Top Management Accountability SMS

Top Management Top Management

Accountability for SMSAccountability for SMS

CAAS Aviation Safety Forum 2007CAAS Aviation Safety Forum 2007

Accountability for SMSAccountability for SMS

Prof Patrick HudsonProf Patrick Hudson

Leiden UniversityLeiden University

The NetherlandsThe Netherlands

Why have an SMS?

•• The legal reason The legal reason -- compliancecompliance

•• You can avoid or survive prosecutionYou can avoid or survive prosecution

•• The practical reason The practical reason -- it worksit works


•• The practical reason The practical reason -- it worksit works

•• The ethical reason The ethical reason -- you shouldyou should

•• The business reason The business reason -- it’s good it’s good

businessbusiness

Safety Management SystemSafety Management System• A system with safety as the goal

– Safety is the primary product in Aircraft Engineering

• Policies are about

– how safety is to be regarded

– what level of performance is to be achieved


– what level of performance is to be achieved

• SMS defines how policies are to be implemented

• SMS must be integrated into everyday business

– Not an add-on

• Unlike most industrial processes, that have an attainable target, safety can always be better

– Not just a simple extension of the quality management system

Safety Management SystemSafety Management System• “Safety management is defined as the systematic management of the risks associated with flight operations and related ground operations to achieve high levels of safety performance”

• “A safety management system is an explicit element of the corporate management responsibility that sets


of the corporate management responsibility that sets out an organisation’s safety policy and defines how it intends to manage safety as an integral part of its overall business”

• “A safety management system is a customised and structured method used by the organisation to manage the safety of operations and personnel in an active and integrated manner”

• From CASA AC 119-270(0)

Safety Management Safety Management

SystemsSystems• “A safety management system is a businesslike

approach to safety. It is a systematic, explicit and

comprehensive process for managing safety

risks. As with all management systems, a safety

management system provides for goal setting,


management system provides for goal setting,

planning, and measuring performance. A safety

management system is woven into the fabric of

an organisation. It becomes part of the culture,

the way people do their jobs.”

• Transport Canada TP 13739 E (04/2001)

Targets of Management Targets of Management

SystemsSystems• The target for a finance system is control of money (financial risks to the business) and improving financial results.

• The target of Quality Assurance is the control of process to achieve predictable and desirable results


process to achieve predictable and desirable results that meet with the customers and company’s requirements.

• The target of a Safety Management System is the control of operational risks and to provide an improving safety record.

• All of these systems are primarily the business of “Top Management” and it essential that they lead, are committed and involved.

PrioritiesPriorities

• What top management considers

important will get done

• People see what is really important

by what they see their bosses DO,


by what they see their bosses DO,

not from what they hear them say

• Customers are increasingly buying

on safety as well as price

Company Board

Management & Direction

Sets Policy

Establishes Objectives &

Targets

Delivers the Business Plan

Finance Plan

Targets & Objectives

Budget

Accountabilities

QA/Safety Plan

Targets & Objectives

Budget

Line Management

Accountabilities

Financial Management System QA/Safety Management System


Business Case

or Safety CaseFinance Case

Allocates Resources

Raises and Approves BudgetsLevels of Authority

Procedures

AccountantsAudits

Checks and Balances

Audit

Findings

Balance

Sheets

Profit/Loss

Management of Both

Major Loss Generators

Makes Business Sense

Profit/Loss

Line Management

Authorities

Procedures

Audits

Compliance Monitoring

QA/Safety

Committee

Audit

Findings

Measure

Performance

RisksRisks

• Risks are what organisations and individuals take

• Risks come in many different sorts– Safety risks - accidents large and small

– Environmental risks - disasters and clean-up

– Publicity risks - bad headlines and all that follows


– Publicity risks - bad headlines and all that follows

– Financial risks - bankruptcy

• Profits are made by managing risk better than the opposition

• Managers are always risk managers, but they don’t always realise what they are doing with risks

Running RisksRunning Risks

• Safety is often seen as taking risks (decision making), but outcomes are the result of running risks (action)

• The Organisational Accident Model distinguishes two parts– Running Risks - Individuals at the time


– Running Risks - Individuals at the time

– Taking Risks - Organisations in advance

• Risks are something we have to take in today’s business environment (but do we have to run them?)

• In a low cost world we have no choice

• Risks have to be run withoutwithout accidents

How do we run risks How do we run risks

successfully?successfully?• You have to understand your hazards

• You have to have adequate controls in place

to prevent problems arising

• You have to have mitigation measures ready


• You have to have mitigation measures ready

in case things still go wrong

• The Bow Tie methodology provides a good

way of understanding this

– more this afternoon

BowBow--tie Concepttie Concept

Events andEvents and

CircumstancesCircumstances

Harm to people and Harm to people and

damage to assets damage to assets

or environmentor environment

HH

AA

CC

OO

NN

SS

BARRIERS


AA

ZZ

AA

RR

DD

SS

EE

QQ

UU

EE

NN

CC

EE

SS

Undesirable event withUndesirable event with

potential for harm or damagepotential for harm or damage

Engineering activitiesMaintenance activitiesOperations activities

Evaluating risksEvaluating risks

• You need to decide what level of risk is acceptable

• A Risk Assessment Matrix helps define the limits of tolerability and acceptance


• These limits have to be set by top management

• Top management also has primary responsibility for ensuring that the necessary controls are resourced

• Neither of these responsibilities can be delegated lower down in the organisation

Typical Risk Assessment Typical Risk Assessment

MatrixMatrix Consequence Increasi ng Probabil ity

A B C D ERating People Assets Env iron

ment

Never

heard of in

industry

Incident

heard of in

industry

Incident

heard of in

company

Incident

happens

severaltimes per

year in

company

Incident

happens

severaltimes per

year in a

location

0 No injury Nodamage

No effects Low

Risk

Low

Risk

Low

Risk

Low

Risk

Low

Risk


damage

1 Slightinjury

Slightdamage

Slighteffect

Low

Risk

Low

Risk

Low

Risk

Med/low

Risk

Med/low

Risk

2 Minorinjury

Minordamage

Minoreffect

Med/low

Risk

Med/low

Risk

Med/low

Risk

Med/low

Risk

Med/low

Risk

3 Majorinjury

Localdamage

Localisedeffect

Med/low

Risk

Med/low

Risk

Medium

Risk

Medium

RiskHighRisk

4 Singlefatality

Majordamage

Majoreffect

Medium

Risk

Medium

Risk

Medium

RiskHighRisk

HighRisk

5 Multiplefatality

Extensivedamage

Massiveeffect

Medium

RiskHighRisk

HighRisk

HighRisk

HighRisk

The colour determines the level of active risk management required

Taking risks makes moneyTaking risks makes money• Classic Economics shows that profits are made by taking risks

• Top management is responsible to the shareholders and other stakeholders to ensure the profitability of their company

• Risks can only be taken and run if the


• Risks can only be taken and run if the management of risk is professional

• An SMS provides the basis for effective safety management

• A Safety Culture builds further on effective safety management, allowing us to survive the unexpected and operate where others fear to tread

The EdgeThe Edge

Inherently

Normally Safe

The Edge


Inherently

Safe

Normally Safe

The Edge

15%12%

8%Return onReturn on

CapitalCapital

InvestedInvested

SMSSMS

Safety CultureSafety Culture

Operating at the EdgeOperating at the Edge

• Anybody can operate when they have physics on their side - inherently safe

• Most hazardous operations rely upon technical an organisational controls to ensure safety

••• The edge is where it gets interestingThe edge is where it gets interestingThe edge is where it gets interesting


••• The edge is where it gets interestingThe edge is where it gets interestingThe edge is where it gets interesting

• Return on capital invested rises as we go out– 8% Inherently safe

– 12% Normally safe

– 15%+ The Edge

– Shareholders want more than 15% return, but are not prepared to tolerate losses

• Failing involves not knowing where you are

So - How do you do it?


Management Systems & Management Systems &

LeadershipLeadership• Successful management requires clear objectives, effective direction, stated plans and demonstrated commitment.

• It is almost certain that top management will be involved in the management of the finances, due to the associated risks.

• Top management often delegate the responsibility for systems such as QA and SMS to allow themselves the


systems such as QA and SMS to allow themselves the chance to “get on with running the business” - this is flawed thinking - safety IS the business

• Although named as the Accountable Managers, CEO’s often are not involved and have little knowledge of these systems, or the problems faced in the workplace (which is why CAAS insists on SMS competence at the top)

• Safety Management should be no different from financial management

The Core of a The Core of a

Safety Management SystemSafety Management System• Safety management is centered round the management of the risks and hazards

– Plan - what are we going to do?

– Do - will we actually do what we planned?

– Check - do we check that what we planned and did actually worked?


– Feedback - do we learn from our successes and failures?

• The Regulator requires proof that these are

– In place - we have a system

– In operation - we are using the system on a daily basis

– Effective - the system is producing measurable improvements

– Permanent - we would still use the system even if everybody moved out

Benefits of Introducing SMSBenefits of Introducing SMS• Gives Top Management full awareness of the key risks of the business

• Provides the ability to control the potential “safety loss generators” that the company faces

• A clear & documented approach to achieving safe


• A clear & documented approach to achieving safe operations that can be explained to others

• Active involvement of all the staff in safety

• Enables top management to demonstrate to the regulator, its customers and the Board that its risks are under control

CAASCAAS• The senior management of the organisation led by the Chief Executive Officer is ultimately responsible for the entire organisations’a attitude towards safety. Its organisational safety culture will depend on the senior management’s level of commitment toward safe operations.


• The accountable manager, having full authority over human resources and financial issues, must ensure that the necessary resources are allocated to the management of safety.He or she has direct responsibility for the conduct of the organisation’s affairs and final responsibility for all safety issues.

• Singapore CAAS AC 1-3(0)

Transport Canada Transport Canada -- Lessons Lessons

LearnedLearned• Management support

– Industry problem: support required continuously

• Progressive implementation – Entire enterprise, however, start with a manageable task; don’t try and implement a


manageable task; don’t try and implement a SMS overnight

• It’s all about culture - Change the way you do things before you implement the infrastructure: “it’s all about culture”

• Development of performance measurements

• Clear and concise standards

• Champions in all areas

Safety CultureSafety Culture“A good safety culture is the embodiment of effective programs, decision making and accountability at all levels.

When we talk about safety culture, we are talking first and foremost about how managerial decisions are made, about the incentives and disincentives within an organization for promoting safety.


an organization for promoting safety.

One thing I have often observed is that there is a great gap between what executives believe to be the safety culture of an organization and what it actually is on the ground. Almost every executive believes he or she is conveying a message that safety is number one. But it is not always so in reality.”

Carolyn W. Merritt - U.S. Chemical Safety and Hazard Investigation Board, November 2005

The Safety Culture The Safety Culture

LadderLadder

CALCULATIVECALCULATIVECALCULATIVECALCULATIVE

PROACTIVEPROACTIVEPROACTIVEPROACTIVE

Safety leadership and valuesdrive continuous improvement

GENERATIVE (HRO(GENERATIVE (HRO(GENERATIVE (HRO(GENERATIVE (HRO(

HSE (( ((( (( (( ((((((((HSE (( ((( (( (( ((((((((HSE (( ((( (( (( ((((((((HSE (( ((( (( (( ((((((((

((((( ((((((((( ((((((((( ((((((((( ((((


CALCULATIVECALCULATIVECALCULATIVECALCULATIVE

W( (((( ((((((( (( ((((( ((W( (((( ((((((( (( ((((( ((W( (((( ((((((( (( ((((( ((W( (((( ((((((( (( ((((( ((

(((((( ((( ((((((((((((( ((( ((((((((((((( ((( ((((((((((((( ((( (((((((

REACTIVEREACTIVEREACTIVEREACTIVE

S((((( (( (((((((((( (( (( ( (((S((((( (( (((((((((( (( (( ( (((S((((( (( (((((((((( (( (( ( (((S((((( (( (((((((((( (( (( ( (((

((((( (((( (( (((( (( ((((((((((((( (((( (( (((( (( ((((((((((((( (((( (( (((( (( ((((((((((((( (((( (( (((( (( ((((((((

PATHOLOGICALPATHOLOGICALPATHOLOGICALPATHOLOGICAL

W(( ((((( (( (((( ((W(( ((((( (( (((( ((W(( ((((( (( (((( ((W(( ((((( (( (((( ((

((((( ((( ((((((((((( ((( ((((((((((( ((( ((((((((((( ((( ((((((

GovernanceGovernance• Governance is about how an organisation is run, rather than the business

• The governance is a primary role for top management– Who reports to whom?

– Who is responsible for what?

– Are there accountabilities defined?


– Are there accountabilities defined?

– Where does the Buck Stop?

– Are there consequences for failure?

• Many of the worst accidents happen to organisations where everyone believes safety is No 1, but there were more important things to do first– When things got difficult, safety was always somebody else’s job

– That somebody didn’t exist

You should haveYou should have• A board Safety committee

• The CEO (or the COO) primarily accountable for safety

• A safety manager/officer who can report directly to the senior accountable person


directly to the senior accountable person (CEO/COO)

• The safety manager may also have a main line report to a more senior manager (e.g. operations), but can short-circuit to the top

• The safety manager is a a good development position for managers to learn the business

Safety responsibilities Safety responsibilities –– TC TC

exampleexampleAccountable executive Safety Review

Board (SRB)

Director of

operations

Director of

maintenanceOther directorates


Flight

safety officer

Maintenance

safety officer

Safety Action

Group (s)

(SAG)

Safety services

office

Ref. ICAO training

Program

What do other industries What do other industries

do?do?• Aviation is actually a latecomer to the field of safety management systems

• Aviation safety has been maintained more


• Aviation safety has been maintained more by fear of the consequences and learning from 100 years of fatal accidents

• Petrochemicals and nuclear power industries have had SMS in place for more than 15 years (often 20+)

SMS in Oil and Gas industrySMS in Oil and Gas industry

• SMS has been the industry standard in Oil and Gas since 1992

• Performance has improved markedly since that time

• Companies that have SMS have now generalised


• Companies that have SMS have now generalised to HSE-MS

• The goal-setting regime means that contractors can be integrated easily into the company overall safety plan

• Most companies insist on SMS even when there is no regulator to satisfy


Shell EP Safety Shell EP Safety

performanceperformance

10

12

14

16LTIF

TRCF

FAR

best ever

avg best 5 yrs

avg past 5 yrs

LTIF(TRCF (( ((((( ((( ((( (((( FAR ((( 100 ((( (((LTIF(TRCF (( ((((( ((( ((( (((( FAR ((( 100 ((( (((LTIF(TRCF (( ((((( ((( ((( (((( FAR ((( 100 ((( (((LTIF(TRCF (( ((((( ((( ((( (((( FAR ((( 100 ((( (((

Piper

AlphaSMS

startedSMS in place

0

2

4

6

8

10

87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03

Goal Setting RegimesGoal Setting Regimes• Old-fashioned safety regulations defined what to do and how to do it

• Compliance was assessed against these requirements

• ICAO SARPs are examples of this approach

• Modern approaches set goals and leave the


• Modern approaches set goals and leave the details of the implementation to the organisation

• Regulators assess compliance against goals

• ICAO is now supporting the goal-setting approach as SARPs are seen as historical rather than proactive– The A380 and B787 are totally new concepts

• This can be used for your own contractors as well

ConclusionConclusion

• Safety management systems give you control over the safety risks of the business

• In aviation safety is the core activity

• Like financial management top management needs to control how these risks are


needs to control how these risks are managed

• Singapore’s CAAS requires and supports an approach that puts top management in charge of their business

• The best organisations have SMS in place without any requirement from a regulator

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