As of yet, however, there is no federal standard in place to require chemical plants to assess their vulnerabilities and take steps to reduce them. But that could be changing very soon.

In fact, the risk of terrorist attack on industrial facilities that store large quantities of hazardous chemicals looms as a daunting homeland security issue. According to the Environmental Protection Agency (EPA), there are 123 facilities in the United States where an accidental release of chemicals could threaten more than one million people. Terrorist sabotage at any of 750 chemical plants could threaten more than 100,000 people. There are 15,000 chemical facilities in the United States that are using, producing, or storing large quantities of hazardous chemical products.

Security at chemical plants is now getting national coveage reflecting the increased concern of the general public. During a broadcast last November, a 60 Minutes crew "visited" dozens of plants in major metropolitan areas where the gates were unlocked or wide open, fences were dilapidated, and unprotected tanks were filled with deadly chemicals that are used to manufacture everything from plastics to fertilizer.

The recent train bombings in Spain, timed to coincide with that country's national elections, has renewed fears that terrorists will now try to take advantage of the U.S. election cycle. No less an authority than National Security Adviser Condoleezza Rice, in fact, told the media on April 18 that this election year could mean an increase in terrorists' efforts to launch an attack inside the United States.



"The hard thing about terrorism is that they only have to be right once, and we have to be right 100 percent of the time. And nobody can be certain there won't be another attack. But, of course, we are concerned about the election cycle."
National Security Adviser Condoleezza Rice, Fox News Sunday, 4/18/2004

While the chemical industry has recognized the terrorist threat and instituted self-policing and self-testing plans, it appears as if the election-year perception of heightened risk could potentially result in tough federal regulation. Two bills are currently pending before Congress: Senator Jon S. Corzine's (D-NJ) Chemical Security Act, introduced in January 2003, and Senator Jim Inhofe's (R-OK) Chemical Facilities Security Act, introduced in May 2003.

The requirements of the Corzine bill are more ambitious. This bill would mandate that owners identify, prevent, and minimize the consequences of intentional releases of certain chemicals. In addition, certain "high-priority" plants would be jointly identified by the DHS and the EPA, and the two agencies would work together to develop regulations for these high-priority plants, addressing mandatory vulnerability assessments and general security improvements.

Chemical industry groups have criticized this bill as being too intrusive and unfairly saddling particular companies with huge expenses related to complying with the aspects of the bill.

The Inhofe bill, while requiring self-evaluations of security vulnerabilities, would not mandate specific benchmarks for hazard reductions. What the final bill that reaches President Bush's desk looks like may depend on when and how the President weighs in on the issue.

Given the potential climate for terrorism, as well as the possibility of an increased government role in chemical plant security, it's clear that companies with extensive manufacturing or chemicals-producing operations need to do two things: evaluate and benchmark their hazardous material security measures against best practices and estimate what kind of investment it will take to close the gap between their operations and industry leaders. Some questions business executives might want to ask themselves include:

• Has my company conducted a comprehensive vulnerability assessment of all chemical facilities?
• Are we prepared for a tougher chemical security bill, under which we might face significant compliance costs?
• Can I quantify the financial impact of a sudden operational disruption?
• Is my company a member of an industry group, such as the American Chemical Council, that shares best practices with members?
• Do we have cutting-edge chemical safety training, equipment, and practices in place for employees?
• Is our security plan synchronized with our business continuity, emergency response, and crisis management plans?

"To combat the threat, [DHS Secretary] Ridge named a new task force to coordinate government and private security at least through next January's presidential inauguration. He said officials from nine Cabinet departments will work to protect trains and planes, chemical plants, shipments of hazardous materials and the electrical grid."
USA Today, 4/20/2004

Protecting lives and protecting your organization
Companies can better protect their facilities from terrorist attack and stay ahead of the legislative curve through a variety of effective consulting solutions.

In order to provide a comprehensive solution to the ever-present threats on human lives and property, identifying the underlying human factors that lead to the initiation of events, as well as physical security aspects must be addressed. The threat of violent crimes continues to demonstrate the need for security and crisis intervention, planning, and training.

Critical incident prevention and planning helps organizations deal with issues involving compromises in company security, threats of violence, and critical incidents with a focus on providing effective, efficient, and economical means of controlling exposures to loss as a result of criminal activities.

Through the process of emergency response planning organizations can develop and implement the policies and procedures and organize the teams necessary to stabilize the effects of an incident. Sole dependence upon public emergency services is not sufficient as disasters can overtax public services, delaying their response or limiting their availability.

Communications can help your company provide timely information to reassure employees, shareholders, clients, analysts, and the media that your organization understands the current safety and regulatory climate as it relates to high-risk chemical facilities. When stakeholders know, understand, and respect a company and its credibility, everyone will be much better off, if and when a crisis does occur.

The overriding concern of everyone is protecting our nation and citizens from the effects of attacks on high-risk chemical facilities. But as your company prepares to protect itself from the worst, it can be better off with a professional risk management partner such as Marsh.

If you have any questions or would like additional information, please contact us.