process systems (especially fluid and thermal
systems). Also used to review procedures and
other sequential operations.
Fault tree analysis
(FTA)
FTA is a deductive analysis technique that
graphically models (using Boolean logic) how
logical relationships between equipment
failures, human errors and external events can
combine to cause specific mishaps of interest.
• Generally applicable for almost every type
of analysis application, but most effectively
used to address the fundamental causes of
specific system failures dominated by
relatively complex combinations of events.
• Often used for complex electronic, control
or communication systems.
Section 3 – Conducting a Risk Assessment B 3 – 9
Table. 3.2 Overview of Widely Recognized Risk Analysis Methods (Continued)
Hazard Risk
Analysis Methods Summary of Method More Common Uses
Event tree analysis
(ETA)
ETA is an inductive analysis technique that
graphically models (using decision trees) the
possible outcomes of an initiating event capable
of producing a mishap of interest.
• Generally applicable for almost every type
of analysis application, but most effectively
used to address possible outcomes of
initiating events for which multiple
safeguards (lines of assurance) are in place
as protective features.
• Often used for analysis of vessel movement
mishaps and propagation of fire/explosions
or toxic releases.
Relative ranking/risk
indexing
Relative ranking/risk indexing uses attributes of
a vessel, shore facility, port or waterway to
calculate index numbers that are useful for
making relative comparisons of various
alternatives (and in some cases can be correlated
to actual performance estimates).
• Extensively used to establish priorities
for boarding and inspecting foreign
flagged vessels.
• Generally applicable to any type of
analysis situation (especially when only
relative priorities are needed) as long as a
pertinent scoring tool exists.
Coarse risk analysis
(CRA)
CRA uses operations/Assessments and associated
functions for accomplishing those
operations/evolutions to describe the activities
of a type of vessel or shore facility. Then,
possible deviations in carrying out functions are
postulated and evaluated to characterize the risk
of possible mishaps, to generate risk profiles in
a number of formats and to recommend
appropriate risk mitigation actions.
• Primarily used to analyze (in some detail) the
broad range of operations/evolutions
associated with a specific class of vessel or
type of shore facility.
• Analyses can be performed for a representtative vessel/facility within a class or may
be applied to specific vessels/facilities.
• Especially useful when risk-based
information is sought to optimize field
inspections for classes of vessels/facilities.
Pareto analysis Pareto analysis is a prioritization technique
based solely on historical data that identifies
the most significant items among many. This
technique employs the 80-20 rule, which states
that ~80 percent of the problems (effects) are
produced by
~20 percent of the causes.
• Generally applicable to any type of system,
process or activity (as long as ample
historical data is available).
• Most often used to broadly characterize
the most important risk contributors for
more detailed analysis.
Root cause analysis
• Event charting
• 5 Whys technique
• Root Cause Map TM
Root cause analysis uses one or a combination
of analysis tools to systematically dissect how a
mishap occurred (i.e., identifying specific
equipment failures, human errors and external
events contributing to the loss). Then, the
analysis continues to discover the underlying
root causes of the key contributors to the mishap
and to make recommendations for correcting the
root causes.
• Generally applicable to the investigation of
any mishap or some identified deficiency in
the field.
• Event charting is most commonly used when
the loss scenario is relatively complicated,
involving a significant chain of events
and/or a number of underlying root causes..
• 5 Whys is most commonly used for
more straightforward loss scenarios.
• Root Cause Map is used in conjunction with
any root cause analysis to challenge analysts
to consider a range of possible root causes.
Change analysis Change analysis systematically looks for possible
risk impacts and appropriate risk management
strategies in situations in which change is
occurring (e.g., when system configurations are
altered, when operating practices/policies
changes, when new/different activities will be
performed).
• Generally applicable to any situation in which
change from normal configuration/operations/
activities is likely to significantly affect risks
(e.g., marine events in ports/waterways).
• Can be used as an effective root cause
analysis method as well as a predictive
hazard/risk analysis method
3 – 10 Section 3 – Conducting a Risk Assessment B,C
Table. 3.2 Overview of Widely Recognized Risk Analysis Methods (Continued)
Hazard Risk
Analysis Methods Summary of Method More Common Uses
Common
cause failure
analysis
(CCFA)
CCFA is a specialized approach for
systematically examining sequences of events
stemming from the conduct of activities and/or
operation of physical systems that cause multiple
failures/errors to occur from the same root
causes, thus defeating multiple layers of
protection simultaneously.
• Exclusively used as a supplement to a
broader analysis using another technique,
especially fault tree and event tree analyses.
• Best suited for situations in which complex
combinations of errors/equipment failures
are necessary for undesirable events to
occur.
Human error analysis
• Error-likely
situation
analysis
• Walkthrough
analysis
• Guide word
analysis
• Human reliability
analysis
Human error analysis involves a range of
analysis methods from simple human factors
checklist through more systematic (step-by-step)
analyses of human actions to more sophisticated
human reliability analyses. These tools focus on
identifying and correcting error-likely situations
that set people up to make mistakes that lead to
mishaps.
• Generally applicable to any type of activity
that is significantly dependent on human
performance.
• Error-likely situation analysis is the
simplest approach and is used as a basic
level of analysis for human factors issues.
• Walkthrough and guide word analyses are
used for more systematic analyses of
individual procedures.
• Human reliability analysis is used for special
applications in which detailed quantification
of human reliability performance is needed.
C. Conducting the Assessment and Follow Up
1. Conducting the Assessment
Once an assessment has been chartered and an approach selected, the risk assessment team can begin the
study effort. The team should follow the approach defined in the charter, and should arrange for periodic
reviews with client personnel (technical and operations) and management.
It is critical that the boundaries and conditions set forth in the charter be honored by the team as the study
progresses. If the team determines that changes need to be made to the documented approach,
recommendations should be made to client management, and the agreed changes should be documented.
Periodic reviews with the client are essential to ensure effective transmittal of data and review of the
assumptions and methods used by the risk analysts. The client organization must identify a focal point or
focal points who are responsible for coordinating the transmittal of data and review of the assumptions
and techniques applied by the risk analysts and/or risk assessment team. Time must be allocated for these
focal points to conduct this most critical task. If adequate client involvement is not obtained, it is the
responsibility of the risk analysts to make the client aware of the potential impact on study validity and/or
schedule. The risk analysts and client organization must work together to resolve any shortfalls in this
area or consider terminating the analysis.
Adequate client management reviews should be defined in the charter and conducted throughout the
assessment process. For short studies, it will be adequate to conduct management reviews only at the
times of chartering and presenting results. For longer studies, intermediate management reviews should
be scheduled to review results of various phases of the assessment and to agree on the path forward based
on preliminary findings. The chartering document should be modified to reflect any agreed changes to
study boundaries or approach which arise from these reviews.
Quality reviews should be conducted within the risk analyst’s organization to assure that the study
process and deliverables meet established quality criteria. Any shortfalls should be promptly addressed to
assure a high quality service is provided. In some cases, client quality programs may also impact the
study. It is important that quality process impacts are identified in the chartering phase so that they can be
incorporated into the study plan and schedule.
Section 3 – Conducting a Risk Assessment C,D 3 – 11
Upon conclusion of the risk assessment, final results, conclusions and recommendations should be
documented and approved by the client organization.
2. Follow-up
After a risk assessment is concluded, and the results are documented and approved, appropriate client
management takes ownership of the study results. It is critical that the client organization address all
approved recommendations and document the actions taken. Failure to document these actions will result
in an incomplete paper trail which will make it difficult or impossible for the client organization to
understand how the results were interpreted and applied at a later date. Failure to document follow-up
actions can also create legal exposures in the event that an incident occurs within the operation which was
studied.
It is also the responsibility of client management to communicate the results of the risk study with the
appropriate parties. In more and more cases, it is becoming a regulatory requirement to communicate
known hazards and risk assessment results with personnel and the public associated with an operation. In
any case, open communication of these results will improve understanding of the operation and its
associated risks. This improved understanding has the potential to improve the operation’s safety and
financial performance as a result of more effective implementation of study recommendations, fewer
human errors, improved designs and operating methods, and more risk-informed decision making.
D. Risk Assessment Limitation and Potential Problems
1. Limitations
In any decision-making process, there is a tension between (1) the desire for more/better information and
(2) the practicality of improving the information. Even with extraordinary investment in data collection,
significant uncertainty generally remains. So, throughout a decision-making process, the decision makers
and those supplying information must work together to ensure that efforts to improve data collection
(including risk analyses) are only carried out to an extent proportional to the value of the more refined
data obtained through those efforts. This is why analysts should never jump to highly refined analysis
tools without first trying to satisfy decision-making needs with simpler tools.
Because dealing with uncertainty is inherent in any decision-making process, those involved in decision
making (directly or indirectly) must be aware of the most common sources of uncertainty: model
uncertainty and data uncertainty.
1.1 Model Uncertainty
The models used in both the overall decision-making framework and in specific analyses that support
decision making (e.g., risk analyses) will never be perfect. The level of detail in models and defined scope
limitations will determine how accurately the model reflects reality. Often, relatively simple models
focusing on the issues that the stakeholders agree to be most important suffice for decision making. Even
if the data were perfect, the model used would generally introduce some uncertainty into the results.
1.2 Data Uncertainty
Data uncertainty is an issue that raises much concern during decision making and can arise from any or
all of the following:
i) The data needed does not exist
ii) The analysts do not know where to collect or do not have the resources to collect the needed data
iii) The quality of the data is suspect (generally because of the methods used to catalog the data)
iv) The data have significant natural variability, making use of the data complex
Although steps can be taken to minimize uncertainty in data, all measurements (i.e., data) have uncertainty associated with them.
3 – 12 Section 3 – Conducting a Risk Assessment D
2. Potential Problems
There are a number of things that can go wrong when applying risk assessment techniques. It is critical
that those leading the study are experienced in conducting risk assessments and can steer the effort to
success. Typical problems which can be encountered when conducting risk assessments include:
i) Inadequately defining analysis scope and objectives
ii) Using quantitative methods where qualitative approaches would suffice
iii) Overworking the problem. Analyzing more cases and using more complicated models than needed
to produce the information needed for a decision.
iv) Selecting inappropriate analysis techniques.
v) Using inexperienced or incompetent practitioners
vi) Choosing absolute results when relative results would suffice
vii) Not providing sufficient resources
viii) Not providing for sufficient data input and review by the client organization
ix) Having unrealistic expectations
x) Being overly conservative
xi) Failing to acknowledge the importance of the analysis assumptions and limitations
xii) Misapplying the results. Results will be operation-specific, and it is often difficult to apply risk
assessment results to other related operations
Recognizing potential pitfalls up front will improve the likelihood of success through effective chartering
and management of the study.
Section 4 – Hazards and Safety Regulations A 4 – 1
Section 4
Hazards and Safety Regulations
A. Overview
,B
Shipping is a tradition-rich industry. Its safety was, and still is, largely regulated by standards developed
within the industry. These standards are historical, international and slow-evolving. While in large part
they are based on sound marine engineering and naval architectural practices, many of these standards
were developed in reaction to high-profile accidents. Above all, the standards are prescriptive, containing
many specific requirements. A concern exists that the shipping industry has a “compliance-culture”,
where safety means complying with requirements. Risk assessment technology as a means of evaluating
risks and improving safety is only beginning to make its presence felt. While individual efforts have been
made in applying risk-based technology to shipping, these tend to be focused studies for a specific
purpose or of an academic nature.
The International Maritime Organization (IMO) has, in recent years, encouraged member states to make
use of risk-based technology (which it calls Formal Safety Assessment (FSA)) in their rule-making
process, but this is still in its infancy and has not been warmly received. The IMO has also, through the
implementation of its International Safety Management (ISM) Code, introduced “risk” as a safety
management concept by expressly stating that one of the ISM Code’s objectives is to “establish safeguards against all identified risks”.
Historically, accidents have been the primary driver for enacting new measures to prevent future
recurrence. For example, the Titanic disaster in 1912, with the loss of more than 1500 lives, led to the first
International Conference on Safety of Life at Sea (SOLAS). Newer versions were adopted progressively.
The current version is from 1974, commonly known as SOLAS 74, which has been amended numerous
times, to implement increasingly demanding measures.
It was only in more recent years that pollution has been recognized as a serious concern. Growing public
concern over the devastating consequences of marine pollution due to oil tanker accidents, in particular
the 1967 Torrey Canyon spill of heavy crude oil on the beaches of Britain and France, prompted calls for
the IMO to consider the health of the marine environment and to take steps to improve it. In 1973, IMO
adopted the International Convention for the Prevention of Pollution from Ships, 1973. This was modified
by a protocol in 1978 and is now usually know as MARPOL 73/78.
While shipping has become much safer as a result of these regulations and many others, high profile
accidents have continued: notably the grounding of the Exxon Valdez which polluted the pristine Prince
William Sound in 1989, and the capsize of the Estonia with the of loss of more than 850 lives in 1994.
Rather than just reacting to accidents, the need to look for more proactive means to improve safety is felt
throughout the industry.
Perhaps the most intriguing aspect of shipping safety regulation is the number of stakeholders in the field.
Taken individually, each stakeholder’s rules would not, by themselves, be adequate to address the safety
of shipping. The safety issues the various regulations address need to be taken as a whole, yet they are
presently fragmented. It appears possible, as many have already advocated, that risk assessment may be
able to bring together the fragmented regulatory regime of the shipping industry. Risk assessment could
also provide the rational approach to safety needed to develop regulations that are based on control of
risks, as opposed to reactionary measures based on experience.
4 – 2 Section 4 – Hazards and Safety Regulations B
B. Major Hazards Related to Shipping
,C
When considering the hazards of shipping, many would quickly associate them with the ship capsizing,
grounding, having fire onboard, etc. According to the definition of the word “hazard” in Section 1.C,
which states that a hazard is the potential to cause undesirable consequences, events such as capsizing or
“loss of stability” are in actual fact not hazards, but events, or occurrences. Hazards are potentials to
cause such events to occur. Historically, while “hazards of the sea” were well recognized, they tended to
be taken for granted. The seamanship of the captain and crew were the primary safeguards against the
hazards of the sea in the early days. In fact, early classification societies were founded to keep records of
ship captains’ credentials. The advancement of technology, along with the proliferation of ship types in
the last hundred years or so, has made shipping so much safer that “hazards of the sea” are no longer at
the top of the list of shipping hazards. In fact, according to the often-quoted statistic that 80% of ships’
accidents are caused by human error, this now appears to be the principal hazard of shipping. However, it
must be remembered that most accidents actually involve a combination of pre-conditions and events, and
human error is usually just one contributing factor.
Hazards differ depending upon the type of vessel and the operating scenario. The hazards in operating an
oil tanker are different from those of a passenger ship. The hazards in the open sea are different from
those in a harbor approach.
Hazards of shipping can be classified as endogenous or exogenous, i.e. those internal to the ship, and
those external to the ship. The following is a list of some of the major hazards related to shipping.
1. Exogenous Hazards
1.1 Open Sea Transit
i) water and associated hazardous states
ii) severe weather
iii) icebergs
1.2 Waterway Navigation
i) other vessels sharing the same waterway
ii) shallow water or underwater objects (e.g. wrecks)
iii) man-made obstacles, e.g. bridges, navigation buoys, piers, offshore structures, etc.
iv) floating natural obstacles such as icebergs
1.3 Port Operations
i) tides, currents
ii) mooring
iii) hazards associated with cargo operations
2. Endogenous Hazards
i) design limitation in structural capability
ii) design limitation in static load distributions and stability
iii) openings in watertight boundary
iv) machinery hazards
v) cargo hazards
vi) inventory of flammable materials
Section 4 – Hazards and Safety Regulations C,D 4 – 3
vii) occupational heath and safety hazards
viii) poor ergonomic design of working environment and workplace
ix) human and managerial errors
C. Potential Consequences of Shipping Accidents
The loss of the ship, severe injury or death, and pollution of the environment are normally regarded as the
most severe consequences which can result from shipping hazards. Loss of ships may be equated to
foundering, or capsizing, or severe damage by fire and explosion: all of which may in turn also involve
injury, loss of life, and pollution.
It appears from the manner in which maritime rules and regulations are written that they do not seek to
mitigate all of these consequences directly. Rather they seek first to prevent the occurrence of intermediate hazardous states or events. Without explicitly expressing it, the regulations recognize that there
can be failures in the prevention of these occurrences, consequently they also provide for mitigation of
consequences arising from hazardous events.
For example, the rules and regulations do not seek only to prevent the occurrence of fires onboard ships.
In addition to requirements to prevent fires, they also include measures to mitigate the consequences of
fires which may still occur. There are requirements for detection of fire, combating the fire, for
containment of fire, for safe escape of personnel to evacuation stations and for the provision of lifeboats.
The rules and regulations also do not explicitly seek to prevent the foundering of ships at sea. Through
experience, the events that could lead to foundering (structural failures, loss of stability, loss of propulsion
or navigational capability) have become known. Rules and regulations have therefore been developed
which prescribe adequate design and construction of the hull structure, intact and damage stability and
protection of watertight boundary, the reliability and integrity of propulsion machinery and navigational
equipment, and competency of the crew. To allow for probable failures in these preventive measures, the
rules and regulations also seek to mitigate consequences of loss of life by provision of lifeboats for
evacuation of personnel on board and provisions for efficient search and rescue.
The rules and regulations seek to prevent pollution by preventing the intermediate hazardous events, such
as collisions, which may lead to pollution events. To reduce the effects of collisions, regulations call for
double hull designs for tankers and damage stability. In addition, the regulations seek to mitigate the
pollution consequences of ruptured hulls by restricting tank sizes and by requiring shipboard oil pollution
emergency plans.
Optimal risk reduction can be achieved through this two-fold approach: effective prevention of hazardous
events in combination with appropriate consequence mitigation for events that do occur.
D. Regulations Governing Safety of Shipping
1. Classification Societies
Historically and until the later half of the 20th century, classification societies played a central role in
addressing safety of ships. The “Rules” published by these societies were regarded as the minimum
standards for design and construction and operational maintenance of ships. However, these rules are
confined largely to providing standards for ships as hardware, or intending to assure the value of the ship
as property. Essentially, they provide for:
i) quality control on construction materials and fabrication
ii) structural design of the ship’s hull, bulkheads, ballast tanks and other major components
iii) design checks on and provision of safety features to machinery and systems vital for propulsion
and maneuvering
4 – 4 Section 4 – Hazards and Safety Regulations D
iv) periodic surveys of hull and machinery to assess their continued compliance with the Rules
The International Association of Classification Societies (IACS), formed in 1969 and now consisting of
13 members, has been working towards unifying some aspects of individual classification rules.
2. International Maritime Organization
The creation of the Inter-governmental Maritime Organization (IMCO) in 1958 – later renamed
International Maritime Organization (IMO) – has precipitated several major international treaties or
conventions, aimed at addressing safety of shipping in a scope considerably wider than that addressed by
the traditional classification rules. These conventions are:
i) International Convention on Load Line (ICLL), 1966: aimed at standardizing the procedures for
assignment of load lines to ships and the conditions of assignment, such as intact and damage
stability, the protection of openings in the watertight boundaries, protection of crew at sea, etc.
ii) International Convention on Tonnage Measurement of Ships (Tonnage), 1969; aimed at having
parameters referred to where those terms are used in conventions, laws and regulations, and also as
the basis for statistical data relating to the overall size or useful capacity of merchant ships.
iii) Convention on the International Regulations for Preventing Collisions at Sea (COLREG), 1972:
aimed at providing “rules of the road” at sea, such as maintaining proper lookout, safe speed, lights
and signals to be displayed, etc.
iv) International Convention on Safety of Life at Sea (SOLAS), 1974: (contains wide ranging topics
and is being revised and expanded continuously) aimed at providing adequacy in (1) ship structural
design (albeit by specifying compliance with classification rules); (2) safety of mechanical and
electrical systems onboard; (3) damage stability; (4) fire safety; (5) radio communication and
search and rescue; (6) safety of navigation and prevention of collision; (7) the provision of life
saving appliances; (8) the safe carriage of dangerous cargoes; (9) safety management; and most
recently; (10) security management
v) International Convention for the Prevention of Pollution at Sea, 1973 and protocol of 1978
(MARPOL 73/78): aimed at preventing and minimizing pollution at sea from (1) oil, (2) noxious
liquid substances, (3) noxious substances in packaged forms, (4) sewage, (5) garbage, and (6) air
pollution.
vi) International Standard of Training, Certification and Watch keeping (STCW), 1995: aimed at
providing unified standards for training and certification of seafarers.
vii) International Convention on the Control of Harmful Anti-Fouling Systems on Ships (AFS), 2001;
aimed at application of anti-fouling systems which are effective and environmentally safe and to
promote the substitution of harmful systems by less harmful systems or harmless systems.
In addition to these Conventions, the IMO issues Codes, Circulars and other documents from time to
time. Unlike the Conventions, these documents are not binding internationally. Each country, however,
may choose to adopt these documents as national requirements and impose them on ships registered under
its flag or on ships entering its ports. IMO Codes include:
i) Code for Mobile Offshore Drilling Units (MODU Code): for safe design and construction of
offshore drilling units.
ii) International Maritime Dangerous Goods Code (IMDG Code): for safe handling, stowage, marking
and carriage of flammable, toxic, and other dangerous substances.
IMO has a cooperative working relationship with other inter-governmental organizations, including:
i) International Labor Organization (ILO) in joint development of STCW.
ii) International Standard Organization for Standards (ISO) in the development of standards for
cargo containers and marine engineering.
Section 4 – Hazards and Safety Regulations D 4 – 5
3. National and Unilateral Requirements
Supplementing the IMO Conventions, each country (or flag state) may impose its own discretionary
requirements wherever such latitude is given in the Conventions. It may also impose other non-binding
documents issued by IMO as requirements for ships registered under its flag. Accordingly, varying
degrees of uniqueness do prevail in the implementation of IMO conventions.
Coastal states, through whose waters international shipping has the right of transit passage, may impose
safety and pollution prevention requirements. Typically, this may involve the imposition of traffic
separation schemes, designated sea-lanes, prohibition of shipping carrying polluting cargoes, etc.
Coastal or flag states sometimes have imposed unilateral requirements in the wake of major maritime
disasters. The Oil Pollution Act of 1990 enacted by the United States following the Exxon Valdez
accident is a case in point.
4. Non-government Organizations
Also active are many professional and trade associations. From the perspective of IMO, they are known
as non-government organizations (NGO). Many of them, like IACS, are granted consultative status in
IMO. They provide important input to rule and regulation making in IMO, with the intent of also
advancing their membership’s interests. In their own area of expertise, these associations supplement
classification rules and IMO conventions in addressing safety of shipping. Apart from classification
society rules, documents issued by NGO are generally not mandatory and are provided for information
and guidance to their membership. For example:
i) International Chamber of Shipping (ICS): with membership of ship owners, issues guidelines for
safe ship operation and accident-prevention;
ii) International Association of Independent Tanker Operators (INTERTANKO): with tanker owners
– other than major oil companies – as membership, issues guidelines for safe operation of
tankers;
iii) International Association of Dry Cargo Ship owners (INTERCARGO): issues guidelines for safe
operation of dry cargo ships;
iv) International Ship Managers Association (ISMA): with membership of ship management
companies, issues and enforces, among its membership, quality standards for ship management;
v) International Transport Workers Federation (ITF): with membership of seafarers’ trade unions,
protects seafarers’ interests and conducting projects towards advancing safety of seafarers;
vi) Oil companies International Maritime Forum (OCIMF): with membership of oil companies,
issues guidelines for safe operation of and pollution-prevention from oil tankers and terminals;
vii) International Association of Port and Harbors (IAPH): with membership of port authorities
worldwide, while serving as the forum to facilitate operational agreements between port
authorities, it is also a forum for safety and environmental protection in port operations;
viii) Society of International Gas Tankers and Terminal Operators (SIGTTO): issues guidelines for safe
operation of gas tankers and gas terminals;
ix) International Cargo Handling Coordination Association (ICHCA): with membership of port
cargo handlers, issues guidelines for safe handling of cargoes onboard ships and in ports.
5. Verification of Compliance
By and large, the maritime industry has regarded the “minimum” level of safety for shipping as meeting
the rules of classification society and the regulations of IMO Conventions.
Classification societies play a key role in verifying compliance with these rules and regulations. Besides
classing a ship in accordance with its own classification rules, each class society is also delegated by
many flag states the authority to verify that ships flying their flags comply with IMO Conventions and the
class societies issue statutory certificates on their behalf. In recent years, under the auspices of IMO,
4 – 6 Section 4 – Hazards and Safety Regulations D,E
port states have enlarged their role in the inspection of shipping in their own ports. The purpose of these
inspections is mainly to verify compliance with IMO Conventions. Some port states (e.g. the United
States) have a broader scope of inspection and include verification of national laws promulgated for
foreign shipping entering their navigable waters.

Not entirely satisfied with their interests being adequately represented and protected, the insurance industry
as well as the ship-chartering community impose their own separate inspections on shipping as well.
6. Fragmented Safety Regime
Thus, there are many different regimes of mandatory rules and regulations promulgated by classification
societies and by IMO in association with its member states, as well as unilaterally by coastal states and flag
states. There are also many non-mandatory operational guidelines issued by professional and trade
associations. Additionally, there are different parties engaging in surveys and inspections to verify
compliance with applicable requirements. All this, no doubt, is intended to help ship operators and stockholders assure the safety of shipping. However, these activities are conducted in a fragmented manner in
which each agency is engaged only in its own sphere of interests. Inevitably this results in areas of overlap,
which cause inconvenience and are wasteful in terms of duplication of effort. This piecemeal approach also
results in areas of concern which fall outside everyone’s sphere of interests. Logically, for efficient and
effective assurance of safety, these fragmented regimes should be amalgamated into a single, holistic safety
regime. How can this be accomplished without upheaval to the existing complex but tolerated regulatory
regime?
E. Conclusions and Future Trends
1. Winds of Change
It has been generally recognized that safety of shipping lies not only in the design and construction, for
which the large percentage of prevailing rules and regulations have been targeted; it lies also in operations
and in the human factor. Recent changes to IMO instruments, notably the amendments to the STCW
convention and the introduction of International Safety Management (ISM) and International Ship and Port
Facility Security (ISPS) Code into SOLAS, are indications of this recognition. Further, changes are also
seen in IMO in encouraging the use of Formal Safety Assessment (FSA) to formulate new regulations and
to assess the existing ones. As envisaged by IMO, FSA is a methodical process of systematically
identifying, assessing and managing risks in activities associated with shipping. This is similarly
emphasized in the ISM Code: one of the code’s objectives is to assess all identified risks to its ships,
personnel and the environment and establish appropriate safeguards. Moreover, in ISPS Code security
threats and risks are treated in systemic manner. Risk assessments of the shipping industry can provide the
framework upon which a holistic safety regulatory regime could be formulated.
Risk assessment methods have been successfully applied in many industries. Four key areas where risk
assessment has been seen to be useful are:
i) identifying hazards and protecting against them
ii) improving operations
iii) efficient use of resources
iv) developing or complying with regulations
It can be appreciated that identification of risks and protection against them are what regulations seek to
accomplish; the regulators and the operators should share the same objective here, and the conduct of risk
assessment should benefit both parties. Improvement of operations and efficient use of resources are
important to operators, and less so the regulators. Risk assessment can be a powerful tool for operational
efficiency. If regulations are risk-based, and the operators conduct risk assessments to satisfy the
regulations, they are likely to benefit by it, as they could make use of the results to improve operation and
optimize resources. Thus, risk-based regulations are inherently beneficial to the operators. Properly
Section 4 – Hazards and Safety Regulations E 4 – 7
conducted, understanding of hazards and safeguards through risk assessment is central to effectiveness and
efficiency in operations, maintenance and emergency response.
Above all, safety needs no longer be construed as mere compliance with requirements, it will be the result of
risk-based controls which are integrated into the operations. A regulatory framework based on risk assessment
is intuitively synergistic and efficient. It should be apparent that for this type of framework to work, the
operator must be intimately involved in the process.
2. Conclusions
In a simplified view, the existing maritime regulatory framework may be said to be a two-part process: a selfregulatory one with requirements formulated by classification societies in consultation with the industry, and
an international-governmental one with requirements formulated under the auspices of IMO. Classification
society rules largely prescribe requirements for hull structures and critical systems and machinery. The implicit
purpose is to seek to achieve an acceptable, albeit unquantified, level of reliability for hull structure and
critical systems and machinery for the prevention of mishaps or accidents.
IMO regulations largely prescribe requirements to prevent specific accidents or undesirable events (such as
fire, instability, pollution) and to mitigate the consequences of such events (fire fighting systems, damage
stability, double hull). Issues such as training and qualification of seafarers and emergency preparedness are
also addressed as a means of mitigating consequences. IMO further introduces the ISM Code to manage
safety. ISM code puts the onus on the ship operators to put in place management systems to ensure compliance
with applicable rules and regulations and to provide safe practices both onboard ships and ashore. As one of its
stated objectives, ISM Code also requires ship operators to assess all identified risks. The code does not
provide guidelines on how this should be conducted, instead, the method is determined by the individual
operator.
The existing framework is chiefly prescriptive: i.e. prescribing requirements either to prevent undesirable
events (e.g. loss of stability) or to mitigate consequences (e.g. capsize) arising from the undesirable events. The
undesirable events and consequences accounted for are based largely on experience and good engineering
practice; so are the prescribed requirements or safeguards.
If the ‘amount’ of rules and regulations which have been established is a reflection of implicit assessment of
the risks involved, there is no means to quantify this. The degree of regulation appears to be based partly on
what was perceived by the industry as affordable and partly on what was considered as socially and politically
acceptable measures to be taken at the time. It may have taken many incidents involving loss of a moderate
number of lives (e.g. bulk carrier losses) to enact new regulations, while it took just one single incident of
major oil pollution (the Exxon Valdez) to precipitate major changes to regulations for tanker design.
Since existing regulations do not explicitly consider risk levels that were accepted, they cannot be made riskbased in a single step. Also, methods for calculating risks and capturing of data in the maritime industry are
still in their infancy. It will take a period of learning and maturing before risk calculations can gain a good
degree of repeatability and confidence necessary for use as acceptance criteria. In the meantime, while more
research and development is going on to help in the accomplishment of this goal, philosophical development
of safety frameworks based on risk consideration should be advanced and debated in the industry.
Section 5 – Offshore Oil and Gas Systems A,B 5 – 1
Section 5
Offshore Oil and Gas Systems :
Hazards and Safety Regulations
A. Overview
,B
In an ideal world, rules and standards developed to regulate a new industry would be the result of a
systematic Assessment of the hazards and concerns associated with that industry. The potential risks to be
encountered by operators, owners, the public and other impacted groups would be carefully evaluated, as
well as the risks imposed on the natural environment. Following thorough assessments of risks, a
comprehensive and workable set of rules and standards could be developed which would protect all of
the people and natural systems exposed to the new industry.
In reality, however, rules and standards have seldom been developed in this fashion. At the onset of an
industry’s development, the knowledge base does not exist to predict what types of rules will be needed.
Typically, initial regulations and codes are developed to meet the most pressing needs of the industry
and governments involved to enable the new industry to get started. Requirements usually increase over
time in response to events that occur in the industry. Accidents, environmental incidents and commercial
or legal difficulties point to chinks in the protective armor provided by regulations, and regulators and
industry groups rush to fill the gaps with additional requirements. This cumulative “adding on” of
requirements accurately describes regulatory development for the oil and gas industry in most countries
and for the marine industry. However, with the emergence of the nuclear industry in the mid-1900’s,
more systematic approaches to industrial regulation were developed. Due to the huge perceived risks
associated with accidents in the nuclear industry, it was acknowledged that more predictive
methodologies must be used to set standards for the industry prior to wide-scale development of nuclear
facilities. The potential consequences associated with nuclear incidents were too great to allow operators
and regulators to “learn from their mistakes”. Many of the predictive risk assessment techniques applied
within the marine and oil and gas industries today originated from the nuclear industry.
B. Major Hazards of Offshore Oil and Gas Production
Offshore oil and gas production systems present a unique combination of equipment and conditions not
observed in any other industry. Although there are few aspects of the industry which are completely new
or novel, the application in an offshore environment can result in new potential hazards which must be
identified and controlled.
Much of the oil and gas processing equipment which is utilized on offshore facilities is similar to the
equipment used onshore for oil production activities or in chemical process plants. Therefore, many of
the hazards associated with the process equipment are well known. However, the inherent space
constraints on offshore structures have resulted in the application of some new process equipment, and,
more importantly, make it difficult to mitigate hazards by separating equipment, personnel and
hazardous materials. Due to the facilities remote locations, personnel who operate or service offshore
facilities typically live and work offshore for extended periods of time. In many ways, these aspects of
offshore operations are similar to those found in the shipping industry. However, the operations that take
place on offshore oil and gas production are different than those which take place on trading ships.
Another difference between offshore and onshore oil and gas production is the relative complexity of
drilling and construction activities, which contribute significantly to the risk picture. Due to the
remoteness of most offshore facilities and the challenges presented by a marine environment, drilling
and construction projects are typically major undertakings which require the use of large and expensive
marine vessels (drill ships, derrick barges, supply vessels, diver-support vessels, etc.). These non-routine
operations dramatically increase the number of persons onboard a facility and the level of marine
activity, material handling and other support activities over more routine production activities.
5 – 2 Section 5 – Offshore Oil and Gas Systems B
Transportation of personnel and materials to and from the offshore locations present a significant risk
element: helicopter transport, marine transport and loading and unloading operations are a routine part of
offshore life.
The design of offshore facilities – multi-deck platforms above the water or floating systems, can expose
personnel to falling and drowning hazards which are not encountered onshore.
In addition to the factors described above, the fact that offshore facilities typically have higher
concentrations of manpower, higher operating costs and revenues, and higher initial capital investments
than their onshore counterparts make them an obvious place to apply risk assessment and risk reduction
measures.
The hazards associated with offshore production facilities can be categorized in different ways, but are
often grouped by operation. This grouping mirrors the way the supporting engineers, operators and
support personnel are grouped within the organization, since these organizational entities are responsible
for identifying and understanding potential hazards and addressing them during design, construction and
operation of the facilities.
Some of the major potential hazards associated with offshore operations are listed below.
1. Production Operations
1.1 Topside Production Facilities and Pipelines
1.1.1 Equipment-related Hazards:
i) Rotating equipment hazards
ii) Electrical equipment hazards
iii) Lifting equipment hazards
iv) Defective equipment
v) Impact by foreign objects
1.1.2 Process-related Hazards:
i) High pressure liquids and gas
ii) Hydrocarbons under pressure
iii) Temperature (High or very low)
iv) Hydrocarbons and other flammable materials
v) Toxic substances
vi) Storage of flammable or hazardous materials
vii) Internal erosion/corrosion
viii) Seal or containment failures
ix) Production upsets or deviations
x) Vent and flare conditions
xi) Ignition sources
xii) Process control failures
xiii) Operator error
xiv) Safety system failures
xv) Pyrophoric materials
Section 5 – Offshore Oil and Gas Systems B 5 – 3
1.1.3 Well-related Hazards:
i) Pressure containment
ii) Unexpected fluid characteristics (sand, etc.)
iii) Well-servicing activities
iv) Proximity of wells to other wells and facilities
1.1.4 Environmental Hazards:
i) Corrosive atmosphere
ii) Sea conditions
iii) Severe Weather (storms, hurricanes, etc.)
iv) Earthquakes or other natural disaster
1.1.5 Material Handling, Air and Marine Transport:
(see below)
1.2 Personnel Quarters
1.2.1 External Hazards:
i) Gas releases
ii) Fires
iii) Dropped objects
1.2.2 Internal Hazards:
i) Flammable materials/internal fires
ii) Toxic construction materials
iii) Inadequate escape routes and lifesaving equipment
iv) Emergency system failures
v) Bacterial hazards
vi) Drinking water supply
vii) Food preparation and delivery
viii) Living conditions
ix) Waste disposal
x) Security hazards
1.3 Personnel Safety
(See Below)
2. Drilling Operations
2.1 Rig Operations
i) Well control
ii) Tubular handling
iii) Lifting operations
5 – 4 Section 5 – Offshore Oil and Gas Systems B
2.2 Air and Marine Transport
i) Vessel approach and docking or mooring procedures
ii) Sea and atmosphere conditions
iii) Severe weather
iv) Vessel failures
v) Diving operations
2.3 Materials Handling
i) Rig transfers
ii) Crane operations
iii) Storage of drilling equipment and supplies
iv) Chemical/flammable storage
v) Radioactive sources
vi) Explosives
2.4 Personnel Safety
(See below)
3. Construction and Maintenance Operations
3.1 Marine Transport
i) Vessel traffic and mooring
ii) Sea conditions
iii) Vessel failures
iv) Diving operations
3.2 Materials and Equipment Handling
i) Crane and lifting operations
ii) Elevated objects
iii) Storage of equipment and supplies
iv) Chemical/flammable storage
v) Static electricity
vi) Radioactive sources
vii) Respiratory hazards (exhaust, chemicals, confined spaces, etc.)
viii) Active or stored energy sources (electrical and mechanical)
3.3 Simultaneous Activities
i) Release of flammable hydrocarbons
iii) Hot work (Welding, grinding, cutting)
iii) Proximity of other operations
Section 5 – Offshore Oil and Gas Systems B,C 5 – 5
3.4 Personnel Safety
i) Inadequate personnel protective equipment
ii) Improper use of equipment
iii) Slipping and tripping hazards
iv) Working at heights
v) Friction, sparks or flames
vi) Drugs and alcohol
vii) Exposure to weather
viii) Fatigue
ix) Housekeeping
x) Living conditions (see Quarters, above)
xi) Waste disposal
This listing of hazards is not meant to be all-inclusive, but is provided to give the reader an understanding
of the types of hazards encountered offshore. Listings such as this or more specific and detailed listings
can be used in hazard identification exercises.
The potential hazards described in this section, if not properly controlled, can lead to undesirable and
hazardous events. The most severe consequences of these events could include:
i) Personnel injury
ii) Loss of life
iii) Impact on public
iv) Environmental impact
v) Loss of facilities and equipment damage
vi) Loss of production
vii) Impact on associated operations
viii) Impact on corporate reputation
It is to prevent these types of consequences that regulations have been developed and corporations have
established internal standards and controls. Through the application of risk assessment approaches, the
risks associated with offshore hazards can be better understood and regulations and controls can be
continuously improved.
C. Historical Progression of Regulations Governing Offshore Oil and Gas Development
In industries like oil and gas development, where requirements have been added incrementally over the
years, the net result is coverage of most of the significant risks, but in some cases a lack of balance,
efficiency and effectiveness in application. Much to the concern of all involved, as the oil and gas
industry reached maturity, undesirable incidents continued to occur, albeit at reduced frequency, despite
decades of well-intentioned regulatory and code development. Recently, many regulators have been
prompted to review the effectiveness of their oil and gas regulations. Several countries have begun to
develop “second generation” requirements which incorporate the learnings of over one hundred years of
experience in oil and gas development. They are endeavoring to apply a risk-based approach to the
development and implementation of new requirements. Risk assessment tools and techniques have an
important role to play both in developing new regulations and in implementing their requirements.
In order to understand the current state of regulations, and to predict future trends in regulatory
development, it is important to have a basic understanding of the historical progression of rules and
standards governing the industry.
5 – 6 Section 5 – Offshore Oil and Gas Systems C,D
1. 1920’s – 1960’s
The first oil and gas regulations primarily addressed the legal and commercial issues needed to provide a
framework for this new industry. Driven by a need to standardize equipment and document safe design
practices, industry standards were developed. American Petroleum Institute (API) Standards were the
first standards developed and were used as a basis of good design practices worldwide. Initially, API
Standards focused on dimensional uniformity of standard equipment to promote the broad availability of
safe and interchangeable products. API Standards have increased in complexity and scope and there are
now over four hundred API Standards covering all areas of oil industry operations.
2. 1970’s – 1980’s
Major industrial accidents which occurred led to an increase in safety-related regulations during the
1970’s. Most of these regulations were prescriptive in nature and followed contemporary standards and
codes. They typically required government approval of drawings and periodic audits of producing
facilities.
3. 1990’s – 2010+
The Piper Alpha disaster demonstrated that even when a facility is built to good design standards,
catastrophic events can still occur. This incident prompted the recognition that exceptional safety
performance requires the implementation of a comprehensive safety management system. Safety
management systems provide a holistic approach to safety, addressing not only technical safety
requirements, but also organizational and human performance issues such as management, training,
documentation, operational procedures, etc. Regulatory trends have been moving away from
enforcement of prescriptive requirements and toward performance-based systems. As operators are
required to demonstrate the effectiveness of their safety management measures, the use of risk
assessment tools has increased throughout the industry.
D. Key Nations’ Offshore Oil and Gas Regulatory Development
,C
The U.S. was an early leader in the development of codes and regulations governing oil and gas
development. In more recent years, the U.K. has emerged as a leader in developing performance
oriented requirements. The tables below are not all-inclusive, but summarize the progression of
regulatory development in several key nations. It can be seen that the U.K. has been the most active in
recent years, and many other nations are using U.K. regulations as a model for new regulatory
development.
Section 5 – Offshore Oil and Gas Systems D 5 – 7
In the U.K., the Health and Safety Executive (HSE) has jurisdiction over safety regulations for the
offshore oil and gas industry.
Table 5.1 United Kingdom Offshore Safety Regulations
Regulation Driver Description
Offshore Installations
(Construction and Survey)
Regulations SI 289
(1974)
Development of Central
North Sea area required
larger and more complex
offshore facilities.
Followed contemporary industry practice, and required
certification demonstrating compliance to prescriptive
requirements and periodic surveys of completed
installations
Offshore Installations (Safety
Case) Regulations
(1992)
Implementation of Lord
Cullen’s recommendations
following the Piper Alpha
disaster in 1988.
For each offshore installation, the operator must
prepare a detailed Safety Case describing their safety
management system, the measures taken to identify
and address all hazards with the potential to cause a
major accident and to evaluate risks to assure a risk
level as low as reasonably practicable (ALARP).
Offshore Installation (Prevention
of Fire and Explosion, and
Emergency Response – PFEER)
Regulations (1995)
Clarifying Safety Case
requirements.
Promotes an integrated risk-based approach to
managing fire and explosion hazards and emergency
response.
Offshore Installation (Design and
Construction) Regulations SI 913
(1996)
Aid in Implementing Safety
Case Regulations
Replaces the certification regime established by SI 289
(1974). Dispenses with the concept of a Certifying
Authority, placing responsibility with the owner or
operator (duty holder) to identify safety critical
elements and to verify performance through
independent review and verification throughout their
life cycle.
In Norway, the Norwegian Petroleum Directorate has jurisdiction over offshore safety regulations.
Table 5.2 Norwegian Offshore Safety Regulations
Regulation Driver Description
“Regulations Concerning
Implementation and Use of Risk
Analyses in the Petroleum
Activities” (1990)
Norwegian response to UK
Safety Case Regulations.
A brief regulation aimed at improving safety
performance through implementation of risk analysis.
Operators are required to define acceptable risk and
are given flexibility in the methods used to
demonstrate the acceptability of their operations. The
Norwegian Petroleum Directorate must agree with the
documentation submitted.
In Australia, the Department of Minerals and Energy (DME) is the Designated Authority regarding
offshore safety regulations.
Table 5.3 Australian Offshore Safety Regulations
Regulation Driver Description
Australian Safety Case Regime
(1996)
Australian response to UK
Safety Case Regulations.
Requires submittal of a number of Safety Cases
which are similar in content to those required in the
U.K. Operators are expected to prioritize hazards
using QRA, set acceptance criteria, demonstrate that
these standards are met, and use cost-benefit analysis
to show the risks are ALARP. Non-quantitative
approaches may be accepted.
5 – 8 Section 5 – Offshore Oil and Gas Systems D,E
In the United States, the jurisdiction over offshore safety is split between the Mineral Management Service
(MMS), the U.S. Coast Guard, the Department of Transportation, and the individual states to the limit of
their jurisdiction in offshore waters.
Table 5.4 United States Offshore Safety Regulations
Regulation Driver Description
Code of Federal Regulations
30 CFR 250
Need to provide
comprehensive regulatory
coverage of the industry.
Provides requirements based largely on API
Specifications and Recommended Practices related to
structures, process equipment, piping, safety devices
and electrical components. Also addresses minimum
training requirements. Because hazards associated
with offshore systems are considered well-known and
well-analyzed, MMS regulations emphasize design in
accordance with “good engineering practice” and that
operations and maintenance activities follow
fundamental safety management principles.
Voluntary Safety and
Environmental Management
Program based on
API RP 75
Desire to encourage
operators to develop
effective safety management
systems without the effort
and expense of totally redrafting existing regulatory
requirements.
Operators are required to implement safety
management systems that address 12 key elements.
The elements include Hazards Analysis (quantitative
risk assessment is not required), and Assurance of
Quality and Mechanical Integrity of Critical
Equipment, Emergency Response and Control, and
Audits. Voluntary compliance with this standard is
being monitored. If voluntary participation levels are
not satisfactory, regulatory solutions will be pursued.
State Regulations Varied With the exception of offshore California and Alaska,
state regulations are prescriptive, minimal, and
focused on environmental protection and safety of
well design. With the exception of requirements for a
structural risk analysis offshore California, there are
no requirements for the use of risk analysis.
E. Conclusions and Future Trends
,C
Although regulatory requirements which apply to offshore oil and gas development are still quite different
from nation to nation, a degree of uniformity is beginning to emerge in the approach operators are taking
toward project development, design and risk assessment. The dominance of the major operators in the newest
areas of offshore development has played a major role in this progression. Many of the risk assessments and
safety studies that are now required for North Sea developments in response to Safety Case legislation are
becoming corporate standards for the large global operators.
Ongoing improvement in the safety of offshore facilities relies upon a union of good regulations and industry
codes and standards. Modern regulations are generally becoming more performance oriented, requiring
operators to demonstrate the effectiveness of their safety management techniques. More and more, Operators
are being given the opportunity to demonstrate, typically by means of risk assessments, the acceptability of
new or novel approaches. Industry codes and standards which are continually improved remain a critical tool
for operators to document practices which have been shown to produce acceptable results and to share learning
from new experiences and approaches.
Section 6 – Benefits of Risk Assessment Applications A,B 6 – 1
Section 6
Benefits of Risk Assessment Applications
A. Overview
,B
Risk assessment techniques can be applied in almost all areas of the offshore oil and gas and marine
industries. Corporations know that to be successful they must have a good understanding of their risks
and how the risks impact the people associated with their operations, their financial performance and
corporate reputation. More and more, regulators are striving to use risk-based approaches in formulating
new regulations. The ability to conduct meaningful risk assessments continues to improve as more and
better data are collected, and computer applications become more accessible.
The four key areas where risk assessment has been seen to be useful are:
i) identifying hazards and protecting against them
ii) improving operations
iii) efficient use of resources
iv) developing or complying with rules and regulations
Examples of risk assessment applications in each of these areas are provided in this section.
B. Identifying Hazards and Protecting Against Them
The primary goal of many risk assessments is to identify the hazards that are involved in a particular
process or system and to develop adequate safeguards to prevent or reduce negative consequences from
the related hazardous events. As previously discussed, the first step in performing a risk assessment is
hazard identification. Whether done in an explicit or implicit form, this step provides an understanding
of the basic hazards (e.g., high temperatures, toxic chemicals, rotating machinery) that are involved in a
process or operation. Because of the negative consequences that can occur if these hazards are not
controlled, the hazard identification step is key in developing an understanding of the contributors to the
risk of operating a particular system or process. Once these hazards are identified and the potential
undesirable events involving these hazards are described, risk assessment techniques can allow
personnel to identify the safeguards, or risk-reducing measures, that are currently in place and to make
recommendations for additional safeguards that would further reduce the risk. These safeguards can
either prevent an event from occurring, or reduce (mitigate) the consequences if an event does occur.
1. Hazard Identification During Project Development
Hazard identification is most effectively applied early in a project’s life-cycle. If hazards can be identified
early, they can often be “designed out” or eliminated completely during the early design phases of a
project. If the hazards are not recognized until design is complete or the system is operational, they will
be more costly to address, and the only feasible way to address the hazards may be to provide measures to
mitigate the hazardous events they may cause.
6 – 2 Section 6 – Benefits of Risk Assessment Applications B
It is best to integrate hazard identification activities into the project development process to assure these
activities are conducted at optimal times. For instance, high level Preliminary Hazards Analyses should
be conducted as early as possible in the project life-cycle, while multiple project options are under
consideration. This will enable risk assessments of the various options and help identify the major hazards
which will need to be managed as the project goes forward. As the development process progresses, more
and more detailed hazard analyses can be conducted. In the offshore oil and gas industry, hazard
identification is typically performed on process systems during conceptual design (when process flow
diagrams and layouts are available) and again at the detailed design phase (when P & ID’s and
equipment specifications are available).
2. Assessment of Safeguards
Since the hazards relating to oil and gas production facilities are generally well understood, safeguards
and preventive measures have become fairly standard across the industry. However, each project has its
own unique requirements as a result of the types and amounts of fluids handled, the location, existing
infrastructure, manning philosophy and other parameters. Safeguards must be customized for each
project to adequately protect the facility. In order to evaluate safeguards, specialized safety studies are
often applied. Companies designing major new offshore facilities typically conduct a suite of these
studies, including:
i) Fire and Explosion Risk Analyses
ii) Equipment Layout Review and Optimization
iii) Evacuation, Escape and Rescue Analysis
iv) Emergency Systems Survivability Analysis
Most hazard identification exercises (HAZOPs, etc.) also include the Assessment of existing safeguards
as a part of their process.
Often, risk calculations are incorporated into these specialized studies. For instance, the risks determined
from the likelihood of process releases and their potential consequences are considerations in Fire and
Explosion Risk Analyses and many Equipment Layout Reviews.
3. Management of Change
After a system is in operation, hazard identification is sometimes required by regulatory authorities as a
design and operational check or to assure that changes made subsequent to the initial design have not
introduced new hazards.
4. Root Cause Analysis
Despite efforts to safeguard against all hazards during the design and specification of a facility,
systematic analyses and strong management systems cannot completely eliminate the possibility of
reliability-related problems. When failures occur, root cause analysis can be used to identify the
underlying reasons (hazards and pre-conditions) that problems occur and to correct the root causes so that
the same problem or related problems with shared root causes do not occur in the future. The root causes
of an event are the most basic causes of an event that (1) can be reasonably identified and (2)
management has the control/influence to fix. Typically, root causes are the absence, neglect, or
deficiencies of management systems that control human actions and equipment performance.
Section 6 – Benefits of Risk Assessment Applications C 6 – 3
C. Improving Operations
1. Evaluating New Operating Modes
Over the years, standard approaches have been developed for operating oil and gas related equipment.
Many of these have been documented as industry standards and/or codified into regulation. For example,
regulatory bodies such as the U.S.’s OSHA and Coast Guard require adherence to basic standards in the
areas of Hearing Conservation, Lock-out/Tag-out, Fall Protection, Electrical Safety, Fire Protection,
Emergency Response, etc. In addition, most operators have developed internal requirements to address
recognized operational hazards.
In efforts to continually improve business performance, successful operators continue to challenge the
established ways of conducting their operations. Opportunities for improved business performance are
continually identified, and must be assessedfor risk impact in addition to financial impact and feasibility.
Risk studies can be conducted to assess the relative risks associated with various modes of operation,
including:
i) Simultaneous Operations (Concurrent Production and/or Drilling and/or Construction Operations)
ii) Construction Activities: (Hazard analysis of construction activities, Risk impact of major marine
activities at producing locations, etc.)
iii) Automation of drilling activities
iv) Production and Maintenance Activities (Manned vs. unmanned platforms, Platform-based
maintenance crews vs. roving maintenance teams, etc.)
2. Improving Emergency and Operating Procedures
During the performance of a risk assessment, detailed discussions of normal operations and abnormal
conditions will often focus on the actions and response of operators, maintenance personnel, and
emergency response personnel. Recommendations for the improvement of procedures are often the
result of such reviews. These can include such things as the addition of procedural steps to improve
clarity, highlight critical steps or provide better control. Unnecessary procedural steps or superfluous
information may be noted and recommended for deletion. In some cases, the addition or deletion of
entire procedures may be a recommendation from the risk assessment.
3. Improving Operations Through Better Understanding
In addition to the identification of hazards and safeguards, the value of the knowledge and understanding
gained from the performance of risk assessments should not be under estimated. This increased
understanding can often result in improved operations, design, maintenance, and emergency response.
Risk assessments frequently yield recommendations to system hardware, software, training, and
procedures that result in more efficient or improved operations, along with increased safety.
Many of the techniques (e.g., HAZOP) used in performing risk assessments involve a detailed, systematic
review of the process or system being evaluated. During a review, a variety of information sources, such
as process drawings, operating and emergency procedures, incident reports and operators’ experiences, are
typically examined in detail to allow an understanding of the hazards, potential events or mishaps and the
safeguards that exist to minimize the frequency or consequence of these events. In addition, many
reviews involve a multidisciplinary team representing various organizations (e.g., operations, engineering,
instrumentation, or industrial hygiene), each member of which has detailed knowledge on particular
aspects of the system. This thorough review and sharing of information typically benefits all personnel
involved in the risk assessment by increasing their knowledge of the design and operation of their facility.
6 – 4 Section 6 – Benefits of Risk Assessment Applications C,D
For example, information provided by operators about the way that a system is actually operated, as
opposed to how it was designed to be operated, can provide process engineers and design engineers with
information on design concerns or equipment problems. This knowledge could result in modifications in
equipment or system design, which increase the safety and efficiency of operations. Details provided by
process engineers on why a particular interlock is required on a piece of equipment or information given
by industrial hygiene personnel on why specific personal protective equipment is required can contribute
significantly to the operating staff’s understanding of the design of the system they operate and the
requirements that they must follow.
D. Efficient Use of Resources (ALARP/Cost Benefit Analysis)
1. Design Option Comparisons
When significant design decisions are being made, a thorough comparison of the options available is
typically performed. This comparison should include an Assessment of the risks associated with each
option, with the goal of selecting an option which meets the organization’s risk acceptance criteria and
provides the best overall value with regard to other factors, such as economics, political considerations,
environmental concerns, legal issues, reliability, operability and safety. An organization risk acceptance
criteria may define tolerable risk levels, or may require that one show that the risk is As Low As
Reasonably Practicable (ALARP), and hence acceptable, subject to certain maximum limits. UK regulators
hold the operators of offshore facilities accountable to an ALARP criterion.
The criterion of ALARP implies the analysis of costs versus benefits. Under this criterion, risk needs to be
reduced to the lowest level as is practical (i.e., risk-reduction measures are required to the point where their
costs far outweigh the benefits). Costs and benefits of course are perceived differently by the various
stakeholders affected by a risk management decision, namely the ship owner, regulatory body, insurer,
crew, etc. The question “How safe is safe enough?” is thus generally difficult to answer. Further, the
“acceptable” answer may itself change over time, due to changing societal values.
2. Reliability of Critical Systems
Reliability analysis can serve as a useful tool for comparisons between various design options for critical
equipment or systems. This is true both during the early stages of the equipment life cycle, such as design
and construction, and during later stages in the life cycle when modifications or changes are considered.
For example, a control system for a ship’s steering equipment may require strict operability requirements
that cannot be fulfilled through the reliability of a single set of components, thus necessitating the use of
equipment redundancy. A reliability assessment could provide designers an Assessment of redundancy
options (e.g., redundant components, redundant systems, multiple redundancies) that could best meet the
requirements. In addition, an analysis could identify common cause failure potentials that could defeat the
planned redundancy.
Another type of reliability analysis that can be beneficial during the design phase is an assessment of
human factors issues. Consider the design of a control panel for a ship’s complex electrical distribution
system. Upon completion of the initial design of the panel, a human factors analysis of the preliminary
layout, using operators who will use the equipment if possible, could identify improvements that could
increase the efficiency and accuracy in which the panel is operated during normal and abnormal situations.
These recommendations could include such changes as the location of switches or meters, the labeling of
equipment on the panel, and audible/visual feedback provided to the operator.
When safeguards are put in place to protect against potentially hazardous events, the reliability of these
safeguards must be validated to meet certain criteria. For instance, the failure rates of the components of an
electronic safety shutdown system must be evaluated and reduced to acceptable levels through system
design and component selection. In another example, issues such as the reliability of the release
mechanism for davit-mounted escape craft must be considered during the selection of lifesaving equipment
suppliers.
Section 6 – Benefits of Risk Assessment Applications E 6 – 5
E. Developing or Complying with Rules and Regulations
1. Risk-based Regulatory and Standards Development
Many regulatory bodies and industry groups now understand the importance of taking a risk-based
approach when developing new regulations and standards. More and more, as industry and regulators work
together to draft new requirements, risk assessments are becoming an integral part of the process. In many
cases, new safety regulations are performance-oriented and leave the operator with the responsibility to
demonstrate the effectiveness of his safety management system (U.K. Safety Case). In other cases,
regulators have commissioned risk assessments to be performed as a part of the regulatory development
process, to assure risks are assessed before new regulations are drafted.
For example, following a near-miss collision between a Gulf of Mexico Deepwater Tension Leg Platform
and an 800-foot tankship in 1997, the National Offshore Safety Advisory Committee (NOSAC), sponsored
by the U.S. Coast Guard, appointed a special subcommittee made up of members from the Coast Guard,
MMS, the oil industry and the marine industry to examine the incident. The subcommittee was asked to
use a risk-based approach to identify potential regulatory and non-regulatory means to reduce the risk of
this type of incident recurring.
In another example, the Mineral Management Service (MMS) has recently chartered a risk assessment of
Floating Production Storage and Offloading facilities (FPSO’s) to help them understand the key hazards
and the risks associated with these types of facilities. The results of this assessment will likely provide a
basis for the development of regulations concerning the use of these mobile production systems in the Gulf
of Mexico.
2. Estimating Overall Facility Risks
In the North Sea, it has become an industry norm to use Quantified Risk Assessment (QRA) methods to
estimate the Individual Risk Rate (annual potential of loss of life for an individual working on the facility)
for Safety Case submittals to demonstrate that the risk associated with a particular platform is ALARP.
Due to the potential for data and modeling uncertainties, and the assumptions made, the accuracy of such
explicit risk rate calculations is not considered to be very good, and may be off by over 100%. Unless
specifically required by regulation (North Sea Safety Cases), the calculation of individual risk rates does
not typically prove to be a useful way to devote risk assessment resources. Many operators prefer instead
to conduct focused relative risk studies of a smaller scope to aid in making decisions between two or more
viable options.
When comparing the relative risks of two or more options, the same methodology and assumptions can
be used to evaluate each option, and the uncertainties associated with the absolute risk numbers calculated
does not significantly impact the decision.
Often, high-level estimates of overall facility risks and the major risk contributors are made early in the
project life to aid in selecting between various development options. This is a valuable exercise, because
it is at this point that a project team has the most impact on the overall risks associated with the project.
Conducting hazard and risk assessments early in the project life also allows time for the development of
mitigation solutions to address major risk contributors.
3. The Future: Providing the Framework for Regulatory Reform
In the shipping industry, where there are an abundance of regulators and rule-makers, and existing safety
rules and regulations are particularly piecemeal in nature, the structure and logic provided by a risk
assessment model may be able to provide a framework for regulatory reform.
Existing rules and regulations prescribe safeguards to protect against hazardous states or events. The rules
and regulations also prescribe consequence mitigating measures, such as: lifesaving appliances, global
search and rescue, fire detection and alarm, fire extinguishing systems, fire containment, limitation of
tank size, damage stability, shipboard pollution prevention plan, etc.
6 – 6 Section 6 – Benefits of Risk Assessment Applications E
Preventive
measures
Hazardous
states or
events
Consequence
mitigating
measures
Preventive
measures
Hazardous
states or
events
Consequence
mitigating
measures
Identification
of hazards
Identification
of operating
scenarios
This approach can be illustrated as follows in Section 6.E, Figure 6.1:
Figure 6.1 Framework of Existing Rules and Regulations
What this approach lacks is a systematic consideration beginning with operating scenarios and the
identification of hazard in each scenario, through to assessing and recommending effective risk- reduction
measures. An improved approach is illustrated in Figure 6.2.
Figure 6.2 A Risk-Based Framework
A risk-based framework as shown in Section 6.E, Figure 6.2 may be looked upon as a systematic, firstprinciple approach to accomplishing what the existing rule-and regulation-based framework seeks to
accomplish. Section 6.5, Figure 2 may be used as a generic safety framework within which the existing
rules and regulations can be populated. In fact it could be used to assess the comprehensiveness of the
existing fragmented regimes of rules and regulations: any gaps or lack of considerations can be identified
and addressed with risk-analysis techniques. Section 6.E, Figure 6.3 illustrates how this may be conduced.
Section 6 – Benefits of Risk Assessment Applications E 6 – 7
Figure 6.3 An Example of the Application of the Framework
1. Operating scenario
[Presently rules and regulations are not specific about operating scenario.
This should be identified as a recommendation for improvement.]
In our example, let this be navigating in a waterway.
2. Hazard identification
[This may be generic as well as specific. The generic ones are
identified below but the ship operators should always review this list
and identify additional hazards, if any, that may be specific to the
particular waterway they are about to navigate. In fact, normally
waterway authorities have already implicitly identified these hazards
and mandated safety measures.]
Tidal changes and water depth
Underwater objects
Local shipping traffic and other ships
Current
Bridges, buoys and other fixed structures
Weather and visibility
Etc.
Rules presently provide for
system reliability through
equipment design checks,
system redundancy, periodical surveys, etc. Risk assessments can be performed to
provide ship operators with
effective system reliability
improvements, e.g.:
• preventive maintenance
programs;
• pre-waterway entry
system-checks;
• crew standing by in
engine room;
• all generators put on
line; etc.
3. Preventive measures
Loss of propulsion
This could lead to collision,
contact, or grounding, which
in turn could lead to other
consequences, such as pollution, blockage of waterway,
foundering.
4. Hazardous states or
events
Presently, rules and regulations do not have requirements for emergency preparedness in the event of
loss of propulsion. Some
waterway authorities mandate requirements such as
tug-escort. Risk analyses
can be performed to provide ship operators with
effective emergency preparedness, e.g.:
• standby with anchors;
• drill crew on procedure for restoring propulsion; etc.
5. Consequence-mitigating
measures
6 – 8 Section 6 – Benefits of Risk Assessment Applications E
As the example illustrates, the framework allows users to:
i) systematically assess each operating scenario and the safeguards that would be needed,
ii) identify where the different regimes of rules and regulations reside and how they relate to other
safety measures,
iii) identify operational requirements that are in fact important elements in the chain of safety
measures, and
iv) identify where risk assessment techniques may be applied to derive effective safety measures.
Regulators could use this framework as an “umbrella” for their regulations, under which they could have
a holistic view of the safety issues they need to address. This would allow them to have a better view of
the roles their rules or regulations play in the safety equation. It would Help them in assessing whether
new requirements ought to be formulated and whether existing ones are adequate. It could provide them
with a “common vocabulary” to reexamine their safety philosophy. Knowing where their rules or
regulations currently reside in the framework, they could either begin to embrace a holistic view towards
safety or stick to the current piecemeal one. In either case, the intent of their requirements will now be
more apparent to those affected by them. Using the framework philosophy as structure, they could
perform risk assessments to examine the effectiveness of their existing rules or regulations as well as to
formulate new ones. By examining the operating scenarios, the hazards, the safeguards and the
consequences, their requirements would acquire a risk-based rationale.
Inter-regime or inter-agency jurisdictions could also be mapped in this framework, thus allowing better
cooperation between agencies. The framework could also provide the opportunity to unify safety
philosophies between agencies and to work towards common safety acceptance criteria.
Owners and operators could use this framework as a template for safety planning in their operations.
Providing a framework, a template and a methodology and having operators perform their own risk
assessments for their own individual operations, as the ISM Code seem to be encouraging, may be a
positive way forward to address the integration of ship operations in the safety equation. It would be the
job of regulators to come up with the framework, the template and the methodology.
Perhaps the insurers would have the most to gain by promoting a holistic safety framework. This would
provide a holistic view of the degree to which risks have been addressed, and would provide a rational
yardstick by which they could underwrite insurance for those risks.
This type of holistic safety framework could be used as the roadmap for major regulatory reform in the
shipping industry. It could be applied to integrate all the different regimes of regulations as well as all the
operational, human and organizational considerations and regard them as one entity. The historic
piecemeal and fragmented approach to assuring safety has served its purpose and must now move on. A
holistic safety framework can be developed which not only accommodates the hard-earned experience of
the past but also provides a philosophy and a structure by which hazards and hence risks can be
systematically and rationally assessed. This would provide a tool not only for the regulators, but, more
importantly, for the operators themselves.
Clearly, the extent to which a holistic safety framework can be applied will be determined by the
willingness of operators, industry groups and governmental bodies around the world to engage in this
process. The result of such an effort could have the potential to significantly improve the safety of
shipping operations through the systematic application of risk-based approaches.
Section 7 – Risk Based Inspection A,C 7 – 1
Section 7
Risk Based Inspection
A. Introduction
,B
“Risk Based Surveys” are an alternate to prescriptive surveys of fixed intervals and scope. Such surveys
recognize that some equipment items pose a much greater risk to an offshore installation than others.
Risk assessment aids in identification of those high-risk items, and allows for higher priority and more indepth surveys to be conducted on these. Conversely, very low-risk items may receive lesser attention than
would have been the case in a prescriptive Survey plan.
B. Qualitative Screening
Some equipment may require little survey activity at all due to low risk. This may include non-hazardous
materials, or non-corrosive service. Equipment ranked “Low Risk” may be included in this category.
Qualitative “screening” methods typically use a risk assessment method similar to the Failure Modes and
Effects Analysis (FMEA), as described in Section 2.B of these guidelines. An additional step is taken to
rank the risk criticality of the failure modes via a risk categorization/risk matrix method as described in
Section 2.E. Failure modes that have low likelihood or low consequences should they occur may be
elimited from more rigorous Assessment, and inspections will be performed on an “as needed” basis, or
may default to the minimum permissible under applicable codes and standards.
C. A Quantitative Model for Equipment with Measurable Damage Rate
1. Scope
This subsection is applicable to most fixed equipment (piping, pressure vessels, etc.) that is subject to a
measurable damage mechanism such as corrosion. Such equipment generally receives predictive
maintenance, i.e. tests and inspections that are intended to determine the wear out time, or repair/
replacement time of the equipment.
2. Determine Damage Mechanisms, Damage Rates, Uncertainty in Damage Rates, Validity of
Previously Performed or Future Planned Inspections and Tests
Based on the environmental exposure (inside and out), the material of construction, the heat treated
condition, the operating parameters and other factors, equipment may be subject to one or more types of
damage. Corrosion, erosion, pitting, crevice or under deposit attack, stress corrosion cracking, and
fatigue are examples of typical types of damage that are measurable. Predictive maintenance such as
gauging, pit depth measurement and visual examination is used to monitor the extent and progression of
damage.
Past experience, previous survey data, and models for corrosion and other mechanisms are useful for
determining the potential existence of a damage mechanism, and an approximation of the rate of damage.
A most important consideration is that the rate is rarely known with certainty due to variations in the rate
(which may average out over time), and especially due to insufficient or inaccurate data. Even if gaugings
have been performed, the corrosion in localized areas that were not gauged may greatly exceed the
measured rate. Therefore, damage rates determined by gauging should be compared to damage rates from
models or other sources of information. Once the validity of available data is evaluated, a final estimate
should be made of the potential for variation of damage rates from the measured or expected rate.
7 – 2 Section 7 – Risk Based Inspection C
As new information is gathered from surveys, the estimate of the variation in the damage rate can be
updated and refined.
An analytical tool known as Bayes’ Theorem is commonly used to evaluate problems such as this. The
state or condition of a thing is unknown, and there are tests that can be conducted to learn more about it.
However, the test results themselves are uncertain. Having performed the test, Bayes’ Theorem allows
one to determine logically how much was actually learned from the test. In Bayes’ Theorem, the
knowledge of the thing before the test is called the “Prior Probability”, the accuracy of the test is called
the “Conditional Probability”, and the final result after the test is called the “Posterior Probability”. These
are illustrated in the flow diagram below.
3. Structural Reliability
In 7.C.2, it was determined how rapidly an equipment item might be deteriorating, based both on the
expected rate of damage, and based on the consideration that the damage rate might be worse. In the next
step, the actual amount of damage is determined (from rate and age), and this is compared to the amount
of damage the equipment is designed to withstand. This comparison is related to the likelihood of failure,
and analytical methods are available to quantify this value.
The methods used vary from complicated to quite simple; however, there is generally a trade off in
accuracy and credibility as one goes from the complex to the simple. One possibility is to use simplified
models that are “calibrated” to the “generic”, or “average”, or “typical” failure rate for the equipment
being studied.
Posterior Probabilities
Evaluate previous inspection data,
number of inspections, method of
inspections, findings that will
influence prior probabilities.
Conditional Probabilities
Evaluate the effectiveness of
inspection methods in
confirming damage levels
and damage rates.
Prior Probabilities
Evaluate possible
damage types and
estimate expected
damage rate. Evaluate
the possible deviations
from the expected
damage rate.
Data from
previous surveys,
experience,
corrosion or
other models,
etc.
Data from
surveys,
experience,
statistical
sampling models,
recommended
practices
Survey
History
To Structural
Reliability
Step 1
Hazards
Identification
Section 7 – Risk Based Inspection C 7 – 3
Note that the above Assessment can provide an estimate of the likelihood of failure, however, it may not
assure that the equipment is in compliance with all applicable laws and regulations. For example, the
ASME pressure vessel code is not based on risk, except in an indirect way. Thus the likelihood of failure
of a vessel that is just above the minimum allowable wall thickness (MAWT) is not very much different
from one that is just below the MAWT, but the latter case has an additional consequence of possible fines
or citations.
4. Consequence of Failure
Determination of the consequence of failure on an offshore installation requires special considerations
compared to onshore facilities, due to the proximity of equipment and relative lack of escape routes.
Some of the methods typically employed are: a release/dispersion model (usually a software package,
highly analytical), a Failure Modes, Effects, and Criticality Analysis (FMECA, a more subjective
approach), or the use of event trees to allow consideration of multiple potential outcomes.
A major consideration is to determine what units consequence will be measured in. Some typical
measures (all per event) are:
i) Area (affected by fire/explosion)
ii) Area (affected by toxic fumes)
iii) Environmental damage (barrels of oil spilled)
iv) Safety (deaths, injuries)
v) Costs (can include most consequences on a common basis)
Step 2
Likelihood
Determination
Evaluate the likelihood that possible levels of
damage will exceed the acceptance requirements of
the equipment (minimum allowable thickness,
critical flaw size, etc.) before the next planned
inspection.
Failure frequency, calibrated to
“generic”, “average” or “typical”
equipment
Data from
surveys,
experience,
statistical
sampling
models,
recommended
practices
To Risk
Assessment
To Risk
Assessment
Step 3
Consequence
Determination
Options:
1a) Release rate/dispersion model
1b) Event trees (scenario resolution)
2a) FMECA (failure mode given/implied
from structural reliability analysis)
2b) Event trees(scenario resolution)
Operating Data:
Fluid type &
properties
Fluid state
Pressure
Temperature
Available inventory
Detection
Isolation
etc
7 – 4 Section 7 – Risk Based Inspection C
5. Risk Assessment and Risk Management
Completion of the analysis and building of the Risk Based Survey Plan is accomplished in the final step.
The likelihood of failure and the consequence of failure are simply multiplied to determine the risk.
Typically, on completion of the first Risk Based Survey analysis, the equipment is ranked in order of
decreasing risks and examined on this basis. This allows performance of a baseline and acts as a check on
all data and assumptions made during the analysis.
The next step (or this is sometimes done as the first step) is to increment the age of the equipment by a
certain number of years, and/or increment the inspection count by one. This allows “what-if” planning for
determining optimal times and locations for surveys.
Evaluate Risk Reduction
Options:
Additional Surveys
Repairs/modifications
Design changes
Improve detection, isolation,
mitigation
Reduce inventory
etc.
Perform Survey, update information
Preliminary Risk Rating
Preliminary Survey Plan
Likelihood
from Step 2
Increment equipment age
by “x” years
Future Risk Rating
Future Survey Plan
Consequence
from Step 3
Risk = Consequence x Likelihood
“Current” Risk Rating
All Risk
Acceptable?
Initial Survey
Planning Loop
Future Survey
Planning Loop
Return to
Step 1
Return to
Step 1
Section 8 – Conclusions 8 – 1
Section 8
Conclusions
Risk assessment is a well-developed field which many operators are currently applying to improve their
operations and reduce their risk exposure. In the offshore oil and gas industry, some progressive
regulators have encouraged the application of risk assessment techniques by enacting performance- based
safety regulations which require operators to demonstrate reduced risk levels. In many areas of the
offshore and marine industries there is a dichotomy: operators must still comply with prescriptive “oldstyle” regulations while being encouraged on other fronts to develop a risk-based approach to safety.
This document has attempted to paint a picture of the current state of risk assessment application in these
industries and to provide some basic information to guide those who would like to apply risk assessment
techniques. There are many challenging issues that organizations must address as they begin to incorporate risk assessment into their businesses:
i) What are my risk acceptance criteria?
ii) What types of internal guidelines are needed to assure consistency in the approach and quality of
risk assessments we conduct?
iii) When should we perform risk assessments?
iv) Where will the resources to conduct assessments come from?
No formal risk assessment should be approached casually. There are any number of pitfalls and issues
which can and will be encountered by the uninitiated. Therefore, it is recommended that any organization
that wishes to encourage the use of risk assessment undertake an effort to provide appropriate training to
all impacted personnel and address issues such as those listed above.
Risk assessment is a good business practice. The thoughtful application of risk assessment techniques can
indeed improve the decisions made by an organization and result in improved performance in a number of
areas by reducing risk exposure.
Risk assessment should be at the core of any safety-related rule-making or regulatory development
process. Since the underlying goal of these rules and regulations is to reduce the risk of losses resulting
from hazards, risk assessment seems an imperative part of any rule-making process. However, buy-in and
significant participation is required by all stakeholders in the process to assure that risk assessment is
incorporated in an effective and meaningful way. This is no small feat considering the number of players
involved, their diverse interests and the wide differences in their levels of understanding with regard to
risk assessment.
As awareness of risk assessment increases, the benefits which can be realized through its application will
continue to increase. Organizations in both the public and the private sectors are becoming more and
more familiar with the benefits associated with risk-based approaches to managing safety, and we
continually see more examples of risk assessment applications across the marine and offshore oil and gas
industry. This document was prepared to support this trend by providing fundamental information about
risk and risk assessment applications.

Appendix A – References A A – 1
Appendix A
References
1. Guidelines for Hazard Assessment Procedures, Second Edition with Worked Examples, American
Institute of Chemical Engineers, New York, NY, 1992.
2. Guidelines for Consequence Analysis of Chemical Releases, American Institute of Chemical
Engineers, New York, NY, 1999.
3. Guidelines for Evaluating the Characteristics of Vapor Cloud Explosions, Flash Fires, and
BLEVEs, American Institute of Chemical Engineers, New York, NY, 1994.
4. Guidelines for Use of Vapor Cloud Dispersion Models, Second Edition, American Institute of
Chemical Engineers, New York, NY, 1996.
5. A. D. Swain and H. E. Guttmann, Handbook of Human Reliability Analysis with Emphasis on
Nuclear Power Plant Applications, NUREG/CR-1278, U.S. Nuclear Regulatory Commission,
Washington, DC, August 1983, with Addendum # 1 to NUREG/CR-1278, August 1983,
September 1, 1985, by A. D. Swain.
6. A. Mosleh, D. M. Rasmuson, and R. M. Marshall, Guidelines on Modeling Common-Cause
Failures in Probabilistic Risk Assessment, NUREG/CR-5485, U.S. Nuclear Regulatory
Commission, Washington, DC, November 1998.
7. Safety of Life at Sea Convention, 1974, consolidated edition, IMO London, 1996.
8. International Convention on the Prevention of Pollution at sea, 1973, consolidated edition, IMO ,
London, 1997.
9. Interim Guidelines for the Application of Formal Safety Assessment (FSA) to the IMO Rulemaking Process, MSC/Circ.829, MEPC/Circ. 335, IMO, London, 17 November 1997.
10. Ingemar Palsson, Gert Swenson. Formal Safety Assessment, Introduction of Modern Risk
Assessment into Shipping, Report 7594, Swedish National Maritime Administration, SSPA
Maritime Consulting, February 1996.
11. Bjorn Sohal. Risk Assessment Applied to Special Trade VLCC Operations: A Case Study,
presented at Safety Risk Assessment in Shipping Conference, Athens, Greece, IIR Ltd., May
1999.
12. Pradeep Chawla. Reducing the Paperwork of Risk Assessment – How to Make Your Safety System
Efficient and User-friendly, presented at Safety Risk Assessment in Shipping Conference, Athens,
Greece, IIR Ltd., May 1999.
13. Allin Cornell, William C. Webster. The Application of Risk-Based Technologies to Ships – An
Introduction, ABS internal research report, August 1998.
A – 2 Appendix A – References A
14. Philippe Boisson. Safety At Sea, Policies, Regulations & International Law, Bureau Veritas, Paris,
1999.
15. Nancy Leveson. Safeware, System Safety and Computers, A Guide to Preventing Accidents and
Losses Caused by Technology, Addison-Wesley, 1995.
16. Panel on Risk Assessments of Offshore Platforms – Draft Report (7th Draft), Panel for Marine
Board of National Research Council, Ken Arnold et. al., April 16, 1997.
17. J.S. Arendt, D.K. Lorenzo, A.F. Lusby. Evaluating Process Safety in the Chemical Industry,
Chemical Manufacturers Association, December, 1989.

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