Tianjin China Explosion Incident Risk Analysis

This article provides a risk analysis of the Tianjin China explosion incident, including risk management principles, consequences, likelihood, risk management plan, risk mitigation, and cost analysis. The explosion caused significant damage to property and the environment, resulting in financial losses and loss of life. The article discusses strategies for mitigating risk, including avoidance, minimization, and retention, and provides a cost analysis of the incident.

Running Head: TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
Tianjin China Explosion Incident Risk Analysis
Name of the Student
Name of the University
Author note

1TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
Table of Contents
Introduction:....................................................................................................................................2
Objectives of risk management:......................................................................................................2
Risk management principle:............................................................................................................4
Consequences:.................................................................................................................................5
Likelihood....................................................................................................................................5
Risk management plan.....................................................................................................................6
Risk Mitigation............................................................................................................................8
Cost Analysis of Tianjin Explosion.................................................................................................9
Conclusion.................................................................................................................................10
Reference:......................................................................................................................................11

2TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
Introduction:
Risk is defined as occurrence of incidents without certainty and prior anticipation which
causes harm directly to the stakeholders who are interlinked with the project. These incidents
have the causes harm for the beings as a whole. Risk can be further classified as the factor that
arises during the completion of task and risk might appear at any stage of the task before it is
finished. Hence identification of risk is one of the foremost priority as it can affect the quality as
well as the overall outcome of the project (Stulz, 2015). Hence the ability to mitigate risk during
project is one of the major concerns for team managing the task. Several theories about risk
management has been proposed which seek to identify and minimize risk factors which are often
unseen and unrecognized by project team.
Objectives of risk management:
The principles of risk management is adopted by the organizations that seek to deal with
the project related risk effectively so that it does not have significant impact on the team work
and the overall success of the project (McNeil, Frey & Embrechts, 2014 ). There are some risk
management principles that are quite helpful for managing project related risk factors: -
Legal: Storage as identified in the case of the Tianjin port, has been one of the factor that
lead to poor disaster management. The main reason for the explosion was the explosion of the
Ammonium nitrate for excessive amount of heat due to the ignition of fire. These incident might
be avoided if the team that was on charge of storing the ammonium nitrate has previous
knowledge about the nature of the substance (Sun, 2015). The fact that ammonium nitrate is
explosive was not known to the team responsible for managing the storage. If the fact was
already known to team, then they could have been more careful while handling the substance that

3TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
lead to the explosion. Several materials sensitive to the explosion was added with ammonium
nitrate which made the explosion much more intense and the fire spread out quickly. Another
reason for the huge explosion was the presence of huge amount of ammonium nitrate, 800 tons
in quantity. Illegal activities were also a reason for uncontrollable fire that broke out in Tianjin. It
is illegal to store huge quantity of dry nitrogen in a single place. Over 300 tons of dry nitrogen
was stored in Tianjin port. As the risk related to the project varies, so should be the strategy
mitigating the risk. Hence, the approach to the risk management must be dynamic. However, in
the case of Taijin explosion, it is evident that the risk management approach lacked in dynamism
and this might be accounted for the incident (Fu, Wang & Yan, 2016).
Human Resources: Sometimes complication arises during the project due to the mistakes
done by the human. An effective risk management strategy should take human factor into
consideration and must considered the factor that an employee can commit mistake and it must
be taken into account (Zaho, 2016). This is evident as the explosion was due to the lack of
knowledge of employees in storing ammonium nitrate. Transparency is an important factor. Risk
management technique should be transparent so that it is easier to manage risk. In this particular
incident employees working in Tianjin port were not aware of the facts and procedure that must
be followed to store the ammonium nitrate properly and hence the incident took place (Huang &
Zhang, 2015). Human Resource manager must be employed in order to perform man
management and provide knowledge to employees regarding the subject they are working on
Financial risk management: A total of $9 billion was wasted in this explosion. More
than 2000 Toyota cars got burnt during explosion that occurred in Tianjin port. Basic price of
Toyota cars being $15,350, average being $25,500 and highest range being $45,888, a gross loss
that that is estimated is over $500 million. Entire showroom of Toyota worth $700 million was

4TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
decimated due to this explosion. Entire China was devastated due to the fact that there has been a
huge loss both financially as well as psychologically.
Environment: After explosion in Tianjin China port, excluding the fact that huge loss in
financial background was suffered, the major problem was pollution that was caused after
explosion. Pollution in environment led to the fact that entre air cycle surrounding china got
polluted and rain turned into acid rain. Due to acid rain, water bodies present in China was
adversely affected. Marine animals were the ones who were affected the most. Marine animals
died in huge numbers. Water pollution was everywhere. Residents of Tianjin vacated Tianjin for
few months in order to avoid water pollution.
Risk management principle:
Risk management involves identification, classification and prioritizing of the risk that
might occur during the completion of the task (Yongli & Guo-xi, 2015):
Identification:
Risk that is associated with the Tianjin port must be identified before the project is
processed
Planning:
Once the risk is identified it should be mitigate with proper planning.
Derivation of safeguards:
Once the identification and planning is completed, proper strategies should be derived to
create safeguards against the risk.
Monitoring:

5TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
It is not enough to derive the safeguards, it should be properly monitored to assess the
quality and credibility of the strategy.
Consequences:
Almost 173 people died after the incident. The figure was discovered after the
investigation and the figure came out after one month of the incident took place. The
combination of water with the chemical proved to be fatal and it acted as the catalyst for the
explosion. The energy of the explosion was equivalent to 2.9 tons of TNT and the seismic plate
was shocked by this event leading to earthquake of magnitude of 2.9 (Middleton, 2016). The
damages caused by this explosion was havoc in nature. It destroyed around 8000 cars. National
Supercomputer Centre was also affected by this explosion. Dhongai road station located near
Tianjin port was adversely affected due to this massive explosion. $9 billion was wasted due to
this massacre caused by the explosion (Li, Zhu & Shi, 2016). More than 300 buildings were
devastated due to this incident. 1200 cars were damaged during the course of this explosion. 200
Toyota cars were blown away at a stretch during this explosion.
Likelihood
8 explosions took place in a row. First 2 explosions occurred in an interval of 30 seconds.
Both the explosions affected employees adversely who were working in the port. 2nd explosion
was comparatively larger than the 1st explosion. Ammonium Nitrate was detonated and over 800
tons of dry nitrogen was depleted that increased intensity of the explosion. Binhai was affected
by this initially as fire broke away in their warehouse. Fire fighters were trying to prevent fire
from spreading and used water to stop the growth of fire. Fact that the explosion was die to

6TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
chemical hazards were unknown to the fire fighters. Chemical reactions occurred due to the fact
that water and chemical effluents reacted in a flammable way, which caused destruction in the
port (Jiu-zhou & Plant, 2015).
Risk management plan
Risk
Description
Impact Reason Crucial
factors
Triggers Risk Response
Strategy
Contingency
Plan
12th
August is
considere
d as one of
the black
days in
China.
Over 3000
peoples
were
injured in
this
explosion
and 173
fatal
injuries
Over $9
billion
was spent
in
mitigating
the
damages
that took
place due
to
explosion
caused.
200
Toyota
cars were
destroyed
2nd explosion
marked
detonation of
800 tons of
Ammonium
Nitrate. In
beginning
there was a
fire at the
warehouse of
Binhai. The
fire was
uncontrollable
in nature. Fire
fighters were
on spot,
Incomplete
knowledge
regarding
chemical
structure
and
chemical
property of
the
elements
that are
stored in
the port is
proclaimed
to be one
of the
major
Water is
often
considered
to be
inflammable
in nature.
Chemical
property
and
chemical
structure of
water also
supports
this fact, but
combining
water with
ammonium
Risk
mitigation
strategy
that must
be
undertaken
to resolve
this
problem is
that
avoidance
of
hazardous
flammable
elements
must be
done and
Contingency
planning will
ensure that
such
activities
does not
occur further
and
employees
have proper
knowledge
regarding
elements
they are in
charge of.

7TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
were
caused
in the
Toyota
company
as it was
located
very close
to the
port. More
than 300
people
died in
this attack.
This
caused
Tianjin
explosion
to be one
of the
fiercest
explosions
in history
of China.
Pollution
fighting the
fire and trying
to prevent it
from
overflowing.
Fire fighters
were not
aware of the
fact that the
fire that has
struck is due
to explosion
of hazardous
chemical
substances.
Applying
water to fire
increased
intensity of
the fire. This
in return
increased the
intensity of
reason for
explosion
(Zhao,
2016).
nitrate and
dry nitrogen
alters the
chemical
structure of
both water
and reacting
element,
leading to
explosion
(Yao &
Qin , 2014).
idea of
retention
of risk
must be
omitted
(Sen,
2016).

8TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
was
caused in
massive
way,
leading to
the fact
rain was
converted
t acid rain
and
marine
animals
were
adversely
affected
due to this
(Irshad,
2015).
explosion.
Risk Mitigation
Strategies to deplete risks: -
Risk avoidance: avoiding risks is one of the most important techniques that will help in
mitigating risks. By understanding the causes of danger regarding accidents, prevention of

9TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
accidents can be made by taking preventive measures (Lo, 2016). Total cost that will be needed
for risk avoidance is very high, as high as $35 million every year.
Risk minimization: Minimizing risk is one of the basic techniques that must be
implemented in order to prevent risks that are heading towards the organization. This has been
the major reason that minimizing risk has been evolving as one of the major techniques to
mitigate risks (Wang, 2018). Risk minimization will cost highest as it will require nearly $97
million in order to minimize the risk.
Retaining risk: Retaining risk is the only managerial decision that higher authorities of
organizations can take regarding risk mitigation for the organization. Higher authorities can take
decisions regarding strategies that must be used to retain the risk, as according to scholars
retention of risks also acts as revenue earner for the organization. Retaining risk is beneficial as
organisations earn revenues by retaining risks. By retaining risk organization can analyse risks
that are approaching the organization. In case the risk that is approaching the organization is
retained insurance cab be earned successfully through it.
Cost Analysis of Tianjin Explosion
Year of
Project
year 0 year1 year 2 year 3 year 4 year 5 TOTALS
Net economic
benefit $36,000.
00
$36,000.0
0
$36,000.
00
$36,000.
00
$36,000.
00
0.7700 0.4500 0.8700 0.6780 0.7473
PV Of Benefits $0.00
$27,720.
00
$16,200.0
0
$31,320.
00
$24,408.
00
$26,901.
29
BENEFITS of
NPV $0.00 $27,720.
00
$43,920.0
0
$75,240.
00
$99,648.
00
$126,549
.29
$126,549
.29
Single terminal $9,000,000,
000.00

10TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
Costs
Recurring
Costs $0.00
($14,40
0.00)
($14,400.0
0)
($14,40
0.00)
($14,400.
00)
($14,400.
00)
Discount Rate
3% 1.0000 0.9434 0.8900 0.8396 0.7921 0.7473
PV Of
Recurring
Costs $0.00
($13,58
4.91)
($12,815.9
5)
($12,09
0.52)
($11,406.
15)
($10,760.
52)
NPV Of All
Costs ($60,000.00)
($73,58
4.91)
($86,400.8
5)
($98,49
1.37)
($109,89
7.52)
($120,65
8.04)
($120,65
8.04)
ROI $0.70
Conclusion
From the above discussion it can be concluded that Tianjin China explosion is one of the
most dangerous explosions to happen in history of China. China was not only affected due to
loss during the explosion, but it’s after effect was massive. Pollution caused due to this explosion
polluted water and citizens of China were drinking impure water causing to breaking of
epidemic. Acid rains were one of the major reasons that polluted the environment of China.
Recommendations are stated in this report which will help in preventing such disasters in future.
On following the strategies that are stated will ensure that there will be proper maintenance of
elements that are stored.

11TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
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