Whether you are just looking at acquiring a new asset or you’ve recently brought one on into your company it is important to quickly understand the risk that comes with operating the facility. Are all the relevant safety threats being well managed or is it a ticking time bomb ready to put your name at the top of everyone’s newsfeed with a major incident?
When making an acquisition, due diligence is a natural part of the process – the physical and financial assets of a company are evaluated and a decision is made around the purchase based on a projected return on that investment. Whether it’s the purchase of a company or a single facility, risks and rewards are evaluated but are the right risks coming into the equation?
Process safety and due diligence: assessing risks around major hazardous events isn’t usually a consideration in many mergers and acquisitions. In the often lucrative but also dangerous business of manufacturing chemical products or producing and refining oil and gas facilities change hands frequently but risk management is often limited to financial, legal and regulatory considerations leaving a major acquisition of risk unknown and unidentified.
Is your risk tolerance the same as the selling company? Not likely. This can be especially true when smaller companies are sold to larger ones. The philosophy around safe operations is rarely the same and even in mergers between large companies, aligning the approach to managing major hazards is critical to avoiding an unsafe day.
So What Should You Be Asking In Order To Safely Integrate New Assets?
- Did the last owner do Process Hazards Analysis (PHA) risk assessments?
- What about Quantitative Risk Analysis (QRA) and incident modelling?
- Does their risk registry contain critical process safety risks to manage?
- Where is the risk documentation?
- Are all critical safeguards identified and prioritized?
- Have all critical recommendations been implemented?
Risk Management is Serious Business
The 2005 explosion at the Texas City is a powerful example of facility acquisitions and major incidents. Fifteen lives were lost in the explosion and many lives were changed during the well known process safety incident. At the time of the incident the facility was in the BP portfolio for just 6 short years. Even a company with a wealth of resources and robust PSM programs can struggle to change culture and improve on safety programs that quickly.
In the reports following the incident it was cited that the facility was under BP ownership for a short time with the 1999 acquisition. Regardless, BP was the headline name and faced the brunt of 300 OSHA safety violations and a $21M fine, the largest fine in OSHA history at the time. It was later sold to Marathon Petroleum in 2013, 8 years after the incident.
The Intelligence You Need to Make the Right Choice
Using analytics and industry data to ensure critical threats are addressed gives you and all stakeholders the peace of mind to know without a doubt that all critical threats are being managed.
Risk Alive®holds the world’s largest collection of PHA and risk data and has the advanced tools and technology to analyze it effectively and efficiently. Never before has this been possible but now you can access huge collections of data for facilities of all types from refineries to gas plants, fertilizer production to French fry factories to identify common threats, mitigations and the best strategies to protect your new investment.
Start leveraging your risk data to support the safe integration
of your new assets with Risk Alive®.