Analysis of Tianjin Port Explosion: Risk management is the key

It has been almost a year since the hazardous chemical explosion occurred at a warehouse storing hazardous and flammable materials in the Port of Tianjin. This explosion has resulted in enormous economic and human losses for enterprises and society. At the same time, it also rang a warning bell to the insurance industry about the importance of identifying and managing risks pertaining to hazardous chemicals.

This accident has caused concerns among the general public surrounding the use of hazardous chemicals. However, many hazardous chemicals are indispensable raw materials and additives necessary for the production of goods that benefit society. Their production, storage, transportation and use are unavoidable. Therefore, correctly identifying and understanding hazardous chemicals, while at the same time managing them scientifically in a targeted manner, has become the highest priority in risk management and control. By reviewing and analysing the causes and effects of the explosion at the Port of Tianjin, Swiss Re hopes to guide insurance companies to place greater emphasis on risk management and raise their ability to identify, control and reduce risks, thereby enhancing underwriting and improving risk control levels.

Man-made disasters in history have led to insurance losses

According to Swiss Re's sigma No 1/2016 study, although many insurance claims on losses have yet to be settled, Swiss Re estimates the insurance losses resulting from the Tianjin explosion are likely to be around USD 2.5 billion to USD 3.5 billion. From a historical perspective, this explosion ranks at the top in Asia and near the top worldwide in terms of insurance losses resulting from global man-made disasters, close to the 9.11 terrorist attack in the US in 2011 and the 1988 UK North Sea oil production platform explosion.

Table 1 Largest man-made insured losses globally, in USD billion at 2015 prices




Insurance losses (USD bn)


Involving hazardous chemicals



Terror attack on WTC, Pentagon, other buildings


2 982




Explosion on platform Piper Alpha



Condensates including propane, butane and pentane



Explosions at a warehouse storing hazardous chemicals at Tianjin Port

2.5 to 3.5


Nitrocellulose, ammonium nitrate



Vapour cloud explosion at petrochemical plant



Ethylene and Isobutane



Damage at nuclear power station





Explosion destroys fertilizer plant



Ammonium nitrate

Why the impact so destructive?

In February 2016, China's State Administration of Work Safety issued an investigation report on the Tianjin explosions. The report points out that the initial fire was triggered by spontaneous ignition of nitrocellulose which lost wetting agent due to damaged packaging. The primary chemical in the two subsequent explosions was ammonium nitrate, a notorious chemical in the risk control field. Meanwhile, between the outbreak of fire and the explosions, the situation was aggravated and intensified by dozens of flammable or oxidising hazardous chemicals weighing a few thousand tonnes which were not supposed to have been stored in one place.

The investigation report lists the key hazardous chemicals stored within the arrival area where the core explosion take place prior to the accident as follows:

48 tonnes


800 tonnes

Ammonium nitrate

2,173 tonnes       

flammable liquids, flammable solids, substances that emit flammable gases when contact with water and oxidising substances

1,831 tonnes

Toxic and corrosive substances, and other hazardous chemicals

The investigation report lists ten violations by the warehouse owner, Ruihai Logistics, leading to the accident. In addition to illegal construction and operating issues, there were also many problems associated with risk control failures and violations of national or industry standards, including:

  • Illegal storage of ammonium nitrate at harbour
  • Severe overcapacity of throughput and excessive storage volumes◊ Illegal mixing of storage and stacking of hazardous goods over the stipulated height
  • Embarking on illegal unpacking, transportation, loading and unloading and other operations
  • Failure of registration and filing of major hazardous sources as required

Notorious hazardous chemical — Ammonium nitrate  

Ammonium nitrate, the hazardous chemical causing the greatest damage at the Tianjin port, was also involved in causing dozens of severe explosions worldwide. Swiss Re's sigma study shows that of the top six man-made disastrous insurance losses  recorded, ammonium nitrate accounted for two, namely the explosion of the hazardous chemicals warehouse at the Port of Tianjin and the chemical fertiliser explosion in Toulouse, France. The common characteristic of these two accidents is that they occurred in densely populated, property-intensive areas. The damage they inflicted on the surrounding property and people far outweighed the losses suffered by the enterprise involved in the accident.

Why does ammonium nitrate frequently cause large-scale accidents?

  • Ammonium nitrate serves as a source of nitrogen in agricultural production, and has an irreplaceable role; for this reason, it is widely used
  • It is also widely used as an explosive in the mining industry and is stored in large quantities

Under normal circumstances, ammonium nitrate is stable and does not explode easily. However, it could explode under high-temperature and high-pressure and when reductants exist: It would begin to decompose at 110℃, and decomposition would accelerate at more than 230℃; at 400℃, decomposition would intensify and an explosion would occur. Therefore, enterprises have to regard risk management of ammonium nitrate as the highest priority.

Risk control in ammonium nitrate production and storage enterprises

On 17 April 2013, an explosion occurred at a fertiliser grade ammonium nitrate  storage facility in West City, Texas in the United States. The accident led to 15 deaths, including the deaths of 13 firefighters, and more than 260 people injured. The US Chemical Safety Board (CSB) indicated clearly in the investigation report that "In a fire, ammonium nitrate exhibits three major hazards: uncontrollable fire, decomposition producing toxic gases, and explosion". According to the conclusion of the investigation report, the US Chemical Safety Board (CSB) proposed a series of recommendations for improvement to the National Fire Protection Association (NFPA). The NFPA, in accordance with the recommendations, subsequently announced an updated "NFPA 400, Hazardous Materials Code, 2016 edition" in 2015.

Some of the major updates include:

  • Non-combustible materials shall be used to construct ammonium nitrate warehouses.
  • It is also widely used as an explosive in the mining industry and is stored in large quantities
  • An automatic fire sprinkler system shall be provided in accordance with NFPA 13 for a minimum extra hazard (group 1). Only water-based suppression systems shall be permitted.
  • A fire alarm system activated automatically by fire detection system shall be setup.
  • If an incipient fire cannot be put out, emergency evacuation of people, including firefighters, within one-mile (1.6 km) of the fire shall be organized immediately.

The premise of these updates is to avoid placing ammonium nitrate in high-temperature fire environments. Other important risk management measures include:

  • Ammonium nitrate should not be stored in the same place with other materials that could cause an explosion
  • If it is stored with other flammable materials in the same warehouse, it must be stored in a different room and be separated by a fire barrier wall
  • Keep the warehouse well ventilated
  • A fire alarm system activated automatically by fire detection system shall be setup.
  • If an incipient fire cannot be put out, emergency evacuation of people, including firefighters, within one-mile (1.6 km) of the fire shall be organized immediately.
  • Rigorously ensure that the warehouse is clean inside. Any leakage must be cleaned up immediately. Strictly ensure that ammonium nitrate is not contaminated by other combustible / flammable materials
  • Report the storage of ammonium nitrate to the local fire department
  • Access to the warehouse must be controlled and only authorized persons may have access

Sharing of knowledge

What are hazardous chemicals?

Our discussion above primarily centred on the explosion at the Port of Tianjin and ammonium nitrate, but there is a wide variety of hazardous chemicals and their degree of danger varies. Only if one has a comprehensive understanding of hazardous chemicals can one have a clear idea of risk control.

In China, the Regulations on Safe Management of Hazardous Chemicals is the basic code regulating hazardous chemicals. In particular, the code clarifies the definition of hazardous chemicals as referring to highly toxic chemicals and other chemicals that have toxic, corrosive, explosive, combustible, and combustion supporting properties that are harmful to the human body, facilities and the environment. Next, we introduce a number of classes of hazardous chemical.

Classification of hazardous chemicals

China's Catalogue of Hazardous Chemicals (2015 edition) lists all hazardous chemicals included under the management of hazardous chemicals. There are a total of 2828 hazardous chemicals. The categories are as follows:

Dangerous goods

Dangerous goods refers to hazardous chemicals or goods that contains hazardous chemicals that involves the transportation industry. China's GB 12268-2012 "List of Dangerous Goods" included nine major categories involving 3495 (types) of hazardous goods. In terms of physical hazards, these almost included the chemical substances listed in the Catalogue of Hazardous Chemicals (2015 edition).

Major Hazard Installation for Dangerous chemicals

Major Hazardous Source for Dangerous chemicals refer to the installation (occupancy or facility) which produce, store, use or transport hazardous chemicals more than the threshold quantity defined by GB 18218-2009 “the Identification of Major Hazard Installation for Dangerous chemicals” . Enterprises involving hazardous chemicals need to identify its own major hazardous sources, as per the standard, and carry out safety evaluation of major sources of risk. Neighbouring enterprises should be informed.

Which industries have hazardous chemicals?

Hazardous chemicals are widely used in various different production and storage industries. The following are some frequently seen examples of enterprises that use hazardous chemicals:

  • Warehousing industry
  • Oil and chemicals/petrochemicals
  • Coal-fired power generation
  • Semiconductor industry
  • Metals processing/hardware
  • Ferrous metallurgy
  • Mining
  • Food processing
  • More

Although the Tianjin explosion is now history, it highlights the importance of professional underwriting and risk management. The hand in hand corporation among insurer, insured and government are required to prevent and handle such accidents,  build up a comprehensive risk management system and promote an atmosphere that focuses on risk management.

Published July 2016