A System for Prioritizing Audit Sites According to Risk

The Phylmar Group, Inc.

1) Objectives

Develop a system to select and prioritize sites for environmental, health, and safety (EHS) audits

Why?

– Cannot audit all operations

– Need to set priorities based on risk management concepts

System should:

– Apply standard criteria to all sites and prioritization decisions

– Generate reproducible results

– Consider quantitative and qualitative data

2) System Concepts

System rates each audit site according to types of risk….

– Inherent risk (IR): fixed due to nature of operations

– Manageable risk (MR): changeable due to management

…..and risk control activities

– Risk control (RC): EHS programs

Audit site rating is derived from formula:

0.4*[IR] + 0.6*[(MR) – 0.5*(RC)]

For each type of risk, priority groups are established and weighted within the audit site rating formula to reflect potential impacts to operations, people, and environment

Parameter rankings within priority groups are assigned, averaged, and weighted to achieve audit site rating. Some of the parameters include number of years site has been operational, population density within one mile of the site, and number of fatalities since the last audit.

3) Step-by-Step Use

Inputs: Questionnaire for each audit site

Definitions and rankings fo parameters

Spreadsheet with priority formulas

For each audit site:

1. Select ranking for each parameter

2. Enter parameter rankings in spreadsheet

3. Calculate audit site ranking

4. Repeat for all audit sites

5. Compare ratings and assign order and frequency to audit activities

4) System Customization

System can be customized to reflect audit program goals

Rating formula, priority groups, and parameters can be changed

– Content

– Definitions

– Additional Risks (e.g., transportation, product safety)

System can be placed in framework of EHS management systems