The Baker Panel Report - ABSA

gHSEr also discusses briefly some key concepts of and strategies for risk management. Key HSE Process 3 in gHSEr defines the term “riskassessment” as “the process of estimating the likelihood of an accident occurring, estimating the magnitude of the consequential loss andmaking a judgment about the significance and tolerability of the risk.” 62 The guidance from that same Key HSE Process indicates that risk is afunction of both frequency and consequence and that risk may be expressed either qualitatively or quantitatively (in dollars or expectedmortality per year). In addition, the same guidance states that “[s]trategies [for risk management] must be cost effective; if they are not, theorganization may be safe but will certainly not be competitive.” 63As discussed in Section V, other Group standards on process safety/integrity management also provide high-level guidance for implementinggHSEr expectations relating to process safety. Among other requirements, the 2001 standard provided that each facility must “systematicallyidentify hazards within its boundary arising from normal and abnormal operations and shall eliminate/control/mitigate the hazards so thatresidual risks are as low as is reasonably practicable.” BP’s new 2006 integrity management standard sets out ten integrity managementstandard elements and related mandatory requirements necessary to satisfy the BP Group values. Compliance with the new standard isrequired by the end of 2008.BP’s engineering technical practice (ETP) relating to major accident risk also provides guidance on managing process risks. Under thisguidance, the Company’s business units assess societal risk by determining the risk of multiple fatalities and environmental risk from potentialmajor accident scenarios at a particular site. The assessment technique considers potential catastrophic and major incidents, such as firesand explosions, on a high level. It is designed to provide a measure of overall risk compared to a Group reporting line, based upon typicalindustry criteria, to highlight if a risk reduction program should be a priority. This Group guidance indicates that a process of continuous riskreduction should be applied both to major accident risks that are above the Group reporting line level, which are required to be reported to theGroup level, and to risks below that reporting line, which are required to be reported to the appropriate level within the business segment. As aresult, this engineering technical practice permits management to take appropriate action to reduce risks as the high expectations of gHSErcontemplate.> Programs for reducing process riskPrograms and practices that address process risks. The Panel notes that BP has implemented a number of programs and practicesdesigned to address and reduce, to some extent, process risks in BP’s five U.S. refineries. As discussed elsewhere in this report, these programsand practices include the 2006 Group integrity management standard (see Section V) and gap analyses designed to bring actual practices at BP’s fiveU.S. refineries into compliance with the standard by the end of 2008, including development of a hazard and risk register at eachrefinery; engineering technical practices that provide guidance on numerous topics including major accident risk and the design and locationof occupied portable buildings; local refinery process safety management programs, including conducting process hazard analyses, performing management ofchange analyses, training programs, and programs for inspecting and maintaining equipment; process safety minimum expectations, which the Panel’s technical consultants recognized as an excellent practice (see Section V.C.); periodic audits and assessments of process safety and integrity management performance and process safety management; establishment of Texas City and U.S. program offices for the purpose of addressing and tracking responses to recommendations thathave been made to improve the U.S. refineries from lessons learned from the Texas City incident and from various culturalassessments; and introducing new process safety performance metrics of action item closure, compliance with process safety minimum expectations,overdue inspection rates, and loss of containment measurements.Process Safety Management Systems C 167