Jacques Vanier ICAO EUR/NAT Regional Officer Almaty, 5 to 9 September 2005 SAFETY MANAGEMENT SYSTEMS RISK VERSUS SAFETY

2 Almaty, 5 – 9 September 2005 SUMMARY  WHY THE SCIENCE OF SAFETY MANAGEMENT?  TERMINOLOGY  COSTS (ACCIDENTS, INCIDENTS, SAFETY)  RISK CLASSIFICATION & ANALYSIS  RISK MANAGEMENT  QUESTIONS

3 Almaty, 5 – 9 September 2005 WHY USE THE SCIENCE OF SAFETY MANAGEMENT?  People often overreact to perceived risk: Train crash in the UK – 5 die  Within one month, more death on car accidents then in trains for 30 years! In risk management one must not transfer risk from one area to another!

4 Almaty, 5 – 9 September 2005 TERMINOLOGY  HAZARD  RISK  MITIGATION  RISK MANAGEMENT

5 Almaty, 5 – 9 September 2005 TERMINOLOGY - HAZARD  Hazard - a scenario which, if it occurs, can have negative consequences to personnel, material (or the environment)  Hazard - an event that has the potential to result in damage or injury.

6 Almaty, 5 – 9 September 2005 TERMINOLOGY - RISK  Risk: a hazard, chance of or of bad consequences, loss or injury, exposure to mischance … (source: the Oxford dictionary)  Risk is two-dimensional:  Likelihood of an occurrence (probability)  Severity of consequences “The degree of risk is based on the likelihood that damage or harm will result from the hazard and the severity of the consequences.” RISK = probability consequences

7 Almaty, 5 – 9 September 2005 TERMINOLOGY - MITIGATION Mitigation is the action taken to lessen the severity, violence or effect of a change.

8 Almaty, 5 – 9 September 2005 TERMINOLOGY – RISK MANAGEMENT Risk management: the identification, analysis and elimination (and/or mitigation to an acceptable level) of those hazards, as well as the subsequent risks that threaten the viability of an organisation Risk management serves to focus safety efforts on those hazards posing the greatest risks.

9 Almaty, 5 – 9 September 2005 BALANCING RISK Risks can be balanced using cost-benefit methodology Risk Unacceptable region Acceptable region Tolerable region (ALARP as low as reasonably practicable) Negligible Risk Risk cannot be justified except in extraordinary circumstances Tolerable only if risk reduction is impracticable or if its cost is grossly disproportionate to the improvement gained Tolerable if cost of risk reduction would exceed the improvement gained necessary to maintain assurance that risk remains at this level risk “limit” risk “target” Costs

10 Almaty, 5 – 9 September 2005 COST OF ACCIDENTS  Direct costs (related to physical damage)  Indirect costs:  Loss of business;  Loss of use of equipment  Loss of staff productivity;  Investigation and clean-up;  Insurance deductibles;  Legal actions and damage claims;  Industry and social costs

11 Almaty, 5 – 9 September 2005 COST OF INCIDENTS  Flight delays and cancellations;  Alternate passenger transportation, accommodation, complains;  Crew change and positioning;  Loss of revenue and reputation;  Aircraft recovery, repair etc. and  Incident investigation.

12 Almaty, 5 – 9 September 2005 COST OF ACCIDENT PREVENTION  Difficult to quantify;  SMS implementation cost-benefit analysis – complicated but should be done;  Requires senior management involvement. If you think safety is expensive, try an accident!

13 Almaty, 5 – 9 September 2005 COST OF SAFETY Total Costs Risk Reduction Losses Protection Costs

14 Almaty, 5 – 9 September 2005 TERMINOLOGY – RISK MANAGEMENT Risk management: the identification, analysis and elimination (and/or mitigation to an acceptable level) of those hazards, as well as the subsequent risks that threaten the viability of an organisation Risk management serves to focus safety efforts on those hazards posing the greatest risks.

15 Almaty, 5 – 9 September 2005 ORGANISATIONAL ACCIDENT STAGES DANGERHazards Losses Unsafe acts Local workplace factors Organisational factors Causes Investigation Latent condition pathway Defences Event System Stages in the development and investigation of an organisational accident

16 Almaty, 5 – 9 September 2005 RISK MANAGEMENT PROCESS Identify the hazards to equipment, property, personnel or the organisation Evaluate the seriousness of the consequences of the hazard occurring What are the chances of it happening? Is the consequent risk acceptable and within the organisation’s safety performance criteria? YES Accept the risk NO Take action to reduce the risk to acceptable level HAZARD IDENTIFICATION RISK ASSESSMENT Severity/Criticality RISK ASSESSMENT Probability of occurrence RISK ASSESSMENT Acceptability RISK MITIGATION

17 Almaty, 5 – 9 September 2005 HAZARD IDENTIFICATION  Design factors;  Procedures and operating practices;  Communications;  Personnel factors;  Organisational factors;  Work environment factors;  Regulatory oversight factors;  Defences.

18 Almaty, 5 – 9 September 2005 FUNCTIONAL HAZARD ASSESSMENT Functional Hazard Assessment (FHA):  determine how safe the system shall be! Reminder! … a system consists of:  People (humans, liveware: L);  Equipment (hardware: H);  Procedures (software: S) and  Environment (E).

19 Almaty, 5 – 9 September 2005 THE FHA PROCESS

20 Almaty, 5 – 9 September 2005 RISK ASSESSMENT Risk is the assessed potential for adverse consequences resulting from a hazard!  THREE CONSIDERATIONS INVOLVED:  Probability  Severity  Rate of exposure

21 Almaty, 5 – 9 September 2005 RISK CLASSIFICATIONS & ANALYSIS The assessment of severity of the consequences always involves:  some degree of subjective judgment;  the use of structured grouped discussions:  guided by a standard risk classification scheme, and  using participants with extensive experience in their respective fields.  and …. should ensure that the outcome will be an informed judgment.

22 Almaty, 5 – 9 September 2005 STANDARD RISK CLASSIFICATION Likelihood of event per operational hour per sector/unit Severity Category QualitativeQuantitative Cat 1Cat 2Cat 3Cat 4 Frequent P s > Low Serious Probable > P s > Low MediumHigh Occasional > P s > Low SeriousHigh Remote > P s > LowMediumHigh Improbable > P s > MediumSeriousHigh Extremely improbable P s > SeriousHigh

23 Almaty, 5 – 9 September 2005 RISK MITIGATION There is no such thing as absolute safety! Risk has to be managed to a level “as low as reasonably practicable” (ALARP)

24 Almaty, 5 – 9 September 2005 “AS LOW AS REASONABLY PRACTICABLE” Risk Unacceptable region Acceptable region Tolerable region (ALARP as low as reasonably practicable) Negligible Risk Risk cannot be justified except in extraordinary circumstances Tolerable only if risk reduction is impracticable or if its cost is grossly disproportionate to the improvement gained Tolerable if cost of risk reduction would exceed the improvement gained necessary to maintain assurance that risk remains at this level risk “limit” risk “target” Costs

25 Almaty, 5 – 9 September 2005 RISK MITIGATION STRATEGIES  Exposure avoidance (if risk exceeds benefits);  Loss reduction (reduce frequency of unsafe events);  Segregation of exposure (separation or duplication):  Isolate the effects of the risk;  Build in redundancy.

26 Almaty, 5 – 9 September 2005 RISK MANAGEMENT – STATE LEVEL  Policy;  Regulatory change;  Priority Setting;  Operational Management;  Operational Inspections.

27 Almaty, 5 – 9 September 2005 RISK MANAGEMENT – BENEFITS  Avoiding costly mistakes;  Ensuring all aspects of the risk are identified;  Ensuring the legitimate interests of affected stakeholders are considered;  Providing decision-makers with solid defence;  Making decisions easier to explain;  Providing significant savings (time and money).

28 Almaty, 5 – 9 September 2005 QUESTIONS, COMMENTS ?

Jacques Vanier ICAO EUR/NAT Regional Officer Almaty, 5 to 9 September 2005 SAFETY MANAGEMENT SYSTEMS - END -