GPCA ’17: Risk management remains critical for chemical firms – execs

DUBAI (ICIS)–Good risk management and control remains critical for a chemical firm to prevent potentially devastating effects to its reputation and bottom line, senior industrial officials told delegates at the 12th Annual Gulf Petrochemicals & Chemicals Association (GPCA) Forum on Tuesday.

Some $33bn worth of losses resulting from incidents  worldwide such as explosions and fires  have been reported over the last 20 years, for both upstream and downstream industries, according to Sultan Al Bigishi, a senior vice president at ADNOC. Some 29% of these losses were contributed by refining businesses, with explosions being the single biggest contributor, he told delegates.

“Management risks calls for a culture built on trust within a company but also openness to learn and share through collaboration within the chemical industry,” said Detlef Kratz, senior vice president of corporate technology and operational excellence at BASF.

High severity incidents can only be avoided by continuously maintaining a high level of “high level of awareness and common understanding of risk”, Kratz said.

An in-depth set of competencies and technological know-how as well as user friendly “environment, health and safety core processes” are also key to avoid major incidents, he said.

Kratz shared measures that BASF has implemented since the 17 October 2016 explosion at its Ludwigshafen site, including the use of low-sparking tools to reduce the risk of ignition as well as fireproof insulation to reduce the risk of explosion.

The incident is still undergoing investigation by the public prosecutor’s office, Kratz said.

Good risk management in order to prevent major incidents helps to bring value to the chemical firm, said Mosaed Al-Ohali the executive vice president of corporate finance at SABIC.

“A low incidence rate could help boost the firm’s reputation and branding both internally and externally to customers and the society at large,” he said.

“Risk management does not cost, it pays,” Al-Ohali said, adding that a deterioration to a company’s risk controls could come with a significant impact on all stakeholders.

“Risk doesn’t go away… even if you have mitigated, avoided or transferred it,” said Yasser Alabbasi, a plants operation manager at Bahrain-based producer Gulf Petrochemical Industries Co (GPIC).

“It is not just about implementing fancy technology and systems, its about everyone being engaged communicating and controlling it,” he added.

A company could also face “blind spots” in managing risks, especially among the upper management, according to George Pilko, the chairman of US-based environmental inspection firm Pilko & Associates.

“Blind spots often exist within an organisation that is not visible to leadership but can lead to catastrophic accidents,” Pilko said, adding that there lies major disconnects in managing risks between the company’s headquarters and the workforce its facilities.

Pilko gave the example of a Middle East producer spending “lots of money and time on operator training” following a risk review by Pilko’s firm. “When we reviewed the operator’s competency, they didn’t have the skillset needed to identify and manage risks… The reality was that there were major gaps,” he added.

Focus article by Nurluqman Suratman