Doubtful that the acronym would make it past any corporate review, but the linkage between ESH risk and IT management is real. There have been plenty of reports on energy consumption by IT hardware, e-waste disposal concerns and chemical/metals content of electronics. But what has not seen much attention is the potential ESH risk posed from internet security breaches. Internet security breaches? A risk to environmental, health and safety? There has been a tremendous growth in computer-based operational controls in manufacturing and process lines. These computer systems can – and sometimes do – control activities such as chemical mixing, fuel flow, exhaust venting and pollution control equipment operation. If these computer systems were to become controlled through unauthorized remote access (in other words, a hacker), a great deal of damage could result. Here are a few scenarios that actually happened. During an IT security test, the “hacker” – a paid consultant in this case – found a way to control the fuel flow to a power generator. The “hacker” ended up running the generator far beyond safety limits, causing it to overheat and start a fire. Fortunately, this was done under controlled circumstances so no one was hurt, no collateral
Read more →Earlier this week the House Subcommittee on Rural Development, Entrepreneurship & Trade held a hearing on EPA’s proposal to classify coal ash (also known as coal combustion products (CCP)) as federally-regulated hazardous waste. Read more about the proposal. The press release released by the Subcommittee stated: During the hearing, entrepreneurs in the recycling industry said that a hazardous waste classification carries a stigma and would raise liability fears, making it difficult to use coal ash in building materials. Lawmakers also questioned whether the EPA had evaluated the full impact the proposed rule might have on small businesses. In one exchange with lawmakers, the EPA witness conceded that stiffer regulation of coal ash could potentially cause a 6 percent increase in electricity rates. Should coal ash be classified as hazardous waste, there is also a potential for third party claims for existing building materials that contain the material. Stay tuned.
Read more →Those of us from the South know the old joke: What does a redneck say before he goes in a hospital? Answer: “Hey Bubba – watch this…” Funny. But what isn’t so funny is that Russia has actually launched a barge that is intended to be the foundation for a floating nuclear power plant. And the head of the Russian nuclear regulatory agency has called the floating power plant “absolutely safe.” They must have hired Neptune, Poseidon, Zeus, Jupiter – and their entire mythological posses – to participate in their risk assessment and control program. That’s impressive. Read the article from Reuters. Perhaps senior level officials from Russia nuclear regulatory agency should come spend a summer in the south with Bubba and his friends. So what does a Russian nuclear agency official say before he creates a nuclear disaster? “Hey Comrade – its absolutely safe”.
Read more →Here is an interesting excerpt from a Reuters piece published yesterday: New York state’s pension fund plans to sue BP Plc to recover losses from the drop in the company’s stock price following the worst oil spill in U.S. history, state Comptroller Thomas DiNapoli said on Wednesday. DiNapoli said the fund owned more than 19 million shares when the Deepwater Horizon rig exploded in the Gulf of Mexico in April. “BP misled investors about its safety procedures and its ability to respond to events like the ongoing oil spill and we’re going to hold it accountable,” said the Democratic comptroller, who will stand for election in November in the race for New York comptroller. The Pension’s action – and it stated basis for the lawsuit – is dramatic evidence of the risk companies can face from shareholder activism in light of EHS matters. It further supports what BusinessWeek reported last week about the likely increased in shareholder demands related to EHS management and disclosure.
Read more →In years past, we have seen a small – but growing – amount of shareholder activism in publicly traded companies concerning sustainability and environmental matters. Several Fortune 500 companies have faced and defeated these attempts at requiring greater environmental risk assessment and disclosure. 2010 looks to be dramatically different. Setting the stage in 2008, TVA experiences a catastrophic failure of an ash pond in Tennessee that also prompts EPA to initiate their own risk assessment of similar ash ponds across the country. Then, SEC published its Interpretive Guidance on climate risk assessment/disclosure that is effective beginning this year. On the H&S front, Massey Energy faces a mine disaster that claims 29 lives and raises the profile of MSHA enforcement gaps. Now, BusinessWeek reports that investor groups are gearing up to require far more information and disclosure from the companies they invest in. Some highlights of the article: In the past, demands for risk disclosure tended to be viewed as hypothetical. In light of the Gulf disaster, [Robert Graham, founder and head of the environmental law practice at Chicago-based Jenner & Block] predicts that requests for such information will become more mainstream. “These issues are real and this disaster dramatically demonstrates
Read more →Business Insurance, one of the insurance/risk management industry’s top publications, today published an article highlighting The Elm Consulting Group International, LLC and Sentiment360. The article, BP spill response tars reputation, features Scott Marticke, COO of Sentiment360 and Lawrence Heim, Director of Elm’s Atlanta, office discussing BP’s environmental and reputational risk assessment in the shadow of the Deepwater Horizon spill in the Gulf of Mexico. Elm and Sentiment360 announced earlier this year the formation of a cooperative relationship to identify, track and assess reputational risk related to environmental, health, safety and sustainability matters.
Read more →The Risk Management Monitor recently posted a piece on a conversation with Bill Berkley, chairman and CEO of W.R. Berkley Corporation. W.R. Berkley Corporation was founded in 1967 and is now the 18th largest property and casualty insurer in the U.S. When the conversation turned to his thoughts on the Deepwater Horizon spill, he responded: I don’t think it’s an enormous lack of risk management in the offshore drilling industry, no. I think it was more a lack of understanding of all the alternative things that could go wrong. Generally, risk identification/assessment go hand-in-hand with risk management, so perhaps it isn’t critical to differentiate. But it is difficult to argue with someone as knowledgeable and successful as Mr. Berkley. Either way, it is critical that companies understand and evaluate a much wider range of risks/failures than perhaps was done in the past.
Read more →Those of us who have been in EHS auditing for awhile have faced this question, either as internal corporate staff or as an outside auditor. You know the situation – an EHS event occurs at a site, it gets reported up the management chain and the questions (and possible finger pointing) begin. How could we have let this happen? How come we didn’t know about this sooner? What did the last audit find? And finally….. Why wasn’t it found or addressed in the audit? Most EHSS audit programs were built to address compliance or management systems conformance. Today, companies are beginning to approach these questions in a constructive manner, looking to develop risk-based EHSS audit frameworks. We at Elm are frequently asked how to incorporate the concept of “risk” into audit programs. For those wondering where to start, here are a few tips: Use existing risk benchmarks within the company. There is no need for EHSS risks to use separate definitions. Actively and aggressively coordinate with all aspects of the company. The business impacts of EHSS exposures are relevant to a surprising number of functions and actitivities. Conduct a thorough EHSS risk assessment. During this process, encourage and embrace discussions
Read more →Our last entry discussed the concept of “Black Swan” events, a term created by noted author Nassim Nicholas Taleb to describe an event that is (a) so low in probablility that it is unforeseeable and (b) so catastrophic in impact that it changes history. Certainly, risk assessments are predictive in nature and no one can predict the future with complete certainty. But in our view, one of the best tools available for risk assessments is an open mind. This can be a challenge in the EHSS world as we generally have engineering and other technical backgrounds. We have been trained to seek absolutes and eliminate uncertainties. At Elm, we believe that involving external support helps to identify and explore events (and their related exposures) that are relevant but get “technically rationalized” by internal staff. With the BP oil spill and the December 2008 Kingston, Tennessee coal ash pond failure, we began thinking about some of the Black Swan events discussed with clients in the past. Below are a handful of EHSS Black Swan risk events that we have discussed with clients over the past years – and some that are currently on our mind. Radical change in EPA’s regulation of coal
Read more →OSHA has released the directive concerning its Severe Violator Enforcement Program (SVEP). It can be read here.
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