Overview of Risk Management
Risk is defined as the potential for the realization of unwanted, negative consequences of an event. Risk can be measured by the product of the probability of the event occurring and the consequence of the event. Risk management is the systematic process of identifying, analyzing, and responding to project risk. It involves minimizing the probability and consequences of adverse events and maximizing the probability and consequences of positive events based on project objectives.
The subsea business is a unique industry in many ways, but its uniqueness is not limited to the diversity inherent in any project or to the differences between all projects; its diversity also includes the people working within the industry. As a whole, these people are at the cutting edge of a high-risk and potentially highly rewarding industry. It would therefore seem beneficial for the industry, as a whole, to adopt an overall risk management methodology and philosophy in order to utilize joint efforts that can help maximize the success of its projects.
Risk management can be regarded as a continuous assessment process applied throughout the design, construction, operation, maintenance, and decommissioning of a project.
Contents
Risk in Subsea Projects
A subsea project is complex and involves uncertainties from a wide range of sources. Managing these uncertainties in a systematic and efficient manner with a focus on the most critical uncertainties is the objective of a successful risk management plan. Some of the areas of uncertainty that need to be considered are as follows:
- Technical;
- Financial;
- Organizational;
- Contract/procurement;
- Subcontractors;
- Political/cultural, etc.
Many cost issues need to be considered when assessing the economics of a field development. In the ranking of different investment opportunities for a field development project, the following issues need to
be considered:
- Costs of capital expenditure and operating expenditures;
- Schedule of project tasks and completion of milestones;
- Taxes and depreciation;
- Health, safety, and environmental concerns (meeting regulations and company requirements);
- Structural reliability (using a design that meets requirements);
- Flow assurance (analysis that meets availability requirements).
Risk Assessment Methods
When assessing risk, the parameter of probability must be considered to obtain an overall assessment because not all risks will evolve into project certainties. During the assessment, risks are removed to get a global view. This method is based on functional expertise, and a fixed scoring value is used to achieve balanced results.
For example, if a risk is assessed as having a probability of occurrence between 1% and 20%, then the mean of the range, 10%, will be used in the calculation. A 100% probability does not appear in the table because 100% probability is a project certainty. The risk evaluation deals only with scenarios that might happen. Once having identified the probability and established the level of risk, it is necessary to prioritize the actions to be undertaken.
Risk Acceptance Criteria
The risk criteria define the level at which the risk can be considered acceptable /tolerable. During the process of making decisions, the criteria are used to determine if risks are acceptable, unacceptable, or need to be reduced to a reasonably practicable level. Numerical risk criteria are required for a quantitative risk assessment. As described previously, risk assessment involves uncertainties. It may not be suitable to use the risk criteria in an inflexible way. The application of numerical risk criteria may not always be appropriate because of the uncertainties of certain inputs. The risk criteria may be different for different individuals and also vary in different societies and alter with time, accident experience, and changing expectations of life. Therefore, the risk criteria are only able to assist with informed judgments and should be used as guidelines for the decision-making process.
In risk analysis, the risk acceptance criteria should be discussed and defined first. Three potential risk categories are proposed in DNV-RP-H10:
- Low;
- Medium;
- High.
The categorization is based on an assessment of both consequence and probability, applying quantitative terms. The categories should be defined for the following aspects:
- Personnel safety;
- Environment;
- Assets;
- Reputation.
Risk Identification
Many tools and techniques are used when identifying risk. Some of them are introduced in this section.
Hazard Identification Analysis
The hazard identification (HAZID) technique is used to identify all hazards with the potential to cause a major accident. Hazard identification should be done in the early stage of the project and be conducted in the conceptual and front-end engineering stages. HAZID is a technique involving the use of trained and experienced personnel to determine the hazards associated with a project. Significant risks can be chosen through HAZID by screening all of the identified risks. The technique is also used to assess potential risks at an early stage of the project.
Design Review
The design review is used to evaluate the design based on expert opinions at various stages. It is also used to identify the weaknesses of a design for a particular system, structure, or component.
FMECA
A failure mode, effects, and criticality analysis (FMECA) is conducted to identify, address, and, if possible, design out potential failure modes. The use of a process FMECA to identify potential failures that could occur during each step of the procedure with a view toward finding better (risk-reducing) ways of completing the task (high risk operations only) should be considered. All procedure-related actions from any detailed design FMECA and peer reviews should be incorporated into the project.
The advantages of FMECA are as follows:
- Applicable at all project stages;
- Versatiledapplicable to high-level systems, components, and processes;
- Can prioritize areas of design weakness;
- Systematic identification of all failure modes.
FMECA also has two weaknesses:
- Does not identify the real reason of the failure mode;
- Can be a time-consuming task.
Risk Management Plan
The risk management plan includes resources, roles and responsibilities, schedules and milestones, and so on. However, it should only involve items that can be achieved within the schedule and budget constraints. By applying the risk management plan to the total development project, risks will be reduced and decisions can be made with a better understanding of the total risks and possible results.
References
[1] American Petroleum Institute, Recommended Practice for Subsea Production System Reliability and Technical Risk Management, API RP 17N, 2009, March.
[2] R. Cook, Risk Management, England, 2004.
[3] H. Brandt, Reliability Management of Deepwater Subsea Field Developments, OTC 15343, Offshore Technology Conference, Houston, 2003.
[4] Det Norsk Veritas, Risk Management in Marine and Subsea Operations, DNV-RPH101, 2003.
[5] J. Wang, Offshore Safety Case Approach and Formal Safety Assessment of Ships, Journal of Safety Research No. 33 (2002) 81–115.
[6] J. Aller, M. Conley, D. Dunlavy, Risk-Based Inspection, API Committee on Refinery Equipment BRD on Risk Based Inspection, 1996, October.
[7] International Association of Oil & Gas Producers, Managing Major Incident Risks Workshop Report, 2008, April.
[8] C. Duell, R. Fleming, J. Strutt, Implementing Deepwater Subsea Reliability Strategy, OTC 12998, Offshore Technology Conference, Houston, 2001.
[9] M. Carter, K. Powell, Increasing Reliability in Subsea Systems, E&P Magazine, Hart Energy Publishing, LP, Houston, 2006, February 1.
[10] H.B. Skeels, M. Taylor, F. Wabnitz, Subsea Field Architecture Selection Based on Reliability Considerations, Deep Offshore Technology (DOT), 2003.
[11] F. Wabnitz, Use of Reliability Engineering Tools to Enhance Subsea System Reliability, OTC 12944, Offshore Technology Conference, Houston, 2001.
[12] K. Parkes, Human and Organizational Factors in the Achievement of High Reliability, Engineers Australia/SPE, 2009.
[13] M. Morris, Incorporating Reliability Centered Maintenance Principles in Front End Engineering and Design of Deep Water Capital Projects, http://www.reliabilityweb. com/art07/rcm_design.htm, 2007.
[14] Det Norsk Veritas, Qualification Procedures for New Technology, DNV-RP-A203, 2001.
[15] M. Tore, A Qualification Approach to Reduce Subsea Equip
