ENTERPRISE RISK MANAGEMENT An ISO 31000 based …ecrisponsor.org/Npresentations/aj12-1-6.pdfStamicarbon’s continuous high-quality innovations, in close cooperation with research

ENTERPRISE RISK MANAGEMENT An ISO 31000 based approach

Tecnimont Vice President – QHSE

Frédéric Veny

Sofregaz Joint Managing Director

Fabrizio Bosia

6 – 7 June 2012, Paris

ECRI SPONSORS MEETING

1. Maire Tecnimont Group: Corporate Presentation

2. Sofregaz Presentation

3. Why Implement ERM in Sofregaz?

4. A Few Definitions

5. The Contours of the Concept of Risk

6. Context Elements on ISO 31000:2009

7. The Framework and Risk Process in Sofregaz

8. And Now What?

AGENDA

2 ECRI Sponsors Meeting Paris, 6 – 7 June 2012

CORPORATE PROFILE

A leading Engineering, Main Contracting and

Technology Licensing Group operating worldwide

in Oil & Gas, Petrochemicals, Power, Renewable

Energy and Infrastructure sectors

Advanced skills in EPC and Process Engineering

services for complex turnkey projects in different

countries and regions

Safety culture and zero incident target

Key competences in Licensing and Intellectual

Property

Strong technology orientation and innovation

culture

Specific focus on environment with key

competences in renewable and research activities

in nuclear energy


GROUP’S LEADERSHIP

Some 140 polypropylene and polyethylene plants delivered worldwide and a share of

approximately 30% of global polyolefin capacity installed in the last six years, including a 40% share in LDPE

The largest gas treatment plant ever awarded in Abu Dhabi (UAE) on a LSTK basis (US$4.7 billion)

More than 230 power plant projects executed or under construction in Italy and abroad, with an installed capacity of more than 20,000 MW

Designing more than one-third of the high-speed railway network in Italy and acting as the EPC contractor for the first automated metro system in Italy

World market leader in urea technology, with more than 250 plants licensed worldwide. A market share of more than 50% in licensing grass-roots urea plants and in urea revamping technology, and a market share of more than 35% in licensing urea granulation technology

World market leader in licensing hydrogen technology, with single train capacity up to 180,000 Nm3/h

World market leader in licensing Sulphur Recovery and Tail Gas Treatment Technology with design capacity of single train up 1,500 t/d


Presence of Maire Tecnimont Group

EXTENSIVE INTERNATIONAL PRESENCE: OUR EMPLOYEES

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About 5,300 employees, half of whom are employed outside Italy

Presence in more than 30 countries with over 50 operating companies

Italian headquarters: Milan

Figures as of 31 December 2011

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Maire Tecnimont safety performances: zero incident targets

* Key Performance Indicator. * * OSHA – Lost Time Incident Frequency. * * * OSHA - Total Recordable Incident Rate. (1) Source: International Association of Oil & Gas Producers. Report No 455, May 2011. Safety Performance indicators - 2010 data. Contractor aggregated data. (2) Source: CII – Benchmarking & Metrics. Safety Report 2007. Aggregated data 2006 (BMM 2007 02 December 2007).

COMMITMENT FOR HEALTH AND SAFETY

Environment, Health and Safety Management System as core value and personal

commitment

Integrated HSE Management System constantly reinforced, diffused, checked and

upgraded with results considerably higher than international standards

GROUP FINANCIAL DATA - REVENUES

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2,536

2,180

2,646

In € million

Infrastructure and Civil Engineering

Power

Oil,Gas and Petrochemicals

2011 REVENUES: BREAKDOWN

All figures are rounded, ensuring total sum to 100%

ECRI Sponsors Meeting Paris, 6 – 7 June 2012

Wide range of competences from feasibility studies to FEED, technology selection and project implementation on a lump-sum turnkey basis:

• gas production and treatment, LNG liquefaction and regasification, underground gas storage, transmission and compression, distribution and pumping stations, aromatics complexes, refinery units, propane dehydrogenation (PDH)

• historical leadership in chemicals & petrochemicals, in particular: polymers (PE and PP), ethylene oxide and ethylene glycol, PTA, ammonia and fertilizers

• complete solutions for fertilizer business including technology licensing, EPC projects and O&M

OIL, GAS & PETROCHEMICALS

Main Clients

EPC - OIL, GAS & PETROCHEMICALS and POWER

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The business unit, also thanks to the special know-how in state-of-the-art gas turbines inherited from Fiat Avio, has developed excellent capabilities in Italy and abroad in EPC projects for power plants:

• simple-cycle and combined-cycle gas-fired power plants

• coal-fired power plants

• hydro, biomass and waste-to-energy plants

• cogeneration

• re-powering

• electrical and energy distribution systems for civil and industrial use

• district heating systems

POWER

Main Clients


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Thanks to Stamicarbon, the Group sells proprietary know-how and delivers services to current and prospective urea producers.

Its main activities are:

• licensing new urea plants and urea granulation plants

• revamping existing plants, with several debottlenecking services

• supply of proprietary equipment

• delivering Full Life-Cycle Support comprising a range of services, from planned inspections and maintenance, troubleshooting, to round-the-clock emergency assistance.

Stamicarbon’s continuous high-quality innovations, in close cooperation with research institutes, suppliers and customers.

Description

Main Licenses

LICENSING & TECHNOLOGY – UREA


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Maire Tecnimont aims at leveraging on its unique set of EPC and Engineering and Technology Services, to fully address the complex projects

value chain from project development and financing down to operation & maintenance, including acquiring stakes in

selected assets in a private equity perspective

ENERGY & VENTURES

Investments promotion in renewable energy through Met NewEn, with a particular emphasis on biomass and solar

20 MWe Olevano Biomass Power plant under realization: deliver 140 Gwhe/y of renewable energy, consuming roughly 200,000 tons/year of biomass. 70% of the plant’s wood chips will come from a short supply chain, with economic and social benefits to the local area.

Next target: developing know how and promoting technical innovation, leveraging on synergies and competences of the Group’s companies

Analyse and select investment opportunities based on technical/economic feasibility studies, guarantying all the required permits and relevant project financing


INFRASTRUCTURE

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Main Clients

Providing partial or global services for the realization of:

• railways including high speed/high capacity

• underground metro systems - building of the Italy’s first

completely automatic (driverless) underground mass transportation system in Turin, implementing the VAL (automated light vehicle) Technology

• highways and motorways

• tunnels

Highly specialized services in re-qualification of industrial sites, design and build of complex works (hospitals, universities, offices, facilities)

Multidisciplinary approach with special focus on risk management and environmental issues

As General Contractor, Maire Tecnimont offers integrated services in the design and construction of transport systems


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http://www.italferr.it/english/default.asp

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F. Veny

Joint Managing Director


Other Companies…

MET GROUP STRUCTURE








8. And Now What?

AGENDA


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SOFREGAZ: AN OVERVIEW

• A fifty-year experienced Engineering

and Contracting Company specialised in

natural gas

• Worldwide experience with more than

850 executed projects in 70 countries

• Organisation based on 150 employees

including all engineering disciplines

• Based in Paris area, SOFREGAZ is fully

integrated within Maire Tecnimont

Group

• SOFREGAZ is certified ISO 9001, ISO

14001 and OHSAS 18001


SOFREGAZ HISTORY

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Creation of Sofregaz, Subsidiary

of Gaz de France

1959 2000

acquisition of 66% of the capital by Tecnimont

2005 2008

Sofregaz fully integrated in

Tecnimont sole shareholder

of Sofregaz


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SOFREGAZ: AN OVERVIEW

All through the Gas Chain, SOFREGAZ offers:

• Feasibility/Conceptual studies

• Basic & Detailed Engineering

• Project Management Consulting

• Procurement / Sourcing

• Construction Supervision

• Commissioning & start-up

• EPC Projects in Partnership or

integrated within Tecnimont

SOFREGAZ references Breakdown by geographical area


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ALL THROUGH THE “GAS CHAIN”

• Production, treatment

• LNG and LPG

• Transmission systems – Pumping

and compression

LNG RECEIVING

TERMINAL

HAZIRA INDIA

GAS TREATMENT

WAFA LIBYA

COMPRESSION STATION

S3-S6 IRAN


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PROCESS AND KNOW-HOW

PRODUCTION AND TREATMENT (gas and oil fields)

• Oil/gas gathering & separation

• Dew point adjustment

• Sweetening

• Dehydration

• LPG extraction

• Crude oil stabilisation

• Gas-lift

• Gas re-injection

References:

• Dalan natural gas treatment plant (Iran)

• Mesdar natural gas reinjection facility (Algeria)

• R4-R5 natural gas boosting stations - phases II and III (Algeria)

• Wafa gas treatment facilities (Libya)

• FEED for the Kharg Island NGL recovery plant (Iran)


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LIQUEFIED NATURAL GAS (LNG)

• Peak shaving plants

• LNG production units

• Receiving and storage facilities

References:

• Revithoussa LNG receiving facilities (Greece)

• Bilbao LNG terminal (Spain)

• Shanghai PuDong LNG peak shaving facilities (China)

• Guangdong LNG Terminal (China)

• Hazira LNG Terminal (India)

• Expansion of Revithoussa LNG receiving facilities (Greece)

• Fos Cavaou LNG Terminal (France)

• FEEDs for Dunkerque (France) and Panigaglia (Italy) LNG terminals

• FEED for Hainan LNG Terminal (China)


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PIPELINE TRANSMISSION & COMPRESSION

• Gas and liquid pipelines

• Pumping and compressor stations

• Telecommunication and SCADA systems

References:

• Beattock natural gas compressor station (United Kingdom)

• Brighouse Bay natural gas compressor station (United Kingdom)

• S3 S6 natural gas compressor stations (Iran)

• FEED Turkey - Greece natural gas pipeline

• FEED GALSI: Algeria-Sardinia-Italy natural gas pipeline stations









8. And Now What?

AGENDA


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How Sofregaz pioneered the implementation of an ERM

As in many organizations, only brutal events give sufficient momentum to start a

change.

In 2009, the sudden realization, at Management Committee level, that the yearly

anticipated Company’s result could be compromised by one single event (not a

project risk – known but not considered to be potentially immediate) pushed

SOFREGAZ to put in place a systematic identification and treatment of such

“risks”.

WHY IMPLEMENT ERM IN SOFREGAZ?


WHY IMPLEMENT ERM IN SOFREGAZ?

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Beginning of the project

2009

This implementation project was named ENRICO,

an acronym that stands for ENterprise RIsk Control.

Early 2010

Support from an external company

Mid 2010

Running tool – Risk start to be manager









8. And Now What?

AGENDA


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ERM – A FEW DEFINITIONS

• ENTERPRISE

An organization created with the purpose to achieve a given set of objectives

• RISK

The effect of the uncertainty on the achievement of objectives

• MANAGEMENT Coordinated activities to direct and control an Organization towards the fulfillment of its goals


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ERM – A FEW DEFINITIONS

• ERM (Enterprise Risk Management)

ERM is a structured process, coherent and continuous, applied across the

enterprise, designed to identify, evaluate, manage and report potential risks,

either adverse or beneficial, that may affect the entity and provide

reasonable assurance regarding the achievement of organization objectives.









8. And Now What?

AGENDA


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CONTOURS OF THE CONCEPT OF RISK

Contours of the concept of risk – evolution in time:

From time immemorial Risk has been equal to Danger

(hence the adverse concept of Safety)

RISK = DANGER

• For example:

Fire is a danger.

Risk prevention is: eliminate fire.


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Then the concept of Risk broadened to “Effect of danger”

RISK = EFFECT OF DANGER

• For example:

Fire has beneficial effects but also adverse effects.

Risk prevention is: reduce adverse effects.


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Then again the concept grew to “the possibility of a damaging effect”

RISK = POSSIBILITY OF A DAMAGING EFFECT

• For example:

Fire has beneficial effects but also adverse effects.

Risk prevention is: reduce adverse effects.


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A more recent acceptation of risk is

«the combination of the occurrence and the impact» of an event.

RISK = COMBINATION OCCURRENCE/IMPACT

• The risk prevention is: reduce either the occurrence (or its probability),

or the impact, or both. However, this concept introduces also some notions

of thresholds, limits, acceptability.

Security is defined as the absence of inacceptable risks: is this acceptable?


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ISO 31000 has come up with a new contour of risk:

RISK = EFFECT OF UNCERTAINTY

ON THE ACHIEVEMENT OF OBJECTIVES

• Emphasis is placed on:

• the objectives;

• the fact that uncertainty will always be there;

Risk prevention is: the decisions made to increase the chances of

achieving the objectives.


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Contours of the concept of risk (continued):

CONTOURS OF RISK CONCEPT

CENTERED ON DANGER POTENTIAL EVENT ACHIEVEMENT OBJECTIVES

TYPE 1 PHYSICAL ABSTRACT HUMAN

TYPE 2 DETERMINISTIC PROBABILISTIC UNCERTAIN

ACTORS TECHNICIANS ENGINEERS MANAGERS & ALL

PREVETION ACTORS CONTROL THE TECHNOLOGIES ANALYZE MODELS OPTIMIZE & ARBITRATE









8. And Now What?

AGENDA


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Context:

• The ISO 31000:2009 “Risk Management” is an international reference

published in 2009, a synthesis of national standards.

• As the other ISO standards, it is based on a voluntary implementation in

Organizations.

• It does not give rise to Certification, at least not until 2014, when ISO 31004

will be published – a guide that will codify the implementation of Risk

Management.

CONTEXT ELEMENTS ON ISO 31000:2009


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Consequences:

For the time being, the decision to implement ISO 31000 is left to each organization.

Each organization can decide to:

• suits its own pace

• be prepared to adopt a later more formalized approach.

CONTEXT ELEMENTS ON ISO 31000:2009


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ISO 31000: PRINCIPLES-FRAMEWORK-PROCESS









8. And Now What?

AGENDA


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CLASSIFICATION

The risks are classified along 4 main defined sectors:

RISK MANAGEMENT IN SOFREGAZ

OPERATIONS RISKS • Projects

• Financial

INFRASTRUCTURE RISKS • Work Environment

• Lack of Resources

• People Skills

IMAGE RISKS • Image

• Juridic

STRATEGIC RISKS • Innovation

• Non Development

• Strategical


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improbable

very probable

not severe critical

PROBABILITY The probability is also graduated with 4 levels, from 1 to 4

For each of the identified risks, two dimensions are defined:


GRAVITY

The impact for each risk adopts 4 levels from 1 to 4. Each level is graduated on a different scale, appropriate to the classification of the considered risk.


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RISK CARTOGRAPHY

Each risk can now be placed in a Matrix 4x4 (Probability/Gravity), along the two

defined dimensions:



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RISK CARTOGRAPHY

Then all the identified risks can also be presented in this same Matrix 4x4

(Probability/Gravity):



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RISK SHEET

Each Risk is described in a dedicated

sheet with the following important

characteristics:

• the number and designation;

• the classification type;

• the gravity and probability levels;

• the description;

• the control level;

• the risk prevention actions;

• the expected new levels of gravity and

probability, once the actions have been

completed;

• the expected new level of control;



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Then the overall risks identified can be cartographied in two matrices

Probability/Gravity:


• one with the number of risks in each of the cells before treatment.

• the other after treatment by the actions.


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Then two other dimensions are defined:

• CRITICITY

The criticity level is obtained by adding the Gravity level and the Probability level.

Hence the criticity level associated to an individual risk may vary from 2 (1+1) to

8 (4+4)

• CONTROL

The control level is the amount of control that the organization possesses on the

risk. It varies from 1 (no control-external) to 4 (tight control-documented).



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RISK CARTOGRAPHY

Then similarly the risks can now be placed in a new Matrix (Criticity/Control):



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TURBOLENCE INDEX

From these matrices Criticity / Control, an indicator is derived, called “Turbulence

Index”, which is calculated:

• Before treatment

• after actions are completed


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THE USE OF THE “TURBULENCE INDEX” IS THREEFOLD:

1 - the index being displaced by the preventing action towards the lowest criticity and

the highest control is an indicator that actions are being fruitful.

2 - the index should stay close to the diagonal that is the optimum area where control efforts are in relation with the criticity. If under the diagonal, then one can question a disbalance on the Risk Management efforts: too many efforts (index on the right quadrants) spent on a low criticity (index on the lower quadrants).


3 - the turbulence index is used for communication since it has been selected as an indicator for the Risk Management activity.









8. And Now What?

AGENDA


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ERM – AND NOW WHAT?

As a conclusion, the

ERM put in place in

SOFREGAZ is based on:

• a Framework

• a Risk Management Process

as required by ISO 31000.


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As such, the ERM implementation in SOFREGAZ has now passed the first stage:

to have the system running.

However the Risk Management in place is not fully compliant yet with ISO 31000

This is the consequence:

• partly of the choice of having a running system first,

• Party of simplifying assumptions taken along the way.



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Hence, the ERM is subject to continuous improvement actions in order to:

• Better suit the needs of Sofregaz organization,

• Strenghten the adequation with the principles of ISO 31000.



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ERM – ISO 31000 : Principles-Framework-Process


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ERM – AND NOW WHAT ?

How do we do on ISO 31000 principles?


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ERM – AND NOW WHAT ?

How do we do on ISO 31000 principles?


[email protected] – www.mairetecnimont.com

Via Castello della Magliana, 75 00148 Rome

Ph.+39 06602161 Fax +39 0665793002

Rome

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(The Netherlands) Ph. +31 46 4237000 Fax +31 46 4237001

Sittard

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20124 Milan

Ph. +39 02 6313.1 Fax +39 02 6313.9052

Milan

Viale Monte Grappa, 3

20124 Milan

Ph. +39 02 6313.1 Fax +39 02 6313.9052

Milan Via Gaetano De Castillia, 6A

20124 Milan

Ph. +39 02 6313.1 Fax +39 02 6313.9052

Milan

Milan

Via Gaetano De Castillia, 6A

20124 Milan

Ph. +39 02 6313.1 Fax +39 02 6313.9052

Group’s Headquarters

Rome

Via Castello della Magliana, 75 00148 Rome

Ph.+39 06602161 Fax +39 0665793002

Registered Office

Documents

ENTERPRISE RISK MANAGEMENT An ISO 31000 based …ecrisponsor.org/Npresentations/aj12-1-6.pdfStamicarbon’s continuous high-quality innovations, in close cooperation with research