Title: Risk Management Procedure

Doc No.: VMC-QMS-QMS-PRO-004

Rev. Date Description Prepared by Checked by Approved by

0 11.08.2022 First issue Anar Hajiyev Tarlan Ahadzada Anar Mahmudov

Table of Contents
1. Purpose/Scope....................................................................................................................................3
1. Abbreviations and Definitions.............................................................................................................4
2. General Requirements.........................................................................................................................5
3. Key Responsibility................................................................................................................................5
4. Procedure............................................................................................................................................6
5.1 General..............................................................................................................................................6
5.2 Identifying workplace hazards...........................................................................................................7
5.3 Top Events (Hazardous event or Accident/Opportunity Event).........................................................8
5.4 Consequences....................................................................................................................................8
5.5 Hazard Register.................................................................................................................................9
5.6 Evaluating the risks............................................................................................................................9
5.6.1 General.......................................................................................................................................9
5.6.2 Risk rating score..........................................................................................................................9
5.6.3 Consequence – definition.........................................................................................................10
5.6.4 Actions to be taken...................................................................................................................13
5.6.5 Threats and Opportunities........................................................................................................13
5.6.6 Hazard Register.........................................................................................................................14
5.2 Implementing the Barriers...............................................................................................................14
5.7.1 Preventive Barriers...................................................................................................................14
5.7.2 Recovery Barriers......................................................................................................................17
5.7.3 Escalation factors and Barriers.................................................................................................17
5.8 Hazard Register................................................................................................................................18
6. Monitor and Review..........................................................................................................................19
7. Competencies........................................................................................................................................19
8. References.............................................................................................................................................19
 1. Purpose/Scope

The purpose of this procedure is to define the “VEYST MANAGEMENT COMPANY” MMC’s risk
management process that serves to reduce significant risks and achieve the commitment of
protection of the health and safety of people while working under “VEYST MANAGEMENT
COMPANY” MMC’s control. The intent is to ensure effective tools, actions, roles and
responsibilities are in place for collecting hazard and risk information, analysis using consistent
risk assessment criteria to enable risk reduction options to be evaluated and implemented
continuously. This procedure gives information on how to carry out risk assessment at “VEYST
MANAGEMENT COMPANY” MMC sites.

Each section of this procedure contains description of the relevant risk assessment process on
significant hazard identification, evaluating risks, implementing the barriers, recording the
findings of the assessment and monitoring ad reviewing them at a later date.

This procedure applies to all performed drilling fluids manufacturing and waste management
activities by and on behalf of the company at “VEYST MANAGEMENT COMPANY” MMC facility
and starting from Sahil port till the final destinations (e.g. Sumgait Hazardous Waste Landfill cell
etc.) of the waste streams.

Appropriate, efficient and systematic application of risk assessment is important proactive

practice to identify, eliminate/minimize adverse impacts on environment, harm to people and
damage to the equipment and consequently to reduce the potential cost of compliance and
financial losses.
 1. Abbreviations and Definitions

A Barrier is a measure which is put in to prevent the release of a hazard or to prevent the
occurrence of a top event once the hazard is released - barriers may be physical or non-
physical. In the bowtie method there are three different places for barriers: between a threat
and the top event (preventive barriers – also known as proactive barriers), between the top
event and a consequence (recovery barriers, also known as reactive or defence barriers) and
between a barrier and an escalation factor (escalation factor barriers).

Consequence is outcome of an event affecting objectives (A consequence can be certain or

uncertain and can have positive or negative direct or indirect effects on objectives.
Consequences can be expressed qualitatively or quantitatively. Any consequence can escalate
through cascading and cumulative effects.)

Control. Prevents the consequence from happening. In the example, the barrier ‘protective
clothing’ will actually prevent the contact with skin itself.

Escalation Factors are conditions that lead to increased risk due to loss of barriers or loss of
recovery measures especially lifesaving or mitigating capabilities

Hazard: The intrinsic property or ability of something (e.g. work materials, equipment, work
methods and practices) with the potential to cause harm, ill health and injury, damage to
property, products or the environment, production losses or increase liabilities

Likelihood is a chance of something happening (In risk management terminology, the word
“likelihood” is used to refer to the chance of something happening, whether defined, measured
or determined objectively or subjectively, qualitatively or quantitatively, and described using
general terms or mathematically (such as a probability or a frequency over a given time period.
The English term “likelihood” does not have a direct equivalent in some languages; instead, the
equivalent of the term “probability” is often used. However, in English, “probability” is often
narrowly interpreted as a mathematical term. Therefore, in risk management terminology,
“likelihood” is used with the intent that it should have the same broad interpretation as the
term “probability” has in many languages other than English.)

Mitigation. Does not prevent the consequence from happening, but lessens the severity of the
consequence. The barrier ‘first aid’ won’t prevent the consequence ‘contact with skin’, but it
will minimize the effects after the contact. At some point barriers take effect too long after the
initial consequence but there is no strict rule about where to stop. In this example a control
such as ‘reconstructive plastic surgery’ is probably too far removed from the contact with skin
to be meaningful, but even that is a subjective judgment.

Opportunity Event is occurrence of an unplanned set of circumstances with an associated

benefit to business performance.

Opportunity risk is an uncertain event or set of events that, should it occur, will have a positive
effect on the achievement of objectives

Risk assessment: The process of evaluating the risk to the health and safety of workers while at
work arising from the circumstances of the occurrence of a hazard at the workplace

Risk: The likelihood that the potential for harm will be attained under the conditions of use
and/or exposure, and the possible extent of the harm.

Threat is a possible cause that will release the hazard to become a top event-includes thermal,
biological, electrical, chemical, kinetic, climatic, radiation or human factors

Top event: The incident which occurs as a result of the hazard being released

2. General Requirements

The “VEYST MANAGEMENT COMPANY” MMC Risk Assessment Procedure has been developed
based on commitments made in the policy, legislations and other applicable international
standards and industry practices in order to meet ISO 45001:2018 standard requirements.

3. Key Responsibility

“VEYST MANAGEMENT COMPANY” MMC will be responsible for the followings:

 Provide a workplace free from recognized hazards

 Examine workplace conditions to make sure they conform to applicable ISO 31000
standards on Risk management — Guidelines.
 Minimize or reduce hazards
Each employees and contractors must comply with this Risk Assessment Procedure applicable
to their activity/services.

4. Procedure

5.1 General
In this procedure we will use the bowtie method for a risk assessment that can be used to
analyse and communicate how high risk scenarios develop. The essence of the bowtie consists
of plausible risk scenarios around a certain hazard, and ways in which the organisation stops
those scenarios from happening. The method takes its name from the shape of the diagram
that you create, which looks like a men's bowtie.

The bowtie method has several goals:

 Provide a structure to systematically analyse a hazard.

 Help make a decision whether the current level of control is sufficient (or, for those who
are familiar with the concept, whether risks are As Low As Reasonably Practicable or
ALARP).
 Help identify where and how investing resources would have the greatest impact.
 Increase risk communication and awareness.
The next section will introduce the elements that make up a bowtie diagram. Building a bowtie
happens in the same order.

Figure 1 - A bowtie diagram showing all elements

5.2 Identifying workplace hazards

The first step in the process of undertaking the actual risk assessment is to identify workplace
hazards. This step will form the basis of all the risk assessments that are subsequently carried
out. The aim is to systematically identify all the significant hazards that exist from work
activities. If the hazards are not identified during this stage, no risk assessments can be carried
out.

The word ‘hazard’ has a negative connotation in daily life. In the bowtie method however,
hazards are part of normal business and are often also necessary to run a business. Hazards can
be operations/activities (operating rotating machinery, driving a car), substances (chemicals,
hot fluids, etc.) or situations (a load suspended at height) we deal with in the normal processes
of our business. As long as these hazards are under control, they will not cause harm, but they
introduce the potential for harm.

Responsibilities
# Action
Sup. Assr. Emp.
Consult with the workplace supervisors in the work
1 areas to be assessed to obtain a preliminary list of work x
activities and possible hazards.
To provide a list of work activities and possible hazards
2 x
to assessor.
To develop and maintain Safety Observation Program at
3 x
workplace.
To review results of Safety Observation report and
4 x
consider hazards associated with listed work activities
To conduct walkaround inspections at workplace and
5 x x
report accordingly

6 To conduct the Job Hazard Analysis (JHA) x x

7 To conduct Incident/Accident Analysis x

8 To review learned lessons from Incidents x

To conduct Quality, Health, Safety and Environmental

9 x
audit

10 To review the audit report x

Examples of hazards are given in Appendix A.

5.3 Top Events (Hazardous event or Accident/Opportunity Event)

When control over a hazard is lost, it is usually possible to identify the moment when a normal
situation changes to an abnormal situation. That point is called the top event in bowtie and is
also the centre event of the diagram.

Assessor will list Top Events which will result when hazards are released and relate them to the
hazards identified
 Example of Top Events:

 Loss of containment
 Electrical shock
 Fall from heights
 Exposure to toxic material
 Exposure to radioactive material
 Effluent discharge into waterways
 Emissions of toxic gases
 Growing demand
 New market required
 Provision of support from local authorities
 Changes to legislation

5.4 Consequences
Assessor will list consequences which result from hazard being released

Example of consequences

 Serious injury or Death

 Latent illness or disease which
has long gestation period
 Property damage - own or public
 Environmental damage
 Loss of reputation leading to loss
in current and prospective
business
 Loss of revenue - paying for
compensation, medical
expenses, production loss or
deferment
 Financial gain

5.5 Hazard Register

Assessor will compile a Hazards & Effects register listing:
  Hazards,
 Top Event and
 Consequences
Hazard & Effects Register is provided in APPENDIX B of this procedure.

5.6 Evaluating the risks

5.6.1 General
The main purposes of undertaking risk assessments are to:

 decide on the level of risk that people, property, environment, product and reputation
are exposed to;
 decide whether the risk is ‘acceptable’;
 concentrate activities on the riskiest activities or processes etc.
A risk rating score has been developed to assist in carrying out the risk assessment and to help
decide what action, if any, is required.

5.6.2 Risk rating score

Risk is essentially a combination of three factors:

 the likelihood of harm/damage actually occurring (L).

 the consequences of likely injuries that people could suffer (P), level of damage to
Asset/property (A), environment, product (E), and reputation (R);
The overall risk can be determined using the following formula:

Risk Rating = Likelihood (L) x People (P) + Asset (A) + Environment (E) + Reputation (R).

The overall risk rating score will provide an indication as to the level of risk associated with
work activities and will help to decide whether the risk is ‘acceptable’. It can also be used to
priorities actions to enable resources to be directed to control activities that pose the greatest
risk. When assessing the severity of harm that could occur, the likely outcome of the accident
should be considered. For example, a trailing cable across a walkway is likely to cause a minor
injury although if the cable was at the top of stairs then the likely injury would be ‘major’.
Similarly, when assessing the likelihood of an accident occurring, the assessor should
concentrate on what is likely, not what is possible. Existing control measures should be
evaluated to identify whether they are sufficient to control the risk. If control measures have
been stipulated for a work activity, it should be ascertained whether those measures are
actually being implemented as planned. This will require both observation and questioning of
employees. It is often found that insufficient training has been given or that procedures,
although understood, are not being implemented due to a lack of management control. The
assessor should also assess the impact of the severity of injury on first-aid requirements.

Assessor will use the Risk Matrix & brainstorming techniques rank the hazards and
consequences based on the probabilities of the Top Event or accident occurring.

Figure 2. Risk Matrix

 INCREASING LIKELIHOOD
RATING 1 2 3 4 5

NEVER HEARD OF INCIDENT HAPPENS HAPPENS

HEARD OF INCIDENT HAS SEVERAL SEVERAL
PEOPLE ASSESTS ENVIRONMENT REPUTATION IN IN OCCURRED TIMES PER TIMES PER
INDUSTRY INDUSTRY IN OUR YEAR IN YEAR AT
COMPANY COMPANY LOCATION
Slight Slight Slight impact Slight impact
INCREASING CONSEQUENCE

1 injury damage 1 2 3 4 5

Minor Minor Minor impact Limited

2 injury damage impact 2 4 6 8 10

Major Local Localised Considerable

3 injury damage impact impact 3 6 9 12 15

Single Major Major impact Major

4 fatality damage national 4 8 12 16 20

Multiple Extensive Massive impact Major

5 fatalities damage international 5 10 15 20 25

5.6.3 Consequence – definition

a) Harm to people

No. Level Description

Not affecting work performance or causing disability (including first aid case and medical
1 Slight Injury
treatment case)

Affecting work performance, such as restriction to work activities (Restricted Workday Case)
2 Minor injury or need to take a few days to fully recovered (Lost Workday Case)/ Limited health effects are
reversible e.g. skin irritation, food poisoning. (Lost Time Injury)

Affecting work performance in the longer term, such as prolonged absence from work.
3 Major injury Irreversible health damage without loss of life, e.g. noise induced hearing loss, chronic back
injuries.

4 Single fatality From accident or occupational illness (poisoning, cancer)

Multiple
5 From accident or occupational illness (poisoning, cancer)
fatalities

b) Asset
No. Level Description

1 Slight damage No disruption to operation. <$ 10k

2 Slight damage Brief disruption. $ 10 k to 50 k

3 Local damage Partial shutdown. $ 50 k to 200 k

4 Major damage Partial operation loss. $ 200k to 500k

Extensive
5 Substantial or total loss of operations. >$ 500 k
damage

c) Impact on the Environment

No. Level Description

Slight Local environmental damage. Within the fence and within systems. Negligible financial
1
impact consequences

Minor Contamination. Damage sufficiently large to attacked the environment. Single exceedance of
2
impact statutory or prescribed criterion. Single complaint. No permanent impact on the environment.

Localised Limited loss of discharges of known toxicity. Repeated exceedance of stttatutory or prescribed
3
impact limit. Affecting neighbourhood.

Severe environmental damage. The company is required to take extensive measures to restore
Major
4 the contaminated environment to its original state. Extended exceedance of statutory or
impact
prescribed limits.

Persistent sever environmental damage or sever nuisance extending over a large area. In terms
Massive
5 of commercial or recreational use of nature conservancy, a major economic loss for the
impact
company. Constant, high exceedance of statutory or prescribed limits.

d) Impact on Reputation
No. Level Description

1 Slight impact Public awareness may exist, but there is no public concern

Some local public concern. Some local media and/or local political attention with potentially
2 Limited impact
adverse aspects for company operations.

Regional public concern. Extensive adverse attention in the national media.

Considerable
3 Regional/national policies with potentially restrictive measures and/or impact on grant of
impact
licenses. Mobilization of action groups.

National public concern. Extensive adverse attention in the national media.

4 National impact Regional/national policies with potentially restrictive measures and/or impact on grant of
licenses. Mobilization of action groups.

International public attention. Extensive adverse attention in international media.

International
5 National/International polices with potentially sever impact on access to new areas, grants
impact
of licenses and/or tax legislation

5.6.4 Actions to be taken

Score* Action to be taken

1-2 Risk acceptable unless cost or effort to control the risk further is very low.

Risk is low. Action is required to reduce the risk, although low priority. Time, effort and
3-6
cost should be proportional to the risk.

Risk is medium. Action required soon to control. Interim measures may be necessary in
8-12
the short term.

Risk is high. Action required urgently to control risks. Interim measures required in the
15-16
short term. Significant effort, time etc., may have to be used to control the risk.

Risk totally unacceptable, immediate action required before work activity can continue.
Risk assessment should be reviewed at regular intervals to ensure that risk is being
20-25
properly controlled. Control measures may have to involve some considerable effort
and time to control.

* If the score is low due to effective control measures being in place, action must be taken to ensure
that those measures remain in place.
5.6.5 Threats and Opportunities

5.6.5.1 Threats
For all hazards and consequences which have been ranked as HIGH risks (15-25), assessor and
participants will identify threat or causes which can release the hazard to become a top event
or incident.

Example of threats:

 High temperature
 Corrosion
 Bacteria
 Overpressure
 Erosion
 High voltage
 Ultraviolet radiation
 Environmental conditions
 Human incompetence
 Design / process unknowns

5.6.5.2 Opportunities
Hazards are part of normal business and are in fact often the sources that are also responsible for
creating the business opportunity.

For all hazard and consequences which have been ranked as LOW risks (1-2), assessor and participants
will identify opportunity or causes which can prevent the hazard to become a top event.

Example of opportunities:

 Changes to international standards

 Changes to legislation
 Changes to needs and expectations
of interested parties
 Cost saving
 New clients and increasing demand

5.6.6 Hazard Register

Assessor will compile a Hazards & Effects register listing:

• Initial Risk Rating,

• Threats and Opportunities

Hazard & Effects Register is provided in APPENDIX B of this procedure.

5.2 Implementing the Barriers

5.7.1 Preventive Barriers
Once all the unwanted scenarios are identified, we can focus on how we stop those scenarios
from occurring. The bowtie method uses the concept of barriers to think about this in a
structured way.

Responsibilities
# Action
Sup. Assr. Emp.
To determine Preventive Barriers for each threats.
1 x x x
To decide on and implement Preventive Barriers as a
control measure to protect the people, asset,
2 environment and reputation from the threats. x

It is important that Supervisor or Manager start from

the top of the hierarchy and work way down.
3 Note: If it is not reasonably practicable to implement x
the first measure, the next level should be tried, with the
least favoured option being the provision of personal
protective equipment

Figure 3. The hierarchical process that must be followed when implementing control measures
 Example of Preventive Barriers:

 Guards or protective shields e.g.

protective coatings, corrosion
inhibitors, machine guards, fencing etc.
 Pressure / safety relief valves
 High temperature cut-off switches
 Correct / valid operating procedures
 Time delays in processes
 Lowering speeds of equipment
 Carrying maintenance when it is due
 Reducing congestion in operating areas

Assessor will use the ALARP principle to test whether the controls are sufficient.
 The amount of risk can always be reduced further, up to a point where a company goes bankrupt to
avoid risk. This is why the amount of risk is always a trade-off between what is practicable given the
available resources, the risk reduction and the original risk.

The HSE UK says: "In essence, making sure a risk has been reduced ALARP is about weighing the risk
against the sacrifice needed to further reduce it." In order to do this, there are three things that need to
be looked at.

• The inherent risk level

• The risk reduction gained by introducing a new barrier for that risk

• The sacrifice in time, money and trouble needed to implement that new barrier

Table 1. ALARP concepts

These three things can vary, and depending on all three, we might decide that a risk is already ALARP, or
needs an additional barrier to reach ALARP. Table 1 lists an example of how these dimensions interact.
We see that if the sacrifice is low, most additional barriers would be implemented. The only category
where we are already ALARP is if the risk reduction of the barrier is low, and the inherent risk is also low.
If the sacrifice is medium, more categories can be marked as ALARP, because they do not justify the
additional investment. For instance, a low risk reduction on a medium risk is not justified if the sacrifice
is medium. A high sacrifice marks even more categories as ALARP. In general, we're not going to bother
with barriers that have a low risk reduction and high sacrifice, no matter how large the inherent risk is.
But we see that even a high risk reduction does not justify the high sacrifice if the inherent risk is low,
meaning we are As Low As Reasonably Practicable in those situations. This is obviously an abstract
example, but hopefully it communicates how these three dimensions interact.

5.7.2 Recovery Barriers

Assessor and participants will determine the Recovery Barriers to reduce the impact of the
Consequences due to the occurrence of the Top Event

Example of Recovery Barriers:

 Gas, fire & smoke alarms

 Emergency Shutdown systems
 Firewater deluge systems
 Fire and blast walls
 Emergency Response plans, training
& drills
 Business Resumption Plans

5.7.3 Escalation factors and Barriers

Once the control measures are identified, the bowtie method takes it one step further and
identifies specific conditions or actions that make it more likely that a barrier will fail. These are
called escalation factors. There are barriers for escalation factors as well. These barriers protect
the main barrier from an escalation factor

Assessor and participants will identify Escalation Factors which will reduce the effectiveness or
operation of the barriers or recovery measures and implement additional measures to
compensate for these factors
Example of Escalation factors

 Abnormal operating condition e.g. critical standby equipment is under maintenance

during an emergency
 Plant operating outside the design envelope
 Extreme environmental conditions - may not allow the activation of planned recovery
measures
 Incorrect operation of the plant due to unavailability of updated operating procedures
 Human error due to lack of competence or ineffective training

5.8 Hazard Register

Assessor will compile a Hazards & Effects register listing:

• Preventive Barriers,
• Recovery Barriers
• List all control measures required
• Action
• By whom
• By when
• Residual Risk Rating
• ALARP

Hazard & Effects Register is provided in APPENDIX B of this procedure.

6. Monitor and Review

Responsibilities
# Action
Sup. Assr. Emp.

1 Decide which risks are potentially more serious x

Establish periods for monitoring and reviewing the

2 x
assessment based on the risk rating

3 Assign the task to competent persons x

To ensure that:
• poor working practices have not crept in;
• the stipulated control measures are still being
used;
x
• the circumstances under which the
assessment was made remain the same.
Note: The assessment should only be reviewed if there is
a change that significantly alters the assessment.

7. Competencies

It is important that the people conducting the hazard identification and risk assessment
are situated with the proper skills and experience, as this can greatly affect the quality of
the results obtained. The quality of hazard identification and risk assessment outcomes
is ultimately dependent upon the knowledge and commitment of those involved.

8. References

1. ISO 31000 standards on Risk management — Guidelines.

APPENDIX A. HAZARD IDENTIFICATION SHEET
APPENDIX B. HAZARD AND EFFECT RESGISTER