© 2009 Capaccio Environmental Engineering, Inc. “Helping Industry and the Environment Prosper”...

© 2009 Capaccio Environmental Engineering, Inc.

“Helping Industry and the Environment Prosper”

Pollution PreventionSaves Money By Reducing

Operational Risk

Robert B. Pojasek, Ph.D.

© 2009 Capaccio Environmental Engineering, Inc.

Pollution Prevention

The Pollution Prevention Act defines "source reduction" to mean any practice which:

•reduces the amount of any hazardous substance, pollutant, or contaminant entering any waste stream or otherwise released into the environment (including fugitive emissions) prior to recycling, treatment, or disposal •reduced the hazards to public health and the environment associated with the release of such substances, pollutants, or contaminants

The term includes: equipment or technology modifications, process or procedure modifications, reformulation or redesign of products, substitution of raw materials, and improvements in housekeeping, maintenance, training, or inventory control.

© 2009 Capaccio Environmental Engineering, Inc.

Making the Business Case

How does a business make the financial case for P2?

• Using the general ledger• Activity-based costing• Real options – more intangible items• Operational risk management

© 2009 Capaccio Environmental Engineering, Inc.

EMFACT Software

• Energy and Materials Flow and Cost Tracker• Used within companies for systematically tracking

materials and energy use, releases, discharges and wastes along with associated costs

• Seeking ways that can create value for company• Resource use and its relation to production and planning

that can help improve both business and environmental performance

© 2009 Capaccio Environmental Engineering, Inc.

Show Me the Money Principle

• Many companies maintain an interest in a green program• However, investing in lower risk is important to sustain the

management interest and grow your brand strength• Look at your entire value chain – suppliers can often

provide great ideas for P2 projects• Maintain a high level of employee involvement in these

programs – facilitation v dictation!

© 2009 Capaccio Environmental Engineering, Inc.

Types of Risk

• Financial Market Risk– Interest rates, currency, commodities,

equities– Socially Responsible Investment

• Business Risk• Operational Risk

© 2009 Capaccio Environmental Engineering, Inc.

Business Risk

• Business Continuity or disruption• Competition• Public Image• Liquidity Risk• Disruptive Innovation• High costs• M&A• Unrealized or lost revenue• Inappropriate management policy and or

decision making process

© 2009 Capaccio Environmental Engineering, Inc.

Operational Risk

The risk resulting from uncertainties related to internal processes, people and systems, or from external events

© 2009 Capaccio Environmental Engineering, Inc.

Framework for theAnalysis of Risk

Risk Assessment

1. Identify hazard and determine levels of exposure

2. Estimate risk

Risk Management

1. Develop options for controlling risks

2. Select appropriate strategy

“The culture, processes and structures that are directed towards realising potential opportunities whilst managing adverse effects”

ISO 36000

© 2009 Capaccio Environmental Engineering, Inc.

Managing the Risks

• Use proven tools and methods• Integrate risk management into the approach• Integrate the methods• Drive into the core business• Make the program part of what every employee does

every day• Make the program part of every management

decision

© 2009 Capaccio Environmental Engineering, Inc.

ISO 31000 – Risk Management

ISO/TMB WG on Risk management N 047Date: 2007-06-15ISO CD 31000Risk management — Guidelines on principles and implementation of risk management

Can integrate with ISO 14001 – Environmental Management System

© 2009 Capaccio Environmental Engineering, Inc.

Risk Appetite

• Risk Appetite” – “….at the organizational level, is the amount of risk

exposure, or potential adverse impact from an event, that the organization is willing to accept.”

» http://www.continuitycentral.com/feature0170.htm

• What is the Risk Appetite of your organization?

© 2009 Capaccio Environmental Engineering, Inc.

Risk Management Process

© 2009 Capaccio Environmental Engineering, Inc.

Risk Register

© 2009 Capaccio Environmental Engineering, Inc.

Probability/Impact Matrix

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Risk Map

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Risk Response Plan

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Risk Management

Regular checking &

Continuous Monitoring

Line Management

Review

Audit

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Organization Risk Management Program

© 2009 Capaccio Environmental Engineering, Inc.

Preventive Action Items• Preventive action #1• Develop Documented Risk Appetite Statement

– Include Reference to P2 Program

• Train all staff to develop preventive approach to risk• Preventive Action #2• New Management Review Element – “RM”

– Changes that could Affect the EMS

• Ongoing Preventive Actions #3 - ∞• Assess Risk – Source Reduction with Appropriate

Controls (P2)

20

© 2009 Capaccio Environmental Engineering, Inc.

Risk Identification methods include:• Scenario Analysis• Stress Testing• Real Options

Risk Analysis/Evaluation:• If possible, assign a $ value for expected impact (such as

profit reduction, revenue loss etc) of each risk event/scenario

• Conduct Sensitivity Analysis• See the impact of these risks on financial strategy of the

company

Risk Management and $$$

© 2009 Capaccio Environmental Engineering, Inc.

Take Away Points

• Top management understands risk• All employees and stakeholders understand risk• Risk can be expressed in financial terms• P2 opportunities are designed to avoid risk – positive risk• EMS Policy includes a commitment to P2• EMS has a requirement for preventive actions• Risk has a management system – ISO 31000• Integrating your EMS with ISO 31001 can set the stage

for an enhanced P2 program that is part of the way the organization is operated day-in and day-out!

© 2009 Capaccio Environmental Engineering, Inc.

Robert B. (Bob) Pojasek, Ph.D.508-970-0033 Ext. 137

rpojasek@capaccio.comwww.capaccio.comwww.iso14000.com