Experience in the Implementation of Risk Management in Occupational Safety and Health and Environmental Issues in Extractive Companies ^†

Abstract

Risk management (RM) as a management technique has developed significantly over the past 20 years globally to address risks. RM is often linked to financial, reputational, and quality risks. The purpose of this article is to shed light on how the extractive sector manages environmental and occupational safety and health (OSH) risks through a number of interviews with extractive industries. These interviews were held as part of the European Commission project “Elaboration of Guidelines for Best Risk Management Approaches in the Extractive Sector” in order to investigate synergies between the areas of the environment and OSH for an effective and integrated risk management approach that stimulates improved performance, leading to overall risk reduction. The interviews revealed how the sector addresses risks, which methodologies are most used, and how risk management is applied in each of the main stages of the extractive value chain. According to these interviews, companies seem to actively search to find corrective measures. On an operational level, most extractive companies use a combination of RM tools and custom-made risk management practices, predominantly for internal use and not for licensing. The extractive sector believes that society’s acceptance is a key element to being licensed to operate. Thus, the management of risks from the perspective of providing high OSH standards and, at the same time, achieving the lowest impact on the environment are key to a productive operation.

1. Introduction

Risk assessment and management is a key part of the extractive operation in terms of performing in a safe and sustainable way. Risk can be defined as the effect of uncertainty on the achievement of objectives (ISO31000:2018) [1]. Risk management is integrated into business processes to ensure that, on a day-to-day basis, both strategic and operational decisions are risk-based [2]. The main objective of the risk-based consideration/decision is to reduce the likelihood or impact of a potential negative risk occurring and/or enhance the likelihood or impact of a potential positive risk occurring. Risks can therefore be both positive and/or negative [1].

The management of risk is undertaken by putting controls in place. A control is defined as an act, object, or system that modifies a risk [3]. It should be noted that a true control therefore has to actively eliminate a risk and not merely measure it. The Critical Control Management (CCM) [4] framework places importance on identifying which of the control measures are critical to the management of the risk, particularly if there are multiple controls required to control a risk. The criticality of a control has an important bearing on the maintenance frequency, test regime, and management action if the control must be disabled [5].

Risk is a complex concept, and the extractive sector illustrates highly variable operating parameters [2]. Integrated risk management is a methodology through which companies and those associated with these activities can proactively manage risks through improved decision making (inclusive of potential opportunities and threats) associated with the extraction and initial processing of minerals and metals [6]. Despite the fact that risk management as a management technique has developed significantly over the past 20 years, with an array of different tools and techniques being increasingly used globally to address risks pertinent to the extractive sector [7], five years ago, the Best Available Techniques (BAT) Reference Document for the Management of Waste from Extractive Industries promoted environmental risk assessment (ERA) as a key tool and proposed 46 “specific BAT risk conclusions” for the protection of the environment and safety.

European companies are prioritizing risk management as never before. Increasingly, top management and the board are setting directions and taking greater control of risk management, integrating it with the overall company strategy and inculcating it deeper into the corporate culture [8]. However, there is a difference between “assessing and reassessing” the company’s risk profile at the board level/executive level (covering and prioritizing all kinds of risks) and the RM that is linked to environmental and OSH risks on an operational level. Specific management actions required for environmental and OSH risks are discussed, in most cases, in a separate sub-committee of the board, which may focus on sustainability, safety, and operations. For this reason, a number of interviews with extractive industries were held, focused at an operational level, in order to investigate and identify the sector-specific approach to risk management concerning environmental and OSH risks [7]. This work was part of the European Commission project “Elaboration of Guidelines for Best Risk Management Approaches in the Extractive Sector”. The target was to investigate how environmental and OSH risks are evaluated, controlled, and/or eliminated by the environmental and OSH management teams and how this information reaches the corporate level for integrated risk management decisions.

Fifteen extractive industries participated in the data collection process, from the exploration and design phase up to the closure phase for the main mineral sectors (metal/metalliferous ores, industrial and construction minerals, and fossil fuels (coal and lignite)). The set of interviews with extractive industry members was also meant to reflect industries of different sizes in different parts of Europe, including Bulgaria, Finland, Hungary, Germany, Greece, Poland, Spain, and Turkey.

2. Legislation and Risk Assessment and Management

General and environmental legislation of the EU, such as the directives on environmental impact assessment [9], water [10], and habitat protection [11], applies to the extraction of raw materials. Following a series of mining accidents, the EU adopted the Extractive Waste Directive in 2006 [12]. This Directive provides measures to prevent or reduce as far as possible any adverse effects on the environment and any resulting risk for human health that may result from the management of waste from the extractive industries. These measures shall be based, inter alia, on the best available techniques (BAT), without prescribing the use of any technique or specific technology but taking into account the technical characteristics of the waste facility, its geographical location, and the local environmental conditions.

On 18 December 2018, the Commission published the BAT Reference Document for the Management of Waste from Extractive Industries (MWEI BREF) [13], addressing extractive waste management through risk assessment. Specifically, the MWEI BREF presents 10 generic and 47 risk-specific BATs. The risk-specific BATs require a proper environmental risk and impact evaluation to determine their applicability and to identify the relevant and appropriate technique among the techniques listed in each BAT that is used for the preparation of the environmental impact assessment. During environmental risk and impact evaluation, the extractive sector typically searches for answers to questions such as “what can happen and why?” and “what are the consequences?”. Such questions and their answers are usually provided to authorities and the public through an environmental impact assessment (EIA). “The aim of risk assessment] should be to reach a common understanding, with all relevant stakeholders, of the risks faced and their relative priority” (EC, 2015). Environmental risk and impact assessments are, in part, already carried out under existing European legislation, e.g., as part of the EIA (Directive 2014/52/EU), and the regulatory basis for EIAs has been reviewed recently by Hamor et al. [14]. This report also summarizes the procedures for scoping and screening in the context of an EIA, which lead to the identification of relevant risks [7].

Additionally, legislative and investor-driven demand for environmentally and socially responsible extractive projects has created an increased focus on environmental, social, and corporate governance (ESG) issues. ESG issues have gained momentum and are driving material change in behavior by both investors and companies, at a pace that is outstripping regulators [15]. The push to incorporate ESG considerations into the extractive sector at the earliest opportunity is reflected in recent updates to the United Nations Resource Management System (UNECE, 2021) and the standards for the public reporting of exploration results, mineral resources, and mineral reserves, e.g., CRIRSCO, 2019 and PERC, 2021 [7]. General basic requirements for safety and health at workplaces are laid down in Directive 89/391 EEC, otherwise known as the OSH “Framework Directive” [16]. The core elements of this Directive are based on hazard identification, worker participation, and the introduction of adequate measures, with the priority of eliminating risk at the source, providing documentation, and conducting the periodical reassessment of workplace hazards.

It is important to understand that legislation is not negotiable but may change over time. Legislation on its own cannot guarantee “zero accidents”, because every mine/quarry is unique and both environmental and OSH risks need to be evaluated continuously due to the dynamic nature of these areas. Risk-based considerations are beyond the legislation and contribute to setting priorities for environmental, OSH, and social protection in an objective and scientific way and can assist the extractive sector. This is the main reason that RM in many industries has become a day-to-day activity for operations and not only a technique for corporate integrated management.

3. Extractive Sector and Risk Management

All the extractive industries are exposed to various types of risks that may impact their operation and the fulfillment of their goals. Mainly, risk management is linked to financial, reputational, and quality risks. Furthermore, the risk of insufficient mineral reserves/mineral resources and the risk of not being sufficiently competitive are also key areas of concern for the sector [17]. However, the fact that every mine/quarry is unique and has its own technical characteristics is also reflected in how each mine/quarry manages its own risks. Risk management for the environment and the OSH is very important to minimize the operational risks of the extractive sites. This is in line with the risk management concept, which is as follows [7].

(i)

Proportionate—Risk management should be proportionate to the needs of an extractive operation.

(ii)

Aligned—Risk management should be aligned to the other systems and processes that exist within an operation, within the environmental and OSH space, but, where possible, also within other aspects of the company.

(iii)

Comprehensive—The knowledge on which a company bases its risk-based decisions should be comprehensive enough to ensure a good-quality decision.

(iv)

Embedded—Risk management only works well when it is truly embedded at every level of the extractive operation. This is especially important for OSH and environmental risks, as it is often these risks that manifest at the front line, yet it can be decisions made at the most senior levels that result in these risk impacts.

(v)

Dynamic—Risk management needs to be agile and dynamic enough to adapt to changes to both the internal and external context and environment.

During the period of May–June 2022, fifteen extractive companies from Bulgaria, Finland, Hungary, Germany, Greece, Poland, Spain, and Turkey participated in a data collection process through the exchange of information and interviews. The extractive companies represented the four main mineral sectors. Specifically, within construction minerals, industrial minerals, and energy Minerals (coal, lignite), two companies for each sector agreed to participate, as well as five companies from the metallic minerals domain (a total of fifteen companies). Furthermore, the companies were selected to represent the total life cycle of an operation (from the planning phase to operation up to the closure phase).

Each company, before the interview, received a questionnaire focused on the tools and methodologies that are most commonly used globally by the sector. These questionnaires were completed by the environmental and OSH managers. They were asked to select the ones that they were familiar with. Then, the interviews were set up to discuss how these tools are implemented, how the environmental and OSH risks are managed, and in which conditions they are successfully managed, to reduce the overall risks and improve their performance.

According to the interviews, every mine/quarry has designed its own tailor-made risk management process based on the generic RM approaches and related tools. The majority of the risk management processes are based on the ISO ideas of risks and opportunities and risk appetite, but, according to the interviews, ISO 31000 is not the starting point. The target for the extractive industry is to develop a system that provides value for their operations and consider how the strategic goals will be achieved.

The majority of the companies that were interviewed confirmed that, at a corporate level, they use integrated risk management (no separation of financial risks, sustainability risks, and environmental and OSH risks (all risks considered at the same time)), but, on the operational level, the main focus remains quality, the environment, safety (occupational and infrastructure), and the societal reputation. Two companies from the industrial mineral sector admitted that, according to their processes, risk management is currently independent in each department. Specifically, since the OHS risk management approach differs from environmental risk management at the operator level, it seems that, at this level, an integrated approach is not appropriate.

During the interviews, it was also highlighted that, for the participants, risk management is a daily routine. Each company’s goal is to assist all the employees in understanding some basic tools that they will use on a daily basis and not to introduce complex tools. Their target is to integrate RM into daily life, and this can happen when the majority of the employees have fully understood one or two basic and the most easy-to-apply tools (the complex tools are for specifically trained employees, and they cannot be used on a daily basis). The everyday routine for RM is to follow the basic RM methodologies (e.g., 5 × 5 matrix), because the basic RM methods can fix 95% of the daily issues in a mine and 5% of the situations require complex methodologies. In large companies, there is a sustainability-integrated system; in most cases, the H&S team works together with the environment team because these sections cannot be separated. At the same time, each of these divisions has their own tools during the risk analysis. The risk analysis that has been developed for risk of loss in production is different from the risk analysis of H&S issues (it is of a different scale), but it is the same approach (consequences and likelihood are evaluated). There is not a common platform in which all risks are brought together. The business areas have the opportunity to choose the models that are suitable for each case. There is no one-size-fits-all tool.

Concerning environmental risk management, the majority of the companies answered that environmental impact assessment is the main guide, since the results from the risk management that they perform, in many cases, internally become part of the EIA.

ISO 14001 [18] and EMAS (CEU 2009) are utilized voluntarily. ISO14001 does not explicitly define a risk or hazard; rather, it refers to environmental aspects, i.e., an “element of an organisation’s activities or products or services that can interact with the environment”, and environmental impacts, i.e., “any change to the environment, whether adverse or beneficial, wholly or partially resulting from an organisation’s environmental aspects”. The true management of risk only begins to take place when the most appropriate actions are taken to actively modify a risk; see ISO 14001 and EMAS (CEU 2009). Therefore, all risk management processes should continue through the risk assessment component to “risk management”, and then finally to “risk monitor, review, and report”.

Regarding OSH, each company seems to consider their risk management process according to EU legislation, but each company follows their own RM path. The most used RM tools are HAZOP for general change management (chemical area: flocculants, acids, and chemicals for water treatment), Workplace Risk Assessment & Control (WRAC), Hazard Identification and Risk Analysis (HIRA) (a tool that can be used on a daily basis), Job Safety Analysis (JSA), and Job Safety & Environmental Analysis (JSEA) (a tool that can be used on a daily basis). For the sector, the most essential aspect is the prevention measures that are accomplished through preventive observations, internal/external audits, safety walks, and “on-the-job risk assessment” using checklists to identify risks.

In

Table 1. List of techniques and tools reported by companies for different purposes.

Technique/Tool
Air emission and dispersion modeling
Assessment of dangerous substances in workplaces [7]
Bowtie analysis
Checklists
Compliance and Obligations Register
Contaminant Source–pathway–receptor models
Decision matrix
Environmental aspects and impacts analysis
Environmental risk analysis (ERA)
Failure Mode, Effect, and Criticality Analysis (FMECA)
Fault Tree Analysis (FTA)
Focus groups
Hazard and Operability Studies (HAZOP)
HERAG: Health Risk Assessment Guidance for Metals (ICMM, 2007)
Horizon scanning (HR) and scenario analysis (SA)
Hydrological modeling
Layers of Protection Analysis (LOPA)
Life cycle analysis
Life cycle assessment (LCA)
Likelihood and consequence matrices
Probabilistic Safety Analysis (PSA)
Process Hazard Analysis (PHA)
Stakeholder analysis and register
Uncertainty analysis
What-if analysis
Workplace Risk Assessment and Control (WRAC)

, the techniques and tools reported by companies for different purposes are presented.

Finally, the participants were asked about the “combination” of risk and opportunity. The majority of the participants replied that, in most cases, risk carries negative connotations, but this can also be translated as “when one risk is handled, this is an opportunity”. Thus, from their perspective, risk management can be seen as a tool to increase the chances of success, and not as a tool for the avoidance of problems. Furthermore, they explained that “if we agree that the extractive industry needs to exist, we want to be the most attractive employer, and one way of being that we must show to society that our H&S standards are extremely high and at the same time the impact on the environment is the lowest, so all the risks are handled under the opportunity to exist and be licensed to operate”. Furthermore, when risk is eliminated, there is an opportunity to potentially increase productivity.

4. Conclusions

Risk management (RM) as a management technique has developed significantly over the past 20 years globally to address risks [7]. Risk management is a methodology through which the industry can proactively manage risks. Operators around the world benefit from RM implementation through the early detection of potential opportunities and threats. It seems that the existence of the extractive sector is linked to the management of environmental and OSH risks. The interviews showed that most extractive companies used custom-made risk management practices, predominantly for internal use and not for licensing. Only the environmental impact assessment acts as a vehicle to summarize the key findings from the RM concerning environmental issues, and to communicate these to regulators and the interested public alike. Members of the environmental and OSH departments state that when complex risks arise, both teams, through brainstorming sessions, use RM to find common solutions. Companies also believe that there are no contradictory risks when assessing the perspective of OSH and the environment.