a transformative force in ehs - the campbell institute€¦ · bill williams, maersk line, inc....

CONTACT INFORMATION

Campbell Institutenational safety council

call (630) 775-2063

web thecampbellinstitute.org

email [email protected] 900001825 ©2012 national safety council

A transformative force in EHS

this leading-edge knowledge is brought to you by the campbell institute

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Executive Edge Track NSC Congress & Expo 2010

Executive Edge Session A (Technical Session 21)

Key Principles

of Operationalizing Risk:

What Leaders Really Need to Know

Moderator: Glenn Murray, ExxonMobil

Joe Stough, Syntex Management Systems

Bill Williams, Maersk Line, Inc.


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Joe Stough, Syntex Management Systems, Founder & EVP

[email protected]

Start with an every day “analogy”:

The FICO score…

The Future of Measuring

Risk Management

Measuring organizational capability to

manage / reduce risk exposures (on

routine basis)


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An Everyday Risk Management Leading Indicator

Definition of Leading Indicator

– A metric which is highly predictive of a specific outcome

FICO: a “model” risk management leading indicator

– Measures individual capability to reduce exposure to a “derogatory event”

– Highly predictive of rate of occurrence of derogatory events (defaults, etc.)

The FICO Story

– FICO analyzed a large data set (since mid-50’s) of credit activities and

lagging outcomes

– Factors predictive of “loss” performance leading indicators

– Used by bankers as business criteria

– Factors are actionable and routinely measurable as management

controls for consumers

– Reward those with best scores (lower interest, access to credit)

– Actionable improvements for those with lower scores


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FICO: An Every Day Leading Indicator

….What are the top performers doing differently?

For a banker: How to “Get to Zero”? – Work ONLY with those who have score > 800

– Help others routinely improve ALL 5 “leading” factors

Actionable factors – Focus on underlying behavior needing improvement

– Not transparent to prevent “gaming”

FICO Score > 800 < 400

Lowest

Risk

Highest

Risk

Analogy to measuring Safety risk management – Accumulate large data set of leading activities and lagging outcomes

To find factors predictive of HSE (safety) loss outcome performance

– Factors must be actionable and routinely measurable as mgmt controls for line mgmt


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Research, Data, Math to Measure Risk Management

Using a common data model – Incidents, investigations,

observations, audits, action items,

etc…

– Worker involvement in above

Millions of records of data – Spanning > 100 countries

– In 24 different languages

Users of IMPACT software – Each company with a central

database of events and actions

Goal: Leading metrics of organizational “risk management capability” – 2008: Studied data from over 100 operating units, defined over 200 potential “leading metrics”

– 2009: Studied correlations to incident event outcomes (TRIR) • Looking for leading metrics which predict performance outcomes

2010: Benchmarking initiative (using 2009 data) – Data from 14 global corporations, over 10,000 operating facilities, over 100 countries

– Studying 75 leading metrics seeking to strengthen correlations, provide leading benchmarks

http://www.lyondell.com/index.shtml

http://www.lyondell.com/index.shtml

http://www.citgo.com/Home.jsp

http://www.conocophillips.com/index.asp











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Searching for the Actionable Safety “FICO” (Index)

Y = Loss Rates Lowest Highest

Getting to

Zero

Worst

Performers

The Data Set – Several years of data from several super-majors, some service companies, mid-sized energy

• Thousands of operating facilities spanning over 150 countries

– Millions of records from leading activities – alongside – over a million lagging events (incidents)

• Scope = any activity that can result in discovery of “risk exposure”

– Top 10% average TRIR = .16, average size of “sample” = 1.2 million hours

• However used a “weighted” TRIR for outcome metric in correlation analysis

Finding the factors predictive of performance – Started with criteria of routinely measurable, actionable metric definitions

• Started with a couple hundred leading metrics

– Statistical analysis + SME feedback filter down to a few predictive of outcome (weighted TRIR)

…Same FICO question: What are the top performers doing differently?


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Action Execution % of total events with action

Rate of action (per wk hours)

% on-time complete findings

% lateness of late items

Other action items…

Leadership, Process % of events with leader involved

Mean days to supervisor response

Mean days to authorize action

% of events with risk or cause assessed

Other leadership / discipline metrics…

Reporting Culture Rate of reporting (per wk hours)

Distribution of involvement

Ratio of low to high (triangle)

Other reporting culture…

Data from Routine Activity Routine Measures

– Recordable injuries

– First aid injuries

– Near misses

– Supervisor walk-around

– Behavioral observation

– Safety issue suggestion

– Hazard ID’s

– Management of change

– Process hazard analysis

– Mgmt system assessment

– Formal risk assessment

– Task risk assessment

– Job hazard analysis

– The list goes on and on…

Reduced

Corrective action

completed, verified

Action

Items Action authorized

by leadership

Routine Activities

Assessed by

SME, Leaders

Risk Matrix

Root Causes

Exposure

Identified Reported

Accepted

by supervisor

Organizational Process

Rep

ea

t W

here

Ap

plic

ab

le


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Vision: The Safety “FICO” Index of the Future

Reporting

Culture

Action

Execution

Leadership,

Process

Other….

Looking Ahead – Contractor selection per Index score

– Internal rewards per index score

– Index score replaces lagging metrics

Issues – Gaming the system

– Unintentional consequences

– Getting the most predictive “index”

Already found “actionable” factors which are predictive

but need more predictive power to be a Safety “FICO”… Better measurements of existing factors

New factors not yet analyzed

Other….

An “actionable” leading indicator.

Good at ALL factors minimized HSE losses Getting to ZERO.

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Questions for the Audience

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Executive Edge Session A (Technical Session 21)

Key Principles

of Operationalizing Risk:

What Leaders Really Need to Know

Moderator: Glenn Murray, ExxonMobil

Joe Stough, Syntex Management Systems

Bill Williams, Maersk Line, Inc.

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Capt. Bill Williams (U.S. Navy, Ret.), A. P. Moller-Maersk

[email protected]

Operational Risk Management for Senior Leaders

Perspectives & Principles

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A.P. Moller - Maersk Group

A.P. Møller - Mærsk A/S

Retail activities

Shipyards, other

industrial companies, interest in Danske Bank A/S, etc

Oil and gas activities

APM Terminals

Container shipping and related activities

Tankers, offshore and other shipping activities

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Maersk Line Creating Opportunities

in Global Commerce

More than 500 container vessels with a total capacity of 1.9 million TEUs

Around 22,000 employees in over 125 countries

Global vessel network

Seamless door-to-door transport of all types of goods

Leading the way in developing solutions to reduce our environmental impact

Committed to advancing industry standardisation including the alignment and automation of processes across the transportation chain

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Emma Maersk

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Container Business Primary Activities

Trucking Equipment Management

Terminal Operations

Vessel Ownership & Management

Container Shipping

Logistics

Customhouse Brokerage & Warehousing

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Our Customers

http://www.footlocker.com/home/default.cfm?TID=5555-12160308552112080681488-0&supercat=home

http://www.pg.com/

http://www.naacp.org/inc/images/convention/home_depot.gif

http://www.kohls.com/main/home.jsp;jsessionid=00010VB2SVLUVQD45IX4ON5CYIQ:u1v27g2l?bmUID=1155305180942

http://www.lizclaiborne.com/home/index.jsp

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A. P. Moller-Maersk in North America

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“The Sea merely lies in wait for the innocent…. but it stalks the careless and the ignorant.”

-- Anonymous

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Residual Risk = Acceptable + Unidentified

Identified Risk

Identified

Unacceptable

Risk

Acceptable

Unidentified

Residual

Unacceptable (Eliminate)

Unacceptable (Control)

Total Risk

Types of Risks

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Risk Management

▪ Success of Identifying Risk

▪ Used Auto + Auto Parts

▪ Customer terminated:

“No More Business”

▪ 65 current shipments

▪ 44 loaded

▪ 21 not loaded

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Executive Edge Track NSC Congress & Expo 2010 Slide no. 29

Perspectives on Risk Management

▪ Individual

▪ Family

▪ Your Operational Facility

▪ Your Company

▪ Nation

▪ International

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Strategies to Deal With Risk Downside

2009 President’s Safety Council

Strategies for Dealing With Risk (or not)

Avoidance

Transfer

Mitigate

Acceptance – Passive

Acceptance – Active

Contingency Plan

Work Around

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Risk Appetite

What are the risks that we need to take to fit with our business strategy?

What risks are unacceptable to us?

What resources do we need to accept those risk?

What risks are our stakeholders willing to bear?

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Risk vs. Reward

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Most Individuals Look at Risk From a Set of Perspectives

▪ Individual perspective – What risk

can I personally accept?

▪ Family perspective - What risk

exposure should my family members have?

▪ Work perspective - What risk will

I tolerate in the workplace, even if I am out of the line of fire, none of my family members work there, and I’m not footing the bill?

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Survey of Risk Tolerance

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10 Principles of HSE Risk Management

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Ten Useful Principles for Safety Risk Management

1. When you “own” the risk, don’t delegate your responsibility or authority to others

2. Do everything you can to mitigate risk that makes you feel uncomfortable

3. If you don’t do your job in managing risk, another stakeholder will do it for you

4. It’s not just about the risk in what you do, but in the people you have doing your work

5. Never underestimate the effort it takes to prevent low frequency, high-consequence events from happening

6. Exposure and risk changing constantly; the best leaders understand this and stay involved in managing change

7. The risks you haven’t identified can kill you just as easily as the risks you know about

8. Recognize the power of your organization’s culture, and how that culture supports or subverts your risk management efforts

9. “You got to know when to hold ‘em, know when to fold ‘em..”

10. Take your risk management responsibilities seriously; the life you save may very well be your own

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Principles of HSE Risk Management

1. When you “own” the risk, don’t delegate your responsibility or authority to manage that risk to others.

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4. Every risk assessment has two equally important dimensions: (1) the operations – “what” you

do, and (2) the people you have doing

them

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Real Risk Management

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2. Do everything you can to mitigate the risk that makes you feel uncomfortable.

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1993 Ford Aerostar Van

1998 Chevrolet Tahoe 1987 Oldsmobile Delta 88

1994 Misubishi Galant 1995 Ford Crown Victoria 1997 Oldsmobile Delta 88

1996 Honda Accord 1998 Mercury Grand Marquis

1991 Ford Ranger pickup truck

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1991 Ford Ranger pickup truck 1 1998 Chevrolet Tahoe 1

1 Traded in, died of natural causes

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1993 Ford Aerostar Van

1987 Oldsmobile Delta 88 1

1 1994 Misubishi Galant 1 1995 Ford Crown Victoria 1997 Oldsmobile Delta 88 1

1

1

1996 Honda Accord

2 1998 Mercury Grand Marquis

KIA Still Alive

1

2

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3. If you don’t do your job in managing risks, another stakeholder will do it for you.

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5. Never underestimate the amount of work it takes to keep low frequency & high impact events from happening.

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6. Risk and exposure change constantly, successful operators know this, frequently look at their operations and exposures, and manage change.

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9. “…You got to know when to hold ‘em, know when to fold ‘em, know when to walk away, know when to run…”

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7. The risks you haven’t identified can kill you just as easily as the risks you know about.

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10. Good safety Risk Management helps you protect your people, but the life you save may really be your own.

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Risk Management Conclusions

▪ Operations – and exposures change frequently; RM is a

dynamic process

▪ JHA/JSAs, risk profiles, process reviews and control

measures are typical safety leader tools for managing operational risk, but

▪ There is no substitute for involved leadership and mature,

risk-based management systems

▪ Much of risk management is instinctive, based on your

own experiences and training. But it is good to have a set of your own guidelines & principles which you can consider from time to time

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Some Questions to Ponder…

▪ Despite my best efforts, am I missing intervention

opportunities because we aren’t reporting the right things?

▪ Is there a useful model that can be applied to reducing

exposures?

▪ We have so much data…How can I simplify the process so

I can focus on what is truly important?

▪ What are some predictive or leading indicators, that will

give me the biggest edge in controlling risks in the workplace?

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Thank you

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What’s Next? Return to this room tomorrow 8:00 – 9:30 am

for Executive Edge Session B: Aligning EHS

Leadership in Creating Business Excellence (Technical Session 44)

And Then... Here again 1:30-3:00 pm for

Executive Edge Session C: Safety in Action –

EHS Management System Implementation (Technical Session 66)

Workshops Following Each Session

Rooms 28A & 28B (Pre-registered participants only)

a transformative force in ehs - the campbell institute€¦ · bill williams, maersk line, inc....

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