Hydrocarbon Processing - March 2022 - 22

Environment
and Safety
C. LEBOEUF
ABS Group, San Antonio, Texas
Building resilience: Why now is the time to invest
in natural hazard risk management
With extreme weather events growing in frequency worldwide,
organizations can do many things to protect their assets
and mitigate some of the risks posed by natural hazards.
From raging wildfires in Australia at the beginning of 2020
to the catastrophic flash flooding across much of Europe in
July 2021, various natural hazard events in recent years have
destroyed property and infrastructure, devastating businesses
and taking lives.
In the U.S., Hurricane Ida brought back painful memories
to the people of New Orleans, Louisiana. The city is still rebuilding
after Hurricane Katrina caused 1,800 deaths and
$125 B of damage in 2005.
Unfortunately, natural disasters like hurricanes, cyclones,
storms, floods and wildfires are occurring more often and
with greater severity. This can be viewed in terms of economic
cost increases over time.
The Asia-Pacific region tells a similar story. Here, average
annual disaster event-induced economic losses between 2000
and 2009 stood at $56.7 B. For 2010-2019, that figure more
than doubled to $117.9 B. The Tohoku Earthquake, which
struck Japan in 2011, is largely responsible. Still, even when
removing 2011 from this period, the nine remaining years averaged
$89.1 B in annual natural disaster damage.
Counting the cost. These concerning figures translate into
a multitude of damages encountered by organizations that operate
across various industries, including oil and gas, refining,
petrochemicals, energy, chemicals, technology and other industrial
sectors with large and highly valuable infrastructure
bases. Unplanned outages and economic losses from production
downtime are major consequences of the disruption
caused by extreme weather events.
Additionally, many secondary and tertiary social and environmental
impacts stem from the primary damage done to
these businesses.
So, why are power and chemical plants particularly affected
by natural disasters?
Geography plays a critical role here. For instance, many petrochemical
facilities are strategically located close to coastal
and inland waterways to enable easy transportation of goods
in and out of their sites.
However, this makes them particularly susceptible to hurricane
and flood risks. For example, in the U.S., many plants and
industrial sites are located near the Gulf Coast, Atlantic Coast
and Mississippi River. Earthquakes are another risk factor, primarily
in the western states and other regions near fault lines.
Key risk areas in Europe include sites along rivers and coasts,
22 MARCH 2022 | HydrocarbonProcessing.com
including those in areas at or only slightly above sea level.
Prior to COP26, there was a great sense of urgency among
key political decision-makers, enterprises and wider society.
Hosted in Glasgow, Scotland, UK, the summit represented a
defining moment for Britain's Prime Minister, Boris Johnson.
His government pushed ahead with some of the most ambitious
climate targets ever pledged by a UK government.
However, enterprises should not wait for more comprehensive
legislation and regulations to impel them into action.
Few or no global regulatory drivers aimed at industrial facilities
require (or assist) them to withstand extreme weather
events. The onus is on organizations to determine their own
natural hazard risk management strategy-given the growing
frequency of these incidents, the time to act is now.
Approaching natural hazard risk management. The extent
and nature of such actions depend largely on each business's
appetite for risk, i.e., the extent to which a business is
prepared to deal with disruptions caused by storms, hurricanes,
wildfires, floods and other extreme events.
Direct concerns may include the reliability and resilience
of the organization's equipment, insufficient worker safety
protocols and unplanned outages.
However, it is also important to consider that physical
damage to buildings and equipment represents only the initial
source of financial loss.
Resultant business disruption and market displacement can
also significantly affect revenue figures, depending on the severity
of the natural hazard in question. Concerns here can center
around storing materials, disruption to feedstock supply, transportation
availability/access and cost/availability of energy.
To help quantify some of these risks, organizations should
consider various factors.
How much revenue will be lost if the facility is shut down
for an extended period? Can an additional understanding of
the risks help the company to manage operations? Will improvements
to preparedness and response reduce direct damage
and limit revenue loss following an extreme weather event?
Considering these questions is an excellent place to start:
the answers may prompt a series of potential mitigation measures.
Facility hardening, enhanced preparedness/response
planning and organizational measures to limit the impact of
any single extreme event are among the risk-mitigating steps
companies can take, along with acquiring insurance policies.
Another option is to leverage the expertise of third parties
in engineering and risk management.
Independent risk assessments and audits can serve as vi
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