How to lessen the risks of doing business
Once the risks have been identified, mitigating measures and barriers should be put in place to reduce the likelihood of an event occurring. For example, a physical barrier between traffic and bike lanes is a better mitigation than a painted, visual distinction between lanes. That said, even the most stringent measures are not always enough. Controls developed at the inception of a project should be maintained throughout its life cycle – from design, through construction, into operations, and decommissioning. In short, they must function until there is no longer a risk. This requires comprehensive change management to maintain the integrity of the facilities, even post-closure.
What’s at stake?
Addressing catastrophic risks – aside from being the right thing to do – has numerous benefits for a client or company:
- Reputation and license to operate. Some large companies can survive the reputational impact of a catastrophic event, but many won’t. A small company that causes catastrophic environmental damage is likely to see its license revoked, and local opposition can prevent it from ever being reinstated.
- Health & safety. In today’s business world, workplace injuries – no matter how minor – aren’t acceptable.
- Environment. With seemingly every company seeking to boost its green credentials, a catastrophic event such as a massive hydrocarbon or chemical spill is more damaging than ever.
- Financial health. A significant catastrophic event will typically involve asset damage, which is costly to repair, and can even prevent an asset from generating revenue. Companies can face additional financial hurdles depending on the nature of the event. Additionally, an event that causes loss of life, damage to the environment or property, can all result in fines and lawsuits.
- Criminal prosecution. Less often spoken about directly, concern about the criminal prosecution of executives can be inferred from conversations about catastrophic events (e.g., catastrophic tailings dam failures).
- Operational performance. Units and businesses with top performing safety organizations are often top performing financial businesses too. Strong risk management can be an indicator of strong team performance.
- Personal integrity. No one wants their area of the business to experience an event that negatively impacts multiple colleagues and families, the company, and their own reputation.
No need to take unnecessary risks
At Hatch, we offer unique, innovative solutions that reduce the inherent risks of your projects while increasing safety and reliability.
Identifying and effectively controlling catastrophic risks – whether for a tailings dam or any other industrial asset – cannot be done through regulatory compliance alone. Clients today realize they must also consider the intermingling influences of design, change management, and their organization’s structure when dealing with the risks of catastrophic events that could adversely impact their companies.
Which is a smart move. After all, to do otherwise would be quite risky.
Principal, Advisory, Advisory
Ryan has over fifteen years of experience in the mining and metals, energy, and infrastructure sectors. His experience includes M&A due diligence, valuation, business improvement, strategy, benchmarking, and market research. As a Principal in Hatch’s global head office near Toronto, Canada, he is currently leading a catastrophic risk management program on behalf of a large, global, diversified commodities firm.