Facilitator Judy Clarey CPRM FRIMA RiskAlign Training & Advisory Services October 2012 RRTO Mining Conference Risk Management Effective Risk Assessment Techniques Professional Development Workshop Yeppoon 19 th October 2012

“Humans - Pre-programmed to take Risks” 2 Chronically Uneasy Stewart Bell 2012

Effective Risk Assessment Techniques Risicare – Early Italian word for “To dare” To take a chance on a favourable outcome 3

Introduction & Check-in 1.0 Introduction 1.1 Legislative Drivers of Risk management 1.2 Global Business Drivers 2.0 Impact of National & International Standards 2.1 Improved RM Process 2.2 Fit-for-purpose Techniques 2.3 Common Risk Assessment Tools 2.4 Risk Matrix-based Analysis 2.5 Inherent Vs Residual Risk 3.0Recalibrating Risk Management Systems 4.0Group Feedback 4

1.1 Legislative Drivers of RM 5 “ Acceptable” Level Of Risk

1.2 Global Business Drivers Adapted from BHP Billiton’s Sustainable Development Plan 6 Social Responsibility Health & Safety Good Corporate Citizen Social Responsibility Health & Safety Good Corporate Citizen Business and Commercial Performance Managing the Environment Political, Economic, Natural ReputationBrand/mage Market Share Market Share

PlanDo CheckAct 7

Hazard - something with the potential to cause harm / injury / illness Risk – Chance of injury or loss occurring from a hazard 2.2 Fit-for-Purpose Risk Assessment Techniques 8

9 Risk Assessment Techniques Applicable To Mining Operations. 1.Informal risk assessment (RA)—identification & communication of hazards & risks in a task by applying a way of thinking, often with no documentation. 2.Job safety/hazard analysis (JSA/JHA)—identification of hazards & controls in a specific task, usually for determining standard work practice (SOP). 3.Preliminary hazard analysis/ Workplace Risk Assessment and Control (PHA/WRAC)—identification and analysis of risk issues/events, often to determine the need for further detailed study. 4.Hazard & operability study (HAZOP)—systematic identification of hazards in a process plant design. · 5.Fault tree analysis (FTA)—detailed analysis of contributors to major unwanted events, potentially using quantitative risk analysis methods. 6.Event tree analysis (ETA)—detailed analysis of the development of major unwanted events, potentially using quantitative methods. 7.Failure modes, effects and criticality analysis (FMECA)—general to detailed analysis of and other potential consequence areas. (7

2.3Common Risk Assessment Tools PHA PRA Figure 10 QLD Guidance Note 17 10

2.4 Risk Matrix- based Analysis Estimate the “Residual” Level with appropriate Controls in place ? 11

2.5 Inherent Vs Residual Analysis 12 WCGW

Residual Risk Assessment Controls “Acceptable” Residual Risk Hazard Risk 13 WCSGW

Group Review Activity 1 Do current Job safety Analysis and Risk Assessment tools help us to decide:  The context or scope of hazards and risk associated with an activity, including?  The objectives, purpose or outcomes of the activity?  Whether or not to undertake the activity?  Are the hazards and their associated risks clearly defined in relation to “outcome/s”  Which risks can be accepted without further control?  Which hazard should be controlled first (or to prioritise hazards?  Whether existing controls are being applied effectively?  Are there gaps in the margin of safety or hazard controls?  What new or additional controls need to be implemented / type of control required?  Whether more detailed studies or major risk assessment needs to be conducted?  The owner/s of risk controls and actions? Workshop Notes Page 14

3.0 Recalibrating Risk Systems  Existing Operations  Changes to operations  New Projects  Acquisition/Divestmen t

3.1 Taking “Stock” of RM Systems The definition of risk in the new Standard is: “the effect of uncertainty on objectives” This change in definition should shift our thinking and emphasis of analysis ‘the risk event’ (something happens) to analysis of ‘the effect’ and, in particular, the “effect” on objectives. By way of illustration, risk isn’t the chance of the commodity processes falling - but the chance that a crash will disrupt or affect the company objectives - for example, limiting capital for expansion. Notes: An effect is a deviation from the expected — positive and/or negative. Uncertainty is the state, even partial, of deficiency of information related to, understanding or knowledge of, an event, its consequence, or likelihood. Objectives can have different aspects (such as financial, health and safety, and environmental goals) and can apply at different levels (such as strategic, organization-wide, project, product and process). 16

Risk Assessment In mature organisations:  Risk Assessment is linked to risk appetite, and begin and end with specific objectives;  Accountability & ownership is clearly established when scoping the assessment;  Reliable & relevant information on Likelihood & Consequence is always considered;  Additional analysis techniques & advice are included as required;  Estimation of residual risk is based on the adequacy and effectiveness of existing controls  Group feedback on additional considerations 17

18 Grant Purdy Broadleaf Capital Group Review Activity 2 ISO Principles & Attributes

19 Group Feedback & Check out

Train the Trainer Workshop Feedback The risk assessment process should: Provide a clear scope of the job or activity to be analysed, Clarify / qualify all of the hazard risk/s associated with the job /activity, Determine the potential sources, causes and exposure levels of these risks, Identify and record those risks that are “acceptable” without further treatment Acknowledge risks that will / should always remain in the “high / unacceptable” consequence category for the job/activity. Rank risks in order of priority for the job, then “estimate” the likelihood of the risk occurring with “ known or existing controls” in place, Then estimate the “most credible /reasonable” magnitude of the consequences of the risk should it occur - before deciding on the level of “residual risk” etc etc 20

Tips for facilitators  Do your pre-workshop research & preparation;  Pre-clarify scope, context and accountability for the risk assessment outcomes;  Select a multi-disciplined team – make sure they understand the problem, the process & their role;  Use ‘fit for purpose” tool/s that you are confident with;  Additional analysis techniques & advice may be required;  The facilitator should lead and support the team, not instruct them. 21