Speaker: Pieter Kruger, Cabot Corporation
Title: Demystifying Monte Carlo Simulations: A Surgical Risk Reduction Approach to Reduce Global Process Safety Risk
Abstract:: Businesses with more than one site strive to minimize operational variability across their entire organization. However, uniformly implementing company-wide standards is difficult because each site maintains its own personality – its own culture.
This paper explores the novel use of a risk minimization tool, commonly used to reduce financial risks in an investment portfolio, to help minimize the global process safety risk. This quantitative risk reduction approach combines the individual site’s process safety risks into a global business process safety risk model, uses a Monte Carlo simulation to determine which site-specific factors contribute the most to the overall business risk, and then helps the business prioritize and choose site-specific risk reduction efforts to help minimize its global risk. The model’s global process safety risk equation contains site-specific frequency and consequence terms, and includes an estimate for the site’s “Operational Discipline.”
The beauty of the Monte Carlo simulation is that the user can account for the uncertainty in the frequency by choosing a frequency probability function based on the range of possible best- to worst-case consequence scenarios. From the surgical perspective, a person (the whole organization) with cancer is often adversely affected when treated with chemotherapy.
The results from this approach, using the image of a “PSM Gamma Knife,” show how selective site-specific risk reduction treatments address each site’s process safety risk without adversely affecting the health of and overall risk to the whole business.