Tianjin China Explosion Incident Risk Analysis

Running Head: TIANJIN CHINA EXPLOSION INCIDENT RISK ANALYSIS
Tianjin China Explosion Incident Risk Analysis
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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