For the past 40 years most industrial facilities operating between 480V and 5kV were designed with 3 phase 4 wire systems. This addressed the concern over transient over-voltages and allowed for neutral loads but these loads are typically 10% or less of the total load and designing a 4 wire system just to accommodate single phase loads adds cost. In addition to higher cost there is higher risk as 4 wire solidly grounded systems have the highest probability of arc flash. Designing a 3 phase 3 wire HRG system and using an isolation transformer for single phase loads saves money, provides for higher reliability and lowers the arc flash risk. For reasons of safety, reliability and economics all industrial facilities should be designed or changed to 3 wire HRG systems and 4 wire systems become a thing of the past.
A HRG does not reduce the arc-flash risk. Yes it may reduce the probability of equipment failure creating an arc-flash event, but not the risk. Many events are a result of human error and are phase-phase faults. The HRG system does not lower this risk. Also the present standards do not address line-ground faults (only phase-phase), and in point 3-wire systems have a higher calculated incident energy level than 4-wire systems.
Further, the use of isolation transformers increase the incident energies at the panels they serve compared to directly fed 4-wire panels due to the delayed operation of protective devices at the secondary of the isolation transformer at the lower fault currents.
The best ways to lower incident energies are with a well-designed system that includes main devices that are isolated from the distribution they serve and alternate settings modes to reduce clearing times at locations while energized work is being performed.