Industrial facilities like refineries, petrochemicals, and chemical plants due to their sheer size and complexity have inherent risks such as fires, explosions, gas leaks, and spills. Insurance companies that provide coverage for these industrial facilities need to assess the risks associated with these facilities to determine the appropriate premiums and coverage levels. This is where risk engineering surveys come in picture.

Risk engineering surveys are assessments conducted by Risk Engineers (normally representatives of re-insurers & engineering service providers such as broker or third party) to evaluate the risks associated with these facilities. These surveys are normally conducted on-site (or virtually in exceptional circumstances like COVID), and they involve a comprehensive analysis of the plant’s operations, maintenance practices, reliability, safety performance, and other factors that could affect risk of accidents or disasters.

Hydrocarbons are naturally flammable substances, and because they are treated under extreme heat and pressure in the presence of hydrogen, they become even more explosive and flammable. As a result, a wide variety of highly skilled and specialized professionals, such as those in operations, process, safety, instrumentation, and electrical, are needed for the safe functioning of refineries.

Significance of risk engineering surveys

a. It helps insurance companies to understand the risks associated with these inherently hazardous industries and to determine the appropriate level of coverage and premiums.

b. For clients, risk engineering surveys can help to identify potential areas of risk and to implement safety measures that can reduce the likelihood of accidents and disasters.

c. Major benefit of a risk engineering survey (of any inherently hazardous industry) is in bringing an experienced 'second pair of eyes' into the facility. (This effect is multiplied if you have a team of experienced insurance engineers with you, but that's not always possible.) Facility owners can, though familiarity, stop seeing hazardous situations or practices. So, this type of third party inspection can be revealing.

d. Another major benefit is providing (anonymised) information regarding losses that other facilities have suffered. As well as sharing good practice, this can help staff of a facility to maintain a constant state of vigilance for unsafe issues or practices among all managers and workers who deal with hazardous systems and materials all day every day.

During risk engineering surveys, both the client and the insurance company need to look at several important factors. These include:

Asset integrity: The survey assesses the refinery's inspection philosophy and practices, any overdue inspections and failures reported. Risk engineering surveys normally look at the equipment such as tanks, pipelines, vessels, boilers, etc., to identify any potential weaknesses or failures that could lead to accidents. Corrosion is one of the important factor which affects the life of equipment and mitigation measures employed

Operations: The survey analyzes the refinery's operations status, which is the heart of any process plant, checks including its processes, procedures, and safety protocols during steady and transient operations. This also involves figuring out any laggard issues that the operation team is dealing with for continuous and safe operations.

Maintenance: Turnarounds and regular maintenance activities are important for the integrity of the plant, therefore of particular interest to the insurers. Proper maintenance can help prevent equipment failures, accidents, and environmental incidents, reducing the overall risk of the refinery. If deficiencies in the refinery's maintenance program are identified during the survey, it could lead to increased insurance premiums or even a denial of coverage. Conversely, a well-maintained refinery may be eligible for more favourable insurance rates.

Emergency response: The survey evaluates the refinery's emergency response plans and procedures, including the availability of emergency equipment, impairment of protection systems, training of personnel, and communication systems in place.

Safety Performance: The survey reviews safety statistics of the facility in terms of numbers of fire & environment incidents reported (referred as Tier-1, Tier-2, and other Process Safety KPIs), potential near misses, incident investigation status, and overdue recommendations.

Regulatory compliance: The survey also ensured that these facilities are in compliance with all applicable regulations and standards. Emissions from heaters, flares and other exhaust are in line with regulations.

Risk improvement recommendations: Based on the hazard & risk assessment, risk engineers will then develop recommendations to mitigate the identified hazards. This could involve upgrading equipment, implementing new safety procedures, or providing additional training to workers. The recommendations will aim to reduce the likelihood and severity of accidents. These observations & preliminary recommendations are briefly presented to the management at the end of the survey.

Survey report: Outcome of the risk engineering survey is the technical report prepared and submitted by the risk engineer (survey team) to re-insurers and to the client (facility owner). The report typically includes an executive summary that outlines the key findings and recommendations of the survey. It also includes a detailed description of the refinery's operations and the associated risks, including fire, explosion, environmental incidents, and worker safety.

Conclusion

Overall, risk engineering surveys are an essential tool for insurance companies and facility owners (client) to identify the hazards present in the facility, help to assess and manage risk, and provide recommendations for mitigating potential accidents. By active participation in risk engineering surveys, refineries can demonstrate their commitment to safety and improve their overall efficiency and productivity.