RESEARCH REPORT 025 - HSE: Information about …

1 HSE Health & Safety Executive Application of QRA in operational safety issues Prepared by Det Norske Veritas Ltd for the Health and Safety Executive 2002 RESEARCH REPORT 025 HSE Health & Safety Executive Application of QRA in operational safety issues Andrew Franks, Richard Whitehead, Phil Crossthwaite and Louise Smail Det Norske Veritas Highbank House Exchange Street Stockport SK3 0ET The Control of Major Accident Hazards Regulations (1999), or COMAH, came into force in Great Britain in April 1999. The general duty under COMAH regulation 4, requires that every operator shall take all measures necessary to prevent major accidents and limit their consequences to persons and the environment. This general duty is consistent with the well-known principle in the UK of reducing risks to a level that is as low as reasonably practicable (ALARP).

2 This study has performed RESEARCH into the use of risk in Health and Safety Executive's (HSE) operational decisions in the context of the COMAH regulation 4. The RESEARCH focussed on the use of regulatory guidance, risk matrices and Quantitative Risk Analysis (QRA) to demonstrate compliance with the ALARP principle. Each approach has its strengths and weaknesses, for any particular situation. Cost Benefit Analysis (CBA) when used in conjunction with QRA is able to provide an economic justification as to whether risk reduction measures should be implemented. This REPORT and the work it describes were funded by the HSE Its contents, including any opinions and / or conclusions expressed, are those of the authors alone and do not necessarily reflect HSE policy. HSE BOOKS Crown copyright 2002 Applications for reproduction should be made in writing to: Copyright Unit, Her Majesty s Stationery Office, St Clements House, 2-16 Colegate, Norwich NR3 1BQ First published 2002 ISBN 0 7176 2570 2 All rights reserved.

3 No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the prior written permission of the copyright owner. ii CONTENTS EXECUTIVE 1. INTRODUCTION .. 1 The Control oF Major Accident Hazard Regulations 1999 (COMAH) .. 1 Scope of 2 2. THE USE OF REGULATORY GUIDANCE .. 4 Bulk Chlorine 4 Bulk Flammable Liquids 5 Usefulness for the Purposes of Demonstration .. 5 3. RISK ANALYSIS .. 14 THE RISK MATRIX .. 14 POTENTIAL PROBLEM AREAS WITH MATRICIES .. 20 Usefulness for the Purposes of Demonstration .. 22 Quantitative Risk 23 Usefulness for the Purposes of Demonstration .. 24 4. COST-BENEFIT ANALYSIS .. 25 Quantification of Safety Related Costs and Benefits .. 25 Assignment of Monetary 26 Factoring of Costs and Benefits Gross 27 Universality.

4 27 28 Cost-Benefit Analysis A Simple Approach .. 28 The Cost of Safety Measures .. 29 Discounting of Costs and Benefits .. 30 Usefulness for the Purposes of Demonstration .. 30 5. COST-BENEFIT ANALYSIS: A WORKED EXAMPLE .. 31 Introduction .. 31 System Description .. 31 Analysis Methodology .. 32 Analysis Results .. 34 Conclusions .. 44 6. RISK REDUCTION 45 Inherent Safety .. 45 REDUCING THE CONSEQUENCES .. 45 REDUCING THE LIKELIHOOD .. 46 7. CONCLUSIONS AND RECOMMENDATIONS .. 47 8. REFERENCES .. 48 APPENDIX 49 APPENDIX II .. 57 APPENDIX III .. 61 APPENDIX 80 iii APPENDICES APPENDIX I COST EXAMPLES APPENDIX II COSTING PROJECTS APPENDIX III EVENT TREES APPENDIX IV LITERATURE SURVEY COST BENEFIT ANALYSIS iv EXECUTIVE SUMMARY The Control of Major Accident Hazards Regulations (1999), or COMAH, came into force in Great Britain in April 1999.

5 The general duty under COMAH regulation 4, requires that every operator shall take all measures necessary to prevent major accidents and limit their consequences to persons and the environment. This general duty is consistent with the well known principle in the UK of reducing risks to a level that is as low as reasonably practicable (ALARP). This study has performed RESEARCH into the use of risk assessment in HSE's operational decisions in the context of the COMAH regulation 4. The RESEARCH focussed on the use of regulatory guidance, risk matrices and QRA to demonstrate compliance with the ALARP principle, as these methods have been widely used by operators to demonstrate compliance with the ALARP principle in COMAH Safety Reports. Each approach has its strengths and weaknesses. Comparison of the prevention, control and mitigation measures in place at an installation with those set out in a regulatory guidance document provides an indirect assessment of risk that gives some indication as to whether a minimum standard has been achieved.

6 In order to demonstrate that risks are ALARP it will normally be necessary to provide some limited risk assessment. Risk matrices can be used to provide a ranking of risks so that the operator can identify the Safety Critical Events (SCEs), which may then constitute a representative set , and to identify those situations where the risks are definitely intolerable. The SCEs are then considered further so that risk reduction measures can be identified and prioritised. The outputs from a QRA can be used to compare the risks directly with the published risk thresholds defined by the ALARP principle. Additionally it can identify those events within the analysis which contribute most to the risk at any particular location or to any particular group of people. QRA can be linked with Cost Benefit Analysis (CBA) to determine whether risk reduction measures should be implemented in order to demonstrate compliance with the ALARP principle.

7 CBA encapsulates a series of complex and controversial issues such as the value of a human life and the true business cost of a major accident. Such issues have to date prevented the widespread use of CBA explicitly as part of an ALARP demonstration. It is shown in this REPORT that CBA is a potentially powerful tool for determining whether risk reduction measures are necessary at an installation. Therefore it is recommended that future work should address these sensitive issues in CBA to determine whether a consistent approach that is acceptable to both the public and industry can be developed. v vi 1. INTRODUCTION The Control oF Major Accident Hazard Regulations 1999 (COMAH) The Control of Major Accident Hazards Regulations (1999), or COMAH, came into force in Great Britain in April 1999. The Regulations implemented the requirements of EC Directive 96/82/EC (the so-called Seveso II Directive).

8 COMAH replaced another set of regulations known as CIMAH (the Control of Industrial Major Accident Hazards Regulations 1984) which implemented the original Seveso Directive (82/501/EC). Further Information on the origins of these Regulations and the Directives they implement can be found in the COMAH guidance published by HSE (HSE 1999a). Application of the Regulations depends on the quantities of hazardous materials held by an establishment. If the quantities of hazardous materials exceed certain thresholds, then the Regulations apply. Within the Regulations there are two levels (or tiers ) of duty. Again, the level of duty that applies is determined by the quantities of hazardous materials on the establishment. The Regulations contain lower tier and top tier threshold quantities of dangerous substances.

9 The general duty under COMAH, applicable to both lower tier and top tier sites, is as follows (Reg. 4): Every operator shall take all measures necessary to prevent major accidents and limit their consequences to persons and the environment. The HSE interpretation of this duty is that: By requiring measures both for prevention and mitigation, the wording of the duty recognises that risk cannot be completely eliminated. This in turn implies that there must be some proportionality between the risk and the measures taken to control the risk. (HSE 1999a) Hence the general duty is consistent with the well-known principle in the UK of reducing risks to a level that is as low as reasonably practicable (ALARP). The framework within which the ALARP principle operates has been described by HSE (HSE 1999b). For establishments falling under the top tier COMAH requirements, the duties include preparation of a safety REPORT , which must be submitted to the Competent Authority.

10 The purposes of a safety REPORT are defined within the Regulations (Schedule 4, Part 1): 1. demonstrating that a major accident prevention policy and a safety management system for implementing it have been put into effect in accordance with the Information set out in Schedule 2; 2. demonstrating that major accident hazards have been identified and that the necessary measures have been taken to prevent such accidents and to limit their consequences for persons and the environment; 3. demonstrating that adequate safety and reliability have been incorporated into the a) design and construction, and b) operation and maintenance, of any installation and equipment and infrastructure connected with its operation which are linked to major accident hazards within the establishment; 1 4. demonstrating that on-site emergency plans have been drawn up and supplying Information to enable the off-site plan to be drawn up in order to take the necessary measures in the event of a major accident; 5.