Why taking an active role in safety is good for business

1st February 2013

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Plant safety and company profitability are very closely linked, says Dr Andrew Fowler.

Few would disagree that the primary objective of any business is to make a profit - preferably a substantial one. In fact, unless a company has been unfortunate enough to suffer the effects of a major accident, it is fairly safe to assume that the main focus in board meetings remains firmly on financial matters, with plant safety often much further down the agenda. The fact is that plant safety and company profitability are actually very closely linked. Major accidents in high hazard industries can be extremely costly, with forced downtime, compensation claims, fines, clean-up costs, rebuilding expenses, damage to reputation, and in the worst case scenarios, loss of human life.

Board members and senior management are ultimately responsible for plant safety. And under the Corporate Manslaughter and Corporate Homicide Act 2007 the courts now have power to prosecute companies rather than individuals in fatality cases where it is deemed that an organisation's conduct in respect of health and safety matters has fallen far below what could have been expected in terms of duty of care.

In addition, employers in high hazard industries are increasingly being called upon to demonstrate organisational competence in Process Safety Management (PSM). This means having a working knowledge and clear policy on PSM throughout the organisation, but importantly led from the top.

As Phil Scott, Safety & Risk Policy Manager at the Chemical Industries Association says: "Businesses managing major hazard potential have to appreciate that the hazardous substances they store represent their highest business risks, and need to be sure they have effective systems to manage those risks."

Despite this, results from the first ever PSM benchmarking exercise for the chemical industry revealed a high reliance on technical staff to know what needs to be done to maintain plant safety and to implement it.

The benchmarking exercise, which was carried out by HFL Risk Services with the support of the CIA, HSE and the National Skills Academy for the Process Industries, highlighted a distinct disconnect between those responsible for setting policy (i.e. senior management) and those responsible for carrying it out. This divide was also identified by the Process Safety Leadership Group (PSLG) following Buncefield, when they made their recommendations concerning Policy, Monitoring and Review.

While it's essential that competent personnel are charged with process safety, experience has shown that if not properly directed this often leads to reactive compliance, meaning that company resources are not necessarily targeted to best effect. Since it is senior management and board directors who ultimately approve the finance for the implementation of changes and initiatives to underpin safety, it makes sense that they understand how hazards and risks are identified and assessed. They need to be aware that just because some aspect of safety management has been deemed a 'hot topic', honing in on one area may not be the most cost-effective way of driving down overall risk. For example, this may be a particular area where a degree of failure can be accepted whereas other areas may be more risk critical and to postpone other programmes in favour of a hot topic could, in some instances, impede improvements to overall plant operation and maintenance and therefore to the business itself.

Of course, installations deemed high hazard are required to comply with a number of regulations, codes and standards, designed to prevent or mitigate the outcomes of major accidents. However, we also need to look at situations where current codes and standards have less relevance. This is especially the case where, due to circumstance and necessity, plant is being pushed well beyond its intended life and yet the design standards have been superseded and the design intent has been lost with the passage of time. Adopting a reactive approach to compliance in these instances will undoubtedly lead to gaps in the PSM programme and a greater exposure to potential loss.

When senior management take a more active role in process safety policy, they find that far from it being a time and resource-sapping exercise, it can in actual fact save the company money.

Identification of plant and processes which are both critical to site safety and the business as a whole is an essential first step in managing process safety. A detailed review of potential loss of containment events will then help identify risk control (management) systems that are essential for ongoing safe operation and maintenance. Key Performance Indicators (KPIs) designed to detect failures within these systems can then be put in place to provide directors and senior managers with the assurances they need to remain confident that the business's statutory and moral obligations will continue to be met.

Positive process safety culture

But if the board and senior management are to truly realise their PSM aims and objectives, there needs to be a positive process safety culture throughout the organisation. This means process safety leadership from the top, with senior management having a thorough understanding and committed role in the development of PSM policy and its deployment.

Essentially policy deployment is a structured approach which is used to plan, monitor and control team and individual involvement in the achievement of company targets and objectives. It concerns all company goals, not just primary objectives on profitability and return on investment, although these will improve as a result.

The key elements of policy deployment are:

- Individuals and teams have clearly defined objectives and targets

- The link between each team or individual objective and the top-level business objectives can be clearly understood.

- Visually displayed KPIs or measures are openly available to monitor the progress of teams and individuals towards objectives

- Each team or individual has clear, visually displayed action plans (these can be electronic or paper-based) which illustrate the activities they will be completing to meet their objectives

- Each team or individual updates their KPIs/measures and action plans on a regular basis

- The management team hold regular reviews of the policy deployment system to monitor progress. If plans are not 'on track' corrective actions are taken.

Like many other aspects of business life, PSM should be seen as an exercise in continuous improvement. Leading from the top and achieving company-wide buy-in and understanding of PSM will by definition help to decrease potential financial liabilities now and in the future.

Dr Andrew Fowler is Operations Director and Principal Consultant at HFL Risk Services, Denton, Manchester, UK.

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