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  1. 1. GOVERNMENT RISK MANAGEMENT VOLUME 10, ISSUE No 19, SEPTEMBER 2009 Surviving The Global Economic S P O NS O RED BY Crisis - Risk Management Main Roads WA
  2. 2. Training Schedule SEPTEMBER 2009 – MARCH 2010 2009 September Business Continuity: Crisis Management 1 day WorkSafe Accredited Occupational Safety & Health Representative Training 5 days October Bunbury Regional Training - Psychological Injury Claims 1 day Minimising Impact, Maximising Outcomes Understanding Your Self Insurance Cover ½ day Business Continuity: Effective Testing 1 day Project/Contract Risks ½ day November GRM Conference 1 day WorkSafe Accredited Occupational Safety & Health Representative Training 5 days 2010 February Risk Management Fundamentals ½ day March Business Continuity Management Fundamentals 1 day Project/Contract Risks ½ day For registration for any event, please register online at:
  3. 3. September 2009 grM 1 Contents Message from the Manager RiskCover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Editor Susan Weary GRM Committee 2009 Western Australian Government Risk Jim Hodges Management Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Derek Fowler Tristan Todd Ashley Tindall Main Roads WA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Miriam Fisher Making Our Roads Safer Kirsty Wilson Design Surviving The Global Economic Crisis - Risk Management . . 7 Insight Communication & Design Government And Individual Letters Write to: Risk Management Broken!! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 The Editor GRM Magazine Insurance Commission Bridging The Gap Between Emergency Management of Western Australia and Business Continuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 The Forrest Centre 221 St Georges Terrace Perth WA 6000 Department of Agriculture and Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Best Public Sector Leadership For Injury Prevention And Management All articles, information and feedback can be directed to: Overcoming Obstacles to Senior Management Susan Weary, Editor Telephone: 9264 3227 Buy-in on Business Continuity Management . . . . . . . . . . . . . . . . . . . . 18 Facsimile: 9264 3966 Email: Critical Case Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Cover Shot: Liability For Negligent Exercise Of Statutory Powers Main Roads WA RiskCover coordinates the production of GRM and welcomes feedback about the magazine and any new issues that could be covered . Agencies are invited to submit articles about their own risk management experiences .
  4. 4. /2 MeSSage froM The Manager riSkcover W estern Australian Government agencies continue to integrate risk management thinking into all aspects of their business with a strong focus on operational and project level risks, whilst still continuing to develop a strategic approach to risk management. This strategic approach brings into focus a potential disconnect at a whole-of-government level, in that most planning and reporting is primarily at the agency level, reinforcing a silo mentality, which will contribute to whole-of-government inefficiencies. The concept of ‘joined up government’ requires that there are long-term strategic directions set at a whole-of- government level, which then cascade down to the strategic plans and operational activities of agencies. A failure to have consistency between the high level government directions and priorities, and the strategic plans of individual agencies, may lead to a highly fragmented public sector which is not focused on the State’s key priorities. Tackling this issue from a risk management perspective, may provide an approach which helps to identify, evaluate and prioritise the key issues that need to be reflected in all levels of government planning. The high level risk issues identified at a whole-of-government level, can be reflected at the agency planning level, as strategies that not only focus on achieving the Government’s “Government must objectives, but also on managing the risks. Don Williams also identify and The importance of a risk approach is not to be risk These factors require government to prioritise its services averse, but to develop a based upon sound rationale, and to consider the risk good understanding of potential of delaying or not delivering services to required evaluate those risks the issues to enable the levels. Government must also identify and evaluate those successful delivery of risks which may impact on the successful delivery of services. goals and objectives. A A robust approach to risk is therefore essential at which may impact risk profile assists with the all levels of government, to achieve a higher degree prioritisation of what is important for Government, of certainty of success when seeking to capitalise and the agencies which on opportunities, and to deliver key services. on the successful are required to deliver on these priorities. Don Williams delivery of services.” The Government is focused on developing the means Manager, RiskCover to ensure better outcomes for the people of Western Australia, and improved services, without burdening agencies with ever increasing demands. The demands on government are increasing and becoming more complex, and with tighter economic conditions, this puts greater pressure of service delivery.
  5. 5. September 2009 grM 3 2009 Western Australian Government Risk Management Conference 5th November 2009 Burswood Convention Centre Grand Ballroom 2 Great Eastern Highway, Burswood “Managing Risk to achieve organisational objectives” The Conference aims to provide Directors, Executive Officers, Managers, Risk Management Officers, Auditors and other staff with: Awareness and understanding of key risk management issues which are having actual or potentially adverse material impacts on Government Practical support in risk management at the strategic and operational levels, to increase organisational effectiveness and the successful achievement of business objectives or goals Networking opportunities for agency representatives to share experiences in implementing and using risk management as a tool to assist their agency in achieving its goals A diverse group of speakers will present on a wide range of Risk Management issues, with the primary goals of demonstrating case studies of experiences with Risk Management, increasing delegate skills and knowledge of Risk Management practices, and enhancing cross-agency relations The program this year includes: • Dr Chris Perryer - Director International Programs - UWA • Mr Ivan Deveson - Chairman - Committee for Economic Development • Mr Rob Redenbach - Special Forces & Police Trainer • Dr Keith Suter - Economic & Social Commentator • Mr Ross Holt - Chief Executive Officer - LandCorp • Dr Ruth Shean - Commissioner - Office of Public Sector Standards Commission • Ms Jo Harrison-Ward - Chief Executive Officer - FESA Please register online at or contact RiskCover on (08) 9264 3806 for more information .
  6. 6. /4 MAIN ROADS WA MAkINg OuR ROADS SAFER M ain Roads WA has embarked on a challenging and innovative program of various initiatives to target the increasing road toll and start a un-cushioned impact at a speed of more than 30km/h. Even relatively low speeds can kill or seriously injure, unless the vehicle and the road and roadside environment take new era for road safety on the State’s roads. account of the physical vulnerability of all road users. Increased vehicle usage, coupled with changes in The Road Network Services Directorate within Main Roads acceptance of driver behaviour and road configurations, WA has taken on the challenge of retro-fitting treatments has prompted the need to improve the safety of the to the existing road network to address the elements of the Western Australian road network to reduce the road toll. Safe Systems approach now accepted throughout Australia. This incorporates innovative demonstration projects that will WA’s Road Safety Council recently released the Western influence future road safety. Main Roads WA has a ‘Vision Australian Road Safety Strategy ‘Towards Zero’, which Zero Logical Framework’, which was developed by the New states that human death and suffering resulting from Perth Bunbury Highway Safe Systems Working Group. crashes on roads are no longer considered inevitable. The strategy looks at addressing the road system in a The four cornerstones of road safety are: sustainable way that considers the limitations of humans, 1. Safe Road and Roadsides, saving the most lives and preventing the greatest number of serious injuries for every dollar spent. Towards Zero 2. Safe Road Use, incorporates the Safe Systems, which recognises two 3. Safe Speeds key limits of people using the road system. These are: 4. Safe Vehicles. • we all make mistakes (and some of us take risks); and Consequently, the key challenge is to design • there are physical limits to the amount of force the road to prevent the possibility of death and our bodies can take before we are injured. serious injury by designing for ‘safe’ crashes. To assist with this challenge, Main Roads WA’s Road Safe Systems Safety Investigator attended the ‘Achieving Ambitious The Safe Systems Road Safety Targets’ tour in 2008, which involved visits approach recognises that to three countries where the road toll was either low even with a focus on “Increased vehicle prevention, road crashes (Norway, Sweden and the Netherlands), or where there had been a dramatic decrease in recent years (France). will occur, so the road The tour looked at Safe Systems models, and showed usage, coupled with system must be designed a preference for a focus on interventions that provide to be more forgiving of maximum impact. Main Roads WA is establishing a human error and attempt Safe System Audit process and has conducted a trial changes in driver to manage crash forces Safe System Audit as part of this development. to survivable levels. Popular and successful components of Safe Systems behaviour and road Installing Safe Systems programs are demonstration projects, innovative treatments to suit all crash median treatments to prevent head-on crashes, cost types due to funding configurations, has or project constraints effective 2 + 1 road installations, innovative traffic calming treatments, separation of traffic classes and is not always feasible. Intelligent Transport Solutions for crash patterns. prompted the need to Consequently, Main Roads WA has focused Safe System Projects in WA on understanding improve the safety...” priority crash types for Main Roads WA is using Safe Systems on two every project as the road major projects to ensure that the objectives are engineering solutions considered and improvements made to the projects, being implemented will be important in achieving the road to make them more forgiving of human error. This safety aspiration. will result in a safer road for all road users. There is a need to find solutions that ensure crash energy is The New Perth Bunbury Highway project established kept within human tolerances for serious injury and death. a Safe Systems Working Group, which has resulted in The System is based on the understanding that the changes to the design of the Highway. As part of their human body is vulnerable and unlikely to survive an work, a logical framework has been developed.
  7. 7. September 2009 grM 5 Research was also undertaken to determine the crash types that are likely to be expected on the Lancelin –Cervantes Road to prioritise available funding. The five year crash history was compared for similar rural roads to determine crash types, and showed that Single Vehicle Run off Road crashes was the major contributor to casualty crashes on the rural state road network, followed by intersection rear ends and head on crashes. Additionally, the horizontal alignment is a significant factor in Single Vehicle Run off Road crashes. A range of engineering improvements are being considered for Indian Ocean Drive, including: Fitzgerald Street • audible edge lines; • minimum sealed Travel Speeds section of the Insurance Commission shoulder width of 1.0m; of Western Australia’s 2008 Road Safety Awards. • wire Rope Safety Barriers for curve < 3000m radius; Each day, 25,000 vehicles use the road, along with • rehabilitation tracks to rehabilitate back a significant around 1,500 pedestrians crossing in the area to access distance from the proposed road reserve/fence line local businesses and shops. Of the 173 crashes recorded or back to a junction in the tracks to discourage over the past five years, five involved pedestrians. uncontrolled access from Indian Ocean Drive; The project involved installing speed cushions on • sealing the aprons at parking bays to Fitzgerald Street to reduce speeds from 60km/h to reduce the occurrence of rubble/rocks being 30km/h in an area of high pedestrian activity to dragged onto Indian Ocean Drive; improve pedestrian and road user safety in the area. • intersections being treated with pre- The trial was funded through the Road Safety Council, deflection or speed and was a joint initiative between the Town of Vincent, “The project reduction device (eg.: the Office of Road Safety and Main Roads WA. ‘blister island’) to reduce involved installing approach speed of Engaging local road users and community members in project development was complemented traffic on the side road; by a communication strategy that raised speed cushions on • installation of right awareness in the wider community. turn pocket pavement Fitzgerald Street to markings at intersections The initial stage of the after study has found that a speed to assist with the reduction has been achieved, with vehicles travelling at actual speeds of 30km/h to 40km/h. The review reduce speeds from delineation through of travel speeds and driver behaviours will continue intersections; until mid 2009, with information gathered being 60km/h to 30km/h • review layouts at used in developing guidelines for future projects. proposed driveways with regard to not in an area of high providing four-way In the short term the ‘success’ of the project will be evaluated against: crossings (depending pedestrian activity...” on the type of vehicles • a reduction of the operating speed using driveway such limit that is self regulating; as farm machinery); • improvements in general driver behaviour; and • provision of overtaking lanes. • a broad assessment of the feedback received during the trial period. Demonstration projects with stakeholder engagement have become critical in addressing speeds on metropolitan roads, In the long term, success will be measured against and in particular, key distributor roads to the Perth CBD. the reduction achieved in the number and severity of crashes occurring within the precinct area and One demonstration project involved reducing speeds a sustained reduction in operating speeds. on Fitzgerald Street in North Perth, which won the Safe
  8. 8. /6 A similar project is set to commence on Beaufort detailed site inspections, video survey, traffic counts, detailed Street, another key distributor road, in June 2009 with analysis and plotting of crash data, investigation of any variable speed signs being placed in an area of high proposed medium or long term treatments, research of pedestrian activity as a trial to lower travel speeds from documented innovative treatments to address predominant 60km/h to 40km/h during peak pedestrian periods. crash types, development of an agreed treatment and the formulation of a cost estimate and benefit cost ratio (BCR). The street carries around 40,000 vehicles per day, and incorporates local businesses; a hotel; A new initiative being trialed as part of this project shopping centre precinct; on street parking is the formulation of a Focus Group, made up and bus bays on both sides of the road. of a number of people from fields such as: A Stakeholder Reference Group including community and • Behavioural expert (Curtin University); business representatives, local government, Main Roads WA • Local Government representative (IPWEA); and other agencies sees the trial as a key safety initiative. • Police (Major Crash Unit); Variable speed signs will be installed at various • Office of Road Safety; places on Beaufort Street. When entering the area • MRWA Standards Manager; from adjoining roads, motorists will see either static signs displaying ‘New Variable Speed Limit Ahead’, • MRWA Road Safety Investigator; and or electronic speed signs displaying the speed limit • MRWA Traffic Manager. warning them to slow down. Outside peak pedestrian times, the existing 60km/h limit will apply. The group meets for a one day workshop (3-4 times a year) to consider/discuss safety improvement options for The trial will run for 18 months to allow the full impact of locations by utilising the different skills and knowledge of the works to be assessed with an ‘after’ study, which will be the invitees. Main Roads WA presents information such followed by implementation of an appropriate speed limit. as traffic volumes; turn movements; crash information; intersection layout plans; photos and video survey Future Initiatives results. The group considers probable causes of the issues, examines a broad range of potential treatments Another key activity is micro-analysis of intersections, and concludes with a recommendation of treatments which involved identification and compilation of the top (standard or innovative) for further investigation. 100 worst sites list based on fatal and hospitalisation crashes only, within the metropolitan area. From this, the A report will be developed for each of the 20 intersections top 20 intersections were identified for micro-analysis. detailing treatments considered, treatment proposed and cost. The report then justifies funding submissions to This involves researching the Main Roads WA record develop and deliver the improvements through various system to determine the nature of complaints received, funding programs such as Blackspot and Safer Roads. Conclusion Recognising design for road safety is not just the responsibility of Main Roads WA has been a significant component within implementing the Safe Systems strategy in WA. Collaboration between a wide range of stakeholders on these varying projects provides an excellent basis from which to form treatments to improve the safety of road users. Safe Systems sees that everyone’s help allows Sustainable Solutions to be identified. Main Roads WA is committed to going to extraordinary lengths, implementing the preferred directions and striving towards improving Fitzgerald Street safety and reducing the road toll. Further information regarding “...striving towards improving safety this article can be obtained by contacting Mr Craig Wooldridge, and reducing the road toll.” Main Roads WA by email:craig.
  9. 9. September 2009 grM 7 SuRVIVINg THE gLOBAL ECONOMIC CRISIS - RISk MANAgEMENT gOVERNMENT AND INDIVIDuAL What is the global Economic Crisis? Australia is, however, part of the G20, a similar group of financial chiefs from Argentina; Australia; Brazil; History maintains that for every peak, there must be Canada; China; France; Germany; India; Indonesia; a trough. Therefore when the bust hit Australia last Italy; Japan; Mexico; Russia; Saudi Arabia; South Africa; year after a period of boom, we had no right to be South Korea; Turkey; the United Kingdom; the US surprised. This is a typical part of the economic cycle. and the EU which has held several summits since, in which in-depth discussions have taken place to direct To sum up, the crisis was initiated following a collapse of the respective governments of each participating country US subprime mortgage market. Subprime is the practice of on what could be done to manage the impending extending credit to people who would otherwise not have financial risk of the serious global economic crisis. access to the credit market. When this collapsed, investment companies folded as loans were not being repaid, leading to ordinary businesses folding as they were unable to find Risk Management to Survive the investors, pushing up interest rates, which led to decreased Crisis – What is the Australian spending, unemployment, and, eventually, recession. A country or countries are considered to be in recession if it government Doing? experiences two consecutive quarters of negative growth. As a result of these meetings, the Federal Government established three measures – How Has the Crisis Affected Australia? 1. guarantee on deposits At first it seemed Australia may fall beneath the radar of the US-led crisis, and although the country remains Applicable from the date of Prime Minister, Kevin relatively well-off in comparison with many, as time Rudd’s press release on 12 October 2008, the guarantee passes and the Australian economy moves through each was an assurance made by the government that stage of the crisis, the blow is becoming more difficult to weather with high interest rates leading to decreases in retail sales, and increases in the unemployment rate as businesses can no longer afford to employ their staff. It was predicted that the unemployment rate in Australia would increase by 7% by June 2010, which equates to around 800,000 lost jobs. The reality of the economic crisis hitting Australian shores became apparent last year. A media release issued by Prime Minister, Kevin Rudd, on 12 October 2008 opened with the ominous sentence - “Global financial markets are experiencing some of the most challenging conditions ever witnessed. In recent days, as global financial conditions have deteriorated markedly, governments around the world have taken unprecedented steps to guarantee the liabilities of their financial systems.” The unprecedented steps the government would take “Global financial markets were heavily influenced by talks held in a meeting held by the G7 a week later. The G7 comprises of finance ministers from the US, UK, Japan, Germany, France, Italy are experiencing some and Canada who attend regular meetings to discuss the economy on a national and international level. Though Australia is not included in the G7, the Federal Government of the most challenging considered solutions proposed by ministers at the meeting and adopted many as part of its own risk management conditions ever witnessed.” strategy for dealing with the global economic crisis.
  10. 10. /8 100% of eligible deposits would be safe. This move the Australian financial system. In addition, these was made to ensure Australia retained international measures will assist Australia’s financial institutions market confidence in loans made through Australian weather the global financial turbulence.” financial institutions, thereby decreasing competition. Several other countries have a cap on deposits, but Additional Federal government Measures under the Australian Government’s Financial Claims Scheme, deposits held in Australian-owned banks, In addition to these measures, the Rudd government Australian subsidiaries of foreign-owned banks, introduced the country’s first economic stimulus package building societies and credit unions will be guaranteed in December 2008 for pensioners, carers, families and for a three year period, after which the Scheme will first-home-buyers in an attempt to counteract the be revised and the cap reviewed. Australia currently decrease in retail sales. The stimulus indeed boosted has no limit on the amount of deposit made. spending over the Christmas period, and a second $42 billion stimulus was recently introduced gradually The guarantee applies to all types of deposits over a period of months, further increasing spending (both retail and wholesale), and include savings; amongst those who received the cash handout. passbook and cheque accounts; pensioner deeming accounts; term deposits; mortgage offset accounts; The Government has also spent money on other projects farm management accounts; first home savers such as improving general infrastructure and schools, accounts and retirement savings accounts. as well as home insulation (to help cut air-conditioning and heating costs), which has led to both improvement 2. guarantee of term funding for institutions in these areas as well as promoted job growth. As quoted in his statement, Prime Minister, Kevin Rudd explained the reasons behind the Have These Measures Worked? second guarantee – “The Australian Government As previously stated, retail sales and unemployment will also guarantee wholesale term funding in Australia have declined, but the blow suffered has of Australian incorporated banks and other been relatively soft. The stimulus has indeed increased authorised deposit-taking institutions (ADIs).” the retail trade, with the Australian Bureau of Statistics “The Government will offer the guarantee in reporting an increase in sales of 2.2% in March 2009 from return for a fee in respect of eligible non-deposit February’s 2% fall. Combined with the decrease in petrol debt obligations of Australian ADIs and foreign prices and the Reserve Bank’s stalling of interest rates, subsidiary banks operating in Australia.” has meant the recession has been relatively mild for the Australian economy thus far. Jobs in the retail sector have This move was taken to enable Australian institutions remained relatively secure overall, with retail sales steadily to raise funds overseas increasing by 6.3 per cent over the past 12 months. and restore confidence “...the Rudd in the credit market. Importantly, the world’s three largest credit rating agencies, Standard & Poor’s, Moody’s Investor’s Services 3. Purchases of and Fitch Ratings), have recently evaluated the latest government Residential Mortgage budget and declared Australia’s AAA credit rating secure, Backed Securities a very good sign for Australia and foreign investor introduced the from non-ADI lenders confidence. This followed the release of Rudd’s second budget for the period of 2009/2010, in which a deficit of On the other hand, to $57.59 billion was forecast, however a return to surplus country’s first safeguard non-ADI lenders, was predicted to be achievable in at least six years. the third major step the government took aimed at However, the Opposition stresses that the increase in economic stimulus ensuring these institutions spending has been a knee-jerk response to the global retained the funding to financial crisis, and that once the money has been spent survive. This decision it is likely the public will begin to rein its spending in and package in was made in conjunction learn to become thriftier due to the large Budget deficit. with the Governor of the It could easily be argued that this is something we all, as individuals, could and should have been doing a lot earlier. December 2008...” Reserve Bank of Australia, the Chairman of the The Rudd Government has achieved much to soften Australian Prudential the blow Australia has felt in response to the credit Regulatory Authority, crunch. But should the economy stabilise significantly as well as the Secretary to the Treasury. in days to come, the repercussions and fallout in the As Kevin Rudd announced in his statement of 12 wake of the crisis will require much time and energy October 2008, “Collectively, these measures will before Australians can truly move on with confidence. reassure Australian depositors that their deposits are safe and that they can have full confidence in
  11. 11. September 2009 grM 9 Risk Management to Survive the Crisis – What Can We as Individuals Do? While financial insecurity is the foremost fear in the majority of minds, optimists and several notable economists perceive the recession as a good opportunity for the community to become more practical-minded, a chance for those of us who live in a consumerist society to become more aware of our spending and readdress our finances. That being said, there are many steps we can take as individuals to help cushion our personal blow. • Pay off as many existing non-tax deductable debts, loans or other repayments as possible. Cut-backs in other areas of life can always be made and reducing monthly bills will greatly aid family or individual budgets, making other bills more manageable. • Become more creative in entertainment and holiday ideas. Rent videos and subscribe to free online news and lifestyle newsletters. Opt for camping trips at one of Western Australia’s many beautiful forest or parklands, rather than pay for airfares and hotels overseas. “...economists perceive the • Get your hands dirty. Instead of paying for someone to do your gardening, cleaning, washing, plumbing etc, roll up your sleeves and do it yourself. The recession as a good opportunity internet is an amazing (and cheap) resource to help you discover easy and affordable ways to unclog your own shower head for example. for the community to become • Mend clothes, or donate them to organisations such as the Good Samaritans or St Vincent de Pauls. If the items are too threadbare, recycle them into rags. Make use of more practical-minded...” the aforementioned second-hand clothes shops to find bargains for yourself while supporting a worthy cause. • Buy local produce. If growing your own seems too much of a mission, buy local. Whether at the local market or major shopping centres, help keep the Australian economy afloat by buying Australian-owned and made. • Study. Learn new skills to improve your knowledge- base and eventually your financial prospects. Taking up the occasional night class on using Excel or MYOB can dramatically open up job opportunities and promotion within your current workplace. Stay-at-home parents can use their spare time to produce items which could later be sold at school fetes or local markets. Take out Home and Contents, Vehicle, Medical/Dental and Pet insurance. Turbulence in the economy can often have an unpredictable knock-on effect on security and health. It may seem your money is disappearing into a vacuum, but should an emergency arise you will find the benefits reaped are much higher in the long run.
  12. 12. / 10 riSk ManageMenT Broken!! S ince the global economic meltdown there have been numerous articles written, presentations made and workshops run focusing “Economic crises are in essence slow motion governance/ institutional failure crises”, and that “there remains a business culture resistant to modern controls and on whether risk management is broken. responsibilities, but in these uncertain times there needs to be greater accountability to avoid future financial crises”. An interesting development and indeed a curious twist in looking for someone or something to blame for what The other aspect to all of this is that the management appears to simply be poor management decisions. As with of risk is not a precise science and anyone portraying any major incident there is always a period of looking it as such is only setting themselves up for failure. It is for someone to blame, which is of course human nature. important to remember past history is only an indicator However in this case risk management itself is being of what has happened in the past, it is not a complete blamed as a key driver of the global financial crisis. assessment of what could happen in the future. This is why it is so important to have the right people involved Historically, the economic cycle goes through booms in the assessment of the risks, those who know the and busts, the only things that vary are the duration business, its processes and what could go wrong. and size of the respective cycles. This time around, the bust has been significantly bigger because of the The key for managers is to use risk assessment business practices of some sectors of the financial information to help inform their decision making. A risk markets. Dare we suggest that management has failed assessment in isolation is not conclusive as it needs to not risk management? Certainly it appears reasonable to be considered along with the opportunities or benefits of suggest that management have failed in their risk taking the activity, the organisations goals and its motivators. decisions - it is not the risk management the process that is broken but more management attitude to risk taking. In short, risk management itself is not broken but more specifically those people who should be using risk In the boom times it is easy for management to get information have either failed to do so or chosen to take the caught up in their own successes and take a somewhat risk to capitalise on an opportunity. As we have seen with more laissez faire attitude toward risk taking. No matter the current financial crisis, the opportunity perceived has which risk management methodology some organisations not materialised, if they did in fact exist in the first place, have used, the risk information generated has been and the risks should have been known and managed. largely ignored, as the greed factor has taken over. A risk management culture needs to be driven from It is obvious in hindsight that many organisations, both the top with clear commitment from the Managing private and public, have in fact been going through the Director or Director General and it is essential to motions of managing risks, simply going through the maintain a balance between opportunity and risk. Senior process for compliance purposes or to satisfy questions executives and Boards must also take a more active from key stakeholders. It is fair to say that management role in communicating their commitment and using have failed to use risk information to inform their decisions. risk information to make well informed decisions. It appears that to many managers the risk management process has been an end in itself, in that as long as the organisation could tick all the boxes ie. having a risk management policy, a risk register and the like, then the organisation was managing its risks. However, it is evident risk-based decision making has not been widespread across many organisations. This indicates that many organisations have actually failed to embed thorough risk thinking into the culture of the organisation. It is also fair to ask what has happened to controls assurance, audits and for that matter corporate governance, since these are all mechanisms put in place to mitigate the manifestation of risks. But, like risk management, these practices are only as good as the people doing them. It appears that when business is booming people tend to put less emphasis on the checks and balances, perhaps believing that things will not go wrong. There “...risk management itself is is a clear correlation between increasing returns and the amount of risk taking - sometimes to a dangerous point being blamed as a key driver of where the amount of risk taken has appeared to become irrelevant. The former vice-president of the World Bank the global financial crisis...” and European Commission auditor, Jules Muis says,
  13. 13. September 2009 grM 11 Bridging The gap BeTween eMergency ManageMenT and BuSineSS conTinuiTy I n a major incident such a cyclone, bush fire, chemical spillage or gas explosion, when a large section of a community is impacted it requires public sector such as fire, bomb threat, accidents and natural disasters, provision of first aid assistance and emergency evacuation. Such requirements are typically driven by occupational agencies and private industry to work together to safety and health regulations and code of practices. minimise disruption to the community, businesses and services, and to recover as quickly as possible. EM practitioners generally tend to have backgrounds in security, law enforcement, military, fire fighting, facilities Effective response to disasters requires Emergency management, occupational safety and health and other Management (EM) and Business Continuity Management public sector emergency response agencies. Their skills set (BCM) disciplines to work together, yet there is often typically includes an understanding of the human impact a lack of understanding of the roles and linkages of disasters, safety and security, hazmat, and first aid. between the two. This often leads to gaps in emergency response and business continuity planning. BCM on the other hand, is organisation specific and aims to restore critical business activities within pre- determined timeframes defined by the business. BCM Characteristics of EM and BCM typically encompass IT disaster recovery planning, The priority of EM is the protection of life, property and business continuity planning and crisis management. environment. EM may be community or workplace focused. The approach is business impact driven, ie. resumption Community focused EM deals with large scale incidents of business activities are prioritised according to the impacting the community and is usually well rehearsed perceived severity of the impact of the disaster to the and well understood by the public authorities, various organisation over time. Activities that have unacceptable government agencies and organisations responsibility for impacts are restored first whilst others are deferred. the state’s critical infrastructure. Typically, an ‘all hazards’ and multi-agency approach is BCM practitioners generally tend to have backgrounds taken to prevent, prepare, in business management, operations, audit, information respond and recover from technology, and risk management. Their skills set “BCM typically disasters. EM requirements typically include an understanding of the business in public sector are impact of disasters, business processes and work flow, mandated by legislation supply chain interdependencies and technology. encompass IT disaster such as the Emergency Management Act 2005 and gaps between EM and BCM Local Government Act 1995. When an emergency such as an explosion, building recovery planning, fire or chemical spill occurs, the priority is protection Workplace focused EM comes under the general of lives and property. It is about getting people out ‘duty of care’ obligations safely, tending to the injured, search and rescue, and business continuity of employers and facilities preventing the spread of the fire or spill. Once these owners to protect anyone are tended to, the focus shifts to business continuity on their premises and – how do we resume critical business activities and planning and crisis ensure that arrangements return to business-as-usual as quickly as possible. are in place to respond It is not uncommon to find that organisations with strong to potential emergencies EM practices often do not have BCM, and vice versa. It is management.” that might occur. This may unusual to find organisations that have in place both good include procedures for EM and BCM arrangements, although this is beginning to responding to emergencies change with greater awareness of EM and BCM.
  14. 14. / 12 The dichotomy in EM and BCM practices may partly be due to the nature of the industry and the inherent risks that organisations in different industries are used to dealing with. Procedures for responding to emergencies are generally well established and practised in process industries such as mining, water treatment and petrochemical. They typically have teams of people trained as first responders to deal with emergencies until professionals from emergency services arrive. They often work closely with public sector agencies on emergency management and planning, and are often involved with the community through bodies such as the Local Emergency Management Committee (LEMC). However, these organisations tend to focus their emergency planning on breakages to their process flow (e.g. ‘what if this pump breaks’) rather than on issues of business continuity (e.g. ‘what if we cannot deliver gas’). The opposite usually holds true for many organisations in the service industry such as banking, insurance, real estate and professional services that characteristically operate in an office environment. Responsibility for emergency management is often relegated to ‘building management’, which more often than not, does nothing more than facilitate building evacuation. Issues that have anything to do with staff are referred to the Human Resources (HR) department, never mind that most HR Photo courtesy of the National Security personnel are not trained or ill equipped to deal with Capability Development Division, traumatic situations. These organisations, nevertheless, Attorney-General’s Department may have in place strategies and arrangements for the backup and recovery of critical data and infrastructure, and continuity of business operations. “The key to bridging the gap is Bridging the gap Every disaster requires emergency management and every disaster causes some kind of business impact. The first to recognise the ‘response relationship between EM and BCM is symbiotic, and truly resilient organisations and communities require both. continuum’, that all disaster Response continuum The key to bridging the gap is first to recognise the response progresses through ‘response continuum’; all disaster responses progress through three phases – emergency, continuity and recovery. three phases – emergency, The emergency phase refers to the period when an incident poses an immediate threat to life and safety. Irrespective of whether you operate on an oil platform continuity and recovery.” or in an office block, plans and procedures must be in place for responding to life threatening emergencies. It means providing staff the knowledge and skills needed to protect themselves and others, and to safely remove themselves from the threatening environment.
  15. 15. September 2009 grM 13 The continuity phase is initiated after the emergency phase for businesses to access a network of expertise on emergency and when business interruption occurs as a result of the management and to form a better understanding of the limitations incident. This phase focuses on managing the consequences and resources of public sector agencies. Likewise, it allows public of the incident (eg. interruption of services to customers) sector agencies to better understand private sector risks, priorities, rather than on managing the incident itself (eg. putting out requirements and dynamics of business continuity. Overall, the fire). This may include relocating staff to work from an everyone, including the community, gains through pooling of alternative premise, redirecting communication links with expertise and information, better communications, coordinated customers, restoring critical data and IT services to users. response and recovery efforts, and sharing of training opportunities. The recovery phase is concerned with bringing operations Cross-disciplinary skills back to normal in the long term. Restoring and rebuilding damaged or destroyed records, equipment, facilities and Building resilient organisations and communities requires premises are key activities undertaken in this phase. cross-disciplinary skills to be brought together. Whilst job It also deals with the long term impacts on employees specialisation is necessary to ensure competency in emergency and their families, taking care of the psychological management, occupational safety and health, security and needs of those traumatised by the disaster and bringing business continuity, it could also potentially hinder an the workforce back into normal operations. organisation’s timely response to emergencies since overlaps and misunderstanding of roles and terminologies inevitably occurs. The emphasis placed on each phase varies with the nature of the industry or work performed in the Education thus plays an important role. Knowledge and organisation. For example, the response arrangements proficiency in EM is a logical extension to the skills set of for a museum will emphasise the emergency (evacuating the business continuity manager, and vice versa for the people and limiting damage to collections) and recovery emergency manager. The more they know and understand (restoration of damaged collections) aspects. The what the other does, the better able they are to narrow the museum may be closed for as long as it takes to recover gap that traditionally separates the two disciplines. and restore the collections, and business continuity becomes secondary along the response continuum. Joint Exercises Traditionally, EM and BCM exercises tend to be held independent In the case of a bank, the core focus is on business of each other. For example, building management may conduct continuity as soon as life and safety issues are taken care an emergency evacuation drill, a chemical plant may run an of. The business impact to the bank and its stakeholders emergency response exercise for a gas leak or a public sector increases in severity the longer the interruption lasts, authority may carry out a cross-agency simulation of an air hence the motivation to resume critical activities crash. These exercises are seldom carried out with consideration quickly, sometimes within hours of a disaster. of the impact on businesses and the processes needed to Understanding the restore critical business activities and services to customers. response continuum and “Building resilient relating this to the nature Similarly, BCM exercises generally tend to assume that emergency response will somehow take care of itself, and the majority of of the industry or business employees will escape the emergency unscathed, will make allows the organisation themselves available and will be mentally capable of carrying out to deploy the appropriate business continuity tasks immediately following a disaster. Such organisations levels of resources and assumptions are misleading and give a false sense of assurance skills sets towards EM that the business continuity plan would indeed work in a disaster. and BCM planning. Joint exercises where EM and BCM processes are tested and communities Public-Private concurrently help to identify gaps in the response continuum Partnership and build a better understanding of the inter-linkages Developing public-private between EM and BCM. Industry-wide exercises involving partnerships (PPP) helps public sector agencies and private sector businesses provide requires cross- to forge closer ties between opportunities for participants to test their planning assumptions emergency response and response strategies under realistic scenarios. agencies, public sector organisations and private disciplinary skills...” businesses. PPP provides an excellent platform
  16. 16. / 14 Conclusion Truly resilient organisations and communities require EM and BCM to work seamlessly. BCM takes off from where EM ends, and although they have a different focus and objectives, and require different skills set, they are part of the same response continuum. Whilst a ‘merger’ of these disciplines is unlikely and unnecessary, it is imperative that professionals in EM and BCM understanding the linkages between the two and that each develops a minimum level of proficiency in the other in order to bridge the gap. Photo courtesy of the National Security Capability Development Division, Attorney-General’s Department “...resilient organisations and communities require EM and BCM to work seamlessly.”
  17. 17. September 2009 grM 15 DEPARTMENT OF AgRICuLTuRE AND FOOD BEST PuBLIC SECTOR LEADERSHIP FOR INJuRY PREVENTION AND MANAgEMENT O n October 24, 2008 The Department of Agriculture and Food (DAFWA) received recognition at the Safe Work Australia Week safety award Applying Risk Control Measures DAFWA has a diversity of risk exposure across the work ceremonies, by being adjudged ‘Best Public Sector its staff perform. The Department demonstrated a strong Leadership for Injury Prevention and Management’. commitment to minimising risk of injuries using a variety of processes to identify hazards and manage the risks. DAFWA is a diverse organisation, both geographically and functionally, with approximately 1,700 employees. These measures include: The head office in South Perth has approximately 650 • application of job hazard analysis and development staff and while the majority are administration and policy of work instructions for technical work tasks; officers, it is also a centre for crop breeding activities with • use of a risk assessment matrix process glasshouses and a plots area devoted to early stages of trials. for agricultural chemicals; There are five regional offices at Bunbury, Albany, • manual handling risk assessments and Northam, Geraldton and Kununurra with a range of reviews in targeted injury areas; district offices within each of the five regions. Staff in • continuous improvement to design and these offices are actively involved in a variety of research purchase of machinery eg. elimination of programs, natural resource/ salinity management and nip points on seeding machinery; development work with farmers, often on their properties. • monitoring of health surveillance data eg. There are also a number of research stations/ organophosphate blood tests and skin cancer screening; farms (some in remote areas of the state) which • checking of workplace machinery and equipment are used for crop trials and animal research. changes for effectiveness in consultation with users eg. manual handling aids in plant breeding; Demonstrating Leadership • maintaining a risk assessment emphasis in A safety culture has been developed at DAFWA by training courses eg. driver training, and piloting identifying roles and responsibilities for all levels of prior to implementation with managers, staff and management and staff and integrating Occupational OSH reps. The value of the training is promoted Safety and Health (OSH) into departmental processes. in both a work and home environment; The vital element that has been the driver to achieve a safety culture has been senior management commitment in demonstrating ‘safety leadership’. This has included: • financial support of initiatives agreed in annual OSH strategies and prioritising safety in capital expenditure decisions eg. $190,000 for conversion of windmills to solar powered pumps to eliminate falls from height risk; • executive/ senior management support and participation in OSH related training programs eg. driver training. The continued monitoring of OSH programs such From left to right as mandatory training, inspections, and policy John Titterington, Minister, meetings involving executive leadership has been Mike Marsh, Jon Dodd, fundamental in making improvements. Monique Kubank, Karen Hayes, Phil Taylor, Ian Longson, Emma Bluett and Heather Hingston
  18. 18. / 16 • procurement systems that monitor application of OSH requirements for service contractors and purchase of new machinery and equipment taken on through the tender process; • developing an early intervention injury management program; • implementing a health and wellness program. Review and Evaluation Extensive consultative mechanisms have been put in place by setting up a departmental OSH Policy Committee (established in 1997) with regional OSH reps, management representation and chaired by a member of the Executive. Skin cancer check This has been complimented by having local OSH Committees or staff meetings with an OSH component in all districts across WA and organisational areas within the head office. Outcomes Achieved A number of significant outcomes have been achieved The organisation has been able to review and integrate OSH during the previous 10 financial years as a result of the and Injury Management with other departmental systems Department’s successful programs which include: and continuously improve by implementing the following: • decreased the number of claims and lost time • quarterly performance injuries (LTIs) by 54% and 65% respectively; reporting on injury “The vital element rate trends and • reduced its LTI incident and frequency lead indicators; rates by 65% and 62% respectively; that has been the • quarterly review of • reduced the average number of days lost from a progress with agreed peak in 1999/00 of 48.9 to 15.4 days on 2007/08; driver to achieve OSH initiatives • two out of the last three years there has been no and outcomes; Severe LTI (time lost greater than 60 days); a safety culture • annual review of driver • reduced actual total annual claims cost from a peak safety statistics; $596,000 in 1998/99 to $156,000 in 2007/08. has been senior • incident data monitored Since DAFWA was recognised for its Workplace for any repeat injuries Driving Safety Program in 2001 it has been used management for activities where risk reduction strategies as a case study by the Office of Road Safety for industry and by RiskCover for the Public Sector. have been put in place; commitment in • internally targeted The Department has extended the application of its reviews of the OSH systems to other organisations it works with in its demonstrating application of collaborative research programs. It has also provided support OSH systems; to groups set up to improve OSH within the agricultural ‘safety leadership’.” • bi - annual review of industry, such as Farmsafe Alliance and Chemcert. all policies by the OSH The Department’s achievements have come from a Policy Committee; consistent focus over an extended period of time – it • auditing OSH functions using the WorkSafe Plan has been no overnight success. To get the engagement Assessment tool every 4 years since 2000. of managers and staff in OSH requires a demonstrated commitment from the organisation – senior management at DAFWA have provided that commitment. The rewards have not just been financial - they have provided a broader positive impact on the quality of life of departmental staff.
  19. 19. September 2009 grM 17 DAFWA LTI Duration Rate 1998/99 – 2007/08 60 50 40 Days lost 30 20 10 0 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 DAFWA Workers Compensation costs 1998/99 – 2007/08 This graph shows current actual cost of claims including estimates 700 600 500 400 $ ‘000s 300 200 100 0 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 DAFWA injury data1998/99 – 2007/08 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 Workers Comp Claims 94 89 68 56 43 72 58 55 53 41 Lost Time Injuries(LTIs) 43 37 29 21 19 27 17 21 27 15 Frequency Rate (No of LTIs 13 11.1 8.8 6.8 6.3 9.0 5.5 7.0 8.7 4.9 per million hours worked)
  20. 20. / 18 overcoMing oBSTacleS To Senior ManageMenT Buy-in on BuSineSS conTinuiTy ManageMenT G etting senior executive buy-in and commitment continues to be the biggest obstacle to getting an organisation’s business continuity management While it may be effective, driving BCM from a compliance perspective, however, is not necessarily the most desirable method, and often leads to a tick-in-the-box mentality (BCM) programme off the ground and sustaining it on rather than a true desire for a workable plan. Compliance an ongoing basis. The challenge for BCM leaders is with BCM requirements does not guarantee that strategies twofold — first, to secure commitment to get the BCM will indeed work or that employees will be capable of programme underway, and secondly, to sustain the responding effectively when disaster strikes. BCM programme on an ongoing basis at all levels of Things which are not picked up by audit but are nonetheless the organisation once plans have been implemented. important may be overlooked. As such, this motivator should be used sparingly and not be over-emphasised. BCM leaders can use five core motivators to achieve buy-in and commitment. These motivators are not good management practice mutually exclusive but complementary to each other, and when used appropriately and at the right time, may This motivator appeals to the sense that BCM is part of be just what is needed to get senior executives going. good corporate governance and is therefore the prudent thing to do. Minimising the impact of operational disruptions, building resilience to failure and having the Motivators ability to respond effectively should the unexpected occur, Compliance all make good business sense. It would be hard to argue against a case for good corporate governance, but one Someone once advised not to waste time trying to work with must bear in mind the myriad of issues, initiatives and those who are not keen on agendas that are competing for the same limited pool of business continuity because resources, money, time and senior executives’ attention. ‘they will come running back “Can you afford to you when audit knocks It is not enough to only espouse the notion that BCM is on their doors’. In itself, this good management practice. It has to be demonstrated. perhaps is not good advice, An effective approach to motivating senior executives into but the need for compliance action is to have them participate in a tabletop exercise. with regulatory, audit or Such an exercise often provides some eye-openers for not to do it if your fiduciary requirements participants — the underestimation of the damaging is usually a very strong consequences to the business of an outage, the current motivator for senior state of unpreparedness in dealing with major incidents, executives. Non-compliance and the mistaken assumption that the organisation will with regulations often carries have the management capacity and capability to deal peers or competitors significant consequences for the organisation. with the outage as it happens. It will very quickly become evident to the executives that preparing for the unexpected This could include public is all about prudent management and duty of care. censure, financial penalties, embarrassment and even What are the competitors doing curtailment or loss of are doing it?” licence. Audit outcomes This brings to bear the pressures from peers and competitors, and raises the question, ‘Can you afford are reported to senior- not to do it if your peers or competitors are doing it?’ level audit committees When disaster strikes, the organisation that is better and the board, and habitual non-compliance with prepared to meet delivery deadlines and customer requirements reflects negatively on the executives. expectations through more resilient operations and