The state of process safety and operational risk management: transforming the status quo
Published by Nicholas Woodroof,
2019 marks the fourth year of the Process Safety Management/Operational Risk Management survey. In the first report, Sphera focused on the challenges companies face with ORM and PSM. Part Two of the survey report takes a deep dive into technology. In Part One (published in August), Spehra found signs of positive progress and momentum – but also a gap between the intent and ability to implement best practice.
Companies in the hazardous industries face challenges on multiple fronts: on the one hand, a brain drain as retirees exit the workforce threatens to hollow out operational expertise within organisations; on the other, companies must contend with ageing assets and an uncertain operating environment, with global changes to oil and feedstock prices. In this scenario, it is more important than ever to stay tightly focused on PSM and ORM and maintain safe, efficient operations.
Intent vs reality
Part One of the survey showed that, in the hazardous industries, safety culture is held in high esteem. Among the respondents, 84% said they believe that safety is part of corporate value structures and is supported by the highest levels of management, including the company president or CEO. In other words, corporate pledges to improve standards are seen as credible, good-faith expressions of intent. This is consistent with last year’s survey, where 83% said the same.
Furthermore, 79% of respondents said they were convinced that, for the most part, companies continuously monitor safety performance, which is up slightly from 77% in 2018. The continuity between years is encouraging; it implies that this confidence is well-rooted and enduring. Some express even more confidence with 61% saying that PSM is incorporated within operational excellence programmes and strategies. So safety culture is strong and matched by good intentions. However, there are clear safety challenges on the ground that cannot be ignored either. And the survey data suggests a root cause.
Nearly half (48%) of respondents said that, typically, most people are unaware of their vulnerability to major accident hazard (MAH) risk exposure.
For Scott Lehmann, Sphera’s vice president of product management for ORM, “It’s not surprising because this visibility is easier said than done. Take a top-down look at one of these companies and you’ll see how quickly they become complex and siloed throughout the organisational structure. While safety culture comes from the top, it’s not a trivial exercise to ensure it becomes an essential part of the company’s DNA at every level.”
Respondents echo this feeling, citing safety culture (52%), leadership support (39%), and training and competency (35%) as the top safety challenges. This suggests a disconnect between good intentions at the top vs. reality at the front line.
It’s been outsourced?
One respondent suggested that outsourced operations and maintenance might be a factor in the disconnect between intent and reality. The person argued that outsourcing, “may be incompatible with operations, plant and asset management strategies.”
Could outsourcing and relying on third-party service providers be part of the problem? Simon Jones, Sphera’s director of solutions consulting for ORM, suggests not: “Services firms today operate very differently to how they once did. They’re not just coming in to do limited service engagements; they’re sticking around to provide ongoing, long-term operations and maintenance support. With that comes a greater ability and incentive to properly integrate with the client’s way of working and Process Safety and Operational Risk Management processes. The important thing is to develop a shared approach to risk and to ensure operator and contractor systems are aligned. If that’s handled well, outsourcing operations and maintenance shouldn’t act as a barrier to proper PSM.”
The proactivity gap: the role of prioritisation and planning
Pressure from regulators and investments in technology do seem to be paying dividends. Nearly three-quarters (72%) of respondents say industry regulations have helped companies reduce their vulnerability to high-potential incidents. Even more respondents (85%) believe technology has helped keep their workers safer.
However, despite these positive signs, only 40% say organisations proactively manage process safety – a barely noticeable increase on the 38% who said the same in 2018. Therefore, while necessary investments to satisfy regulatory requirements and technology have not resulted in proactive, integrated risk management across the business, is this a cause for concern?
“It boils down to the difference between a reactive and proactive mindset,” Jones said. “Regulations are excellent for establishing baseline standards.”
He added: “But if your starting point is asking and answering questions and proactively looking for where you can identify hazards, look at risk trends, solve challenges and mitigate risks, then not only will you clear the bar for regulations, you can increase productivity and competitiveness. This mode of thinking, an ORM-focused, technology-based approach, is a trend we’re seeing with some of the larger, faster-moving organisations out there, but it’s far from the norm.”
In fact, a surprising 73% say companies are not actively managing risk or driving PSM through the planning process. This is reflected in what appears to be a flawed planning process, even in areas where risk considerations are indispensable: respondents reveal that in a typical month, on average, only 66% of scheduled safety-critical maintenance is achieved. Some respondents take it a step further. About a quarter of them (23%) said they do not believe that it is even possible or practical to achieve 100%.
“If you routinely only complete two-thirds of your planned safety-critical tasks, then there is clearly plenty of room for improvement,” Jones said. “Perhaps there are issues with the transition between planning and scheduling, or perhaps practical execution of the schedule in the field is where the challenges arise. In reality, it’s probably all of the above. Planning and scheduling rarely take into account the full risk picture for assets and maintenance activities, especially in siloed organisations. To increase attainment, companies need to get smarter.”
The reasons given why not enough safety-critical maintenance tasks are achieved are instructive. Limited resources, conflicting priorities and budget constraints made up the top three, and 55% of respondents suggested there is resource tension between safety-related projects and other capital project allocation. It seems that the issue is one of prioritisation and planning. So, can technology be a difference-maker?
“It’s a question of transparency and good data,” Lehmann said. “There is sometimes a feeling that capital is allocated to whoever shouts loudest or whichever new thing is shiniest. Of course, there will always be trade-offs, but decisions grounded in good data and an integrated understanding of risk ensure all priorities are given an equal seat at the table.”
23% of respondents say they do not believe it is possible/practical to achieve 100% of scheduled-safety critical maintenance.
- Limited resources (64%)
- Conflicting priorities (59%)
- Limited budget (45%)
Asset integrity: a familiar story
This year Sphera asked about asset integrity inspections for the first time. As reported in Part One, according to respondents, in a typical month, on average 69% of scheduled asset integrity inspections are achieved, and 24% said they do not believe 100% of those types of inspections is possible or practical.
“These figures are remarkably similar, if ever so slightly higher, than those for safety critical maintenance — suggesting similar issues of planning and prioritisation,” Lehmann said. “Asset integrity systems often sit outside other safety management systems, but there’s a case for closer integration and better planning across the board.”
Planning a digital transformation
Simply put, organisations need more integrated risk management solutions to support planning and scheduling, but the next round of digital progress is just beginning to be embedded through digital transformation strategies.
Most organisations employ a bevy of systems and tools for managing sources of operational risk, including spreadsheets and lists at sites all the way through sophisticated PSM systems. Generally, respondents agree that the capabilities of these various systems are essential for managing risk in an integrated way.
However, only 10% of companies have deployed integrated digital solutions. So, while digital solutions are important for integration and are not themselves rare, integrated solutions are in short supply in the process safety and risk management practices. Indeed, almost 75% of respondents said they are operating with siloed data and piecemeal insights. It’s hardly a surprise then that prioritisation and planning are difficult.
Lehmann said that: “Siloed data and systems are the bane of a true digital transformation programme. It’s not just a technical challenge—though don’t underestimate that—it’s a business process challenge. Typically, most systems and the data they contain are organised for departmental decision-making rather than end-to-end business processes. This decentralised decision-making, while in theory enables more agile, quicker decisions, has done so at the expense of context and understanding of the bigger picture of the current real-time operational reality. As a result, operational decision-making is not as well-informed and joined up as it could be. You don’t know what you don’t know.”
Additionally, “It can also lead to disjointed technology investments,” he said. “A department or subsidiary here needs a system to do X, so it goes out and gets an X system. Another over there needs to do a Y and procures a Y system. Someone gets a Z system to do Z and so on. It’s pretty much understood that, while in theory these systems can and should speak with each other, they don’t and won’t.”
The good news is that industry leaders are advancing their digital transformation strategies to connect disparate processes and are well-aware of the benefits in doing so. When asked the top benefits of integrating sources of operational risk, 48% of respondents pointed to the ability to manage the asset integrity inspection backlog, 41% said tracking status of safety critical elements and display process safety barrier impairments, and 34% said calculating cumulative risks.
“In many ways, that’s the holy grail,” Jones said. “Knowing the cumulative risk across the organisation is what unlocks truly effective planning, prioritisation and risk mitigation. That’s what connects the dots and lets asset leaders understand and manage the risk status on the facility. The same is true for the technician with the wrench executing the work at site: they should know the status of critical barriers and safeguards, not just on the asset at hand, but on the entire operation – and this insight enables them to act accordingly.”
Today’s top digitalisation strategies
- Connect disparate data to create actionable insights (59%)
- Enable real-time visibility of risk on the plant (49%)
- Improve work prioritisation and planning (48%)
As such, it is encouraging to see many leaders share a focused direction, with 33% currently deploying technology systems to support better operational activity management and associated risks. Of course, deploying does not necessarily mean scaling, and wholesale system change is a particularly heavy lift.
In Part One of the survey report, 84% think risk awareness and safety would be improved if the workforce and management had access to real-time process safety risk indicators on the plant, and that’s precisely the way things are headed. Leaders are looking forward to digitalisation strategies of the future which are anticipated to deliver capabilities such as Digital Twin modelling that provide the ability to simulate what-if scenarios (58%); new process safety key performance indicators (KPI)/metrics that reflect operational reality (58%); and a single, shared view of the operational reality for everyone (57%).
The golden thread that runs through all of these is a fixation on “reality”. Models that that do not reflect reality do not produce processes that work in reality. In hazardous industries, that means risk. Companies understandably want systems that reflect, predict and share reality throughout the organisation.
The state of play
Companies are excited about the future that digital transformation offers. However, digital strategies are still evolving. Companies need to know there is a journey ahead in terms of enabling true Integrated risk management. The difficulties of major organisational change should not be underestimated. Any major upheaval will be resisted by those who stand to lose out, such as the layer of middle management whose roles are tied into the status quo and may feel threatened.
But there are grounds for optimism. Just under a quarter of companies surveyed are beginning to develop digitalisation strategies to manage impaired process safety barriers, deviations from management system requirements or expectations, and deviations from performance standards associated with critical equipment. And though some may resist change that does not accord with their skill set, others will benefit greatly, especially newer workers. Modern systems come with built-in ‘brain power’ and operational experience based on years of best practices, which allows companies to minimise brain drain while allowing workers to get up to speed faster with digital knowledge.
Lehmann said: “We are seeing the green shoots of real digital transformation. Economic conditions are forcing companies to find ways to do more with less. And sure enough, technology is maturing to the point where organisations of the future can begin to make strategic strides. It’s difficult though—siloed approaches lead to piecemeal deployment. You see operators enter into a swathe of proof of concepts and get stuck at that stage. Root and branch rebuilding of a company’s systems, processes and mindset is a serious business.”
However, forward-thinking firms are moving towards platform-based risk management strategies to build ecosystems of truly interoperable systems. There will always be a race to be second holding things back somewhat, but leading operators are mapping their transformation, step-by-step. And they are thinking about the most important data to collect, compare and analyse across operations – which, for operators in any hazardous industry, is data that is safety- and operation-critical. That puts process safety and operational risk management systems at the forefront of digital transformation.
Methodology and participants
The 2019 Sphera OR/PSM Survey was conducted online between 3 April and 6 June 2019. A record 230 people took part in this year’s survey, of whom 31% said they have worked in process safety, asset integrity and operational risk for more than 15 years. Nearly half (45%) said they work in the oil and gas industry, 18% in the petrochemicals industry and 9% in manufacturing. More than a third of the respondents (38%) said they work at companies with more than 10 000 employees, and about half (45%) said their company operates more than 25 plants. Additionally, a third of respondents (30%) said they hail from North America while 23% said the Middle East, 18% Asia and 11% Europe.
Read the article online at: https://www.oilfieldtechnology.com/special-reports/20122019/the-state-of-process-safety-and-operational-risk-management-transforming-the-status-quo/
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