Risk Management Plan for Tianjin Port: Principles and Implementation

The report discusses different risk management principles like identifying potential loss, analyzing consequences, estimating likelihood, and measuring and ranking risk. A risk management plan has also been provided, which includes proper labeling and packaging of products, hiring experts for assurance of stored goods, and regular monitoring of the port. A cost-benefit analysis has also been conducted to show the economic benefits of implementing the risk management plan.

Running head: RISK MANAGEMENT
RISK MANAGEMENT
Name of the Student
Name of the University
Author Note:

1RISK MANAGEMENT
Table of Contents
Introduction..........................................................................................................................2
Discussion............................................................................................................................2
Disaster plan analysis......................................................................................................2
Risk management principles............................................................................................3
Risk management objectives.......................................................................................3
Identification of Potential loss.....................................................................................3
Analyzing of consequence...........................................................................................4
Estimation of likelihood..............................................................................................4
Measure and rank of risk.............................................................................................4
Risk management plan.....................................................................................................5
Cost benefit analysis......................................................................................................10
Conclusion.........................................................................................................................12
References..........................................................................................................................13

2RISK MANAGEMENT
Introduction
Two massive explosions on the port of Tianjin and north China have resulted in the death
of a large number of people (Zhou et al., 2014). This particular incident in China resulted in the
injury of around hundred people along with affecting the whole city. The incident was
encountered at a warehouse which has stored various inflammable and hazardous materials. This
explosion is considered to be one of the deadliest accident in China which has caused a huge
economic loss.
The upcoming pages of the report mainly deal with a proper plan regarding the disaster at
Tianjin port chain. Different risk management principles with respect to Tianjin port explosion
have been discussed in brief. The risk management principles mainly comprise of objectives,
potential loss, consequence, likelihood, and measure of risk. At the end of the report, a proper
risk management plan with respect to matrix have been provided.
Discussion
Disaster plan analysis
A DRP (Disaster recovery plan) is a well-known business plan which provides
information regarding the fact that how fast the work can be resumed after a disaster. Disaster
recovery plan can be considered to be a part of a business continuity plan which is generally
applied to different aspects of the business(Ying & Yijun, 2016). In the year 2016, the
administrative department of China has provided an idea regarding the explosion at Tianjin port
China. The incident took place at the port just because of emission of nitrocellulose. The
emission of harmful chemical was due to damage packing of material. Later on, the investigative

3RISK MANAGEMENT
team pointed out the fact that ammonium nitrate was responsible for the explosion. The
explosion at Tianjin port took place due to illegal storage of ammonium nitrate.
The incident at the port created a serious concern to the general public regarding the use
of various hazardous chemicals (Loucks & Van Beek, 2017). At the same time, it created a
proper sense of warning to the insurance industry regarding the use and importance of
identification of various risks. For proper risk control, the basic aspect is to properly the analyze
the hazardous nature of various chemicals. After reviewing the incident at Tianjin port, it is
expected that various insurance organization should stress risk management principles.
Risk management principles
Risk management mainly comprises of five stages that are identifying, prioritizing and
proper classification of risk (Nicholls et al., 2018). It is mainly done by making use of various
aspects like control, monitoring and lastly overcoming various risk.
Risk management objectives
The risk management objective mainly comprises of a series of steps like
 The adopted process or method should create a proper value at Tianjin port.
 It should be taken to an integrated part of the overall process for this Tianjin port.
 It should affect the overall process of decision making at this port.
 The plan should be transparent in nature so that it is understandable to various
stakeholders of this port.
 The plan needs to properly check an analyzed so that it can provide benefit to a
large number of people.

4RISK MANAGEMENT
Identification of Potential loss
A large number of steps should be taken into consideration for properly performing risk
management at this port like identification, planning, safeguarding and lastly properly
monitoring.
Identification: In this phase, the various kinds of risk which are involved in this Tianjin
port needs to be properly monitored or checked (Shao et al., 2014).
Planning: A proper planning is required to so that one can easily analyze the various
kind of risk which are involved at Tianjin port.
Derive safeguard: In this stage, various kinds of risk are analyzed so that it can be
considered to be helpful so analyzing various risk at Tianjin port.
Monitoring: Tianjin port needs to analyzed or monitored on a regular basis so it kind of
risk which has been overlooked can be tracked or monitored.
Analyzing of consequence
The blast at Tianjin port has resulted in various kinds of consequences like a financial
loss. Along with this, the blast at Tianjin port has resulted in the death of more than 170 people
(Speece & Kawahara, 2015). The blast has resulted in a cost of asset and interruption of business
at this port.
Estimation of likelihood
The blast at Tianjin port has occurred due to storage of huge explosive material like
ammonium nitrate (Cao et al., 2014). The explosion at the port has resulted in a huge amount of
financial loss. Ammonium nitrate is a useful chemical material which is used for the production

5RISK MANAGEMENT
of crops. For this reason, the harmful chemical cannot be easily replaced. Ammonium nitrate is
also used as an explosive in the mining industry.
Measure and rank of risk
A large number of steps should be taken for measuring the risk at this Tianjin Port:
Avoiding risk: There are many situations or phases in which the blast at this port would
have been avoided (Berkman, Cole, & Fu, 2015). If the various stored goods have been
monitored on regular basis, then the blast at this particular port would have been avoided.
Minimizing risk: In many cases of disaster, it is noticed that risk cannot be neglected but
could be reduced to a certain extent. It can be easily used for accomplishing the turning effect of
the plan into a specific zone (Beresford et al., 2012). If the various hazardous material at the port
is kept with safety measures, then the blast at Tianjin port would have been controlled at the
beginning stage.
Sharing risk: If a particular risk needs to reduced or avoided then a series of steps should
be taken which can be used for sharing of various kinds of risk.
Retaining risk: This particular stage is considered to be as a judgmental call as it is taken
when all the other stages have been exhausted (Long et al., 2014). As the other steps have been
exhausted then the in charge of the disaster at Tianjin port should take some steps which can be
used for retaining the involved risk.
Risk management plan
Risk
Descriptio
Impact Reason Important Triggers Risk Mitigation

6RISK MANAGEMENT
n factors Strategy plan
Two
massive
explosions
at north
China and
Tianjin
port have
resulted in
the death
of more
than a
hundred
people
(Hanson et
al., 2016).
The
incident
has
resulted in
devastatin
g the
whole city
The
impact of
the
incident
is
considere
d to be
dangerou
s because
it created
huge
financial
loss
along
with the
death of
a large
number
of
people.
The
official at
the port
was
considere
d to be
responsibl
e for this
incident.
They
were
mainly
responsibl
e for
tagging
the arrive
product
which
appropriat
e threat
level. A
report
The main
factors
responsible for
the blast at the
port are
 Unlabele
d or
unname
d
containe
r
 Imprope
r
inspectio
n
 Non-
consider
ed
packing
of
various
products
Exposure
of toxic
products
along with
reactive
componen
ts
The
incident
has
mainly
taken
place due
to the
improper
or
inadequat
e
functionin
g of
various
officials.
The first
thing
which
should be
taken into
account is
properly
The
mitigation
plan should
be taken
account for
analyzing
the fact that
this type of
incident in
near future.
A proper
audit team
should be
there
analyzing
the various
aspects of
Tianjin
port. The
team should
comprise of
various

7RISK MANAGEMENT
along with
the death
of mass
people.
claimed
about the
fact that
nearly
14000
containers
comprise
deadly
products
which
have
resulted
in various
kinds of
risk.
Apart
from this,
improper
storing
and
packaging
of
products
avoiding
various
scenes
from
holding
various
officials
into
account.
No
container
should be
allowed
on the
port
which is
unlabeled.
As it can
contain a
product
which can
cause the
serious
members
from
different
technical
background
s’ that they
can analyze
the threat of
each
product.

8RISK MANAGEMENT
have
resulted
in the
blast. If
some
appropriat
e steps
have been
taken,
then this
particular
blast
would
have been
avoided.
level of
threat.
Another
measure
which
should be
taken into
account is
to product
packaging
as per the
labeling
of the
product.
With the
help of
proper
labeling,
various
products
at the port
would be
safe and

9RISK MANAGEMENT
will not
cost any
kind of
harm at
the port.
The
security
team at
port hire
expert
which can
provide
assurance
of the
products
and goods
which are
stored at
the port.

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Cost benefit analysis
Budget Plan - INPUT VALUES
Hardware
Software
Development team salaries
Training
Total Development Cost
Hardware
Software
Operational Labor
Total Operational Cost
Approximate salary savings
Reduced operating cost
Total Benefit
Discount Rate Used
Project Cost-Benefit Analysis
Analysis Variables:
Enter values for the cost-benefit
analysis in the INPUT_VALUES
worksheet.
Discount Rate Used
5.00
%
Annual Benefits
$
155,
000.
00
Annual Operational Costs
$
28,2
10.0
0
One-Time Development Cost
$
60,9
00.0
0

11RISK MANAGEMENT
Year of
Project
0 1 2 3 4 5
TOT
ALS
Economic Benefit
$0.
00
$
155,
000.
00
$
155,
000.
00
$
155,
000.
00
$
155,
000.
00
$
155,
000.
00
Discount Rate
1.0
000
0.95
24
0.90
70
0.86
38
0.82
27
0.78
35
PV of Benefits
$0.
00
$14
7,61
9.05
$14
0,58
9.57
$133
,894.
83
$12
7,51
8.88
$121
,446.
56
NPV of all BENEFITS
$0.
00
$
147,
619.
05
$
288,
208.
62
$
422,
103.
44
$
549,
622.
33
$
671,
068.
88
$
671,
068.
88
One-Time COSTS
$(6
0,9
00.
00)
Recurring Costs
$0.
00
$
(28,
210.
00)
$
(28,
210.
00)
$
(28,
210.
00)
$
(28,
210.
00)
$
(28,
210.
00)
Discount Rate
1.0
000
0.95
24
0.90
70
0.86
38
0.82
27
0.78
35
PV of Recurring Costs
$0.
00
$
(26,
866.
67)
$
(25,
587.
30)
$
(24,
368.
86)
$
(23,
208.
44)
$
(22,
103.
27)
NPV of all COSTS
$(6
0,9
00.
00)
$
(87,
766.
67)
$(1
13,3
53.9
7)
$
(137
,722.
83)
$
(160
,931
.26)
$
(183
,034.
54)
$
(183,
034.
54)
Overall NPV
$
488,
034.
35
Overall ROI
2.66
64
Break-even Analysis
Yearly NPV Cash FLOW
$(6
$
120,
$
115,
$
109,
$
104,
$
99,3

12RISK MANAGEMENT
0,9
00.
00)
752.
38
002.
27
525.
97
310.
45
43.2
8
Overall NPV Cash FLOW
$(6
0,9
00.
00)
$
59,8
52.3
8
$
174,
854.
65
$
284,
380.
62
$
388,
691.
06
$
488,
034.
35
Conclusion
The above discussion focuses on the fact that this report is all about risk management
plan for Tianjin port. Just before the blast at the port, various firefighters were there for
controlling the fire which has resulted due to spreading of various chemicals on the Tianjin port.
So a step like the appointment of audit team should be taken for stopping the blast at the port.
The audit team will monitor the performance of various port officials and various associates. The
various port officials were considered to be responsible for any kind of disaster at Tianjin port.
The appointed team will follow a list of things like quantity and quality of goods at this
particular port. After that, any kind of fake data regarding the goods can be minimized with the
help of this appointed team members.

13RISK MANAGEMENT
References
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China. Maritime Economics & Logistics, 14(1), 73-98.
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parties: Evidence from China. Journal of Banking & Finance, 33(1), 141-156.
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the current state and potential health risk. Journal of environmental management, 90,
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Hanson, S., Nicholls, R., Ranger, N., Hallegatte, S., Corfee-Morlot, J., Herweijer, C., & Chateau,
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Muir-Wood, R. (2018). Ranking port cities with high exposure and vulnerability to
climate extremes.

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