Establishing Successful Refinery Risk Management | RefinerLink

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Establishing Successful Refinery Risk Management

By Steve Pagani

Jan 18, 2016

Success factors to consider when assessing your refinery organization's risk management capabilities.


Walk through any refinery and you’ll pass millions of risks. Operating with risk is just part of the business at any refinery, but spending the money to address the right risks is absolutely critical. Each refinery has its own way of dealing with this issue but here are some tips to be more efficient at it.


Identifying and Quantifying Risks


You can’t mitigate a risk unless you identify it first. Identifying each risk is an enormous undertaking and takes a significant amount of time and resources.

Multiple failure scenarios exist on every single vessel, tank, pump, compressor and piping circuit. And each failure scenario has numerous possible consequences.


For all equipment consider the various degradation mechanisms that may apply. Utilize the available inspection data,


process conditions, and past history to determine the probability of failure over the specified timeframe. Consider the experiences of other refineries as well.

Each failure mechanism should also have consequences attached to it. There may be safety, environmental, or economic consequences. Each consequence should have its own probability. The combination of the consequence and probability will determine where it is placed in your site’s risk matrix (similar to one below).


The location of the risk determines its priority. The combination of high probability and high consequence likely means urgent action is needed; while low probability and low consequence conveys minimal to no action needed.





Mitigation Strategy


Once a comprehensive list of risks along with their relative priority has been assembled, managing these risks becomes easier. A reasonable criteria can be created determine the urgency of addressing each risk.


For instance a site may decide that all “E” level risks should be mitigated within 3 months unless proper approval is received from site management. Or that no more than $1K be spent to mitigate a “L” level risk.  The criteria can distinguish between the types of risk as well. A high level safety risk may warrant more urgent action than a high level economic risk.


Risks can be further prioritized based on the amount of money needed to mitigate. So on a limited budget, a “M” level safety risk that needs $50K to mitigate should be done before a “M” level safety risk that requires $500K.


Creating a simple structure for the organization to follow can ensure that money is spent fixing the right things.



Potential Gaps


A poorly functioning risk assessment program can be almost as dangerous as not having one. If the right risks aren’t identified or if the risks aren’t quantified properly it can give the site a false sense of security… or force them to spend money in the wrong areas.



If the site’s risk analysis is incomplete, there may be some major issues lurking that aren’t getting the deserved attention. If the quantification of the risk is inconsistent, management may lose trust in the system and stop utilizing it in order to make decisions.


It is critical that the right resources are dedicated to the proper identification and quantification of risks at your refinery. A properly functioning program will minimize unnecessary work and prevent major failures in the future.

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  • Ron Radford :   I would like to chime in on risks many refineries still don't consider - mercury in process streams. I wish this application would allow for the attachment of a technical article so please go to our PEI page and download the latest 5 year case study over mercury management and associated chemical decontamination for re-use and decommissioning that was published in the Nov 2015 issue of hydrocarbon processing.

    Jan 24, 2016

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