Applying Risk Management Tools to Achieve Operational Excellence
Maximizing the Benefit: Applying Risk Management Tools to Achieve Operational Excellence
By Louis A. Sorrentino III
CEO & Managing Director, Aviation & Marine Safety Solutions International
One of the benefits of an effective, enterprise-wide risk management program is the opportunity to break down pre-existing barriers between and within departments. Yes, many organizations’ administrative and technical departments still operate in silos, where information and the means to communicate are not shared. The silos exist for a variety of reasons; for example, a lack of trust or understanding of the other department’s need to know, a manager’s compulsion to maintain strict control of information, or even fear of exposing the actual level of performance of a department. Forensic post-event analysis revealed these and many other similar conditions, highlighting the need for enhanced communication and information sharing between operational and administrative departments, such as Risk Management.
To ensure you have an effective Risk Management program within your organization, many Risk Managers look to independent validation of their programs, focusing on those leading indicators that reveal the effectiveness of the organization’s safety and loss control programs. Relying on lagging indicators such as loss history suggests a backwards, custodial view—“Yes, we had another loss. Now what?” Focusing on leading indicators from your enterprise-wide EH&S program and SMS will provide a much clearer picture of the terrain ahead.
To help an organization’s Risk Management program evolve and mature, Finance and Risk Managers should ensure they are involved and spend quality time on the shop floor and flight line. This is particularly important when dealing with companies with diverse organizational risks. Governance principles require it, by ensuring there is a process to engage all impacted stakeholders through a process of inclusion, transparency and, above all else, accountability.
Managers must also understand the intent and content of the organization’s safety and quality programs, and invest the time to determine if they are functioning effectively—again, supporting basic governance principles. Finance and Risk Managers need to treat safety management like any other management system, requiring a defined structure, a well thought-out and communicated plan, budget, applied resources, management controls and performance goals and objectives.
Equally important is the data sharing connection between Risk Management and Safety. The safety department should have a keen sense of where resources need to be focused, mainly from leading indicators derived from proactive safety assurance exercises and safety audits, as well as lagging indicators from loss history. By educating Risk Management on the ever-changing operational risk profile of the company, they can better prioritize risks and apply mitigations while communicating necessary information upwards throughout the management system, and serve to introduce bespoke services and resources to operational departments.
An informed management team is an engaged management team, and an engaged management team is more likely to recognize and support the need to invest in necessary programs, training, equipment, or insurance products. An important role for the Risk Management leadership is ensuring that there is a conduit for all vital safety and risk information to reach the management team and the Board.
Risk Managers who are aware of what the industry can offer (i.e., external loss control services, or providing access to service providers and resources via a bursary account), play a vital role in the maturation of the Enterprise Risk Management program.
In today’s highly competitive, dynamic aviation marketplace, maximizing your organization’s Risk Management performance is assured by taking advantage of available resources to make your organization a more attractive risk.
AvMaSSI provides safety, security and operational integrity evaluations, consulting and auditing to airlines, airports, charter and corporate operators, OEMs, marine operators, seaports, governments, international agencies and financial institutions the world over. AvMaSSI provides IS-BAO preparation and audit services and supports Global Aerospace and its SM4 and Vista Elite Programs with focused safety/SMS, security, regulatory compliance and IS-BAO auditing services. AvMaSSI is a proud member of the Global Aerospace SM4 partnership program.
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