HAZARD ANALYSES

1. 1
Process Hazard Analysis is
about applying the basic
principles of probability
and risk management to
make risk-based decisions.
Process Hazard
Analysis

2. Starting Point
Organizations understand that accidents are not a necessary
cost of doing business. However, a proper understanding of the
real cause of accidents is critical to the effective control of loss.
Process Hazard Analysis (PHA) is fundamentally a loss
causation and consequence model. This model points the way
to what must be done to control the risk.
To control losses, organizations must first identify loss exposure
and then evaluate the level of risk associated with each
exposure before deciding on the appropriate control actions to
be taken. The goal of any loss control program is not to
overprotect the facility to the point where the asset becomes
inoperable, but also not to under protect resulting in excessive
risk exposure.
The starting point for any good decisions coming from a PHA
should be a shared understanding of the objectives. When
designing a complex facility to operate safely yet productively,
there needs to be a decision framework that everyone
understands: one that facilitates discussion and encourages
high quality decisions. The challenge is that the framework
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1.1

3. must be simple, intuitively understandable, and can be applied
consistently while not oversimplifying.
This handbook illustrates the approach that allows a team of
PHA participants to think through the design, exhaustively
identify and clearly assess the risk. A well executed PHA can
become a shared language that allows a team to make
decisions based on shared knowledge.
This handbook breaks down the different PHA techniques into
manageable building blocks that allow for a logical decision
framework. The reason they are called building blocks is that
they are all interconnected components that contribute to the
overall outcome of the HAZOP, LOPA, or SIL study. However,
these processes are not always linear and iterations may be
required to optimize the design.
A key outcome of a PHA is the documentation that shows due
diligence was applied to the design with a systematic approach
for identifying, evaluating, and controlling abnormal process
conditions; that the risks are clearly understood and managed.
9

4. A Risk-Based Decision Process A risk-based decision is about choosing the best alternatives, to
maximize the chance of meeting the business goals and
minimize the risks of loss.
The value to risk-based decisions occurs not when there is
complete certainty of future situations but when there isn’t:
when uncertainty exists.
By assessing the risk in operating oil and gas facilities, a project
team can understand the consequences of process deviations
and account for the likelihood of the consequences happening.
If the risk is too high to accept, actions need to be taken reduce
it.
PHA incorporates the risk-based decision framework with a
participatory decision making process. The goal is to apply the
basic rule of risk-based decision making, that is, “keep the
process as simple as possible – and no simpler”.
Risk Management Principles
Risk is inherent in all processes. The best performing
organizations develop, implement and continuously improve a
risk management system as an integral component of their
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5. 11
enterprise management system. The four principles of
Operational Risk Management (ORM) are:
1. Accept risk when benefits outweigh the cost
2. Accept no unnecessary risk
3. Anticipate and manage risk by planning
4. Make risk decisions at the right level
How Does Applying Risk Management
Principles Help Organizations?
• Increase the likelihood of achieving business objectives
• Encourage proactive management
• Identify and treat risk consistently throughout the organization
• Improve the identification of opportunities and threats
• Comply with relevant legal and regulatory requirements and
international norms
• Improve stakeholder confidence and trust during design and
operation
• Establish a reliable basis for decision making
• Effectively allocate and use resources for risk reduction
• Improve operational effectiveness and efficiency
• Enhance health and safety performance, as well as
environmental protection
• Improve loss prevention and incident management
• Improve organizational learning
Lets Get Started
You can now benefit from a well-stocked toolbox by using this
Process Hazard Analysis Handbook for managing operational
risk in a transparent, systematic and credible manner within any
scope of a project.
Addressing Uncertainty With
Probability Principles
All operations are faced with uncertainty. Equipment does fail,
humans will make mistakes, but there is limited control as to
when these events will actually occur. The most accurate way
to describe and communicate the uncertainty is with probability.

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Probability is a measure of likelihood of occurrence of an event.
Probability is two-faced: on one side are the seemingly hard-
nosed calculations, for example, the 1 in 10,000 chance per
year of an accidental automobile fatality for an individual; on the
other side are people and their experiences and perceptions,
like an operator’s experience of numerous control valve failures
in his career.
Numbers and probabilities tend to show the final account,
chance in aggregate, summarized for a whole population. But
numbers are indifferent to life and death, numbers are unafraid
of danger nor have the ambition to take risks.
People that participate in Process Hazard Analysis do care
about the safety of workers and also need to balance this
concern with that of meeting production targets and project
milestones. There is always a certain amount of risk that is
inherent to oil & gas operations. Operators are trained to
respond to hazards and engineers design to control hazards.
PHA guides the participants to make decisions based on
acceptable risk tolerance set out by the company. PHA
participants’ intuition might not match statistics, and they might
say, “I have never seen it happen before in my years of
experience, so why worry about it?”. They will also ask quietly
in their head, “Is the facility safe enough for me to work in?”
When working with probability, its dynamics appear: one
impassive, formal, and calculating, the other full of human
ambition and fears.
On one hand, human factors will play a big part in a PHA.
People don’t always do what the numbers seem to suggest
they should. Some feel safe when they are in danger and some
feel scared when they are safe. In a situation the numbers may
matter less to us than feelings of control, the expectations of
our colleagues and our emotions.
On the other hand, industry numbers give probabilities, which
often don’t claim to know the precise characteristic of a
process, corporate culture or operating environment.
To understand the true risk, the PHA team needs to see these
dynamics through shared perspectives.
Since probability is used to represent the PHA team’s state of
knowledge, there are no correct or incorrect probabilities. There

7. 13
are two major questions that arise in collecting and estimating
probabilities:
Question of knowledge: Does the PHA team have an
adequate state of relevant knowledge? Are sufficient and
correct experience and data available? Does the PHA facilitator
have the training and intelligence to assimilate the PHA team’s
experience and data?
Question of biases: Are there biases, either conscious or
unconscious, that can make estimations inadequate
representations of the PHA team’s state of knowledge?
Its the facilitator’s job to question the team and arrive at a
realistic probability assessment.
Attitudes Toward Risk Taking
Upper-level management may view the financial loss of one
facility as minor compared to the entire corporate portfolio while
the facility engineer responsible may view the same incident as
catastrophic to his career.
Each individual in a PHA will have different attitude towards risk
taking, therefore the organization’s corporate attitude should be
used as the decision criteria.
The goal of a pre-defined Risk Matrix is to drive towards
consistent risk-based decisions across different projects. The
criterion should be applicable to all decisions, simple to apply in
a participatory decision making environment, simple to
communicate, and based on solid grounds – not just a rule of
thumb of limited applicability or by a gut feeling.
Methodologies Used in the Oil and Gas
Industry
There are a number of methodologies to conduct a process
hazard analysis, including:
• What-If Study
• Hazard and Operability Study (HAZOP)
• Layer of Protection Analysis (LOPA)
• Failure Mode and Effect Analysis (FMEA)
• Quantitative Risk Analysis (QRA)

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The key to a successful PHA is to avoid analysis paralysis
which is the state of over-analyzing a situation to the extent that
a decision or action is never taken. This effectively paralyzes
risk management in an organization. At the same time, the PHA
should be executed with the right level of information.
Which Methods Should Be Used?
This books zeros in on HAZOP, LOPA, and SIL. If done well,
these three methods complement each other and they provide
a comprehensive approach to identify risk in a group
environment. They allow a logical and traceable breakdown of
the risk based on clear decision criteria. HAZOPs are flexible
yet detailed enough to identify hazards and spotlight high risk
scenarios. LOPAs enable the high consequence scenarios to
be analyzed more closely with an explicit tolerable event
frequency. SIL studies ensure that the safeguards identified in
the HAZOP and LOPA are adequate to protect against the
consequences. All three methods are part of an iterative
process that helps support a safe work environment, facilitates
the development of the safety requirement specification,
provides a framework for future revalidations, and makes
management of change easier.
HAZOP, LOPA, and SIL are extensively written about by the
Center for Chemical Process Safety and referenced in IEC
61508, IEC 61511 and ANSI/ISA 84.00.01 as hazard evaluation
techniques that fit into an overall Process Safety Management
(PSM) program and Safety Instrumented System (SIS)
lifecycle.