Risk Management Definitions
The Congress finds that the movement of hazardous materials in commerce is necessary and desirable to
maintain economic vitality and meet consumer demands, and shall be conducted in a safe and efficient manner.
(HMTUSA; 49 App. U.S.C. 1801).
Satisfying the needs of our highly competitive industrialized society, while maintaining an acceptable level of
safety at a reasonable cost, is a regulatory challenge that PHMSA consistently, and successfully, meets through
its hazard/risk-based approach to the management of the hazardous materials transportation safety program.
The terms hazard, risk, risk analysis, hazard analysis and hazard or risk management have many forms and meanings.
For hazardous materials safety the following terms are understood to mean:
HAZARD
is the inherent characteristic of a material, condition, or activity that has the potential to
cause harm to people, property, or the environment.
RISK
is the combination of the likelihood and the consequence of a specified hazard being realized.
It is a measure of harm or loss associated with an activity.
LIKELIHOOD
is expressed as either a frequency or a probability.
Frequency is a measure of the rate at which events occur over time (e.g., events/year, incidents/year, deaths/year, etc.).
Probability is a measure of the rate of a possible event expressed as a fraction of the total number of events
(e.g., one-in-a-million, 1/1,000,000, or 1X10-3).
CONSEQUENCE
is the direct effect of an event, incident or accident.
It is expressed as a health effect (e.g., death, injury, exposure), property loss, environmental effect, evacuation, or quantity spilled.
HAZARD ANALYSIS
is the identification of material properties, system elements or events that lead to harm or loss.
The term hazard analysis may also include evaluation of consequences from an event or incident.
RISK ANALYSIS
is the study of risk in order to understand and quantify risk so it can be managed.
RISK ASSESSMENT OR RISK CHARACTERIZATION
is determination of risk context and acceptability, often by comparison to similar risks.
QUANTITATIVE RISK ANALYSIS
incorporates numerical estimates of frequency or probability and consequence.
In practice a sophisticated analysis of risk requires extensive data which are expensive to acquire or often unavailable.
Fortunately few decisions require sophisticated quantification of both frequency and consequences.
RELATIVE RISK ANALYSIS
means that a risk is evaluated in comparison to another risk.
The type of risk analysis used should be appropriate for the available data and to the exposure, frequency and severity of potential loss.
RISK MANAGEMENT
is the systematic application of policies, practices, and resources to the assessment and control of risk affecting
human health and safety and the environment.
Hazard, risk, and cost/benefit analysis are used to support development of risk reduction options,
program objectives, and prioritization of issues and resources.
A critical role of the safety regulator is to identify activities involving significant risk and to establish an acceptable level of risk.
Near zero risk can be very costly and in most cases is not achievable.
AN ACCEPTABLE LEVEL OF RISK
for regulations and special permits is established by consideration of risk, cost/benefit and public comments.
Relative or comparative risk analysis is most often used where quantitative risk analysis is not practical or justified.
Public participation is important in a risk analysis process, not only for enhancing the public's understanding of the
risks associated with hazardous materials transportation, but also for insuring that the point of view of all major segments
of the population-at-risk is included in the analyses process. Risk and cost/benefit analysis are important tools in informing
the public about the actual risk and cost as opposed to the perceived risk and cost involved in an activity.
Through such a public process PHMSA establishes hazard classification, hazard communication, packaging, and operational control standards.
HAZARD/RISK-BASED MANAGEMENT IN THE HAZARDOUS MATERIALS PROGRAM:
- REGULATORY STANDARDS: The hazardous material regulatory system
is a risk management system that is prevention oriented and focused on identifying
a hazard and reducing the probability and quantity of a hazardous material
release. Hazardous materials are categorized by hazard analysis and experience
into hazard classes and packing groups. The regulations require each shipper
to classify a material in accordance with these hazard classes and packing
groups; the process of classifying a hazardous material is itself a form
of hazard analysis. Further, the regulations require the shipper to communicate
the material's hazards through use of the hazard class, packing group and
proper shipping name on the shipping paper and the use of labels on packages
and placards on transport vehicle. Thus the shipping paper, labels, and placards
communicate the most significant findings of the shipper's hazard analysis.
A hazardous material is assigned to one of three packing groups based upon
its degree of hazard, from a high hazard packing group I to a low hazard
packing group III material. The quality, damage resistance, and performance
standards of the packaging in each packing group are appropriate for the
hazards of the material transported.
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SPECIAL PERMIT S TO THE HAZARDOUS MATERIALS REGULATIONS: With great wisdom,
Congress in the Hazardous Materials Transportation Act of 1974, created a
risk management program that can authorize alternative regulations. The purpose
of these alternative regulations -- special permits -- is to facilitate the implementation
of more efficient methods and new technologies that provide a level of safety
at least equal to that provided by the regulations. The procedural regulations
governing PHMSA's special permits program, published under section 107.103 of Title
49 of the Code of Federal Regulations (49 CFR 107.103), require all applications
for special permits to be accompanied by a safety analysis, i.e., documentation
and data substantiating a finding that the special permit sought will provide
at least the same level of safety as that provided under the regulations.
The safety analyses required to support special permits vary greatly, from complex
risk analyses for complex packaging systems involving new technologies to
simple comparative analyses for minor variations in packaging or operational
controls for relatively low hazard materials. The risk present in new technologies
and materials is often particularly difficult to evaluate and often requires
extensive risk analysis.
- EMERGENCY PREPAREDNESS AND RESPONSE: Should
an incident occur, PHMSA's hazardous materials program includes elements
to mitigate the consequences of a release. PHMSA publishes and distributes
to first responders an Emergency Response Guidebook to provide guidance on
hazards, emergency actions and protective action decision factors and distances.
This information is also tailored to reflect the risk of each material. To
support emergency preparedness and response planners at the State and local
levels, PHMSA, the Federal Emergency Management Agency, and the Environmental
Protection Agency jointly developed a Handbook Of Chemical Hazards Analysis
Procedures and a personal computer based program Automated Resource for Chemical
Hazard Incident Evaluation (ARCHIE). PHMSA, through its Planning and Training
Grants, provides funds to State and local emergency preparedness and emergency
response organizations for planning and training directed towards mitigation
of the consequences associated with hazardous materials incidents.
- INFORMATION/DATA BASES: Information is critical to the effective
use and application of hazard/risk analyses. PHMSA has improved the information/data
bases used to determine which risks in the transportation of hazardous materials
appear to be the greatest, and to identify corrective actions needed to address
the major contributors to those risks.
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COMPLIANCE: PHMSA uses risk management to prioritize compliance activity
and address the risk associated with non-compliance. PHMSA places greater
compliance emphasis on materials and packagings associated with materials
presenting high hazard to the public such as poisons and flammable gases,
explosives, and poison inhalation hazard liquids. When packagings are found
in non-compliance, risk and benefit/cost assessments are used to determine
if an appropriate course of action, such as recall, down-rating or use restriction,
is necessary to protect public safety. PHMSA has developed a "Procedure
for Removal of Nonconforming Hazardous Materials Packagings from Service that
delineates a process and assessment guidelines for nonconforming packagings.
- OUTREACH: Communication of regulatory requirements and changes to
the general public and industry is a critical area of risk management.
Clear, consistent information dissemination is a top priority with PHMSA.
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