A study on the financial approach of risk assessment using chemical accident records in chemical process industries

Abstract

Usually, risk assessment is a combination of risk analysis and risk appraisal to evaluate the consequences and frequencies of hazardous events. The acceptability of the exposed risk is also judged in the process. In this regard, the financial risk matrix could be a useful tool based on the frequency and expected loss of damage. Thus, it is adopted in this study where a financial approach has been taken in risk assessment; the proposed methodology uses frequencies from chemical accident records and value at risk (VaR). The methodology consists of mainly five steps. It starts with hazard identification, and is followed by adjustment of history-based accident frequencies by using severity ratios. Then, accident probability and expected damage loss are estimated. The results obtained in the previous two steps are combined to compute VaR for the target process; this value is mapped with financial risk matrix to re-evaluate accident frequency. As an illustrative case, Texas BP refinery accident in 2005 is studied according to the proposed methodology. The results indicate that the financial risk increased from a low level to a medium high level after the occurrence of the tragic accident. As similar accidents frequently occurred for the same process, the risk of the process should have been increased. This proposed method can reflect this dynamic change in risks with the help of accident records and their impacts. 

Investigative Analysis of Safety Risk Assessment at a Science and Technology University: Analysis of 2019 Risk Assessment and 2021 Actual Accidents

“…Jang et al attempted to adopt a financial approach in risk assessment. 9 They proposed a methodology that uses accident frequencies from chemical accident records and the value at risk (VaR). As an illustrative case, they used the methodology to study the Texas BP refinery accident in 2005 and claimed that it can reflect dynamic change in risks with accident records.…”

“…The applicability of the proposed method has been tested using real cases, and it has been shown to be a useful tool for risk assessment and management in university chemistry laboratories. Jang et al attempted to adopt a financial approach in risk assessment . They proposed a methodology that uses accident frequencies from chemical accident records and the value at risk (VaR).…”