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Managing the Corporate Beast. Elevating the Management of Safety to the Corporate Level Through Enterprise Risk Management David T.Deveau, P.Eng., M.B.A., B.E.D.S . 2013 International Aviation Safety Summit Washington, DC - October 29-31, 2013. The presentation will - PowerPoint PPT Presentation
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Managing the Corporate Beast
Elevating the Management of Safety to the Corporate Level Through Enterprise Risk Management
David T.Deveau, P.Eng., M.B.A., B.E.D.S. 2013 International Aviation Safety Summit
Washington, DC - October 29-31, 2013
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Safety Management Consulting
Presentation
• The presentation will– Examine gaps that continue to limit organizational
integration of safety– Emphasize the importance of elevating safety to
the highest levels of the organization– Offer a framework to help safety take its rightful
place alongside other company priorities
• Content– Problem Statement– The Evolution of Safety Management– Safety in the Risk Pantheon– Cautions, Challenges & Conclusions
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Jazz & Presenter
Jazz• Fleet of 127 aircraft• Bombardier DHC8 100/300, Q400, and CRJ705• 78 USA and Canadian destinations with
800 flights and 30,000 pax a day• Bases in YHZ (HQ)/YUL/YYZ/YYC/YVR • 5,000 employees• Contract flying for Air Canada, Jazz Charters, Jazz Safety Solutions
& Other Services (Ground Handling, etc.)• Previously operated 757 a/c for Thomas Cook Canada
David Deveau• VP, Safety Quality & Environment• Professional Engineer/MBA• Chair Safety Subcommittee of National Airlines
Council of Canada (NACC) and Member of Safety Council of Regional Airline Association (RAA)
• Principle: Jazz Safety Solutions
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PROBLEM STATEMENT
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Good News
There is a lot of good news for safety
• The profile of safety in aviation has grown over time• Safety management is more sophisticated than ever
due to safety management systems (SMS)• There is increasing recognition that safety issues can
be organizational in nature, and that safety itself needs to be managed at the organization level
• This provides a much better basis for advancing safety governance than existed when safety was considered a purely operational consideration
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The Problem
If good news…So what is the problem? • Safety still struggles to compete for status, attention
and resources along side other corporate priorities (financial performance, commercial, etc.)
• This is not because safety isn’t seen as important• For many at the top of organizations (outside the
safety role), safety remains an operational enigma– Safety related risks just are not understood– Safety and business functions often don’t
speak the same language– Top decision makers can find it a
challenge to compare safety priorities with other business needs
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The Problem
What the Problem Looks Like
Financial Business Case
Safety Business Case
Return on
Investment
Expense versus
Revenue
Reduced financial
exposure
Incremental Risk
Reduction
Cost
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HOW DID WEGET HERE?
THE EVOLUTION OF SAFETY MANAGEMENT
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Evolution
• Safety has evolved from reacting to accidents to proactively identifying and mitigating risks
TIME AND MATURITY
AccidentInvestigation
ImprovesMachine
Design
InvestigativeTechniquesand TrainingIncorporate
Understandingof Human
Factors
IncreasedSophistication
in Trending and Analysis
(HeinrichRatio)
MaximumProactive Approach
and WholeOrganizationSafety Culture
ImprovementsLike Safety
Reporting (ASAP)FOQA, etc.
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Proactivity
• Like other management systems, safety has evolved from being random to more predictive in nature (recently, SMS has helped with this evolution)
Random
Reactive
ProactivePredictive
SMS
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Integration
• At the same time, safety silos are being replaced by integrated, cross-functional systems
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System Evolution
• Although safety is more organizationally integrated than ever, it still hasn’t been integrated into organizational culture and governance as much as other management systems (finance, HR, etc.)
Disconnected• Isolated
business processes in place
Common•Process consistency
is evident with common goals
Unified• Inter-related processes
interact in sophisticated ways
Systemic•Highly functional,
coordinated processes work across multiple business unit
Embedded•Highly evolved system
that permeates all aspects of the organization
SafetyManagement
FinancialManagement
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Hierarchy
• A sure sign of how fundamental something is to an organizations success – and how valued it is in the organization’s culture – is how deeply it penetrates every aspect of how business is conducted
• How would we recognize if safety “…penetrates every aspect of how business is conducted”??– Safety can be found at EVERY level of an organization– Safety is treated the same way by senior leaders than
other company priorities are– Safety has status in the organizational structure, in the
business plan and on every agenda– Safety exists throughout the hierarchy of the organization
Safety Management Consulting
Hierarchy
How far in the organization’s hierarchy does safety go?
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Shareholders
Board
Executive Management
Senior Management
Non-Management
Gap?
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HOW DO YOU KNOWIF YOU HAVE A GAP AT THE
CORPORATE LEVEL?
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Challenges
• Is safety leadership buried too deeply in the organizational structure for significant influence?
• Are safety objectives and targets overshadowed by other business priorities in company strategic plans?
• Is it a struggle to secure financial or other resources for safety improvements as soon as senior decision-makers become involved?
• Is there over-reliance on regulatory non-compliance fear, bad press, scare tactics or other “safety cards” to get support for safety?
• Do executives and the Board struggle to understand and compare the relative importance of safety investments compared to other business cases?
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Strategy
How do we address these challenges?
• Put safety leadership at the executive level• Make safety a formal strategic priority, which ensures
it gets its own objectives, targets, etc.• Create a common framework based on risk so that
safety can be compared to other business issues on a relative basis (apples to apples)
SafetyFinance Operations
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SAFETY IN THE RISK LANDSCAPE
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Corporate Risk
• Organizations must consider many varieties of risk• Financial and business risks are generally high on the
executive and Board agenda and well understood• Safety is normally on the agenda, but not always at
the same level as other topics– Buried or invisible (subcategory of other topics)– Only escalated to high levels when there are very serious
issues, regulatory concerns, audits, etc.– Not understood outside safety and operational functions
What can we do to fix this?
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ERM
• Enterprise Risk Management (ERM) can be used to translate safety into a language that is understood by the exec/Board…so that they can compare risk topics
• What is ERM?– A common framework to define, categorize and manage
risks…regardless what type of risk– Provides a common risk language that can be understood
by the exec/Board…regardless what type of risk– Creates a bridge between safety and business leaders
• What does ERM include?– Risk taxonomy (structure describing risk areas)– Methodology to assess, and classify risks– A consistent way to report on the organizations risk profile
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Financial
Safety
Human Resource
Business
Geo-Political
ERM
What does a risk hierarchy look like?
Flight Safety
Ground Safety
Security
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ERM Components
ERM Components• Risk definitions• Risk assessment tools• Risk tolerance policies• Risk Reporting Templates• Risk classifications
Severe
High
Moderate
Low
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Part of Agenda
• Safety can then take its place alongside other priorities at the highest levels of the organization
Financial• Risk a• Risk b• Risk c
Safety• Risk a• Risk b• Risk c
Human Resource• Risk a• Risk b• Risk c
Business• Risk a• Risk b• Risk c
Geo-Political• Risk a• Risk b• Risk c
HIGH LOW Moderate ModerateSEVERE
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CAUTIONSCHALLENGES &CONCLUSIONS
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Cautions
Be Prepared• Many (most?) executives and Boards are not familiar
with enterprise risk management – if they do not “buy in”, there is no value in implementing ERM (educate)
• ERM systems will take expertise and work to design for your organization (get help if you need it)
• With more profile at the executive and Board comes more interest and more expectations!
• Be prepared for the truth – sometimes safety priorities are not going to be the most important (and that is OK)
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Conclusions
• Safety management is in better shape than ever!• However, there is still more to do for safety to be – properly understood at executive/Board levels– treated the same as other corporate priorities
• One way to help push safety up the organizational hierarchy is to create a common risk management system for all risks (including safety)
• Be prepared for the journey to the top!
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Thank YouQuestions?
David.Deveau@Flyjazz.cahttp://ca.linkedin.com/in/daviddeveaupeng/
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