Risk Management Report: Analysis of Tianjin Port Explosion Risks

This report examines the major risks associated with the catastrophic 2015 Tianjin port explosion in China, focusing on effective risk management principles. It identifies financial, legal, environmental, and human resource issues caused by the disaster, assessing their impacts on engineering activities and environmental management systems. The report details a plan for measuring and monitoring performance using SMART objectives and analyzes strategic issues through supply chain risk management tools. It explores the application of research methods, such as risk assessment, as a decision-making tool, and discusses the importance of a risk communication plan and business impact analysis. The report also includes a personal reflection on the knowledge gained and the importance of regulatory compliance and contingency planning in managing such critical situations.

Running head: RISK MANAGEMENT
Risk management
Name of student
Name of University
Author note

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Table of Contents
Introduction......................................................................................................................................3
Identification and risk analysis considering the financial, legal, environmental and HR issues.....3
Plan for measuring and monitoring the performance......................................................................5
Processes used for analysing the strategic issues............................................................................6
Research principles and methods applicable...................................................................................8
Personal autonomy...........................................................................................................................9
Conclusion.......................................................................................................................................9
References......................................................................................................................................11

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Introduction
The report is presented to discuss the major risks that are associated with the huge
catastrophic explosion that occurred at Tianjin port in China in the year 2015. As the topic
focuses on the ways of managing risks, so the principles of risk management are considered here
as effective for controlling the risks and mitigate those too with ease and effectiveness. The risks
will be assessed here along with the mitigation plan with the inclusion of a cost benefit analysis
for controlling the risks with ease and effectiveness. The topic will also discuss the risk analysis
techniques and a suitable plan for monitoring the performances of business after the explosion
occurred (Meyer & Reniers, 2016). Various processes are used to analyse the strategic issues,
and suitable research methods such as risk assessment procedure shall be applied as a decision
making tool. Lastly, the personal reflection will be presented too to discuss the outcomes that
have been achieved with the help of risk management.
Identification and risk analysis considering the financial, legal, environmental and HR
issues
The explosions caused financial, HR, legal and environmental issues that created an
impact on the engineering activities at the port by stopping those and even harmed the safety and
efficiency of the environmental management systems (Park et al., 2013).
Financial
Due to the explosion caused at the Tianjin port, nearly 200 people faced severe death, and
many were left injured. The explosion was so devastating that it destroyed many buildings,
infrastructures, organisations that were present there and even the cars parked in that area. The

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dormitories were also destroyed that not only made many shop owners face loss but also created
shockwaves that were felt like earthquakes in the nearby areas. There was loss of property worth
nearly $2.5 to $3.5 billion (Glendon, Clarke & McKenna, 2016).
Environmental
It is certain that explosions like this can affect the environment negatively too. The port
area stored numerous storage containers holding chemicals and hazardous substances that
exploded and caused harmful gases to spread everywhere. As soon as the fire spread, fire fighters
put water which got mixed with the chemicals like calcium carbide and released poisonous gases
like acetylene, carbon monoxide and other harmful pollutants that damaged the ecological
balance in nature. The nearby plants, trees were the subject of destruction due to the fire and the
flames, gases further degraded the environmental condition and polluted everywhere (Aven,
2012). This made it difficult for people to breathe fresh air and even toxic gases deteriorated the
environment conditions.
Human resources
Human resources mean the employees who used to work in the port area and this can
help in enhancing the productivity level and make the organizations gain good profit in business.
Not only the explosion took the lives of many people, but also created difficulties for the workers
to perform to their potential. There were state officials too who were there to discuss the safety
standards and the explosion resulted in their deaths as well. The warehouse at Tianjin Dongjiang
Port Ruihai International Logistics was one of the major companies present there and many of
the workers there also died. The firefighters who came to the rescue, few of them also found
dead afterwards (Colicchia & Strozzi, 2012).

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Legal
The legal issues were that the safety standards were not maintained and among the 15000
storage containers holding the chemicals and hazardous substances, only a few of those were
checked, and the remaining were left unchecked. It was even ignored that the packaging was not
done properly, according to the organizational standards, which could also be the cause of such
explosion. Due to the lack of safety standards, proper measures were not taken, which created
legal issues afterwards for Tianjin Dongjiang Port Ruihai International Logistics. The explosions
went viral on social media and this mad the Government manage legal procedures for
overcoming this kind of issue faced by Tianjin Dongjiang Port Ruihai International Logistics
(Ghadge, Dani & Kalawsky, 2012).
Plan for measuring and monitoring the performance
Though there were no proper evidence regarding the cause of such explosion, still it
could be predicted that the explosion of 800 tonnes of ammonium nitrate had caused due to the
overheating of storage container holding dry nitrocellulose. It was also found that the quantity or
volume of hazardous substances and chemicals were over the permissible limit, which caused the
explosion and destructed the warehouse of Tianjin Dongjiang Port Ruihai International Logistics.
Among the vast numbers of storage containers, only a few were checked which further increased
the risks of explosion (Diabat, Govindan & Panicker, 2012). There were many casualties and
even the health care organizations became overcrowded because of so many patients.
The goals and objectives are to monitor the entire situation and develop
risk mitigation procedures by creating a stable position again. Based on the SMART objectives,
Specific objective is to identify the risks and measure the level of its effect from the financial,

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legal and environmental perspective. The objective, which can be measured, is to create an
effective communication plan and the achievable objective has been related to the focusing on
monitoring the performances of business in the area after the explosion. The relevant objective is
identifying the effects caused by the explosion whereas the time-bound objectives are to resolve
the risks within quick time and develop supply chain strategic management system to find
solutions to the risks and issues conveniently (Mabrouki, Bentaleb & Mousrij, 2014).
Figure 1: SMART objectives
(Source: Mabrouki, Bentaleb & Mousrij, 2014)
The supply chains of Tianjin Dongjiang Port Ruihai International
Logistics located at the port were destroyed, which created lots of financial, HR, legal and
environmental issues too. The Port facilities must manage proper compliance with the
organisational standards and even follow the legislation, acts, rules and regulations properly.
SToidentifytherisksandmeasurethelevelofitseffectfromthefinancial,legalandenvironmentalperspectiveMTocreateaneffectivecommunicationplanATofocusonmonitoringtheperformancesofbusinessintheareaaftertheexplosionRToidentifytheeffectscausedbytheexplosionatdevelopmitgationplanTTodevelopsupplychainstrategicmanagementsystemandfindsolutionstotherisksquickly

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According to the rules and regulations, the permission for storing 10 tonnes of chemicals is
applicable, and any more than that is over the actual allowable quantity (Wieland & Marcus
Wallenburg, 2012).
Processes used for analysing the strategic issues
The supply chain strategic risk management tool can be applied to maintain proper health
and safety standards for avoiding such kinds of explosions again and ensure early prediction of
such kinds of risks. Continuous assessment and monitoring of the supply chains at Tianjin
Dongjiang Port Ruihai International Logistics should be done for allowing proper strategic
implementation, risk management procedures and reduce chances of vulnerabilities through the
implementation of effective strategies. By analysing the issues, it is important for the Port
facilities located in Tianjin to make sure that the chemicals that are stored in the storage
containers do not exceed the quantity that has been permissible. This kind of tool also acts as a
decision making to identify the daily and exceptional risks and supply chains through proper risk
assessment (Serpella et al., 2014). This would help in reducing the chances of vulnerability and
ensure continuation of services at the port soon. The contingency plan is developed with the
implementation of a supply chain risk management procedure with the use of latest technologies
for mitigating the catastrophic incidents and ensures that the safety standards are maintained
properly. Among the numerous storage containers, only few were checked, which contained
hazardous chemicals and the remaining that were not checked might be the cause of such
explosion at Tianjin port in China (Bahr, 2014).
The risk communication plan is another process to analyse the strategic issues, evaluate
the effects of such kinds of risks including the discontinuation of trade related services and fulfill

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the duties of regulatory compliance for protecting the people and the port area from any kinds of
risks arising from the explosion at Tianjin port. The risk communication plan is promoted by
Tianjin Dongjiang Port Ruihai International Logistics through delivery of training sessions to the
workers for making them informed about the safety rules and organizational standards that
should be maintained. Another effective process is the business impact analysis or BIA that
could identify the resources required for mitigating the risks and prevent any damages to the
property, people and the environment (Nickel et al., 2012).
Research principles and methods applicable
Following are the research questions derived:
How could the various strategic, financial, legal and environmental issues affect the engineering
activities?
What positive impact would be created with the help of effective risk assessment methods?
The risk assessment technique is an useful decision making tool, because it can help in
adhering to the needs of segregation for the hazardous substances. The risk assessment procedure
has identified the risks and allowed the International Maritime Organization to provide
guidelines for maintaining safety standards. The risk assessment has even identified the financial
issues related to the claims for insurance money by many companies and individuals. This
facilitated the processes of review and assessment of various aspects of the insurance policies
and managed coverage for the property or number of lives that were lost during the accident. The
risk assessment could mitigate the impacts of these issues on the business operations and finance
of Tianjin Dongjiang Port Ruihai International Logistics by making a list of all the resources
related to global connections (Meyer & Reniers, 2016). By obtaining information about the

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issues and its impacts, it would be easy to develop alternative sourcing, storage, transportation
and distribution to ensure that the condition of the port is retained.
Though the risk assessment technique has several benefits, there are few drawbacks and
limitations as well including lack of ability to predict the incident at earlier stages. All the
storage containers should have been checked because these contained hazardous chemicals and
substances that were needed to be checked before delivery. Due to the lack of knowledge, skills
and expertise among the port workers, the risks might not be assessed properly, further could
lead to other negative impacts on the functioning of Tianjin Dongjiang Port Ruihai International
Logistics as well (Park et al., 2013).
Personal autonomy
From the report, I have obtained all the necessary information about how risks are
managed during such catastrophic incidents. I have obtained knowledge about the different types
of risks that have arisen along with the SMART objectives that are needed to be achieved. I think
that Chinese laws, rules and regulations must make it mandatory regarding the location of the
storage facilities at 1000 meters away from the places where people live. The rules were
violated, and even all the containers had not been checked properly, which had resulted in
managing risk assessment techniques for identifying the risks and mitigate those. The supply
chain risk management technique was utilized to analyse the supply chains and its associated
risks resulting from the explosion at Tianjin port (Aven, 2012). I believe that regulatory
compliance obligations must be assessed to manage improvements in protective measures,
deliver emergency responses and even plan for effective training activities to keep the workers in
that area well informed about ways of maintaining safety. The business impact analysis has been

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considered by me as effective to manage the assessment of critical activities and enable active
monitoring to improve the supply chain activities. According to me, these ways or approaches
undertaken could develop contingency plans and resolve the issues that were faced during a
critical situation, which is beyond control (Colicchia & Strozzi, 2012).
Conclusion
The report was prepared for assessing the different types of risks that had created
negative impacts on the engineering activities at Tianjin port, China. Few issues included
destruction of many buildings, cars, creating negative effect on the environment, not complying
with the Chinese rules and regulations, etc. To measure and monitor the performance, it was
needed to maintain a limited amount of chemicals stored in the containers and accomplish the
SMART objectives too. The objectives were to identify the risks, assess those, determine its
effects, create an effective mitigation or contingency plan and develop supply chain strategic
management system for handling these risks Tianjin Dongjiang Port Ruihai International
Logistics in Tianjin port. The risk communication plan had been effective for ensuring that the
regulatory mechanisms complied with the safety standards while the business impact analysis or
BIA had prevented the issues and prevented damage to property and loss of lives.

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References
Aven, T. (2012). Foundational issues in risk assessment and risk management. Risk
Analysis, 32(10), 1647-1656.
Bahr, N. J. (2014). System safety engineering and risk assessment: a practical approach. CRC
Press.
Colicchia, C., & Strozzi, F. (2012). Supply chain risk management: a new methodology for a
systematic literature review. Supply Chain Management: An International Journal, 17(4),
403-418.
Diabat, A., Govindan, K., & Panicker, V. V. (2012). Supply chain risk management and its
mitigation in a food industry. International Journal of Production Research, 50(11),
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Ghadge, A., Dani, S., & Kalawsky, R. (2012). Supply chain risk management: present and future
scope. The International Journal of Logistics Management, 23(3), 313-339.
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Mabrouki, C., Bentaleb, F., & Mousrij, A. (2014). A decision support methodology for risk
management within a port terminal. Safety Science, 63, 124-132.
Meyer, T., & Reniers, G. (2016). Engineering risk management. Walter de Gruyter GmbH & Co
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Nickel, S., Saldanha-da-Gama, F., & Ziegler, H. P. (2012). A multi-stage stochastic supply
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511-524.
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