Risk Management

Running head: RISK MANAGEMENT 1
Risk Management
Student’s Name
Institutional Affiliation

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Summary
This study provides in-depth information and facts on the Tianjin explosion that took place on
August 2015 in China.A summary the explosion, losses suffered, explosion substances, analysis
of the risks and management strategies are highlighted. The fire resulted in enormous human and
economic losses for the society as well as the enterprise. It changed the way insurance industries
operate in terms of identifying and managing risks connected to hazardous chemicals. As a result
of the explosion, a lot of concerns have been raised among the members of the public about the
use and storage of dangerous chemicals. It is therefore important to, correctly identify and
understand the nature of hazardous chemicals so as to manage them scientifically in a specific
manner.

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TABLE OF CONTENTS
Chapter Page
EXECUTIVE SUMMARY.................................................................................................2
TABLE OF CONTENTS.....................................................................................................3
CHAPTER I: Introduction...................................................................................................4
CHAPTER II: Body.............................................................................................................7
Sub heading (heading 1)......................................................................................................7
Sub-sub heading (heading 2).............................................................................................11
Tables.................................................................................................................................15
CHAPTER III: RECOMMENDATION............................................................................19
CHAPTER V: CONCLUSION..........................................................................................19
CHAPTER VI: RECOMMENDATION............................................................20
REFERENCES..................................................................................................................21

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INTRODUCTION
Tianjin fire explosion was one of the worst manmade disasters in Chinese history(Fu, Wang,
& Yan, 2016).It was as a result of a series of explosions which happened in one of the container
stores at the port of Tianjin which left over one people dead and more than one hundred firemen
injured(Fu, Wang, & Yan, 2016).The explosions occurrence of the explosion was in series and
with the first two explosions happening in just 30 seconds from the other; the second explosion
had a bigger magnitude involving the detonation of close to 800 tons of ammonium
nitrate(Popov, Lyon & Hollcroft, 2016).Figure 3 and 4 show images of Tianjin port after the
explosion. The main course of the explosion was not apparent at first, although through an
investigation by Chinese authorities, it was cited that the explosion was triggered by overheated
chemical containers.
The explosion led to huge human and economic losses for the industry and the society as
a whole. It also revolutionized the insurance industry but sending a warning on the need and
usefulness of risk identification and risk management with regards to hazardous chemical
substances. The usage of such chemicals has also been a point of concern among the public as a
result of the explosion. Majority of the hazardous chemicals, however, are indispensable
ingredients and additives which are of great benefit to the society. Production, warehousing, and
transportation of such chemicals are thus unavoidable. The main priority in risk management and
control then is the correctness in identifying and understanding dangerous chemicals so as to
manage them in a scientific manner.
By analyzing, reviewing and getting an insight of the Tianjin explosion, many companies
will be able to apply more safety standards and measures in their day to day operations. More

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research will be done to ensure a proper understanding of various chemicals and their
reactiveness when exposed to different environments. In addition, insurance companies have
been given a blueprint on risk management and their ability to identify, reduce and control risks
has taken a new turn through enhanced underwriting and risk controls.
According to Sun, (2015), a risk is defined as the potential loss emanating from a given
action or lack of action .The choice of an action is the main determinant of an outcome. A risk is
illustrated by two features of a possible future and the probability of its occurrence as well as the
resulting consequence of the event if it happens. Risk can be said to be undefined if the chances
of occurrence cannot be ascertained. Figure 1 shows how risks can be rated based on their
severity. Human beings are normally at the forefront and on the hidden side of events and thus
human factor is an element of driving force in decision making. System engineering management
risks are those associated with the process of system development. Risk management in a very
dynamic environment is an essential requirement if reaching strategic advantage of a company is
to be achieved. Risks associated with the system can generally be traced to the attainment of
customer requirement cycle. Product risk encompasses both final product risks which relate to
the performance and system cost while enabling products represent those products that produce,
support, test and maintain the system. Risks relating to the management can either be technical
management risks or those triggered by external influences. Those concern with internal
management are basically the ones dealing with schedules, workflow, resources, timely
deliveries, critical operations as well as the availability of qualified personnel. On the other hand,
risks pertaining external factors fall under resource availability, regulatory requirements
including the visibility of the program.

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However, risk can be detrimental to any business operation and in case an entity is hit by
an eventuality that it had not planned for, time, costs, as well as a company's reputation, could be
on the line. This, therefore, makes Risk Analysis a key element in an environment where risk is
likely to be experienced. Risk analysis referred to as the process of defining and analyzing the
perils to businesses, individuals and government agencies posed by human-caused and natural
adverse events (Popov, Lyon & Hollcroft, 2016). .A proper risk analysis provides a clear insight
into the identification and understanding the risks that someone could potentially face in the line
of duty. Consequently, this too can help one to manage these risks and reduce their impact on
plans. It is a process which aids in identifying and managing potential problems that could
forestall major business projects.
To carry out a risk analysis, potential threats need to be identified and an estimation of
the likelihood of these threats to materialize need to be done. The process can be complex and
challenging as detailed information needs to be drawn in the form of project plans, security
protocols, financial information, marketing forecast and any other relevant information.
Nonetheless, it's a key planning tool that saves much of the money, time and company's image.
Reports on risk analysis can either be qualitative or quantitative. Quantitative risk analysis
involves numerical attempt to determine the likelihood of various unfavorable events and the
possible extent of losses in case such event occur. Qualitative risk analysis, on the other hand,
does not concern itself with numerical probabilities of damage by rather in defining threats,
investigating the extent of exposure and devising forestalling measures should an eventuality
takes place. In probing into the explosion at Tianjin Port, three components of Risk analysis need
to be examined in-depth. They include; an assessment of risks, management of risk and
effectively communicating risks factors.