1. CHALLENGES AND BENEFITS IN SAFETY MANAGEMENT
Baku, Azerbaijan, 5-7 April 2006
George Firican and Victor Kourenkov
ICAO Regional Officers European and North Atlantic Office

2. Overview Safety Culture – a definition (again ?!)
Safety Culture – Series ONE of five challenges!
Reporting Culture – Series TWO of five challenges!
Implementation – Series THREE of five challenges!
Global and Local Components – other Series of five challenges!
Safety vs. Benefits – Why bother?
Conclusion
Baku, Azerbaijan, 5-7 April 2006
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3. Safety Culture – a definition
What defines a safety culture?
Safety culture = the product of organizational traits
Safety culture = a product of actions and policies
Safety culture = generated by the beliefs and values of the organization.
What defines a safety culture?
You can think of safety culture as the product of organizational traits. Safety culture is not only a product of actions and policies, but just as important, it is generated by the beliefs and values of the organization.
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4. Safety Culture – Series ONE of Five Challenges!
Wary - "We believe in Murphy's Law“
Informed - “Management is aware how things work – how they really work“
Just - "We don't shoot the messenger” (except for the messengers who really, really deserve it!)
Learning - "What we learned from the past will help us keep learning in the future“
Flexible - "Everyone is empowered to steer the ship away from an iceberg“
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5. Just/Reporting Culture
Just culture and the reporting culture = the bedrock of the safety culture.
Employees must not be afraid to report errors, and their reports must be:
encouraged and
quickly chanelled,
analyzed, and
acted upon.
In the safety culture literature, the bedrock of the safety culture is the just culture and the reporting culture. Employees must not be afraid to report errors, and their reports must be encouraged and quickly disseminated, analyzed, and acted upon.
A just culture is really a matter of management and organizational values, but a reporting culture has a significant technological and process component. It's not enough to encourage people to come forward. You must effectively gather the information, transmit that information to the proper managers, disseminate that information throughout the hierarchy, store the information in a flexible database, and analyze it from different perspectives to find underlying patterns and hazards. In aviation and other high risk industries, elaborate but efficient reporting systems are critical to the safety culture.
Baku, Azerbaijan, 5-7 April 2006
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6. Just/Reporting Culture (cont’d)
A just culture is a matter of management and organizational values;
A reporting culture has a significant technological and process component.
In the safety culture literature, the bedrock of the safety culture is the just culture and the reporting culture. Employees must not be afraid to report errors, and their reports must be encouraged and quickly disseminated, analyzed, and acted upon.
A just culture is really a matter of management and organizational values, but a reporting culture has a significant technological and process component. It's not enough to encourage people to come forward. You must effectively gather the information, transmit that information to the proper managers, disseminate that information throughout the hierarchy, store the information in a flexible database, and analyze it from different perspectives to find underlying patterns and hazards. In aviation and other high risk industries, elaborate but efficient reporting systems are critical to the safety culture.
Baku, Azerbaijan, 5-7 April 2006
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7. Reporting Culture – Series TWO of Five Challenges!
Reporting requires to effectively to:
gather the information,
transmit that information to the proper managers,
disseminate that information throughout the hierarchy,
store the information in a flexible database, and
analyze it from different perspectives to find underlying patterns and hazards.
In aviation elaborate but efficient reporting systems are critical to the safety culture!
In the safety culture literature, the bedrock of the safety culture is the just culture and the reporting culture. Employees must not be afraid to report errors, and their reports must be encouraged and quickly disseminated, analyzed, and acted upon.
A just culture is really a matter of management and organizational values, but a reporting culture has a significant technological and process component. It's not enough to encourage people to come forward. You must effectively gather the information, transmit that information to the proper managers, disseminate that information throughout the hierarchy, store the information in a flexible database, and analyze it from different perspectives to find underlying patterns and hazards. In aviation and other high risk industries, elaborate but efficient reporting systems are critical to the safety culture.
Baku, Azerbaijan, 5-7 April 2006
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8. Implementation – Series THREE of Five Challenges!
Competing priorities for scarce resources; lack of resources: inadequate staffing and work overloads;
Resistance to change (the assumption that providers are already providing safe services);
Culture of blame (current safety culture is punitive in nature);
Lack of senior leadership understanding and involvement with safety issues;
Culture of safety workforce perceptions, attitudes and behaviors of error “cover up.”
Following are the main challenges (barriers) to the implementation of Safety Systems
Competing priorities for scarce resources in a system safety is not considered a top priority; lack of resources: inadequate staffing and work overloads
Resistance to change (the assumption that providers are already providing safe services).
Culture of blame (current safety culture is punitive in nature).
Lack of senior leadership understanding and involvement with safety issues.
Culture of safety workforce perceptions, attitudes and behaviors of error “cover up.”
If you've read this far, perhaps you've noticed something interesting: the very barriers to implementing Safety are also the main problems that Safety seeks to overcome. It's a tautology: if your organization doesn't consider Safety a priority, that's a barrier to making Safety a priority.
The reverse is probably also true: if you don't face those five barriers, you've probably already implemented Safety measures or something close to them.
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9. Other 5 Challenges – Global and Local Components
The presented diagram illustrates the interdependence of global and local institutions. Many components of the system (users, regulators, providers) perform different roles at different moments. From a global perspective, civil aviation is a transportation system that is vital to economies. Its components are both publicly and privately owned, are usually highly regulated by different levels of government. A shared objective is to develop a safe and efficient global transportation system for improving the economic and social environment, capitalising on the opportunities offered by different cultures, to the ultimate benefit of stakeholders: nations, regions, business enterprises, organisations and communities.
in the system, the performance of each component potentially affects all of the others.
From a global perspective, culture and technology cannot be separated. Culture affects how we use technology. From a global perspective, safety is about all having a set of shared expectations and perspectives. Although there may never be complete agreement on the meaning of safety and risk, the different perspectives need to be shared. If the local system deviates from the global pattern, there must be a recognition and communication of the risk level associated with this: is it a perceived or an actual difference in risk, and are the two necessarily separate.
IN a complex system the human beings, weather considered as users, operators, consumer (passenger) or bystander can be segregated from the system when the complexity of the system makes it difficult for them to understand what is happening. Thus the system is less responsive to the human beings in the system. Large-scale systems are inherently complex, leading to greater vulnerability. Large systems are also uniquely typified by the fact that they have no owners. Large-scale systems are the integration and interdependence of multiple local systems. When fault States and accidents result from integration incompatibilities, different local components each blame each other!
The Operating System of Civil Aviation
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10. Safety versus Benefits
WHY BOTHER ?
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11. If you think safety is expensive, try an accident!
Cost of Safety
Difficult to quantify;
SMS implementation cost-benefit analysis – complicated but should be done;
Requires senior management involvement.
It’s often said that safety makes economic sense. Unless a company experiences a loss , or critically assesses both the direct and indirect costs of an occurrence, it is often quite difficult to relate to this statement. The direct costs are usually quite easy to quantify.
It is the indirect costs such as loss of business, legal fees and damage claims, cost of lost time by injured persons and increased insurance premiums that is usually more difficult to calculate.
Loss of confidence the organization’s ability to operate safely cannot be quantified. The damage caused, however, can take years to repair and in some cases leads to the closure of the business.
If you think safety is expensive, try an accident!
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12. Cost of Safety (cont’d)
Costs
Total Costs
Losses
Safety and profit are not mutually exclusive. Quality organisations realize that expenditures on the correction of unsafe conditions are an investment toward long-term profitability. Losses cost money. As money is spent on risk reduction measures, costly losses are reduced (see figure). However, by spending more and more money on risk reduction, the gains made through reduced losses may not be in proportion to the expenditure. Companies must balance the costs of losses and expenditures on risk reduction measures. In other words, some level of loss is acceptable from straight profit and loss point of view. However, few organisations can survive the economic consequences of a major accident. Hence, there is a strong economic case for an effective safety management system. They may require energy and persistence, but not always a large budget.
Risk Reduction
Protection
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13. There are two ways of thinking safety:
Traditionally – safety has been avoiding costs!
Modern – safety and efficiency are positively interlinked!
Safety management system approach reduces losses and improve productivity!
There are two ways of thinking about safety. Traditionally, safety has been about avoiding costs. Many organizations have been bankrupted by the cost of a major accident. This makes a strong case for safety, but cost of occurrences is only part of the story. Research shows that safety and efficiency are positively linked. Safety pays off in reduced losses and enhanced productivity. Safety is good for business.
A safety management system will provide an organization with the capacity to anticipate and address safety issues before they lead to an incident or accident. A safety management system also provides management with the ability to deal effectively with accidents and near misses so that valuable lessons are applied to improve safety and efficiency. The safety management system approach reduces losses and improves productivity
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14. Safety vs Benefits – Why Bother?
Yearly Incident Costs
PROFIT MARGIN 1% 2% 3%
$1,000
$100,000
$50,000
$33,000
$10,000
$1,000,000
$500,000
$333,000
$5,000,000
$2,500,000
$1,667,000
$10,000,000
$3,333,000
SALES REQUIRED TO COVER LOSSES
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15. Benefits – Reducing Costs 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
The costs of safety are difficult to quantify; more difficult than the full costs of accidents (or incidents) – in part, because of the difficulty in assessing the value of accidents that have been prevented. Nevertheless, some airlines have attempted to quantify the costs and benefits of introducing safety management systems. They have found the cost savings to be substantial. Performing a cost-benefit analysis is complicated; however it is an exercise that should be undertaken, as senior management are not inclined to spend money if there is no quantifiable benefit. One way of addressing this issue is to separate the costs of the safety management system from the cost of correcting safety deficiencies, by charging the safety management costs to the safety department and the safety deficiencies costs to the line management most responsible. This exercise involves senior management in considering costs and benefits.
Baku, Azerbaijan, 5-7 April 2006
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16. Benefits – Reducing Costs 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.
The costs of safety are difficult to quantify; more difficult than the full costs of accidents (or incidents) – in part, because of the difficulty in assessing the value of accidents that have been prevented. Nevertheless, some airlines have attempted to quantify the costs and benefits of introducing safety management systems. They have found the cost savings to be substantial. Performing a cost-benefit analysis is complicated; however it is an exercise that should be undertaken, as senior management are not inclined to spend money if there is no quantifiable benefit. One way of addressing this issue is to separate the costs of the safety management system from the cost of correcting safety deficiencies, by charging the safety management costs to the safety department and the safety deficiencies costs to the line management most responsible. This exercise involves senior management in considering costs and benefits.
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17. Conclusion Safety – a challenge not easy to achieve;
Safety – can be achieved;
Safety – makes economic sense;
Loss of confidence in the ability to operate – cannot be quantified;
Safety and efficiency are positively interlinked.
It’s often said that safety makes economic sense. Unless a company experiences a loss , or critically assesses both the direct and indirect costs of an occurrence, it is often quite difficult to relate to this statement. The direct costs are usually quite easy to quantify.
It is the indirect costs such as loss of business, legal fees and damage claims, cost of lost time by injured persons and increased insurance premiums that is usually more difficult to calculate.
Loss of confidence in the organization’s ability to operate safely cannot be quantified. The damage caused, however, can take years to repair and in some cases leads to the closure of the business.
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18. CHALLENGES AND BENEFITS IN SAFETY MANAGEMENT
Baku, Azerbaijan, 5-7 April 2006
END
THANK YOU!