Using R&M analysis to calculate economic risk in the process industries

A systematic procedure for quantifying the financial risk of repetitive hardware failures is used to analyze the reliability of plant electrical systems and process units. The procedure uses component failure rates and the financial impact to calculate annual risk premiums, which approximate the insurance premiums required to compensate for financial losses caused by the component failures. Basic reliability calculations are then used to combine the component characteristics and to find the annual risk premium of the system. Typically the annual risk premiums for components follow a Pareto distribution; i.e., several component failures account for most of the production losses. Results of these calculations provide data for: ranking component failures on the basis of financial impact across discipline, system, and unit boundaries; developing realistic estimates of the future availability of units and systems; developing alternatives for upgrading systems to achieve desired availability; and developing maintenance strategies.