SIKORSKY 30 th International System Safety Conference Awards Luncheon The Business Value of Safety August 9, 2012 Atlanta

SIKORSKY

Macro Sales Stock Price Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings THE VALUE OF SAFETY

SIKORSKY Macro Sales Stock Price Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings THE VALUE OF SAFETY

SIKORSKY Macro Sales Stock Price Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings THE VALUE OF SAFETY

SIKORSKY Macro Sales Stock Price Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings THE VALUE OF SAFETY

SIKORSKY OBJECTIVES Can System Safety yield business and financial value? Is SMS the correct roadmap? Sikorsky’s legacy: Does it actually lower risk and earn money? Should this all be considered by our customers and their insurers?

SIKORSKY PATHOLOGICAL REACTIVE CALCULATIVE PROACTIVE GENERATIVE Chronic unease Safety seen as a profit centre New ideas are welcomed We are serious, but why don’t they do what they’re told? Endless discussions to re-classify accidents Safety is high on the agenda after an accident The lawyers said it was OK Of course we have accidents, it’s a dangerous business Sack the idiot who had the accident Resources are available to fix things before an accident Management is open but still obsessed with statistics Procedures are “owned” by the workforce We cracked it! Lots and lots of audits HSE advisers chasing statistics Presentation by Patrick Hudson of Leiden University to Bristow Safety Conference, Lagos Nigeria, Feb 2011 SAFETY CULTURE INDICATORS

SIKORSKY SMS Basic Principles Leadership Risk Mgmt Assurance People Culture & Value CULTURE COMES FROM REPETITION

SIKORSKY CULTURE Started at the top Safety

SIKORSKY LEADERSHIP Principles/values help make daily decisions “There are two things that must happen every day. First, every Sikorsky aircraft ever manufactured must land at the time and place of choosing of the pilot. Second, every employee must go home exactly as they came in, or better. We must be perfect in both cases.” Jeffrey Pino, President Sikorsky Aircraft

SIKORSKY Safety CULTURE Starts at the top

SIKORSKY LEADERSHIP

SIKORSKY HIGH RELIABILITY ORGANIZATION

SIKORSKY By protecting its employees and remaining dedicated to “doing the right thing”, Sikorsky has reduced its accident rates, workers’ comp costs and carbon footprint to become a company synonymous with strong environmental leadership, safety and environmental responsibility. COMPETITIVE EDGE

SIKORSKY As a strong proxy for management quality, environmental, health & safety performance consistently correlates well with stock price performance. Innovest 2005 REAL VALUE The macro business case Sikorsky Revenues ($ billions)

SIKORSKY We pioneer flight solutions that bring people home everywhere…every time™

SIKORSKY And we know it makes business sense…

SIKORSKY 19 TACTICAL RESULTS

SIKORSKY Avg Intervention Cost: $19,000 Avg NPV: $244,000 Avg DPP: 2.1 years WE CAN CALCULATE IT PRECISELY

SIKORSKY 1. Build an accepted business tool. 2. Apply an easy to use process. 3. Communicate value of Safety investments. 4. Improve performance by encouraging better decisions. TASK FORCE FORMED IN 1995 In 1995, a taskforce of fifteen Fortune 500 companies sponsored the development of a process and supporting tool set to determine the financial value of Safety investments:

SIKORSKY RETURN ON HSE INVESTMENT Safety Accident rates Property loss Insurance premiums Fines and citations No. of people trained Exposure Assessments Near misses Behavioral Observations Audit findings ROHSEI bridges the gap Finance/Operations Earnings/EPS ROI Payback PVRR Internal Rate of Return Production rates Earnings/employee Net Present Value Cost Benefit BUSINESS TALK

SIKORSKY Develop and document the focus of the opportunity: ROHSEI Analysis of SMS

SIKORSKY Research/document relative numbers of accidents:

SIKORSKY Determine financial cost of an accident:

SIKORSKY Hit the calculations button:

SIKORSKY Present results to your management:

SIKORSKY David Eherts PhD CIH VP and Chief Safety Officer Sikorsky Aircraft Corporation Stratford, CT USA Office: Cell: ( GMT – 5 ) MY CONCLUSIONS 1. Safety yields value. 2. This value can be calculated. 3. It should be considered by our customers and the insurance industry. 4. We’d love to share lessons learned.