1. GEMI Survey EHS Risk Management
October 2001
Carl Wirdak
Occidental Petroleum Corporation

2. Outline Survey Recap Risk policy and program features
Risk assessment process
what is covered
how is risk assessed
Information and communication
Risk management process responsibilities
Risk management outcomes
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3. Survey Overview
Survey covers the management of environment, health or safety (EHS) related risk as it applies to a company’s business activities (i.e., manufacturing, transportation/distribution, product formulation and use, etc.).
Survey response rate = 69%
27 companies responded to the survey
Not all companies completed all questions
Broad industry coverage
Chemicals, semiconductor, oil/gas, consumer products, pharmaceuticals, food/beverage, forest products, energy, transportation, etc.
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4. Most risk management programs are formal
Risk Policy
>95% of respondents have an internal policy or guidance document that directs efforts to identify / manage EHS risks
Most risk management programs are formal
Acceptable risks are established on a case-by-case basis, rather than by setting “bright-line” or unequivocal limits
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5. Risk Policy Majority require that all risks be identified and managed
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6. Risk Assessment - Scope
All respondents do EHS compliance audits
80% of respondents covered by a legally mandated risk management requirement (OSHA PSM / EPA RMP)
88% of respondents conduct EHS risk assessments and all of these address risk issues that go beyond regulatory compliance
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7. Risk Assessment - Focus
Physical risks appear to be the primary focus
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8. Risk Assessment - Process
67% have written procedure that provides a method for categorizing EHS risks
50% say the methodology for categorizing PSM / RMP related risks is different than for all other types of risk
43% force rank different types of EHS risks on a common scale
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9. Risk Assessment - Process
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10. Information / Communication
84% of respondents address inherent EHS risks of operations
92% report on risks that go beyond those areas covered by PSM / RMP
Nature of risk discussion
83% include mitigation opportunities
59% document risks left unmitigated
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11. Information / Communication
Facility, Corp EHS and Legal “know” the risks
Risk information communicated to Division/BU management
Corporate management does not receive risk information
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12. Information / Communication
Legal Department involvement
80% of companies have legal input
Risk assessment team member or report reviewer (sometimes directs the team)
Twice as likely (40%) to have outside counsel involved in risk assessments versus EHS audits
Apply audit privilege
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13. Responsibilities
Identification and management of EHS risks rests with line management and facility, division, or corporate EHS staff
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14. Responsibilities
EHS and (to a lesser degree) other facility staff are primarily responsible for conducting and validating the risk analysis
Where corporate EHS is not involved in risk analysis, more than 25% of respondents do not validate the output
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15. Headcount
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16. All Risks Identified / Managed
Outcomes
80% of companies require identification and prioritization of risks
Only 45% require elimination of risk
Line management is responsible for choosing accepting risks
Popular 3rd party insurance:
Operational
Business Interruption
E, S, H No
Yes
All Risks Eliminated
All Risks Identified / Managed 11 8 3 2
Number of Companies
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17. Outcomes Benefits of EHS risk management Lower risks
Reduced potential liabilities
Improved EHS performance
Enhanced EHS legal compliance
Lower EHS costs and lower insurance costs
Enhanced management awareness
Safer products
Smoother ISO registration
Satisfy stakeholder expectations
Created new customer service opportunities
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18. Emerging areas of risk management
Outcomes
Emerging areas of risk management
Sustainability
Social Responsibility
Company and brand reputation
Community relations
Persistent chemicals
Biosafety
New issue management
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19. Questions / Comments
We assess existing risks to find ways to avoid conditions and designs that create significant future risk.
We use our life cycle management process, EHS management system plus RMP/PSM and EHS audits to control risk.
Has any company outsourced the risk analysis function?
Are companies considering a transparent, full disclosure policy or participation (by NGOs, etc.) on company risk assessments?
How well do companies utilize their risk evaluations related to intangible assets for financial analysts?
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