Risk Appetite – Reaching for the stars

Written by Alexander Larsen CFIRM, IRM Energy SIG Chair & Ghislain Giroux Dufort MIRM, both of Baldwin Global 

The Institute of Risk Management recently released a thought leadership document based on a survey of the Energy industry. As part of the survey results, there were a number of articles contributed and featuring in the final report.

This was one of the featured articles. To download your own copy of the publication, please CLICK HERE for the IRM site

How much appetite for risk does your organisation have to achieve objectives or seek new challenges? Are staff and managers aware? are the senior management team or board even aware? Is the organisation ready to reach for the stars?

Some organisations operate in  high risk environments (think SpaceX, Virgin galactic and NASA) whilst other less so. No matter the industry however, establishing risk appetite and tolerance levels (and monitoring over time the actual risk profile against them) is essential to the long-term success of any organisation, whether in the energy industry or other sector of activity.

When discussing risk appetite, people tend to think of bland and non-informative risk appetite statements, or overly quantified and financial risk appetites. Both of these have limited value and often restrict risk taking rather than allow risk taking. In many cases space travel, air travel or other high risk activity should not be possible according to risk appetite statements. How can we expect to achieve great things and remain competitive with such appetite statements?

Looking at the high-level risk appetite statements, they are nearly always:

A) Too broad to gain any significant use out of the statement

• How can decisions realistically be made from a statement such as we “will not accept any risk that affects our reputation”?

B) Rehashes of the corporate objectives or taken from other targets such as HSE accident rates

• An organisation could have endless risk appetite statements that would allow no risks to be taken if this was the case.

C) Inconsistent with objectives

• How can an energy company operate in an environment where a risk appetite statement says “we will not accept project delays of x” or “we will
  not accept loss of life.” The nature of the business is projects and delays, while operating in countries such as Iraq or Afghanistan goes against “we will not accept loss of life”. The statements are too broad and lack detail or real decision-making value.

D) Never change

• Once an organisation sets a risk appetite statement, they rarely change, and why would they? It’s a very high-level statement that can only be written in a small number of ways.

E) Don’t consider the risks

• The risk appetite statements we have seen are almost exclusively linked to objectives, which doesn’t take into account the actual risks or opportunities that the organisation faces.

Most organisations struggle with putting together even the high-level type of risk appetite statements. They often spend a lot of time and resources on trying to perfect high-level statements that don’t provide much decision- making value, or on overcomplicating the statements, which again leads risk appetite to being ineffective.

In this article we highlight a methodology that provides decision-making value to quantified risk appetite statements by linking corporate objectives to leading key risk indicators (KRIs) established at the source of risks that may affect the achievement of those objectives. This approach provides a warning system that increases the chance that organisations may take action before risks materialize as well as ensuring that organisations are not spending too much money over controlling risks. In other words, allowing them to take more opportunity or spend the money more wisely elsewhere!

Objectives v risk

While the whole point of risk management is to identify and manage risks to the objectives, risk appetite statements tend to focus solely on objectives, for example aspirations of zero accidents or deaths. Risk appetite therefore ends up driving risk identification rather than the risks driving the risk appetite.

Assume an organisation has 5 key objectives, and 5 major risks. Once targets and acceptable deviations relative to targets have been set for key objectives, how does
the organisation manage to minimize the chances of deviating from key objectives? The answer is to focus on the major risks to key objectives and to set risk appetite statements for these risks rather than only on objectives. Assuming that risks change more often than objectives, we can also expect the appetite statements to change more frequently too.

One other major benefit of linking appetite to risk is that we can actually map the risk through to the relevant key risk indicators (KRIs) with individual risk appetite ranges for each KRI as shown in Figure 1 overleaf.

Figure 1: Baldwin Global’s Key Risk Indicator and Risk Appetite Model

How to set risk appetite and key risk indicators in your organisation

In our experience, high-level risk appetite statements based on each major risk can be put together in a half-day workshop with management teams. Detailed quantified risk appetite statements based on KRIs established at the source of risks will require some
more time depending on the nature of the risk and availability of data and expert opinion. It is important to run workshops rather than setting these statements in isolation. Not only does it ensure everyone is aware of the risk appetites, but there is the added benefit of increasing risk knowledge and building a positive risk culture while also gaining a variety of views and experiences to develop the appetite statements.

Of course, when setting statements, it is important to consider the wider implications for the organisation. Rather than setting a figure for what is acceptable in terms of accidents or deaths for example, AirSafeCo, the fictitious airline company example below in Figure 2, decided to look at improvements to long term trends and focus on not accepting an increase in the trend. This presents a more sensitive approach to safety risk and its management over time, rather than having an “acceptable” number of casualties or fatalities.

In addition to the general risk appetite statement written in Figure 2, more specific and quantified statements should be established based on leading key risk indicators linked as closely as possible to the source of the risk. Figure 3 illustrates such a statement for AirSafeCo’s three top components of Safety Risk: Crash, Turbulence and Tarmac delays.

Figure 2: AirSafeCo’s General Risk Appetite Statement

Figure 3: Examples of KRIs and how to build a risk appetite linked to them

The Green Zone represents the quantified risk appetite for each risk component: the amount of risk the company is willing to accept in order to achieve its objectives.
The Orange Zone represents the first level of tolerance and may require, for example, an investigation into the reasons for this deviation. The Red Zone represents the highest level of tolerance where immediate action is required. More risk tolerance zones may be inserted to provide various levels of analysis and/or action. Leading KRIs of crashes might be, for example, near miss events. In turn, one could then search for leading indicators of near miss events, and so on. Each industry and company should find or create leading KRIs that are causally correlated to their key risks and linked to their impact on corporate objectives.

Risk workshops may provide expert opinion on KRIs and appetite and tolerance levels. But having the right data to validate those opinions is essential too, and it is therefore important to understand what the components and causes of risks are, in order to understand what information is required. As an example, for an oil & gas facility in a sensitive area, the risk of “major loss of life” could come from a terrorist attack, major accident or natural disaster. Once you have identified the components and causes of major risks, KRIs can be established which allow individual risk appetites set at their source.

Also note that Figure 3 is two-sided: the right side indicates positions of increasing risks, while the left side indicates positions of reducing risks – but at an increasing cost. Since risk management is not free, trade-offs may have to be made when deciding on risk appetite and tolerance, and the cost of managing a risk to its appetite and tolerance can also be monitored using this approach.

How does this help decision-making and risk reporting?

One of the roles of risk management is to enable boards of directors and senior management to make better strategic decisions. Too often, organisations limit themselves to reporting risks independently, through risk registers and heat maps. This is very limiting and often out of date. Additionally, risks rarely change significantly which means the top 3 or 4 risks (in terms of likelihood and impact) are discussed at length whilst the others get missed. What should be done is to integrate risk assessment and reporting within business cases for decision making purposes.

Figure 4: Example of Risk Reporting based on Appetite

As we have seen earlier, risk visualisation is a far more effective method of viewing risks for decision-makers, offering an alternative view of what the top risks might be. The approach to risk appetite and KRIs that we have so far discussed offers yet another alternative to the traditional risk register approach to reporting. It provides real-time snapshots of the status of risks to the business and a perspective on their trends. The top three to four risks on most risk registers are usually very well managed, and senior management would be better off discussing the other risks that might be less well managed. A visually effective reporting template allows for such focus on relevant risks and is demonstrated in Figure 4 above.

Looking at the reporting example in Figure 4, the output from the KRIs and the related risk appetites shows clearly which risks are most pressing. Senior Management and the Board would be able to tell quickly which risks are within their appetite and which ones lie outside their appetite or tolerance levels. A focus on the last five quarters of Safety risk shows that KRIs have gradually improved over time towards the Green Zone, a sign that enhanced safety risk management has paid off in this example.

Conclusion

Whether they operate in the field of transportation, energy, or any other sector, including not-for-profit ones, organisations need to take risks in order to achieve their objectives and to thrive.

In the words of Sir Richard Branson, “Unless you risk something, the world stands still”, something which his Virgin brand always seeks to do (Changing the world) from space travel to hyper look and hyperspeed travel to greener air travel. “We take a lot of calculated risk, but we make sure that no one risk is going to topple everything. Protecting the downside is critical”

Where risk appetites and tolerances have already been determined, it is counterproductive to be over-managing risks. One of the unique aspects of this approach to risk management and reporting, aside from focusing on risks that really need attention, is that it also exposes risks which may have too many controls and where resources would be better spent elsewhere.

MEA Risk Awards 2016

Over 150 risk managers, insurance professionals and CEO’s attended the impressive Four Seasons Hotel in Jumeirah Beach, Dubai, for the 2016 Middle East and Africa Risk & Insurance Awards held by Strategic Risk & Global Reinsurance Magazine.

I had personally only attended a couple of Awards Ceremonies over the years and never as a nominee for an award. Lukoil, who I was respresenting, had gone all out by reserving what ended up being a full table of Lukoil executives and managers. Feedback was positive from organisers too suggesting that the attendees had brought a level of enthusiasm and support rarely seen at awards ceremonies.

I have to thank my colleageus for their genuine and enthusiastic support and top management for reserving the table in the first place.

It was a fantastically successful night for Lukoil who were nominated in 2 categories, Risk Communication Strategy of the year & Risk Manager of the year, something that only a handful of other companies managed to accomplish. Even more impressive was the fact that Lukoil won awards in both categories they were nominated for! No other company succeeded in winning more than one award making it a fantastic evening for the oil and gas company who has been pushing ahead with Risk Management despite pressures in the market and with other oil giants cutting their staff in the thousands.

A special mention to Qatar Foundation who have been nominated a few years in a row now for various awards and who i feel a strong affiliation with having helped develop the Risk Management program a few years ago. The risk department have done an excellent job in pushing forward with Risk Management and championing it across the organisation whilst developing it further and continuing to increase risk maturity!

For me personally, its been a tough couple of years here in Iraq. Working in isolation, in a difficult environment, on a shift basis and in a dangerous environment. Its been stressful and challenging but the award has made my effort and time well worth the while and I have to thank Lukoil for the ongoing support of risk management, my colleagues for supporting the process and always being transparent and honest when identifying risk and helping me understand very technical aspects of oil and gas.

This award is a highlight of my career and I look forward to continuing to add value to the risk management professsion anyway I can.

MEA Risk Management Awards 2016

Over 150 risk managers, insurance professionals and CEO’s attended the impressive Four Seasons Hotel in Jumeirah Beach, Dubai, for the 2016 Middle East and Africa Risk & Insurance Awards held by Strategic Risk & Global Reinsurance Magazine.

I had personally only attended a couple of Awards Ceremonies over the years and never as a nominee for an award. Lukoil, who I was respresenting, had gone all out by reserving what ended up being a full table of Lukoil executives and managers. Feedback was positive from organisers too suggesting that the attendees had brought a level of enthusiasm and support rarely seen at awards ceremonies.

I have to thank my colleageus for their genuine and enthusiastic support and top management for reserving the table in the first place.

It was a fantastically successful night for Lukoil who were nominated in 2 categories, Risk Communication Strategy of the year & Risk Manager of the year, something that only a handful of other companies managed to accomplish. Even more impressive was the fact that Lukoil won awards in both categories they were nominated for! No other company succeeded in winning more than one award making it a fantastic evening for the oil and gas company who has been pushing ahead with Risk Management despite pressures in the market and with other oil giants cutting their staff in the thousands.

A special mention to Qatar Foundation who have been nominated a few years in a row now for various awards and who i feel a strong affiliation with having helped develop the Risk Management program a few years ago. The risk department have done an excellent job in pushing forward with Risk Management and championing it across the organisation whilst developing it further and continuing to increase risk maturity!

For me personally, its been a tough couple of years here in Iraq. Working in isolation, in a difficult environment, on a shift basis and in a dangerous environment. Its been stressful and challenging but the award has made my effort and time well worth the while and I have to thank Lukoil for the ongoing support of risk management, my colleagues for supporting the process and always being transparent and honest when identifying risk and helping me understand very technical aspects of oil and gas.

 

This award is a highlight of my career and I look forward to continuing to add value to the risk management professsion anyway I can.

Risks in Iraq – Road infrastructure related risks

Road related risks come in many forms, whether its traffic, lack of roads, lack of bridges, bridges that cant carry heavy loads, roads that are not fit for purpose and roads that are not wide enough for delivery of critical equipment. Before embarking on any major project it is vital to fully understand the status of road infrastructure in the area of work. This is not often easy as access to sites in Iraq during tender stages of projects can be restricted due to land ownership issues, land mines not having been cleared etc.

Road infrastructure on Large Equipment Delivery

1. Road not wide enough for trucks

One of the critical factors in delivering equipment to site is the width of roads allowing trucks to access them. Often, roads are not wide enough in places to allow access for trucks carrying large equipment. This can lead to delays or additional cost to the company in order to build sufficient roads to allow access to these trucks.

2. Road closures leading to delays to delivery

Due to the poor quality of roads in Iraq, there is often works needed to be undertaken in order to fix roads. During this period, roads are closed meaning that equipment ready to be transferred from port to site may not be able to leave the port leading to delays to the project or even exposing operations to major disruption if it is replacement equipment. There are other reasons why roads may be closed including security issues which makes it vital that the company is aware of alternative routes (or the lack thereof)

3. Bridges unable to take weight of trucks

Basra is essentially based around marshland with rivers flowing and bridges needed to cross key access points. There is a risk that some bridges are unable to take the weight of some trucks or trucks with heavy equipment which the company may need to resolve by building alternative crossings or seeking out other routes which could come with their own issues such as security etc.

4. Trucks getting stuck on roads

Due to some roads being in severe states of disrepair or being essentially dirt roads, there is a risk that a truck can get stuck on the roads or mud (during periods of rain). The company should consider this in their delivery strategy ensuring that heavy or critical equipment is delivered outside the rainy months and ensure that all vehicles are fit for purpose, maintained and tires changed regularly in order to withstand major potholes.

In order to overcome some of the above risks, alternative strategies should be sought in order to ensure delivery such as considering a modularised strategy in order to allow smaller pieces of equipment or piping etc. to be brought to site before being assembled.
Road infrastructure on Large Equipment damage

1. Damage to equipment due to bumpy roads
I mentioned before that the condition of the roads can be poor and lead to a very bumpy ride. Assuming the vehicle doesn’t get stuck there is still a risk that the equipment, if not secured effectively (this can be difficult to monitor when using subcontractors in Iraq), can either be damaged during transportation or worse fall off the vehicle causing more severe damage.

Road infrastructure on access to sites

1. Delay of project startup and mobilization due to limited access to site
Assuming there is no infrastructure on the site of work (green field site for example), there will obviously be a delay to the project startup with teams needing to arrive on site in order to build basic infrastructure. Something that can delay this further is the fact that the site may be on marshland causing great difficulty in sustaining the basic infrastructure when rainy season comes. Assuming the initial roads are washed away with rain, significant delays can be expected. Additionally, some roads may be flooded if there isn’t a full understanding and plan of where the marshlands flood.

2. Delays to work on marshland sites during rainy weather due to lack of roads
As mentioned in the previous risk, where there is marshland there may be no access to road infrastructure during rainy season. Whilst I suggested it would be vital to consider the flood plains and build around this area, there will no doubt be areas that are unavoidable such as pipelines running through the marshland. This means that any roads that are built will need to be built higher than the floods and be able to withstand excessive water before the rainy season.

 

Risks in Iraq – Holiday related risks

One of the interesting aspects of Iraq is the vast number of holidays that they have throughout the year. This often makes it very difficult to plan schedules, especially if the contractors don’t have experience of working in Iraq or indeed, the middle east. Even if they do have experience /of the region it can still be difficult. What is even more tricky is trying to adjust for productivity drops during these periods. Very few companies have accurate data or history of productivity in Iraq and the unique nature of the country as well as holidays and the fact that it is still a war zone in many places make predicting productivity very difficult..

Ramadan holidays

Ramadan is the ninth month of the Islamic lunar calendar. Every day during this month, Muslims around the world spend the daylight hours in a complete fast. During the month of Ramadan, Muslims all over the world abstain from all food, drink, and other physical needs during the daylight hours (such as smoking or sex). Ramadan is much more than just not eating and drinking; it is a time to purify the soul, refocus attention on God, and practice self-discipline and sacrifice.
Due to the fasting, work hours are often reduced and productivity is less.

1. Lack of sufficient consideration of productivity in schedule for ramadan

Often, foreign contractors can underestimate the impact on productivity that Ramadan has on a schedule. The shorter working hours, prayers during the night and fasting during sunshine hours takes a toll on workers (and especially during the last few years when Ramadan has been overlapping with long hot summer months). If productivity isn’t considered carefully, and either extra manpower, or more time accounted for, then a schedule can fall seriously behind during Ramadan.

2. Increase in accidents and errors

Due to the lack of concentration brought about by tiredness and fasting, there is an increased risk of accidents and errors occurring. This can be in the form of HSE related injuries to employees themselves or damage to equipment or quality failures that may require rework later in the project or even at the time leading to further delays.
For operations the impact can be even greater with damage to equipment causing considerable production downtime. the damage to equipment doesn’t have to be direct either, it can be a result of mistakes during maintenance which in turn lowers reliability or even a mistake causing a power cut and power surge which can damage equipment.

Short and unplanned holidays

1. Lack of sufficient consideration for inclusion of holidays in schedule

Similar to Ramadan, there is often key holidays that are left out of schedules. This is especially true when entering into new territories where the project teams or company has little experience of working in. As an example, in Iraq, there are 10+ days of holidays at the end of the year that many companies were unaware of and that were unaccounted for in the schedules. There are also a number of 1 or 2 day holidays throughout the year for various prophets birthdays and these can differ from region to region. It is therefore vital to understand fully, the number of holidays during the year prior to starting the project.

2. underestimating the number of days that holidays will impact schedule

Interestingly, even when a project team feel that they have accounted for all the holidays, there may be an understimate of number of days that the holiday will impact. If you take Eid for example, the official number of days holiday for Eid will be about 5-7 days. Often however, there can be an additional 2 or 3 days on either side of the holiday where workers do not turn up for their work. There is a number of reasons for this including lack of public transportation in their home towns, length of time to reach and come back from their home towns (especially in a country with red zones), extended breaks of bus drivers around the country and sometimes the worker simply feels like taking a couple of days extra off.

3. increased incidents of Protests

Something that often occurs in Iraq is that when a short holiday is announced it allows tribes to gather, unhappy workers to gather and organised events to occur. It allows these disgruntled workers or tribes to organise themselves and protest which will often have an impact on deliveries to site, safety of staff traveling around sites and security of some sites. There have been instances of offices and sites being stormed or targeted leading to asset damage, injury to staff and theft.
In some instances this has stopped operations and significantly delayed construction due to materials being missing or key equipment being damaged.

Risks in Iraq – Animals, reptiles and Insects – Part 3 (spiders,scorpions,insects)

I have already gone into detail in my last post about poisonous snakes, however there are also dangerous spiders to be aware of which are often more difficult to notice due to their size and tendency to find hidden corners in rooms or behind furniture. There are other arachnids to be concerned with in Iraq however and I will be covering them in this post.

1. Poisonous spiders

2. Camel Spiders

One of the scarier spiders, which doesn’t actually fall under the arachnid family, but rather is a cousin of the Scorpion, is the very scary and ugly camel spider. These can grow to a ridiculous size and for arachnophobia sufferers, can only be described as a nightmare. Luckily these are not seen too often and when they are spotted, they tend to be dead already.

3. Scorpions
Scorpions are rife in Iraq. All over camp during certain months, you will see at least 2-3 large ones during a shift, and at least 4-5 baby scorpions per night walking around camp. This isn’t so much a problem since the PPE footwear and even normal shoes will protect you, however when they start wandering into the rooms you have problems.

Companies should keep anti venom, have processes and procedures in place in order to deal with bites and have a procedure with a local hospital in place. Additionally, regular emails should be sent to staff reminding staff of the dangers.

Insects & Other

when it comes to insects and other creatures, it’s comforting to know that most of them aren’t going to potentially kill you, nonetheless, many of the insects in question can be quite annoying to staff either whilst working out on site or taking a walk in the evening or finding them in the rooms.

1. Locust
Locust can be found flying all over camp and landing on you whilst you are out walking or working but what is more surprising is the amount of them that manage to find their way into your room in the middle of the night. You can hear them jumping and walking around the room.

2. Flies

Flies can be an absolute nightmare during certain months. They get in the canteen and crawl all over the food, land on your face whilst you try to eat and generally make it miserable to try and eat. They also manage to get into transport vehicles making any journey very frustrating as you fight to keep the flies out of your ears or eyes.

3. Mosquitos

whilst mosquitos aren’t dangerous the bites they give people leave very large bite marks which are itchy and annoying when you are trying to focus on work. They tend not to be in the rooms too often which is positive but if you try to go for a walk during the summer in the evenings there is a good chance you will end up bitten.

4. Ants

Ants always manage to find a way into rooms. No matter how much you spray the room or keep the room tidy and free of crumbs, they still manage to find their way into the toilet or room. Often this isn’t a big issue however if they get into the room at night and you need to spray them, you end up being unable to sleep due to the fumes of the spray.

5. Cockroaches

Whilst I haven’t noticed too many cockroaches in my room, they are definitely present around the camp and although the majority are quite small, I have seen some absolute beasts that I really wouldn’t be pleased with if I found them in my room.

6. Frogs

Due to the area we are working in being marshland there are a vast amount of frogs around site and camp. This is a major positive for insect control.

7. Lizards and ghekos

Again, like frogs, the more lizards and ghekko seen around camp the better the insect control.

8. Hedgehogs

The presence of hedgehogs in Iraq was a surprise to many of us in the camps. It’s not uncommon to see at least one hedgehog a day. One of the unfortunate things about hedgehogs getting into camp is that they can often get caught in traps set out for dangerous insects or rats. This is something many employees work on avoiding.

9. Ticks

Ticks are rampant during certain times of year and employees need to be very careful with these insects. They are small and can go unnoticed however if they manage to bite into you, there are a number of diseases they can transmit which needs to be checked out by a doctor.

10. Others

Aside from the insects mentioned above, there area an abundance of interesting insects such as stick insects and beetles. Very often however you will come across insects that are not easy to identify such as the insect in the below picture (no doubt people in certain countries will be familiar with them, but certainly in most parts of northern and Central Europe they are not present.

Risks in Iraq – Animals, reptiles and Insects – Part 2 (snakes)

Unfortunately for people working in Iraq, there are a number of snakes that are often seen around the sites and inside camps. Worse still is the fact that many of the species found in Iraq are poisonous

Saw-Scaled Viper ( Echis carinatus )
The smallest of Iraq’s vipers, the saw-scaled viper rarely exceeds 2 feet and averages only about 18 to 20 inches. It is highly variable in color and pattern. Typically it has a brown or tan ground color, although it may also be gray or reddish. The snake’s dorsum has one to three rows of dark blotches with light centers. The snake may be striped or display a wave pattern on the sides. Perhaps the most reliable way to quickly distinguish the saw-scale from other vipers in Iraq is the presence of the characteristic arrow-shaped marking on the top of the head.

The fiery little saw-scale is blamed for more deaths annually than any other species in the world. The bite of this snake has been known to cause massive internal hemorrhaging and bleeding from all bodily orifices (not a snake to mess around with).

Desert Horned Viper (Cerastes cerastes)
The desert horned viper is a thick-bodied snake that averages approximately 20 inches and rarely exceeds 2 feet in length. Typically a smooth, bony horn extends above each eye, although one or both may be absent. Ground color is variable from light gray and brown to yellowish. Dark blotches extend the length of the back.

This snake is fond of loose sand, and it can disappear into the sand in a matter of seconds. When buried, only the eyes, nostrils and horns remain above the surface. Sidewinding is its preferred method of movement. Foraging occurs chiefly at night, and prey consists of lizards and small rodents.

Bites from the desert horned viper show hemotoxic effects and have great tissue-damaging qualities.

Lebetine Viper (Macrovipera lebetina)
Also known as the Levantine or blunt-nosed viper, Macrovipera lebetina is a large and attractive species that can reach lengths in excess of 6 feet.

Field’s Sand Viper (Pseudocerastes persicus fieldi) and Persian Horned Viper (P. p. persicus)
Two subspecies occur in Iraq. The Field’s sand viper occurs in western Iraq, and the Persian sand viper is found in the eastern and central portions of the country. Both subspecies prefer semi-arid conditions with combinations of sandy and rocky terrain.

Pseudocerastes persicus is a heavy and slow-moving species. Typically nocturnal or crepuscular, it may sometimes be found resting in shrubs during daylight hours. Bites seem to be relatively infrequent. When they do occur, symptoms display a nasty blend of hemotoxic and neurotoxic effects.

Kurdistan Viper (Vipera raddei kurdistanica)
In Iraq, this species is known to occur only in a small region of the northeast. The Kurdistan viper is a montane species that prefers rocky slopes in higher elevations (4,000 feet plus).

Desert Cobra (Walterinnesia aegyptia) 
Like most cobras, it is easily adaptable to various habitats. But locations occupied by humans are a particular favourite where shelter and rodents are on offer. Whilst this glossy snake does not actively seek confrontation, it can move with lethal speed when provoked. . The effect of the venom on humans is not known, but presumed to be dangerous. This is the commonest and most widespread cobra in the Middle East.

The desert cobra, or “desert blacksnake,” is the only species of the family Elapidae occurring naturally in Iraq. That being said, non-native cobra species from throughout the Middle East are sometimes imported for showman activities and could potentially be encountered in Iraq

A typical Warning email from HSE regarding snakes :

Solutions

For companies operating or constructing in Iraq, access and agreements with local hospitals that hold anti venom and that meet minimum company standards  should be in place. Alternatively and probably preferably, anti venom should be stocked on company site and staff trained to administer.

Additional controls should be in place to protect employees such as ensuring PPE is provided, HSE induction training is provided that deals with working and regular checks are in place to ensure no snakes are in the vicinity of the work area.

Risks in Iraq – Animals, reptiles and Insects – Part 1 (dogs,cats,mice,fox)

This is more of an entertaining blog post as I plan to discuss some of the rather unpleasant creatures that you can find around the site and whilst I will be outlining the various types of creatures that employees on site need to be aware of (and that companies need to manage appropriately), I will also be covering how some of these can actually cause a loss of power or damage to equipment. 

Part 1 covers dogs, cats, mice and desert foxes whilst part 2 covers snakes and part 3 covers spiders, scorpions and insects.

Stray dogs

There are a surprising number of stray dogs around the site. Often this is welcome for employees on site and many will have a little play with them or give them some water or food during the hotter months. However there are some risks to having stray dogs around site, especially in a country with many diseases still present that we are not used to in the west.

Perhaps the biggest risk is that of rabies. With so many stray dogs and rabies known to be present in Iraq, there is a risk of a dog bite leading to rabies in employees. There have been some incidents of this nature already in Iraq so special precautions should be taken.

Apart from rabies, any dog bite can lead to infection and many of the stray dogs have been ill treated in the past and may turn on a human at any time if it feels frightened. 

Other less worrying risks are worms, fleas and ticks from the dogs.
A solution to the problems of stray dogs could be for the organisation in question to arrange a “trap and vaccinate” programme which will not only be beneficial to safety of staff but could provide a much needed after hours activity for volunteer staff whilst also building an ethical reputation for the organisation in a industry that is hounded by negative climate and environmental press. Additionally, with the organisation safe in the knowledge that the dogs are healthy, the camps on site could provide a safe haven for the dogs and providing employees with some much needed company on site.  

Cats

Each site and camp have a handful of cats that usually hang around the canteen area waiting for food. Again, like dogs, most people welcome this and enjoy spending time with the cats and taking care of them. Whilst there is no major risk from the cats, in fact it is an opportunity as they can keep the mice population down, there is the usual issue with fleas, ticks, worms etc. 

Companies can introduce policies for cats (as previously mentioned with dogs) including providing medicine for animals on site or camp.

Mice

something that was unexpected for me was the amount of mice found in Iraq. During certain months there are a large number of mice around the camp and in the offices. Whilst this doesn’t sound like much of a risk, there have been some major risks that have occurred from this already and that companies should be aware of. 

Mice are attracted to optical cables for some reason and this can lead to them eating through cables leading to outage of networks and even power, getting stuck in power outlets to the extent that they end up causing a short circuit or even a fire in a building. THere are ways to ensure that mice are not attracted to the cables by having stringent cable handling procedures such as wearing gloves in order to ensure no bodily oils are left on cables. Additionally food restrictions can be implemented in areas with cables. 

Another risk is mice in the kitchen and getting into food or contaminating food which might lead to wide spread disease or illness and major downtime of staff.

A solution to this problem tends to be mice traps, although other less humane traps are often used in many places. Another option is to use the cats that are on site as a natural deterrent.
Desert foxes

Since arriving in Iraq I have seen at least 2 or 3 Desert foxes. Whilst they don’t pose a threat to operations or projects, it is a really nice sight to see these foxes in their natural habitat. Perhaps this is the major risk. The risk that these foxes are losing their habitat and being forced off their land as we have done with so many other animals around the world. 

Unfortunately, unlike in many countries, where there are more stringent environmental regulations and requirements for building on land (or sea), there are often less developed requirements in regions such as Iraq. This shouldn’t stop organisations from working in line with other country standards and create a set of organisation policies geared towards positive environmental preservation and build a genuine ethical reputation.

Risks in Iraq – Legislation and customs clearance – PART 2

Legislation changes

1. Risk of changes to legislation causing rejection of visa

Throughout the life of the project there will be a need to renew employee visas. Visa renewal is required annually. This includes blood tests every 6 months. Often there are changes to requirements both in terms of blood tests and visa procedures or documentation requirements. Often there is little consultation and communication is either not efficiently dispersed or it is announced in Arabic with vague interpretations when translated into English. Unless the company is on top of this there is a real risk that visas will be rejected leading to arrests of employees or employees not being allowed back into the country leading to extensive delays in schedule.

2. Risk of changes to legislation causing rejection of equipment

As with the previous risk, changes can be announced at any time with little time for implementation. You could have a piece of equipment arriving in the next week from China with all the paperwork in order only to find that the requirements have changed and you now face a long delay at customs as you work with vendors to replace the paperwork. It’s not unheard of for equipment to be stuck at port for up to 9 months or more.

3. Risk of specific Nationalities visa’s not being renewed

The reliance on a specific nationality of worker is another risk that companies operating in Iraq face. Often contractors will work with their home workforce, which makes sense, however with Iraq still finding its feet politically and with relationships with neighbours being delicate, there is a risk that Iraq implements a ban on certain passport holders (and this has already happened on a couple of occasions) working in the country. This can lead to having to change contract strategy as a contractor you have awarded work to may now be unable to work in Iraq.

It is not just on the Iraqi side however. Certain nations impose bans on their citizens working in specific countries and this too could cause a problem of getting staff.

 

4. Risk of change to resource procedure requirements

Another risk related to legislation change is that of supply of critical resources such as Diesel. With Diesel being essential to projects during the construction phase when there is limited power supply, any changes to the procedure of obtaining Diesel needs to be communicated clearly. Unfortunately this is often not the case. Even if the company receive clear instruction and follow this new instruction, there is the risk that suppliers or other contractors don’t get the update and a breakdown occurs whereby Diesel no longer gets delivered to site.

 

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5. Risk of specific countries being blacklisted from providing equipment to Iraqi projects

Yet another risk faced as a result of a change of legislation at government level is that of certain countries being blacklisted from being able to provide equipment on behalf of a project. This can be for numerous reasons from relationship breakdown with a country or a preconception of quality coming out of the country. This again can delay the awarding of a vendor or indeed a vendor may need to be changed mid project.

6. Chemicals or parts requiring more stringent paperwork

As has been the theme in the last few risks, as a company, you need to be ready for change. What may have been accepted at the start of a project may suddenly be blacklisted a year later. Critical Equipment parts or critical chemicals may require army authorization (laser related equipment for example) which can add weeks to months to the process of securing equipment. Paperwork or procedures may change for chemicals that you rely on for operations too, and considering chemicals are topped up on a monthly basis its critical that you hold enough spare chemicals to account for any delivery delay as a result of a change of procedure. Of course many chemicals have a shelf life which means this is not always possible.

Even when a company is prepared and fully understand all the requirements of a change of legislation, delays can still happen if the new legislation itself is a complicated process that causes confusion within local ministries and departments who are new to the process and still need time to go through it a few times. There may even be an unwillingness of some departments or ministries to sign off on the process due to confusion. This is often the case where the authorised signatory is on holiday and due to it being a new process, there is no deputy comfortable to sign off on it.

 

Paperwork and approvals

1. Delay to decision making process due to incorrect paperwork

So far I have covered a lot of risks that impact schedule or operations but its important to remember that changes like this also impact management. When setting strategy there are certain things that need to be in place or agreed with partners (in this case the Iraqi government or ministry of oil). It could be the need for approval for additional costs to be covered, new projects to be started or to increase number of employees. It could also be decisions on budget, handover dates, etc. Whatever the reason, the company needs these approvals or decisions in order to make its own decisions regarding contracting strategy, long term strategy, budgeting requirements etc.

There will be both internal and external procedures that need to be followed in order to obtain these approvals or decisions. Even if there have been no changes to the procedures and the company has followed the procedure perfectly, the internal processes within the company and the government and their agencies/ministries can be complex, bureaucratic and time consuming. Often decisions may take much longer than planned which can hinder the company in making any of their own decisions. This can end up costing money and impact schedules and strategy not just to the particular project but to the company as a whole having wider impacts on the project portfolio as a whole.

Risks in Iraq – Legislation and Customs Clearance – PART 1

Entering into any new country requires a solid understanding of Legislation and customs processes. Unfortunately in a country which is still evolving, legislation can change often and through different communication channels which might not be picked up by the company. Additionally, suppliers and contractors working with the company will certainly not be aware of any paperwork requirements. These are just some of the issues.

Suppliers and contractors Lack of experience with Legislation & customs

1.Risk that customs clearance not considered properly in project schedule

When building a schedule for a project in Iraq, contractors and schedulers will often put a set amount of days in the schedule for delivery to site of equipment. Often customs clearance is not even a consideration and they only take a figure based on regional experience. Even if they include customs clearance as a specific activity, very often they will only assign a week or in some cases a maximum of 2 weeks for customs clearance. Experience has shown that customs clearance actually rarely takes 2 weeks, and that is a best case scenario. A month was a more realistic number and should be accounted for in schedules.

2. Risk that mobilization not considered properly in project schedule

As in the previous risk, this is schedule related. Too often unrealistic targets are set in terms of mobilization. 3 months is a common figure in schedules. This might be possible in other countries but in Iraq it certainly isn’t. From issues with visa’s to issues with getting equipment to site in order to start building for mobilization, it all leads to a more realistic mobilization time of about 5-6 months. If you get this wrong from the outset then you are already facing a large delay in your project which may be difficult to recover from.

3. Risks of incorrect documentation or incorrect translations for equipment

A risk that occurred frequently in Iraq was that contractors would often have incorrect documentation for customs clearance. There are a variety of requirements that contractors or vendors who have never worked in the country will not know about. Even if they do know about them, they may not be completely aware of the specific detail behind the requirements. There are additional issues such as translation that could be incorrect or from non-authorized entities which again can delay the process.

4. Risks of incorrect documentation or incorrect translations for visas

Like the previous risk, this is related to contractors or vendors not having the correct documentation or translation for visa’s. There have ongoing issues with visa issuances due to incorrect documentation provided by contractors. This is usually only during mobilization and once they overcome the initial hurdles they understand the requirements much better.