“Helping Industry and the Environment Prosper”

1. “Helping Industry and the Environment Prosper” Pollution Prevention Saves Money By Reducing Operational Risk Robert B. Pojasek, Ph.D.

2. Pollution Prevention • The Pollution Prevention Act defines "source reduction" to mean any practice which: • reduces the amount of any hazardous substance, pollutant, or contaminant entering any waste stream or otherwise released into the environment (including fugitive emissions) prior to recycling, treatment, or disposal • reduced the hazards to public health and the environment associated with the release of such substances, pollutants, or contaminants • The term includes: equipment or technology modifications, process or procedure modifications, reformulation or redesign of products, substitution of raw materials, and improvements in housekeeping, maintenance, training, or inventory control.

3. Making the Business Case How does a business make the financial case for P2? • Using the general ledger • Activity-based costing • Real options – more intangible items • Operational risk management

4. EMFACT Software • Energy and Materials Flow and Cost Tracker • Used within companies for systematically tracking materials and energy use, releases, discharges and wastes along with associated costs • Seeking ways that can create value for company • Resource use and its relation to production and planning that can help improve both business and environmental performance

5. Show Me the Money Principle • Many companies maintain an interest in a green program • However, investing in lower risk is important to sustain the management interest and grow your brand strength • Look at your entire value chain – suppliers can often provide great ideas for P2 projects • Maintain a high level of employee involvement in these programs – facilitation v dictation!

6. Types of Risk • Financial Market Risk • Interest rates, currency, commodities, equities • Socially Responsible Investment • Business Risk • Operational Risk

7. Business Risk • Business Continuity or disruption • Competition • Public Image • Liquidity Risk • Disruptive Innovation • High costs • M&A • Unrealized or lost revenue • Inappropriate management policy and or decision making process

8. Operational Risk The risk resulting from uncertainties related to internal processes, people and systems, or from external events

9. Framework for the Analysis of Risk “The culture, processes and structures that are directed towards realising potential opportunities whilst managing adverse effects” ISO 36000 Risk Management Develop options for controlling risks Select appropriate strategy Risk Assessment Identify hazard and determine levels of exposure 2. Estimate risk

10. Managing the Risks • Use proven tools and methods • Integrate risk management into the approach • Integrate the methods • Drive into the core business • Make the program part of what every employee does every day • Make the program part of every management decision

11. ISO 31000 – Risk Management ISO/TMB WG on Risk management N 047Date: 2007-06-15ISO CD 31000Risk management — Guidelines on principles and implementation of risk management Can integrate with ISO 14001 – Environmental Management System

12. Risk Appetite • Risk Appetite” – • “….at the organizational level, is the amount of risk exposure, or potential adverse impact from an event, that the organization is willing to accept.” • http://www.continuitycentral.com/feature0170.htm • What is the Risk Appetite of your organization?

13. Risk Management Process

14. Risk Register

15. Probability/Impact Matrix

16. Risk Map

17. Risk Response Plan

18. Regular checking & Continuous Monitoring Line Management Review Audit Risk Management

19. Organization Risk Management Program

20. Preventive Action Items • Preventive action #1 • Develop Documented Risk Appetite Statement • Include Reference to P2 Program • Train all staff to develop preventive approach to risk • Preventive Action #2 • New Management Review Element – “RM” • Changes that could Affect the EMS • Ongoing Preventive Actions #3 - ∞ • Assess Risk – Source Reduction with Appropriate Controls (P2)

21. Risk Management and $$$ Risk Identification methods include: • Scenario Analysis • Stress Testing • Real Options Risk Analysis/Evaluation: • If possible, assign a $ value for expected impact (such as profit reduction, revenue loss etc) of each risk event/scenario • Conduct Sensitivity Analysis • See the impact of these risks on financial strategy of the company

22. Take Away Points • Top management understands risk • All employees and stakeholders understand risk • Risk can be expressed in financial terms • P2 opportunities are designed to avoid risk – positive risk • EMS Policy includes a commitment to P2 • EMS has a requirement for preventive actions • Risk has a management system – ISO 31000 • Integrating your EMS with ISO 31001 can set the stage for an enhanced P2 program that is part of the way the organization is operated day-in and day-out!

23. Robert B. (Bob) Pojasek, Ph.D. 508-970-0033 Ext. 137 rpojasek@capaccio.com www.capaccio.com www.iso14000.com