The Airport Risk Manager’s ERM/SMS Dilemma
The Airport Risk Manager’s ERM/SMS Dilemma
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The Airport Risk Manager’s ERM/SMS Dilemma

By Louis A. Sorrentino and Mike Natale
CEO, Aviation & Marine Safety Solutions International

So many projects, so little time…and money, and staff and resources and…. This may apply to two of the biggest challenges faced by airport risk managers today, namely the apparent impediments to championing Enterprise Risk Management (ERM) and a Safety Management System (SMS) within your organization. Both can seem like daunting challenges when viewed in a vacuum. But are they really two separate challenges or part of one, overall risk management plan?

We expect that the FAA will be mandating that 14 CFR Part 139 commercial air service airports implement SMS for all airfield and ramp areas. This is accomplished via the DOT rulemaking process which has been delayed several times but is still in progress. ERM has been around for years, but since it is both complex and elective, many airports have not embraced it.

Rather than see this as two separate challenges, why not view SMS as a subset of an overall ERM program? Rather than implementing SMS on a standalone basis, why not make it the first step in establishing an organizational ERM program? One has only to look at the basic components of ERM and SMS to see the close interrelationships.

Safety Management System (SMS)

Safety Policy – Establishes senior management’s commitment to continually improve safety; defines the methods, processes and organizational structure needed to meet safety goals

Safety Risk Management – Determines the need for, and adequacy of, new or revised controls based on the assessment of acceptable risk

Safety Assurance – Evaluates the continued effectiveness of implemented risk control strategies; supports the identification of new hazards

Safety Promotion – Includes training, communication and other actions to create a positive culture within all levels of the workforce

Information Courtesy of FAA Website

Enterprise Risk Management (ERM)

ERM Policy – Set objectives, identify risk appetite and establish program parameters and communication channels

ERM Risk Assessment – Identify, assess and prioritize risks and existing mitigations; evaluate risk treatment alternatives and implement changes to address any gaps

ERM Assurance – Monitor progress and facilitate continuous improvement through use of internal and external audits, metrics and performance reviews

ERM Promotion – Build ERM culture through sustained and targeted communication and training that enables people at all levels of the organization to incorporate consideration of risk when decisions are made

Both activities are organization-wide efforts that require policy statements, risk analysis, audits, training, communication and other matching components. The FAA has designed SMS so that organizations, within a general framework, can tailor it to their specific needs. ERM is predicated on the same concept. The process used to identify, prioritize and mitigate risks is transferrable between both approaches, and the analytical tools used to document and analyze risks are also strikingly similar.

SMS and ERM should not be viewed as a “one size fits all” solution, but rather an approach that is scalable to the organization. This approach improves the airport’s ability to identify, evaluate, document and continuously monitor operational activities so that risk can be clearly understood and better managed. Most modern airports are already practicing some of the core elements of SMS and ERM, they are just not practicing them consistently across all components of the enterprise.

If SMS is implemented with the minor tweaks required for it to be Phase I of an ERM program, an airport will have taken an important, cost-effective first step in the ERM process while addressing the mandate of SMS. Phrased in a different way, SMS can be implemented leveraging an ERM approach, which will enable airports to meet FAA requirements while simultaneously building an infrastructure that addresses other critical and relevant risk areas.

About the Authors
Michael Natale is a Bickmore Senior Consultant and former Risk Manager for the Metropolitan Washington Airports Authority. Mike works with Lisanne Sison, Director, Enterprise Risk Management.

Bickmore is a leading independent risk management, insurance and actuarial consulting firm with clients in 37 states. Formed in 1984, Bickmore has over 100 employees, with 60% holding advanced degrees and professional designations in risk management, law, workers’ compensation, accounting, actuarial and loss and risk control.

Louis Sorrentino is the CEO and Managing Director for Aviation & Marine Safety Solutions International (AvMaSSI). Lou and his team at AvMaSSI have designed and implemented scalable SMS programs at airports and support organizations throughout the Americas.

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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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