An external domino effects investment approach to improve cross-plant safety within chemical clusters.

Every company situated within a chemical cluster faces the risk of being struck by an escalating accident at one of its neighbouring plants (the so-called external domino effect risks). These cross-plant risks can be reduced or eliminated if neighbouring companies are willing to invest in systems and measures to prevent them. However, since reducing such multi-plant risks does not lead to direct economic benefits, enterprises tend to be reluctant to invest more than needed for meeting minimal legal requirements and they tend to invest without collaborating. The suggested approach in this article indicates what information is required to evaluate the available investment options in external domino effects prevention. To this end, game theory is used as a promising scientific technique to investigate the decision-making process on investments in prevention measures simultaneously involving several plants. The game between two neighbouring chemical plants and their strategic investment behaviour regarding the prevention of external domino effects is described and an illustrative example is provided. Recommendations are formulated to advance cross-plant prevention investments in a two-company cluster. Copyright (c) 2009 Elsevier B.V. All rights reserved.