So what is risk management excellence? Is it simply a vacuum in which there are no accidents? Is it project man hours metric-based? How will recognize it when we see it?
More importantly – how can we achieve it if we don’t understand what it truly is?
First, it is important to realize “zero accidents” or any improvement in accident frequency or severity is a lagging indicator of safety, which is a result, and not the risk management process that produces the results.
Three elements are critical to form a true understanding of the process of risk management excellence: 1) strategy, 2) process indicators, and 3) culture … Each of these elements will establish a fundamental understanding as follows:
A definition of risk management excellence that does not include strategy to achieve it is like going into war without a battle plan. Wanting to win is admirable but victory without strategy is extremely rare.
Many companies substitute improvement targets for risk management strategy … which is really just defining the desired result, but not the process that will achieve these desired results.
A practical strategy for achieving risk management excellence is to start with creating an interactive learning environment with your management team. The next step is to begin to understand the dynamics of safety culture improvement to form the basis of your risk management excellence strategy.
Additionally, measurement of “process indicators” (versus lagging indicators) is very important for successful managing of risk management in your company.
Traditional approaches in safety improvement focus too much attention on lagging indicators. Lagging indicators are basically “accountability” metrics. They tell us if we are doing worse, better or about the same. They do not tell us how to improve; this is the purpose of risk management process indicators.
If we have a strategy that involves a risk management process to produce quantifiable results, we can measure how well we are working our risk management processes … then determine if it is impacting the lagging indicators. Excellence is not just about producing results with short-term objectives … but rather understanding how good results are produced for long-term sustainability. In other words, we can measure if we are working our plan and measure whether or not our risk-management plan is working.
If approached correctly, a risk management culture can be the sustainability tool of excellence. Culture not only influences its members’ decisions and practices in the here and now; it impacts individual habits and working methods of future company members as well.
It truly can become “the way we do things around here…” and “what we do when no one is watching…” as described by foremost expert Edgar Schein in his 1990 book, Organizational Culture and Leadership. These cultural objectives can become contagious in your organization. And they are commonplace when organizations encourage a learning environment and promote open and honest communications about cultural aspects of risk management.
Many approaches to improving risk management culture focus on “characteristics and integrity…” rather than hard line capabilities. Excellent risk management cultures are “can-do” cultures with the vision and tools to continually improve. They have a strategy and process indicator metrics to keep them on track. They develop the risk management characteristics successfully as a byproduct rather than a precursor of their performance.
If your organization desires to achieve risk management excellence, it is recommended that you develop a deep understanding of what excellence is truly comprised of. Dr. Edwards Deming, the foremost authority on theory and practice of quality management, called such an understanding of excellence as having “profound knowledge.”
It not only is a performance goal, but a definition of what risk management excellence is and a process to achieve the goal. It must have process metrics that are measured to facilitate understanding of how risk management excellence is achieved. Truly excellent risk management organizations know exactly how to duplicate and improve their success in crane operations year after year.
Kevin Cunningham is CEO, Construction Division, HIIG Underwriters Agency Canada, Ltd.