The Concepts of Risk Management in Relation to Heron Towers - Case Study Example

Risk Management Name Date Course Risk Management Introduction Risk management process is important in terms of determining the levels of risks that are associated with a particular project or building. Risk management plays an essential role in determining the level of safety with regards to a particular building (Centre of Chemical Process Safety, 2001). This is for the purposes of enabling the management to put in place measures that will lead to the control of the risk. The risk management process is important for the tall buildings as it usually accommodates a high number of people (BS9999, 2005). Some of the risk may therefore impact negatively on the occupants of the building. In the United Kingdom, several tall buildings are in place and risk management has been done. Heron towers is one of the tallest buildings in the United Kingdom. The tower is a commercial skyscraper and it stands at 230 meters tall. It also has a huge floor area which occupies an area of 43,000 square meters. The building was the also considered the tallest in London city in the year 2010 and the third greatest. The construction works of the tower began in 2007 and it was completed in 2011. Currently, 67% of the building has already been leased. This is an indication that the building houses thousands of people. The risk management is thus important for the purposes of ensuring that the safety measures are in place in order to caution the occupants of the building. The paper thus discusses the concepts of risk management in relation to Heron Towers. Heron Towers Risk identification Risks can be identified through a number of different scales when it comes to the process of risk management (CLG, 2000). PESTLE analysis is one of the common methods that is usually used for the purposes of identifying the risks. The PESTLE analysis method will therefore be used for the purposes of identifying the risk in relation to Heron Towers. PESTLE Analysis table Risk context Risk Political The political environment in the United Kingdom is stable which promotes the development of the building although it also limits some aspects of development. Rules and regulations usually change from time to time when a new government takes office and it may affect the future development of the building. Environmental The economic crisis still impacts negatively in the industry as it was greatly affected. The high rental costs have discouraged most of the tenants from leasing properties which has a direct impact on the building. The industry is also currently facing uncertainty. Social The society is usually very choosy when it comes to the type of property or building and this may affect the leasing process of the building. Technological The cost of using technology to with regards to the building is high due to its size. A lot of technological experts will also be required due to the size of the building. Legal Zoning and planning requirements limits some of the development aspects of the building. The laws governing the industry are also strict and any acts of omission results to prosecution. Environmental The building will requires the consumption of a lot of energy and hence impacting negatively on the environment. A high amount of carbon footprints may be witnessed due to the high level of energy consumption. Risk ranking The process of risk ranking involves ranking the individual risks that have been identified. The ranking process is dependant on the frequency, likelihood or severity of the risks that have been identified (Fire Protection Association, 2001). The process is important in terms of determining the risks that are most likely to occur and hence putting in place the measures to combat the risk. The FN diagram plays an important role during the risk ranking process. The risk ranking method is important in terms of determining the level of risk and its intensity (Konosu, 2011). The ranking are also made depending on the risks that are likely to cause a lot of damages and loss of life. The process is important for the high rise building like the Heron Towers and it has been applied for the purposes of identifying and ranking the risks within the building. Table 1 RISK MATRIX Consequence Frequency Remote Unlikely Likely Frequent Extensive Severe Moderate Minor FN diagram for Heron Towers Hazard identification Risk Risk level People at risk Large number of people who occupy the building Escape routes Fire prevention measures Sources of ignition Electric sparks Naked flame Hot surfaces Sources of fuel Flammable chemicals and liquids Paper and plastic Furniture Litter and waste materials Oxygen source Natural airflow The FN diagram indicates that fire is a potential source of risk for the building. This is because of the nature of activities that usually takes place within the building. On the other hand, it is evident that the number of fatalities will be high due incase of the risk of fire. This is because its risk will result to extensive damages on the building and hence loss of life (Fire Protection Association, 2001). FMEA This analysis plays a significant role in terms of identifying the risks and also suggests the measures that can be taken for the purpose of minimizing the same risks (Vilà, 2012). The table below is a FMEA analysis for Heron Towers. This method identifies the risk together with its level and it also recommends the actions that should be taken for the purposes of controlling the identified risk. The probability and likelihood of the risk is also identified through the use of this method (Kreyszig, 2004). It severity is also important in determining the intensity of the damages and hence its impacts on the building. HERON TOWER FMEA ANALYSIS Systems Possible system failures Severity 1-3 Possible effects Det 1-3 Cause Probability 1-3 RPN Control Building repairs The electrical system may be interfered with. Sparks from the machines and tools used for repairs 2 Short circuiting. Ignitions. Power loss 1 Lack of proper tools and equipment. Lack of adequate knowledge and skills. 2 4 Use of appropriate tools and machinery. Supervision of the contractors. Electrical systems Overload and poor materials used for installation. 3 Electrocution. Injuries. Power loss. Short circuiting. 2 Lack of proper specification. Negligence by the contractor. Lack of proper supervision. 2 12 Proper screening of the electrical contractors. Training and supervision of the contractors. Use of papers and littering Extensive use of papers in the offices. 1 Spread of ignition by providing combustion materials. 2 Poor waste disposal measures 3 6 Effective control of the waste materials Proper disposal of papers and litter. Fault tree The tree diagram is a top down deductive failure analysis that is used for the purposes of determining the undesired state of a system. A series of lower level events are usually combined using the concepts of Boolean logic (Pickford, 2001). The fault tree analysis plays an important role in safety engineering as it also determines the reliability of the systems. An understanding of how systems fail and identifying the best way to reduce the risk is also an important concept of the fault tree diagram (Sutton, 2003). The concept of fault tree analysis diagram has been used in the risk management of Heron Towers. The diagram below indicates a fault tree diagram for Heron Towers in relation to a fire event. Common Cause Analysis The common cause analysis plays an important role in terms of establishing the relationship between the causes of the risk and the underlying events. This method plays an important role in terms of ensuring that the causes of the risk are identified and clearly understood (Vose, 2002). It also important to note that the common cause analysis can be used for the purpose of developing future strategies that is useful in preventing the risks in future. The common cause analysis also plays an essential role in terms of determining the dependencies among the events that leads to the risks. This is because the causes of events like fire are dependant on other events. On the other hand, it is also important to note that the common cause analysis is usually useful in providing recommendations that are useful in terms of reducing the dependencies failures (Yung, 2004). The diagram below is a common cause analysis for Heron Towers in the event of a fire. Reliability block diagram The reliability block diagram is a diagrammatic method of establishing the success of failures of a complex system (Kerzner, 2014). It is composed of a series of blocks that are connected either in a parallel way or in series. It is also important to note that each block in the diagram represent a certain component in the system. In the parallel configuration, all the parallel paths have to fail in order for the system to fail (Kerzner, 2013). On the other hand, in the series block diagram, the failure of any component leads to the failure of the whole series. The reliability block diagram therefore plays an important role in the risk management process. This is because it can be used to identify the possible risks that may lead to the failure of the systems. On the other hand, it also provides important analysis of the individual systems and the effects of their failure. The reliability block diagram has an important application in Heron Towers as the building is faced with risks including the risk of a fire outbreak. The fire may be caused by various factors and it may result to extensive damage of the building and loss of life. The diagram below is the reliability diagram for Heron Towers. Cost benefit analysis The cost benefit analysis is mainly a comparison of the costs that will be incurred during the process of preventing the failures or hazards and the cost that will be incurred incase of the failures or the hazards (Heagney, 2014). The cost of preventing the failures and hazards as may include purchase of equipment, training of the staff and monitoring the systems. In the case of Heron Towers, the cost that will be incurred mainly involves; training the employees and fore wardens in the building, installation of the fire alarms, installation of sprinklers and purchase of fire fighting equipment, detection systems and building the fire barriers. It is also important to note that regular maintenance of the systems will be required so as to avoid its failures incase of a fire outbreak. On the other hand, it is also important to note that the size of the building is big and a fire outbreak may lead to massive destruction of properties and loss of lives. The table below shows the cost benefit analysis for Heron Towers in the relation to fire out break. Cost benefit analysis for Heron Towers Cost benefit description Year Benefits 1 2 3 4 5 Reduced premiums on personal harm 24000 26000 29000 33000 38000 Reduced premiums on the building 24000 28000 32000 36000 40000 Reduced premiums on equipment 4000 5000 6000 7000 8500 Downtime avoidance 60000 80000 100000 120000 140000 Total benefits 112000 139000 167000 196000 226500 Annual cost Training 30000 33000 36000 39000 41000 Inspection and supervision 8000 8500 9000 10000 11000 Operation costs 100000 115000 118000 125000 133000 Total benefits 138000 156500 163000 174000 185000 Initial costs Equipment 10000 15000 22000 25000 28000 Equipment installation 15000 15000 15000 15000 15000 Start up testing costs 50000 50000 50000 50000 50000 Total benefits 75000 80000 87000 90000 93000 The cost benefit analysis indicates that a lot of money will be saved due to the risk management strategy and hence indicating the importance of risk management. On the other hand, it is also important to note that the company would greatly suffer financial losses incase of an actual outbreak of a fire in the building. Reflective comparison Different methods have been used for the purpose of identifying the risks and analyzing them. The pestle analysis has played an important role in terms of identifying the general risks as a result of external factors. This method is important since some of the risks are usually caused by the external factors and if ignored they may lead to extensive damages to the building and loss of life. This method is thus important in the risk analysis and it can also be considered as the first step towards risk management. The risk ranking method also provides insight information regarding the risks that the building is likely to encounter and the effects of the risk. This method is useful as it provides vital information regarding the extent of the losses that may occur incase of a fire outbreak. On the other hand, the method also plays an important role in providing a clear analysis of the risks. Although this method does not provide information regarding the external risks, it is plays an essential role in highlighting the internal risk that are associated with a fire outbreak. The levels of the risks are also established through the use of the method. This is an indication that the method can be relied upon in terms of establishing the managing the risks in relation to the building. The level of accuracy that is associated with the method is also high and hence its reliability in the risk management process. However, it is not recommended for the risk management in the building. The FMEA analysis method is however the best method for the risk management in relation to the fire outbreak in the building. This method is the best because it identifies the risks and it causes. On the other hand, it provides possible solutions to the risk. This method is thus effective and the best for the purposes of managing the risk in the building. The fault tree is also an effective method of risk management. This method identifies the risks as well as the causes. This method is effective although it is brief as compared to FMEA. However it can be used in the place of FMEA for the purposes of risk management in the fire event. The common cause analysis has also been used and it provides important information that is related to the risk. However, the method is shallow and a lot of assumptions are made. This method does not have the ability of explaining some of the risk management concepts in relation to the event. The reality block diagram has some concepts that are related to the common cause analysis. This method is brief and it does not provide much information in relation to the risk. Although the use of the method provided information in relation to the project risk management in the event of a fire outbreak, it is the least useful. The method is also complicated as it may require the use of calculation s during the process of carrying out the analysis. Budgetary allocation Budget allocation based on a fixed budget will play an important role in managing the risks that are likely to be encountered in the event of a fire outbreak. On the other hand, it is also important to note that extensive damages to the properties and lives will be witnessed in the event of a fire. This is because the building is large and it is occupied by a large number of people. The FMEA method of risk management plays an important role in identifying the risks as well as recommending the possible solutions. On the other hand, the method also plays an essential role identifying the level of risk with regards to a fire outbreak at the building. This method will therefore be used for the purposes of resource allocation. The fire outbreak due to electric fault is one of the greatest risks in the building. The resource allocation will therefore ensue that a higher amount is allocated on the systems that useful in preventing the electric fault from taking place and causing the fire. On the other hand, the training of the employees and the occupants of the building will also be allocated some amount of money for the purpose of ensuring that they are prepared. This will play a vital role in preventing the loss of life as well as the extensive damages of the building in the event of a fire (Pinnington, 2012). The budgetary allocation of the different aspects will also be based on the level of risk as identified using the FMEA analysis method. It is also important to note that prevention of wastages during the budgetary allocation swill plan an essential role in eliminating the wastage of funds. The table below shows the budgetary allocations for Heron Tower HERON TOWERS RISK ASSESMENT BUDGET ALLOCATION Risks Risk level (1-10) Effectiveness of mitigation (1-10) Effectiveness of resources Budgetary allocation estimates (%). Overload leading to electric faults. 6 5 30 25 Sparks from the machines and tools used for repairs. 3 4 12 6.5 Extensive use of papers in the offices. 4 5 20 15 Interference of the electric system 6 6 36 53.5 The budgetary allocation for the risks indicates that the most amounts will be allocated for the purpose of ensuring that the electric fault does not occur as it is the most likely risk that may lead to the outbreak of fire at the Towers. The building is also has a lot of electric installations and hence the increasing risk of electric fault leading to a fire outbreak. The budget will enable the company to implement measures that will ensure that electric fault does not occur. The mitigation of the risks associated with electric fault causing an outbreak of fire is will also be carried out within the budget that has been allocated for controlling the risk due to electric fault. Conclusion In conclusion, it is evident that the risk management strategies are important for the purpose of controlling and mitigating the risks. The most likely risk that may occur at Heron Towers is an outbreak of fire. This is because of the size of the building and the nature of activities that takes place within the building. On the other hand, it is also evident that the fire outbreak may be as a result of electric related faults. This is dues to the high consumption of electricity at the building and the high number of electric installations that are for the purposes of serving the building. It is also evident that various methods can be used for the purpose of identifying the risks that may occur within the building. The methods are unique in their own ways but the results are the same as it identifies the risks. On the other hand, the methods also play an essential role in terms of providing the possible solutions to the risks that may be encountered within the buildings. The solutions that are offered are also useful in the budget making decision. The levels of the risks are also identified using the different risk management methods. This also provides information regarding the frequency and the consequences of the risks can also be obtained. List of References BS9999, 2005, & PD7974-7, 2003, Probabilistic Risk Assessment. Centre of Chemical Process Safety, 2001, Layer of Protection Analysis, John Wiley & Sons, New York. CLG, 2000, Fire Safety Toolbox, Communities and Local Government Fire Protection Association, 2001, Essentials of Fire Risk Management. Fire Protection Association, 2001, Risk Assessment for the Emergency Services. 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