Safety Culture and Managing Catastrophic Risks Karlene H. Roberts Haas School of Business Center for Catastrophic Risk Management University of California, Berkeley

Many of today’s organizations are extremely complex and managing them requires equal complexity. Let’s take one example:

Incident Command System First Responders Incident Commander

Incident Command System Structure Elaboration Incident Commander OperationsPlanningLogistics

Incident Command System Fully Elaborated Incident Commander OperationsPlanningLogisticsFinance/Administration InformationSafetyLiaison

We want to AVOID:Work Management Operational Staff Company Regulators Government Actions Accident

Our Agenda…. What is a high reliability organization (HRO)? Organizational cultural processes to achieve HRO status Organizations are really systems of integrated parts Does reliability enhancement influence production Low Reliability Organizations (LROs)

What is an HRO ? An organization conducting relatively error free operations over a long period of time making consistently good decisions resulting in high quality and reliable operations This constitutes the culture of a high reliability organization But, how do you get there?

Five Components of a HRO Process Auditing Reward Systems Quality Degradation Risk Perception Command and Control

1. Process Auditing: An established system for ongoing checks designed to spot expected as well as unexpected safety problems. Safety drills are in this category, as is equipment testing. Follow-ups on problems revealed in prior audits are critical.

2. Reward Systems: The reward system is the payoff an individual or organization receives for behaving one way or another. Organizational theory points out that organizational reward systems have powerful influences on the behavior of individuals in them. Don’t reward behavior A while hoping for behavior B Similarly, inter-organizational reward systems also influence behavior in organizations.

3. Quality Degradation Avoiding degradation of quality and/or developing inferior quality: This refers to the essential quality of the system as compared to a referent generally regarded as the standard for quality in the industry. Who is the best in your industry?

4. Risk Perception: There are at least two elements of risk perception; (1) Whether or not there is knowledge that risk exists, and (2) If there is knowledge that risk exists, the extent to which it is acknowledged and appropriately mitigated and/or minimized Part two is a logical outgrowth of part one.

5. Command and Control Elements: Migrating decision making: (the person with the most expertise makes the decision). Redundancy: (people and/or hardware), i.e., backup systems exist. Senior managers who see the “big picture”: i.e., they don’t micromanage. Formal rules and procedures: A definite existence of hierarchy but not necessarily bureaucracy in the negative sense. Training. Training. Training.

High Reliability Organizations Process auditing - spot the expected and unexpected Reward & Recognition -Drive the correct behaviors -Value contribution of the line Quality Systems Risk Perception – Knowledge that risks exist? –Extent to which risk is acknowledged and mitigated Training - High technical competence Formal rules and procedures Senior managers who see the big picture Depth/Org. Capacity Migrate decision making to the appropriate person

Poole, R. Beyond Engineering: How Society Shapes Technology, 1997, p.276 In a generation or two, the world will likely need thousands of high-reliability organizations running not just nuclear power plants, space flight, and air traffic control, but also chemical plants, electrical grids, computer and telecommunication networks, financial networks, genetic engineering, nuclear- waste storage, and many other complex, hazardous technologies. Our ability to manage a technology, rather than our ability to conceive and build it, may be the limiting factor in many cases (1997, p. 276).

Organizations are Systems The five processes exist within organizations Organizations are systems of integrated elements Organizations also contribute to systems of integrated organizations The systems must be flexibly structured to work appropriately Remember the Incident Command System

Does this kind of organizational enhancement influence productivity: Three examples from complex interdependent organizations

*see last slide for definition of UCI/LCI CLASS A FLIGHT MISHAPS Manned Aircraft Only Number Rate/100K Flt Hrs CLASS A MISHAPS/MISHAP RATE FY COMPARISON: FY15 MISHAPS/MISHAP RATE: 10-YEAR AVERAGE (FY06-15) MISHAPS/MISHAP RATE: 6-Jul-166-Jul-15 5/0.78 9/ /1.12 6/0.93

Nuclear Energy Institute Data Rx Trips/ Scrams Cost ( ¢ /kwh) Significant Events/Unit Capacity Factor (% up)

Attend meetings and solve nothing, Catch airplanes and miss ‘connections’, Conduct briefings and persuade no one, Evaluate proposals and miss the winners, and Meet deadlines for projects on which the plug has been (or should be) pulled Are organizations in which people shuffle papers and lose a few Non-HRO’s Weick, Sutcliffe, Obstfeld (1998)

Focus on success Underdeveloped cognitive infrastructure Focus on efficiency Inefficient learning (episodic) Lack of diversity (focused conformity) Information & communications filtering Reject early warning signs of quality degradations Non-HRO’s

Are you in a high or low reliability organization?