The

Corporate Social
Responsibility

Business Business Flexibility

Case for
PROCESS
SAFETY
Loss Prevention

4th Edition

Sustainable Growth

Leadership
Excellence
 SINCE 1985, The Center for Chemical Process Safety (CCPS) has helped
manufacturers, insurers, government, academia, and consultants work together
to improve process safety. CCPS and its members are committed to protecting
employees, communities, and the environment by developing engineering
and management practices to prevent or mitigate catastrophic releases of
chemicals, hydrocarbons, and other hazardous materials.

Copyright © 2018
Center for Chemical Process Safety of the American Institute of Chemical Engineers
120 Wall St., 23rd Floor, New York, NY 10005

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system,
or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or
otherwise without the prior permission of the copyright owner. AIChE™ and CCPS® are trademarks
owned by the American Institute of Chemical Engineers. These trademarks may not be used without
the prior express written consent of the American Institute of Chemical Engineers. The use of this
product in whole or in part for commercial use is prohibited without prior express written consent of
the American Institute of Chemical Engineers. To obtain appropriate license and permission for such
use contact the Center for Chemical Process Safety at +1.646.495.1371 or [email protected].

CENTER FOR CHEMICAL It is sincerely hoped that the information presented in this document will lead to an even more
PROCESS SAFETY impressive safety record for the entire industry; however, the American Institute of Chemical Engineers
AMERICAN INSTITUTE OF (AIChE), its consultants, the AIChE’s Center for Chemical Process Safety (CCPS) Technical Steering
CHEMICAL ENGINEERS Committee and the Project 285 Subcommittee members, their employers, their employer’s officers
and directors, and Scott Berger and Associates LLC and its subcontractors do not warrant or represent,
120 Wall St, 23rd Floor expressly or by implication, the correctness or accuracy of the content of the information presented
New York, N.Y., 10005, U.S.A. in this book. As between (1) the AIChE, its consultants, the CCPS Technical Steering Committee and
TEL: +1.646.495.1371 Subcommittee members, their employers, their employer’s officers and directors, Scott Berger and
E-mail: [email protected] Associates LLC and its subcontractors, and (2) the user of this document, the user accepts any legal
www.ccpsonline.org liability or responsibility whatsoever for the consequence of its use or misuse.

2
 THE BUSINESS
CASE FOR
What separates the top-performing chemical, PROCESS
oil, gas, and related companies from the rest?
SAFETY
IN ONE WORD, SUSTAINABILITY. Without sustainability, a company may have a
streak of strong quarter-over-quarter growth. But that ultimately ends, sometimes
spectacularly. Financial decline is also precipitated by causes other than process
safety incidents. However, declines frequently involve the same kinds of leadership
and management system failures that precipitate process safety incidents. “We have seen process safety benefit
our business in many ways. It made
Sustaining a high level of process safety performance leads to numerous benefits. us competitive and it certainly has
Benefits appear in top line revenue, bottom line profit, cash flow, company helped our bottom line.”
valuation, and stock price. This requires leadership – the kind of strong, felt, ARNEL SANTOS
leadership that benefits other business areas as well. SVP Operations
NOVA Chemical Corporation
This, in short, is the fundamental Business Case for Process Safety. A company which
integrates strong leadership and management of process safety into the heart of its
business reaps numerous benefits.

This finding originated from a study conducted by the Center for Chemical Process
Safety (CCPS) between 1999-2002. Incidents since that time have only provided
further evidence for this conclusion, leading to this 4th edition of the publication.

Based on recent industry experience, process safety benefits companies in five

ways. All these benefits make it indispensable for companies of all sizes to achieve
manufacturing excellence and increase profitability and shareholder value.

The Five Benefits of

Cost Reduction Value Creation
Process Safety
Quantitative

Loss Prevention Sustainable Growth

Leadership
Excellence
Qualitative

Corporate Social Business Flexibility

Responsibility

3
THE BENEFITS
OF PROCESS
A BUSINESS CASE for process safety should not be necessary. The need to protect
SAFETY workers, the community, and the environment is as obvious as the need to protect
market share, provide & protect shareholder value, and make payroll. But with
the many daily demands of business, the obvious can sometimes be left behind.
“I commend CCPS
When a company leaves process safety behind, they miss significant financial and
for this work because organizational benefits described in this publication.
recent incidents
have shown an This benchmark survey of CCPS member companies, combined with data from
even stronger link other sources, provides conclusive evidence that methodically implementing
between process safety excellence and process safety delivers five benefits that help the company to sustainability. These
sustainable growth. We have seen benefits range from quantitative to more qualitative, and from value creation to
process safety benefit our business in cost reduction.
many ways. Process safety excellence
enabled us to be actively sought after
and become a partner of choice. It The Benefits
made us competitive and it certainly
1. Corporate Social Responsibility
helped our bottom line. Process safety
Process safety helps make a company more attractive
is a fundamental tenet of every
successful business.”
to employees, communities, governments, insurers and
investors. This opens the door to the second benefit…
ARNEL SANTOS
SVP Operations
NOVA Chemical Corporation
2. Business Flexibility
Companies considered welcome by communities and
governments can expand and evolve with fewer social
or political barriers. Equally important, major incidents
can sap human and financial resources that could
otherwise be focused on growth. Process safety helps give
companies the ability to determine their own future by
avoiding them.

3. Loss Prevention
Any major process safety incident results in an obvious direct financial loss. How-
ever, losses can extend beyond onsite and offsite damage and injuries. Especially
with severe incidents that cause property & environmental damage, companies
can suffer adverse financial losses including cash shortfalls, sometimes forcing asset
sales often at significantly below their value.

4. Sustainable Growth
Process safety requires that processes be well-controlled and reliable, and that
every person in the organization fulfills their process safety responsibilities faithfully.
This results in increased productivity and quality.

5. Leadership Excellence
Process safety requires heartfelt and involved leadership,
as well as rigorous management to ensure responsibilities
are carried out consistently and reliably. These practices
carry over to all other business areas.

4
 WHAT IS
PROCESS
PROCESS SAFETY is a management system which controls a wide range of
operational, cultural, and technical activities essential for preventing incidents SAFETY?
involving hazardous materials. It applies wherever chemicals, oil, gas, or
combustible dust are produced, handled or used.
“We make electricity,
There are process safety management systems (PSMS). Some are based on so it would be easy
regulations, some on guidelines or standards, and others internally developed to think that process
by companies. All require the basic features identified in the CCPS Risk Based safety doesn’t apply
Process Safety Management System approach. to us. But we have
process hazards like any chemical
Companies should implement a PSMS to ensure that its processes meet the plant or refinery. Our respect for those
company’s predetermined risk criteria. The PSMS identifies the operational, hazards and the potential release
technical, and cultural barriers necessary to help prevent process safety scenarios is paramount as we develop
policy and process. Our deliberate,
incidents. Leaders then implement & sustain the PSMS to ensure that all barriers
determined approach to manage
remain effective.
process safety is driven by our belief
that all accidents are preventable.
This in turn drives our passion for
process safety excellence.”
MARK C. McCULLOUGH
Executive Vice President, Generation
American Electric Power

(Figure Courtesy of D Guss, Nexen, Inc.)

5
 Sustainable companies are socially responsible.
Process Safety plays a leading role.
PROCESS SAFETY helps make a company more attractive to investors, employees,
communities, governments, and insurers. Maintaining a strong process safety
commitment over time tells critical stakeholders that you care about them and
your employees, and that you are managing the company well.

These benefits reflect directly in the primary measurement of a company’s

valuation – share price. A review of 12 recent major accidents in 4 countries and 4
BENEFIT 1 industry sectors shows the impact of these accidents on share price.1 In all cases,
CORPORATE after accidents, share price immediately begins to drop relative to the market and
may continue for a year or more. Following the Bhopal disaster in 1984, Union
SOCIAL Carbide’s stock dropped continuously relative to the market for 15 years.
RESPONSIBILITY The decrease in share price includes losses well beyond the tangible losses alone.
The difference, simply put, is shareholder perception. Nearly every stock is priced well
above the value of its tangible assets. This premium reflects the confidence of inves-
“Process safety is a
tors in the company’s ability to manage, control risk, innovate, and continue to grow
core element to safe,
efficient and resilient sustainably. Practices for showing this premium on balance sheets vary. In some cases,
production. Our terms such as Intangible Assets or Goodwill reflect all or a portion of this premium.
global process safety
standards provide the framework for This shareholder confidence premium is built – or destroyed – by factors directly
the safe construction and operation linked to process safety:
of our plants and therewith for
the protection of people and the n Actual risk and perceived risk.
environment. So, it is fair to say that n Corporate image.
process safety essentially contributes n Support for the company in the communities in which it operates.
to our sustainable business growth n Employee engagement and attitudes: is the company a preferred place to work?
and our social responsibility.”
n Trust in the company from investors, politicians, regulators, activists, and the press.
BEATE EHLE
President Environmental Protection,
Health & Safety
BASF

1
Incidents occurring in Germany, India, Japan,
and USA. Normalized to the applicable country’s
stock market sector index (chemical, petroleum, *Share price compared to month-end before incident, normalized by the relevant
pharmaceutical, or utilities, as applicable). market index to eliminate gross market trends.

6
Process safety removes barriers to growth.
COMPANIES that manage process safety effectively earn the flexibility to freely
manage their businesses and grow profitably, while satisfying all stakeholders;
local communities, the public, regulatory authorities, governments, investors,
and customers. Business flexibility results from earning the trust of the public and
especially of the local community. It is your company’s license to operate.
This analogy is complete in the sense that, as with any license, those who
award it can also revoke it.

Every incident represents a lost opportunity, because, the company must divert BENEFIT 2
resources to investigation, clean-up, and recovery, as well as legal and regulatory
challenges. These resources could otherwise be focused on growth.
BUSINESS
FLEXIBILITY
Major incidents can also significantly drain available cash. This can force companies
to sell valuable assets, often at a fraction of their value - another lost opportunity.
Moreover, in many cases it can lead to the loss of the company and the livelihoods
of every employee..
“Excellence in process
Flexibility benefits a company by: safety enables us to
enter markets and
n Allowing managers to focus on growth and productivity, rather than damage manufacture products
control and recovery faster, and it makes
n Protecting cash flow from unexpected disruption us even stronger in terms of reliability,
n Proving your worthiness to hold a license to operate which has been a historical Eastman
n Strengthening and maintaining good relationships with the local community; advantage. As a specialty materials
and company, speed and reliability are
n Helping you obtain approvals for expansion permits or new facilities more integral to the success of our overall
quickly – a critical strength when implementing the new projects needed to corporate strategy.”
compete effectively. DAVID GOLDEN
Senior VP
A major incident can also weaken a company’s ability to respond to competitors’ Chief Legal & Sustainability Officer
business actions. A company in a weakened state may also become subject to an Corporate Secretary
undesirable takeover. Eastman Chemical Company

Additionally, significant incidents can & have lead to new regulations. This impacts
the company and everyone throughout the industry.

7
 Process safety helps your company reduce
risk and avoid loss.
COMPANIES that have the operational discipline to implement effective process
safety programs receive a windfall benefit every year. This gain shows up on the
bottom line in the savings from incidents that did not occur.

Some companies may avoid major incidents for a time through luck alone. But
even then, the costs of smaller incidents and near misses continue to add up. And
luck eventually runs out.
BENEFIT 3
LOSS A strong PSMS, coupled with strong process safety leadership, is the only way to
sustainably avoid large and small incidents alike. Loss prevention benefits include:
PREVENTION
n Lives saved and injuries prevented: Painful personal and financial
impacts of human loss
n Reduced property damage loss: Major incidents cost an average of $330
“PETRONAS has million each2
benefitted greatly n Reduced business interruption loss: Business interruption losses typically
from integrating
range from 2 – 3 times the property damage loss and can be as much as 11
our process safety
times greater2
management
n Protected market share: After an incident, market share may be lost,
system into our principles of
operational excellence in driving and regained only slowly after production has been restored. Companies that
business sustainability. We focus on sell direct to consumers may also see market share lost until the company’s
improving operational discipline and reputation is restored
asset integrity across the group to n Reduced fines and litigation costs: For major incidents, fines can be in
prevent major process safety events. the millions of dollars. The costs of lawsuits brought by victims and affected
Continuous improvements are vital. communities can be significantly greater. And in recent years, laws around the
By leveraging on collaborations with world allow senior executives to be tried criminally for serious accidents
our stakeholders, we can raise the bar n Reduced regulatory attention: A major incident usually results in increased
of Process Safety Excellence in all regulatory inspections, which can lead to additional fines and tie up resources
that we do.” n Reduced remediation costs: Environmental clean-up costs can be
DZAFRI SHAM B AHMAD significant and may go on for years
VP, Group HSSE
Petroliam Nasional Berhad Many of these costs can put a smaller company out of business, due to a
(PETRONAS) significant stress on cash flow. If the company does not have sufficient cash to
address the capital and sales losses, it may be forced to sell valuable assets at
distressed prices, resulting in a significant loss of shareholder value.

2
Marsh, The 100 Largest Losses 1974-2015, London, 2016

8
Process Safety Leadership and Management
Systems lead the way to operational excellence.
COMPANIES around the world have learned that when they implement robust
process safety management systems, their productivity and quality increase while
costs decrease. The reasons should be obvious. Process safety leadership requires
you to:

n Understand your process better – normal operation and what can go wrong
n Improve process development and front-end engineering design
n Follow procedures rigorously BENEFIT 4
n Keep equipment, piping, and controls maintained and in good operational SUSTAINABLE
integrity
n Manage change thoroughly GROWTH
n Stop safely when the process goes out of control, and
n Learn from investigating incidents and near-misses

These can lead to: “At Reliance, safety is

n Greater uptime and longer periods between unplanned and planned both a core value and
a priority. As a key
shut-downs
element of our group
n Improved yield and productivity; and
strategic framework it
n Improved quality and reduced rework
has been a prerequisite in and enabler
of our value creation journey. We are
Moreover, participating in cooperative efforts to promote process safety more deeply committed to the operating
broadly across the industry also brings real value: philosophy that safe operation
overrides all production targets. It
n Suppliers and customers: Helping them improve process safety helps is our firm belief that good Process
assure materials supply and uninterrupted sales for your company Safety and Operations Excellence go
n Contractors: Maintaining open communication can help bring in best hand in hand and I am happy that
practices learned elsewhere a culture of “safety first” has become
n Standards, guidelines, and regulations: Helping develop these deeply ingrained in the DNA of
exposes you to external knowledge and experience, and allows your input Reliance.”
to be clearly heard KV SESHADRI
Group Head – Safety and
Embracing process safety as an essential part of the way you do business allows Operational Risk
your company to measurably increase revenues and reduce costs. The value Reliance Industries Limited
created can be substantial. The companies that participated in this study reported
financial returns from their investment in process safety from:

n Increased Productivity and Decreased Downtime: Due to increased

reliability of equipment and risk-based maintenance.
n Decreased Production Costs: Due to increased efficiencies.
n Decreased Maintenance Costs: Due to improved design and maintenance
management.
n Increased Capital Efficiency: Due to improved front-end engineering and
design to risk criteria.

9
 Process safety requires — and develops —
strong leaders.
COMPANIES increasingly organize their operations management and leadership
activities in an integrated management system called, among other names,
operational excellence. A closer look at these management systems shows that
operational excellence depends on executing the core principles of process safety
with dedication and professionalism.

In an ever more competitive global business environment, companies need

BENEFIT 5 visionary leaders who rigorously manage the details. Process safety requires
LEADERSHIP everyone to actively lead, which helps prepare employees for future leadership
roles. And since process safety touches so many operational and technical roles, it
EXCELLENCE helps produce an ever-growing cadre of leaders and managers to drive the future
of the company.

“Process safety Just as process safety protects the company against losses from major incidents
has been a key that can threaten the sustainability of the company, it can also offer protection
element of my against other losses – of efficiency, trust, environmental quality, product integrity,
personal leadership and many more.
development and is
now an element of new leader reviews
at Arkema. In today’s environment
when “safe enough” cannot support Leadership skill required
a sustainable business model, it’s Process safety role dimension and developed
excellence in leadership that develops
resilient organizations to move us to Set meaningful risk reduction targets, Vision and inspiration
the next level.” communicate, and obtain buy-in
PAUL LEONARD
Establish risk criteria and metrics to Showing the way
Vice President HSE
track progress.
Arkema Group
Implement and ensure Maintaining discipline
performance of barriers

Provide needed tools and resources Empowerment

and authority to use them

Show visible support and engage regularly Motivation

in process safety-related activities

Execute role and duties with professionalism. Accountability

Expect the same of the organization.

Appreciate bad news, convert into Walk the talk

opportunity for improvement

10
 PROCESS
SAFETY
VISION 20/20

As the person
accountable
for drilling and
completions at
Chevron, I make
well control my primary process
safety focus. I must understand
and prioritize the process safety
risks that exist throughout my
organization. I must be familiar
with the safeguards in place to
mitigate these risks, and I must have
a high degree of confidence in the
competency of my organization
that we have put the necessary
critical safeguards in place and
manage the details effectively. My
VISION 20/20, developed by CCPS, looks into the not-too-distant future to dedicated assurance organization
demonstrate what excellence in process safety will look like when it is championed works directly for me. This team
by industry. Vision 20/20 is driven by five tenets and four societal themes. independently verifies the quality
of well design/plan, rig certification
and execution which includes
For more information, including a spreadsheet assessment tool, see
critical safeguards at all our drilling
https://www.aiche.org/ccps/resources/vision-2020.
locations by Chevron. Process safety
must be lived. It can’t be only a
Tenets Societal Themes binder on a shelf.
Committed Culture Enhanced Stakeholder Knowledge
KIMBERLY MCHUGH
Vibrant Management Systems Responsible Collaboration Vice President
Disciplined Adherence to Standards Harmonization of Standards Drilling & Completions
Chevron
Intentional Competency Development Meticulous Verification
Enhanced Application and Sharing of
Lessons Learned

For more information, including a spreadsheet assessment tool,

see https://www.aiche.org/ccps/resources/vision 2020

11
THE BUSINESS
CASE FOR
In summary, the business case for process safety is like the business case for
PROCESS any other aspect of the business. A robust process safety management system

SAFETY operating in a robust culture will enhance your business in five ways, all driving
improved profitability and shareholder value:

n Corporate Social Responsibility builds the image of your company, adding to

shareholder value through increased goodwill, while helping make your
company a preferred place to work..

n Business Flexibility removes barriers to growth and enables your company to

focus on innovation and market development.

n Loss Prevention prevents damage to assets and the broader destruction of

shareholder value that accompanies incidents.

n Sustainable Growth boosts productivity and quality, while helping to keep your
company at the forefront of management systems and technology.

n Leadership Excellence drives leaders to hone their skills and helps develop
future leaders.

Influence of the Business Case Elements on Corporate Financial Performance

12
 THE PATH
FORWARD
Realize the Benefits
Nine steps to achieving business excellence through process
safety management:

Doing
Leadership Action Checklist 
“At Chemours, we
Commit and take accountability among your company’s
believe it’s not
leadership and board of directors.
enough to consider
safety a priority—
Establish risk criteria and ensure barriers are implemented and
even a top priority.
maintained sufficiently to meet these criteria.
The stakes are too high. Safety must
be an obsession—something we think
Build or close gaps in your process safety management system. about, teach about, and preach about
every day. Whether it’s process safety
Assign responsibilities at the corporate, business, and facility levels for or driver safety, safety must come first,
coordinating and executing the process safety management system. everywhere, at all times.”
MARK VERGNANO
Build or strengthen a strong process safety culture based President and CEO
on core values and clear performance expectations. Chemours Company

Ensure competency in process safety appropriate to all levels.

Implement goals and lagging and leading metrics to track

them to drive performance improvement.

Visit your facilities to reinforce the importance of process safety.

Learn from incidents and near misses.

This is not a one-time set of activities. To be sustainable, this commitment must

also be sustained. Revisit these steps periodically and implement improvements
based on lessons learned.

13
ABOUT THE
ARTWORK
Media Description
The artist, Julia Eve Dubin, used watercolor to depict bright, sunny, natural scenes
representing safety and health – of workers, the environment and the bottom line.
The Business Case for Process Safety should become as natural as these scenes.

Image Descriptions

Corporate Social Responsibility: This image

shows a prospering community living in harmony
with the plant. When companies collaborate with their
employees and their communities, all benefit.

Business Flexibility: A boy is repotting a growing

sapling, representing an operating site that wishes to
grow, into a larger pot. Its roots now unconstrained, the
tree – and the site – can now expand, strengthen, and
prosper.

Loss Prevention: This image illustrates preventing

the loss of a newly planted tree by staking it up.
Following the themes of the previous two images, the
company (hardhat) cooperates with the community (no
hat) to protect the tree (site).

Sustainable Growth: The tree (the manufacturing

site) continues to grow. Having protected the tree in its
early years and having removed its barriers to growth, the
tree now provides an increasing diversity of opportunity.

Leadership Excellence: Process safety requires

everyone to work together cooperatively to reach the
top goal of preventing accidents. While not everyone will
be at the same place at the same time, everyone plays a
critical role.

14
 HELPFUL CCPS
RESOURCES
CCPS offers more than a dozen courses and more than 100 books addressing
all aspects of process safety. Some resources useful to business, operations, and
technical leaders include:

n Vision 20/20: A Guiding Vision for Process Safety

n Courses and Workshops
n CCPS Leadership Workshop
n Process Safety Boot Camp
n Foundations of Process Safety
n Recognizing Catastrophic Incident Warning Signs Workshop

n Books
n Process Safety: From the Boardroom to the Frontline (early 2019)
n Essential Practices for Creating, Strengthening, and Sustaining Process
Safety Culture
n Guidelines for Risk Based Process Safety (2007)
n Guidelines for Integrating Management Systems and Metrics to Improve
Process Safety Performance (2016)

For more information, and a complete listing of courses and books, visit
www.ccpsonline.org or call +1.646.495.1371

If your company a CCPS Member?

n You are encouraged to engage and benchmark with fellow members to help
each other realize strong process safety programs.
n You are also encouraged to join project teams to help shape future guidelines,
another way to bring other companies’ experience into your efforts.

If your company not a Member?

n Please contact [email protected] or +1.646.495.1371 for more information

CENTER FOR CHEMICAL PROCESS SAFETY

AMERICAN INSTITUTE OF CHEMICAL ENGINEERS
120 Wall St, 23rd Floor, New York, N.Y., 10005, U.S.A.
TEL: +1.646.495.1371 | E-mail: [email protected] | www.ccpsonline.org

15
The revised
CCPS study shows
The Business Case for
that the benefits PROCESS SAFETY
go even deeper.
“(Process safety) has made us competitive and it certainly helped
our bottom line…”

“Process safety excellence enabled us to be actively sought after

and become a partner of choice…”

“Excellence in process safety enables us to enter markets and

manufacture products faster, and it makes us even stronger in
terms of reliability…”

“As a key element of our group strategic framework (process safety)

has been an enabler of our value creation journey…”

“Process safety essentially contributes to our sustainable business

growth and our social responsibility…”

“(We have) benefitted greatly from integrating our process safety

management system into our principles of operational excellence
in driving business sustainability…”

“Process safety is a core element to safe, efficient and resilient

production.”

“(Process safety) must be an obsession—something we think

about, teach about, and preach about every day…”

CENTER FOR CHEMICAL PROCESS SAFETY

AMERICAN INSTITUTE OF CHEMICAL ENGINEERS
120 Wall St, 23rd Floor, New York, N.Y., 10005, U.S.A.
TEL: +1.646.495.1371 | E-mail: [email protected] | www.ccpsonline.org

CCPS thanks all the committee members and other member company representatives who contributed to
this study. CCPS also thanks author Scott Berger, President, Scott Berger and Associates, LLC, and his team
including Julia Eve Dubin - Artist, Cindy Geist - Designer, Israel Dubin - Editor, and Allison Berger - Researcher.
©AIChE 2018 • 3433_18