Risk Curve: Modelling the “Ideal” Hazard

Risk! Engineers Talk Governance
Season 7, Episode 10

In this episode of Risk! Engineers Talk Governance, due diligence engineers Richard Robinson and Gaye Francis discuss the mathematics behind risk modelling and why relying on heat maps for decision-making can have limitations.

Richard and Gaye explore the concept of the "ideal" hazard risk curve, unpacking why every hazard carries its own unique risk profile rather than a neat line of constant risk. Drawing on Heinrich's accident triangle and the hyperbolic relationship between consequence and likelihood, Richard walks through the calculus of integrating under a risk curve, and why simply "spotting the dot" on a five-by-five risk matrix can underestimate high-consequence, low-likelihood events by an order of magnitude or more.

They discuss the limitations of the standard risk matrix for large organisations dealing with vastly different scales of risk, and why New Zealand's updated WHS legislation is shifting focus toward identifying critical hazards and credible controls first, rather than getting bogged down debating likelihood.

Key takeaways:

• Heat maps are useful for communication, but dangerous as standalone decision-making tools

• The area under the risk curve matters – it's far larger than a single dot suggests

• Safety risk assessment should prioritise critical hazards and reasonable controls over likelihood arguments

Note: This episode references slides, for the full visual experience you may prefer to watch the video recording.

Access the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:00):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers, Richard Robinson and Gaye Francis discuss the Risk Curve: Modeling the "Ideal" Hazard.

(00:14):

We hope you enjoy the chat. If you do, please support our work by giving us a rating and subscribing on your favourite podcast platform. And if you'd like more information on R2A, our newsletter and resources or have any feedback or topic ideas, please head to the website www.r2a.com.au.

Gaye Francis (00:33):

Hi Richard. Welcome to another podcast session.

Richard Robinson (00:36):

Good morning, Gaye.

Gaye Francis (00:38):

Today we're going to talk about modeling the ideal hazard if that really exists.

Richard Robinson (00:42):

As we mentioned earlier, small children can be in this category.

Gaye Francis (00:46):

Ideal hazards, maybe. So what we're going to do just as an introduction, I guess, we're going to use some slides in this particular podcast. So if you usually just listen to us and it might be worth transferring over to the YouTube channel (see description), but we will explain the slides as best we can as we're holding them up as well. So not critical to go to the YouTube channel, but just be aware that we will be holding some slides up.

Richard Robinson (01:13):

Now, the reason why we're doing this particular podcast, because it's come to our attention that a lot of people have decided to use heat maps again with regards to downside risk.

Gaye Francis (01:21):

For decision making purposes.

Richard Robinson (01:22):

Rather than just reporting purposes. And we've talked about this in the past, but I thought it was worth just mathematically explaining a little more robustly why using it as a decision making tool will put you in the wrong place. Now I'll put up the slide here, but normally R2A deals with sort of three core areas of risk. Downside risk, the risk from which there's no prospective gain, that's safety risk, which is all negative.

Gaye Francis (01:47):

Yep. And that's your graph on your left hand side.

Richard Robinson (01:51):

Upside, downside risk, which is what popped up in the 1980s, particularly with the commercial people. So you can buy shares in the stock market, the price can go up or the price can go down. Or downside risk from a promised upside risk position, which is what project risk is about. Those three things are actually quite different for a start, but today we're just talking about downside safety risk in the first instance. Now, if you just look at that slide, it is downside. It's going negative. But when you're actually doing this sort of stuff, most people use the heat map. They've got the heat map on the positive side of things, which is sort of on one level, a little bit peculiar.

Gaye Francis (02:28):

So when Richard says the heat map, it's typically the five by five matrix like we see in the Australian Standard.

Richard Robinson (02:34):

Yeah, red, amber, green sort of thing. Where green's low risk and red usually don't go there. Now one of the interesting things about these things, they're normally done on a log log scale. And the reason why that's the case, there's actually some technical competent reasons for that is that back in the 1930s, a fellow called Heinrich in the US was doing studies of all US accidents and that was built upon by a guy called Bird and you probably read about it, the accident triangle where one very serious incident was accompanied by 10 not so serious events and then about 30 or 40 or 50 other events. And by the time you get down to the near misses, you're at sort of the hundreds, close to a thousand, that sort of thing.

(03:10):

The numbers were always a bit flaky because how many people actually report near misses when it comes to the crunch. But the general recognition was, and I've never seen anybody disagree with this, is that generally a tenfold increase in consequences accompanied by a tenfold decrease in risk. And that's a hyperbolic curve, Y equals one on X, Gaye.

Gaye Francis (03:33):

Excellent mass lesson, Richard. <laughs>

Richard Robinson (03:34):

Well, we haven't got there yet. Now what people do on a heat map ordinarily, they just spot the dot, one point. And if you assume the risk follows a line of constant risk, on a log log scale, that will be a 45 degree slope, which is the way most people normally sort of treat these things. And a tenfold increase in consequence, accompanied by tenfold decrease in likelihood. Then if you pick one point in that line at one level, you have characterised the full possible range of outcomes of that risk because a very small one happens a lot and a very rare one, a very big one is very rare. The problem, of course, is that no hazard has a line of constant risk associated with it. Every hazard has its own unique risk curve associated with it.

Gaye Francis (04:24):

And it's often wobbly and different shaped.

Richard Robinson (04:26):

Yeah, mine is pretty wobbling. I mean, I've sort of just sort of prepared a prior argument.

Gaye Francis (04:31):

A non-ideal.

Richard Robinson (04:32):

A non-ideal <hazard>. And what that's basically showing is that there's probably wobbles. I mean, if you just think about a high voltage hazard or something like that, if the arc flashes, it's either pretty much going to hit you or it's going to miss you. Or if there's two of you walking along...

Gaye Francis (04:45):

One goes and one doesn't.

Richard Robinson (04:47):

Or maybe both of you go. But it'll have jumps and bumps in it. But nevertheless, if you were actually trying to work out the actual risk associated with this thing, what you really need to know is the area under the risk curve.

Gaye Francis (05:00):

Okay.

Richard Robinson (05:01):

And that means you've got to really integrate the area under the risk curve. Now if you take the ideal risk curve, which is Y equals one on X, which is the hyperbolic, and then you plot that on an ordinary graph paper, it looks something like that <shows slide>, which is, if you think of a hyperbolic risk curve, it's obviously a tenfold increase. Well, you get a shape like that (high then drops sharply). Now in practical terms, this always made a lot of sense to me because the one place you do not want to be is high consequence, high likelihood.

Gaye Francis (05:36):

Correct.

Richard Robinson (05:37):

And that means you're in the top left hand corner of this diagram, the bright spot, the hotspot on the chart. And if you stay equally distance away from a point up there, what shape curve must you get?

Gaye Francis (05:48):

Hyperb...

Richard Robinson (05:50):

This is really getting <difficult>.

Gaye Francis (05:51):

I know it is. <laughs>

Richard Robinson (05:56):

Now, and if you want to integrate the area under the risk curve and it's a function Y equals one over X, Gaye, what's the integral of one over X? It's the natural log.

Gaye Francis (06:07):

It's the natural log. There you go.

Richard Robinson (06:09):

Now if you start integrating the natural log, one of the difficulties you have with a hyperbola is it goes asymptopic in both directions. So if you integrate from zero to infinity, you get an infinite number, which makes it mathematically very inconvenient.

Gaye Francis (06:24):

Almost impossible, you would think.

Richard Robinson (06:25):

So therefore you have to integrate over a range. Now obviously if it's such a small matter, then you don't worry about the really small events because nobody's being hurt and maybe somebody gets a bruise or something like that - it happens an awful lot, but who cares? It's a bit like stubbing your toe in the morning when you get up. It's very annoying, but you still go to work.

Gaye Francis (06:42):

That's true.

Richard Robinson (06:46):

And then obviously you've got to put a limit on the other end because if you keep saying planet destroying meteorites constitute a hazard that we have to deal with, then it's a one by 10 to the minus 12 and minus 14. How far do you integrate the other direction? So you have to integrate under the line over a region and what change does it get. Now the plot that I just put up was just basically one over X, so it's going through the one point. So therefore if you just sort of start integrating from say one to 10, one to 100, one to a thousand, one to 10,000, something like that, what's the actual increase you get over the actual line, which at that point is just one. It's a line of constant risk going through one. And the answer is quite significant. The handy thing about integrating that particular line is that you have to... the log integral is the LM of the upper limit minus the LM of the lower limit. The lower limit has to be one that makes the natural log zero.

Gaye Francis (07:56):

OK.

Richard Robinson (07:56):

Or if anybody's interested in this sort of stuff and you want to do it yourself, that's easy. But just to give you the rough idea, if you integrate from one to 10 of one over X and the natural log, it goes up by a factor of two point something. If you integrate from one to a hundred, it goes up by a factor of 4.6, from one to a thousand it goes up 6.9, from one to 100,000 goes up to 11 point times the value of risk. And if you went to one in a million, it goes up by a factor of something like 13, an order of magnitude. That's significant, particularly when you're dealing with high consequence, low likelihood events that happen very rarely. And as I pointed out to you before, before we started this podcast, if you want to be statistically significant about failures, you've got to fail at least three times doing the same thing, which from a risk point of view is not a particularly good thing to do.

Gaye Francis (08:51):

No, and I don't think that's particularly a lot of times have to fail either.

Richard Robinson (08:56):

No, what's the line? If it first you don't succeed, try, try again. Whether it's statistically significant. Which must be useful. I don't know. Now the point about all this is everybody spots the dot and thinks, I don't know what they sometimes think. I think they think they've done a risk assessment. But what you've done is a fearfully complicated thing and you want to be clear we have only at this point considered downside, pure risk, safety risk. We're not talking about upside normal distribution risk that the commercial people like doing. That's why people do PhDs and these things. And we certainly haven't been considering downside risk from the point of view of a critical project. Because remember with the project is downside risk from the promised upside risk position.

Gaye Francis (09:37):

So where do you start your curve?

Richard Robinson (09:39):

Well, remember the whole point of our project due diligence process is you start off with the critical things because you cannot let a showstopper happen. It's not possible with a big project.

Gaye Francis (09:50):

But that means we're still ... I think what this is saying is typically you know what the potential range of consequences are. Characterising the likelihood associated with the consequences is always the difficult part.

Richard Robinson (10:03):

And if you're talking about high consequences, likehood, like for example, an explosive air fuel mixture in the chamber and you just spot the dot and say one in a million is here, you have probably underestimated by an order of magnitude.

Gaye Francis (10:17):

And I think that's, well, primarily that was one of the reasons why the WHS legislation came in and the due diligence approach was to eliminate all of those games that people played with the likelihood things, with the likelihood arguments.

Richard Robinson (10:32):

And what are the Kiwis done with their new amendment bill? They're changing their legislation to say that you must focus on the critical ones first.

Gaye Francis (10:41):

Critical ones, but you're also still focusing on the controls that you can put in place. So there's no discussion around, you're only testing the likelihood element when you're looking at the control that you can put in place as a balanced argument.

Richard Robinson (10:57):

It's a reasonableness test.

Gaye Francis (10:59):

And I think what we've seen in a lot of these sort of stuff when people are using the risk characterisation five by five matrix and characterising risk, they get bogged down in the detail because it's always an argument about what the risk is before you even start to look at the controls you can put in place.

Richard Robinson (11:18):

But the other problem they've got is the scope of their risk curve. I mean, if you're talking about a one in a million event, awful lot of people say that 99.9, well, 0.001, rare is one in a thousand. No. They don't just cover the range.

Gaye Francis (11:36):

No. And we've found that when we have been doing some of these, the risk matrix curves are, oh, sorry, risk matrices are really good at the communication aspect and we've done it for enterprise risk frameworks and things like that. So you're communicating things and characterising things in the system of the <inaudible>.

Richard Robinson (11:58):

The value system of the decision makers.

Gaye Francis (12:01):

But often you're right, the five by five scale is not big enough to characterise all of the issues of a water company, for example, because they're dealing with dam failures, but they're dealing with burst pipes as well.

Richard Robinson (12:16):

Same thing with hospitals, but any large organisation, the state governments, remember we did a couple of jobs for hospitals. You got the hospital, what's critical for individual hospital isn't necessarily critical for Department of Health and what's critical for the Department of Health isn't necessarily critical for the state as a whole. So that's another two orders of magnitude. And BHP Bilton used to do it that way too.

Gaye Francis (12:34):

So we're not saying don't use any of these things, but what we're saying is understand what they can be useful, their limitations and have that understanding when you're doing it. But safety risk is still asking you to say, what are all the credible, critical issues, what are the controls you can put in place and what is reasonable in the circumstances?

Richard Robinson (12:58):

And that's where the Kiwis are going. I hope the Australians catch up quickly.

Gaye Francis (13:02):

Here's hoping, but as you said, New Zealand's definitely leading the way. That was a very technical podcast for us.

Richard Robinson (13:10):

Well, for some.

Gaye Francis (13:11):

For some. Yes, other people enjoy this sort of stuff. I understand. But thanks, Richard, for explaining that and we will see you next time.

Richard Robinson (13:19):

Thanks, Gaye.

Season 6 Wrap: SFAIRP Complexities

Risk! Engineers Talk Governance
Season 6, Episode 10

In this episode of Risk! Engineers Talk Governance, due diligence engineers Richard Robinson and Gaye Francis wrap up Season 6 and the theme of SFAIRP complexities.

Key season highlights they revisit:

• Three essential components of SFAIRP: "As Far", "As Is", and “Reasonably Practicable”,

• Confusion around hierarchy of controls, 

• Contradictions between WHS Legislation (OHS Act in Victoria) and planning and safety law.

Engineering for Communities & Season 5 Wrap

Risk! Engineers Talk Governance
Season 5, Episode 10

In this final episode of Season 5, Richard Robinson and Gaye Francis conclude their theme of difficult conversations engineers need to have as well as discuss Engineering for Communities. 

They explore how engineering should focus on improving rather than maintaining the status quo, and the concerning trend of engineers being sidelined in critical decision-making processes.

The discussion includes:

• How councils and planning decisions have become "de-engineered"

• The importance of due diligence beyond just health and safety - extending to environmental protection and project management

• Why engineers seem to have "vacated the field" in many areas, leaving non-technical decision-makers to handle complex problems

• The need for validation, verification, and challenging assumptions rather than blindly applying Standards

• How proper due diligence can demonstrate governance and protect communities, workers, and the environment

• Due diligence is an ongoing process requiring continuous thinking and adaptation as technology and circumstances change. 

The also discuss their confusion how anyone could they're a designers and not demonstrate due diligence irrespective of what the WHS/OHS legislation says and that they’re setting themselves up for a fall.

Access the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:00):

Welcome to Risk! Engineers Talk Governance. In this final episode of Season 5, due diligence engineers, Richard Robinson and Gaye Francis wrap up the theme of difficult conversations engineers need to have, as well as discuss engineering for communities.

(00:19):

We hope you enjoy the chat. If you do, please give us a rating and subscribe on your favourite podcast platform.

(00:26):

If you'd like to keep in touch with R2A's work and events, please head to the website www.r2a.com.au and sign up to our quarterly newsletter.

(00:37):

Thanks for all the wonderful support and feedback this season and look out for Season 6, as well as an in-person event.

Gaye Francis (00:46):

Hi Richard. Welcome to our final podcast session for Season 5, the wrap up.

Richard Robinson (00:52):

Season 5!

Gaye Francis (00:53):

Season 5.

Richard Robinson (00:54):

It's hard to believe Gaye.

Gaye Francis (00:54):

It is. It is, but it's very exciting. It's been quite an interesting season this season because we themed it difficult discussions that engineers need to have, and we've covered risk management and negligence, our new booklet. The difficult conversations that engineers need to have. Catastrophic project blowouts, which is also one of our booklets, but also we've seen that in government projects in particular and how big projects are not meeting the requirements on time, on budget and specification. Insurance criteria. One that got a lot of feedback was standards are not the solution, so that was an interesting podcast. Target levels of risk and safety always gets the the thought leadership conversations happening. Relevant, reasoned and concise, especially around expert witness type cases. How things are done in silos. And then due diligence revisited.

(01:53):

So today we thought we'd try and bring all of those topics together in a bit of a mismatch, but bring them all together and talk about in the context of engineering for communities and the philosophy of engineering is about change and not maintaining the status quo. So that comes down to one of...

Richard Robinson (02:11):

Meaning things improve.

Gaye Francis (02:13):

And meaning things improve, correct!

Richard Robinson (02:14):

And don't decline. <laughs>

Gaye Francis (02:18):

And that it requires engineers and the people in those sort of positions to think about things and not just apply standards like we've talked about previously, to get that improvement in our communities.

Richard Robinson (02:33):

Yes. Well, you're actually addressing a somewhat larger subject when you talk about engineering for communities, and what I think you're saying is that in practice in community, a lot of the core decisions that have been going on around the place have de-engineered. One of our frustrations and that's what the previous podcast (S5E9) was about, that due diligence is not just about health and safety.

Gaye Francis (02:52):

Correct.

Richard Robinson (02:53):

It's about protecting the environment. It's about not having projects blow out when you're trying to get something done. And it is also about making sure that existing plants and processes do the best they can with what you've got. Because sometimes you simply aren't going to be able to replace all these things in a hurry. So ageing, thermal power stations, yeah, we'd like to keep them going until we're sorted out whatever else we're going to do. Australia's getting, well, I think we're getting better at it... we are making it happen because we have to.

Gaye Francis (03:22):

And due diligence is one of the processes that you use to demonstrate that that's being done

Richard Robinson (03:28):

Correct. Now, from the point of view of engineering and societies, I mean one of our frustrations we've noticed, for example, in planning decisions with councils - councils are basically de engineered. I mean, they've got all these planners making decisions about, and they like target levels of risk and safety because it means you can make a quick decision when they having to think things through. Although as we have demonstrated we have a current case, even actually demonstrating what the level of risk is, is somewhat messy, let's put it that way.

Gaye Francis (03:57):

Difficult thing to justify.

Richard Robinson (04:00):

And uncertain. And then when you try to work out the quantum of human effort, that should be put into a place to deal with something that's messy. That's a little bit scrappy too. So when you're trying to put the two things together, that's why it's hard and people have to think about these things. Now if you don't have the engineers around, and certainly in planning decisions, engineers seem to have basically left the fields as far as I can tell. Same things happened with building surveying. The engineers for the most part, apart from doing particular studies on bush fires or soil conditions or whatever the aspect is...

Gaye Francis (04:34):

They're a single input into the process.

Richard Robinson (04:36):

A series of single inputs the way it's going. But the collective overview of what's important to the thing seems to have gone missing and how many projects do we keep seeing blowing out? It's a little bit frustrating to us to be invited to a large project late in the day and then trying to as politely as we can point out that, yeah, it would've been better if you thought about this upfront.

Gaye Francis (04:58):

Yeah. Because what you can put in place, the controls that you can put in place and precautions you can put in place when a project is well on its way after practical completion, even some might say, is very, very limited compared to what could have been done in a safety and design process.

Richard Robinson (05:15):

And you would recall we have some Cabinet in confidence projects that we facilitated their demise and we're not allowed to talk about in case the tenderers find out.

Gaye Francis (05:24):

Correct.

Richard Robinson (05:24):

And sue the government.

Gaye Francis (05:26):

But that would have been a lot less hurt than if it had a gone ahead.

Richard Robinson (05:29):

Much less hurt, but let's not go into that. So the whole thing to us has become rather odd and we don't quite understand why the engineers have, in a sense vacated the field. And more to the point, the senior decision makers haven't grasped that in an advanced technological society, pushing the engineers away is going to cause excessive pain for the senior decision makers.

Gaye Francis (05:57):

And make those decisions harder and making informed decisions even harder.

Richard Robinson (06:03):

I'm not sure. I don't quite understand how they've done it? It's not as though, I mean we've talked about this before, but in Australia, as long as the sun's shining, I mean all the places on the planet where there's a lot of sun. I mean, you have your Finnish friends.

Gaye Francis (06:18):

I do.

Richard Robinson (06:18):

And they like nuclear reactors because in winter it's very cold and very dark.

Gaye Francis (06:24):

Not much sunshine.

Richard Robinson (06:24):

Not much sunshine. Whereas we have lots of it, and it's now cheaper to build solar power stations cheaper, faster, and quicker than nuclear plants. How long did it take the Finns to get the next Olkiluoto station going?

Gaye Francis (06:38):

I think the last one took up to 15 years because they weren't going to switch it on until they were completely confident that it was "safe".

Richard Robinson (06:47):

Which we in our society tend to say, oh, we better turn it on because we've got an election coming up or something like that.

Gaye Francis (06:54):

That's a bit cynical, Richard. But yes.

Richard Robinson (06:57):

Not after our experiences on the Geelong Freeway, but perhaps we shouldn't go there either. <laughs>

Gaye Francis (07:04):

So I think as was saying, due diligence is one of those processes that we've always said is used to demonstrate and as a defense against negligence, but it can be applied across the field, not just in health and safety. It can be applied in environment and projects and SIL reviews (safety integrity level) reviews and a whole lot of things. But one of the other important things I think that goes with the due diligence aspect is that validation and verification, and it's the ability to test and challenge and question, which is not necessarily being done. And that comes down to that questioning of things and thinking things through, but also not just applying the Standard as a minimum requirement and not thinking of the context in which the particular problem that needs to be solved in.

Richard Robinson (07:52):

Correct. And not avoiding a problem if you can in the first instance. I mean, we are continually astonished that people coming up with ideas and the solution of not doing it that way at all and doing it a better way for some reason just doesn't seem to be considered. We don't get that.

Gaye Francis (08:12):

And I think we've used this in our course many, many times just because everybody else is doing it that way, is not a defense against negligence.

Richard Robinson (08:18):

Correct. And the lawyers have been crystal clear about that forever.

Gaye Francis (08:21):

Yeah. Yeah. So think these things through what has always been done isn't necessarily the way to go about it. You've got to be diligent. And we are just talking and people are absolutely correct that there's no requirements in legislation and in the WHS Act, that is a requirement for engineers to be diligent or demonstrate due diligence. But as an engineer and a business owner, I'd like my engineers to be diligent.

Richard Robinson (08:57):

Certainly.

Gaye Francis (08:57):

And to be able to think these things through from scratch and understand the context in which they're applying it.

Richard Robinson (09:08):

A designer who doesn't demonstrate due diligence is just kidding themselves. I don't understand how somebody could even possibly say they're designers and they don't have to demonstrate due diligence irrespective what the legislation says. You would just be setting yourself up for a fall every time.

Gaye Francis (09:24):

So I think engineers are important people in our society and we're required to have good communities.

Richard Robinson (09:30):

Actually, their importance is actually demonstrated because whenever there's a court case, it's always the engineers.

Gaye Francis (09:35):

That come up and solve it or present the evidence.

Richard Robinson (09:38):

Yeah, it's not the town planner, it's the engineers. It's not the building surveyor, it's the engineers. Whenever there's a hard problem, it's the engineers that appear. And I don't quite understand why if you just look at the court process, if that's what happens, why do all these other parties who can't be a part of the solution per se, why are they making the decisions? That's the bit I don't get.

Gaye Francis (10:05):

I think it's also interesting, and another observation that we've probably had is that many of the health and safety people and advisors in organisations don't have that technical expertise.

Richard Robinson (10:16):

So they couldn't tell you how to avoid it in the first place, not the design party.

Gaye Francis (10:20):

So many of the solutions that are put forward by these people and these parties are often in the admin, the procedural sort of areas. So you've down the hierarchy of control before you even start.

Richard Robinson (10:32):

And do they attempt in the first instance, which is what they ought to be doing, to consult with those people who could perhaps eliminate the problem? I don't think they do. I think they just put forward the suggestion and more importantly, actually impose a rule on people without actually testing what the larger solutions ought to be.

Gaye Francis (10:51):

So I think there's two things that we've sort of seen, and much of the work that we do could probably be put into two categories. It's those people that want to improve safety in the organisation by demonstrating due diligence.

Richard Robinson (11:04):

Or project management

Gaye Francis (11:05):

Or project management

Richard Robinson (11:06):

Or environmental management.

Gaye Francis (11:07):

Yes, thank you. And then by doing that process, the due diligence process, you're also demonstrating a governance process that you've been through a governance process and it's sort of hand on heart stuff again, isn't it? We've done everything reasonably we can to protect our community, our workers, the people who our work exposes, what else can we do? Or we've got all reasonable practical controls in place to manage this big project or this environmental issue, whatever it is.

Richard Robinson (11:43):

And that's what that CFA chief said. Remember he said, I've been a volunteer chief for 10 years and I know that I'm going to lose somebody if I keep doing this job.

Gaye Francis (11:50):

In a bushfire.

Richard Robinson (11:51):

In a bushfire, but what I need to be able to do is put my hand on my heart and say, it wouldn't have mattered if it was my son or daughter fighting the fire. The same thing would've happened and we'd done everything reasonably practicable, but we could in the circumstances, and this is Australia and we burn.

Gaye Francis (12:06):

Yeah. And so I think due diligence is one of those processes that can do that. It is a process that requires people to think things through.

Richard Robinson (12:16):

Correct.

Gaye Francis (12:17):

Look at the context in which your situation is and look at all the controls, not just do the status quo, maintain the status quo. Technology's changing all the time. The controls are changing all the time, and what's reasonable in the circumstances can change year to year. And so it's not something that's done once put on the shelf and forgotten about. It's something that has to be thought about continuously.

(12:44):

So I think that's sort of a wrap to Season 5. We hope you've found it interesting and the difficult discussions that engineers need to have.

(12:58):

Richard and I are still looking at doing an in-person event in mid-late 2025, and especially around this sort of difficult discussions that engineers need to have because the interesting part is the different opinions of people and how it works within organisations. So we're looking at setting up a due diligence seminar, as I said, in mid 2025. And if you are interested, sign up to our newsletter to keep informed on how that's coming along and further details as they're released.

(13:30):

So thank you again for joining me on for Season 5, Richard. And we will be back for Season 6 later in the year. Thank you.

Richard Robinson (13:40):

Thank you.

Due Diligence as a Governance Process, Dam Safety & the Relevance of Due Diligence (Season 4 Wrap)

Risk! Engineers Talk Governance
Season 4, Episode 10

In the final episode of Season 4, Richard Robinson and Gaye Francis wrap up the key theme of the season of due diligence as a governance process. They also provide another industry example in Dam Safety, and discuss the relevance of WHS/OHS legislation and the state of prosecutions.

Key take-aways include:

•  The due diligence process is a governance process that focuses on high consequence, low likelihood events rather than risk management.

• Dam safety highlights how regulators focus on the worst-case scenario of a dam failure rather than likelihood.

• The due diligence process involves four key tasks: completeness checks, identifying critical issues, determining reasonable controls, and implementing a quality assurance system. 

• WHS/OHS legislations must be integrated across safety decisions. 

• WHS prosecutions seem to be more prevalent in jurisdictions where it’s been in place a while, with regulators more likely to prosecute smaller to medium-sized organisations due to the increased likelihood of winning.

Access the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:01):

Welcome to Risk! Engineers Talk Governance. In this episode, the last for Season 4, due diligence engineers, Richard Robinson and Gaye Francis chat about the season's overall theme of due diligence as a governance process across industries. They also provide another example in Dam Safety and discuss the relevance of WHS/OHS in legislation and prosecutions.

(00:30):

If you enjoy listening to our podcast, please give us a rating and also don't forget to subscribe on your favourite podcast platform. If you'd like more information on R2A's work or have any feedback or topic ideas, head to www.r2a.com.au. We'll be back for season five in 2025!

Gaye Francis (00:52):

Hi Richard. Welcome to the wrap up of season four. Forty episodes down, can you believe it?

Richard Robinson (00:58):

It's very hard to believe, Gaye, now that you mentioned it.

Gaye Francis (01:02):

Season four we focused on some industry-based case studies or examples of which we've applied the due diligence process to. And I think one of the outcomes is that the due diligence process is a governance process. It's focused at the...

Richard Robinson (01:23):

High consequence, low likelihood things. That is, not at risk.

Gaye Francis (01:27):

Not at risk.

Richard Robinson (01:28):

And therefore does not follow the risk management standard.

Gaye Francis (01:31):

And when we use the word risk, we mean the appreciation of consequence.

Richard Robinson (01:36):

Simultaneous appreciation of likelihood and consequence.

Gaye Francis (01:38):

Okay. Thank you for finishing my sentences. <laughs> We've been doing a lot of these, haven't we? So I guess the way to bring it all together in this particular episode, and we've got a couple of other observations that we've had over the last few months or so, is maybe to use Dam Safety as an example.

Richard Robinson (01:57):

Indeed.

Gaye Francis (01:58):

And the due diligence process, the four key areas that we look at. The four key tasks are: Completeness check, what are the credible critical issues? What are the controls you can put in place in the circumstances? Which ones are reasonable? And then a QA system to make sure that the ones that you agree to are sustained.

Richard Robinson (02:17):

And the Dam Safety people are pretty clear on this. Dam breaks is the (issue) that motivates them the most. And so they look at the worst case flood that could result from a total dam break. And they don't really care about likelihood. They're just saying, if that happened, how bad could it be?

Gaye Francis (02:30):

And that takes into account a whole lot of different things, doesn't it? And we probably touched on it in the bushfire episode that we did, and it's really about the vulnerability.

Richard Robinson (02:40):

Correct.

Gaye Francis (02:40):

Are there people exposed to the potential flood from this dam?

Richard Robinson (02:44):

And then in that case, what are your options and what's available to you and in the circumstances, what's reasonable? And that's where the mechanisms by which these things could happen become particularly important.

Gaye Francis (02:55):

And ANCOLD (Australian National Committee on Large Dams), I think interestingly, although they still use the term ALARP, I think, which we've had many discussions with the Dam Safety people, but what they have done is they've sort of got a graph, but it's got an upper limit to where it becomes prohibitively dangerous, I guess. But what they've done is they've taken away that lower limit. There's no lower limit to risk.

Richard Robinson (03:16):

Correct. So they actually basically stopped using target levels of risk and safety for the most part. I mean, if you conclude something's prohibitly dangerous, you've got to stop it. Now, precisely how you come to that view is an interesting question. But if you've got any doubts about the dam, basically if you've got doubts about a dam, you pretty much start draining the dam if there is things and people at risk.

Gaye Francis (03:34):

And I think that was one of the questions we had. We had one of the regulators come in and there was a dam above a community and it was higher than the houses.

Richard Robinson (03:42):

The water level was higher than the roof of the houses down immediately below the dam. And the dam safety regulator turned up and was looking at it and looking at what the policemen looking at that saying, how the hell do those houses get there? What planning scheme let that happen?

Gaye Francis (03:56):

Which we have touched on again in this season. Bushfire again, and also major hazard facilities and that planning. So like everything, the due diligence approach, it's not a cookie cutter approach. You can apply a similar process, but it's about actually thinking the things through that are actually relevant to your particular circumstances.

(04:22):

I gave a talk at a Co-op Federation leadership conference or workshop recently in the last month. And they were mainly co-op retail facilities, but they also provided services like crop dusting and water haulage and things like that. So they had a whole range of things that were potential issues for them. But one of the chairs came up to me after the session and said, okay, I get it now. It's all about the process. And documenting the process in a diligent manner to say that we've actually thought through the things that we could be exposed to, the things that we can do, and then making sure that we put those in place.

Richard Robinson (05:06):

Well, we've discussed this many times. It's not about being right, it's about being diligent. And you can always be diligent, but you can't always be right. And that's the point.

Gaye Francis (05:14):

I think one of the other interesting things that has come out of this season, and we did another podcast of it, was the relevance of the WHS and OHS legislation.

Richard Robinson (05:24):

Yeah, it's driving everything. I mean, what I told you, we had, I think we mentioned in a previous podcast, but I had that discussion with a fellow doing a PhD on how security and fire integrated together. And we had a security guy and me and he was talking to both of us, and he asked the question at the end and both the security advisor and I looked at each other and said, it's got to be harmonised and it's all got to go, and it's all driven by the Work Health and Safety legislation. And this researcher was: You both agree on this point? Because we were from completely different backgrounds with completely different understandings. He was an ex-military fellow who'd gone into security. And I was a fire engineer, factory mutual trained HPR (high protective risk) engineer, and we were of one mind. And I think he (researcher) was really genuinely surprised.

Gaye Francis (06:06):

But even when we work with organisations, I don't think they sort of think that the WHS legislation's almost off to the side. Safety is still being thought about in a silo almost.

Richard Robinson (06:17):

So fire is protection. You may recall when we did Q1, perhaps I shouldn't say these things, but the fire engineers were so relieved when the due diligence engineers turned up and started speaking WHS.

Gaye Francis (06:27):

Yeah. So WHS and safety should be business as usual -- should be integrated into all of these aspects. And I think it does allow all of those things to be brought together in an integrated sense.

Richard Robinson (06:40):

Yeah. The other thing which we were going to talk about, which you were particularly going to focus on was what we discovered about prosecutions. Because a lot of WHS prosecutions arer going on, and it does seem that the longer the state has had the legislation in place the more likely they are to prosecute. So Victoria's got about 10 years on every other jurisdiction. We're about double the prosecutions from what I've seen on the various websites. But we sort of discovered this thing following from that conference you attended last year and talking to an ex regulator from Western Australia.

Gaye Francis (07:09):

And the information that came out of that, I guess, was that they're typically prosecuting small to medium sized organisations.

Richard Robinson (07:19):

Because it's more likely to be successful.

Gaye Francis (07:21):

Because more likely to be successful. And there's a couple of reasons for that. The distance between the board members and the senior executive management and the people that are working on the ground is a lot smaller, distance wise in smaller, medium sized organisations. Where it's quite large still in larger organisations. So the notion of the corporate veil is still working.

Richard Robinson (07:45):

The big organisations can hire bigger, better lawyers and presumably more expert witnesses. And it's just harder to get them.

Gaye Francis (07:54):

And we sort of tried this proposition, I guess, at one of our courses quite recently, and, you're right, there was an ex regulator from WA there, and they said, that's exactly what's happening. They said what they're trying to do is they're trying to make examples of organisations and it's easier to prosecute and successfully prosecute.

Richard Robinson (08:17):

And that flows onto the comment we made previously, and it's a source of frustration to us. There are two types of regulators, those who think that the number of successful prosecutions is a measure of success, and those who think the number of successful prosecutions are a measure of failure. And it does seem this decade has turned into the decade of the number of successful prosecutions are a measure of success.

Gaye Francis (08:37):

Which is really interesting. And there may be a couple of other reasons for that. Regulators seem to be having less technical expertise in their organisation.

Richard Robinson (08:45):

I don't think they can get the people. I don't know that that's by choice by the way,

Gaye Francis (08:50):

But that's another observation. And one of the ways that they can do it is by doing that sort of compliance audit.

Richard Robinson (08:58):

Yeah. If it doesn't compliance. We've got you.

Gaye Francis (09:01):

So as a full wrap up of this season, we've talked about a number of industries. We've talked about dam safety today and bush fires, major hazard facilities. We've talked about rail and we've talked in another episode, we talked about electricity industry. So the due diligence process is really, really useful for those high consequence, low likelihood events. And if you look at all the controls that could be put in place and determine what's reasonable in the circumstances, what else can you do? You've been diligent and Richard's line: You can't be right all the time. Which engineers like to be.

Richard Robinson (09:41):

Well, they try to be!

Gaye Francis (09:44):

But you can be diligent. And I think this governance and due diligence approach is asking people to think about the key issues of concern and make sure that they're being managed properly.

Richard Robinson (09:56):

Well, that was basically what I was retained to give that expert witness advice in the Cuddle Creek fire. And what I was asked basically: Was the process that the defendant undertook reasonable in the circumstances,

Gaye Francis (10:08):

And what else could you do?

Richard Robinson (10:09):

That's basic point.

Gaye Francis (10:11):

We've talked about a lot of other sessions that you're not going to stop all things going wrong.

Richard Robinson (10:17):

You're not going to stop all bushfires, it's not going to happen.

Gaye Francis (10:19):

No, but was there anything else you could do? And I think that's when people get cranky.

Richard Robinson (10:25):

Reasonably can do.

Gaye Francis (10:26):

Reasonably can do. When people get cranky, when there's something that could have been done, if it had been done, would've stopped it going wrong or would've mitigated the consequences in some way.

Richard Robinson (10:37):

Yep.

Gaye Francis (10:38):

So thank you for joining us for season four and we will be back with season five very soon. Thanks everyone. Thanks Richard.

Richard Robinson (10:45):

Thanks everyone. Season five, huh? <laughs>

Criticality & Design and Climate Change Design Options (Season 3 Wrap)

Risk! Engineers Talk Governance
Season 3, Episode 10

In the final episode of Season 3, Richard Robinson and Gaye Francis discuss the theme of criticality and design in the context of climate change and sustainability due diligence. 

They discuss:

• The consequences of redirecting rivers for irrigation, 

• Why the Victorian Government built the, to now, unused desalination plant, and argue if they should be considering the potential impacts of global warming,

• Three possible design solutions: Sun shields, increasing cloudiness, and fertilising the Southern Ocean to address climate change, and

• How knowledge, technology and costs of design solutions are constantly changing. 

The textbook where the three design solutions are highlighted is R2A’s Engineering Due Diligence which you can purchase online.

Access the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:00):

Welcome to Risk! Engineers Talk Governance. In this last episode of season three, due diligence engineers, Richard Roberson and Gaye Francis wrap up the season that's had a theme on criticality and design and discuss it in the context of climate change and sustainability due diligence.

(00:21):

We hope you enjoy the episode. If you do, please give us a rating. Also subscribe on your favourite podcast platform. If you have any feedback or topic ideas, get in touch via admin@r2a.com au. And look out for season four.

Gaye Francis (00:39):

Hi Richard, welcome to another podcast session. Today we're actually wrapping up season three.

Richard Robinson (00:46):

Yeah, it's our 30th (episode), which is a bit of a surprise to both of us.

Gaye Francis (00:50):

It is. There've been some interesting topics along the way, some good sessions recorded. But we're just reflecting on what we've sort of covered in season three and there's been a real commonality of thread, throughout many of the sessions this season. And that's on criticality and design. And we've, as many of you who have listened to us before, Richard and I, I've been against risk assessment for many, many years. The appreciation of consequence and likelihood. And so I've always focused on that criticality. But I think bringing in the design element this season, what are the credible critical issues and then what can you do to address these? And the way that we thought we'd sort of wrap up this season was by giving an example on climate change or a sustainability due diligence example that we've written up in our (Engineering Due Diligence) textbook. So we think that sort of brings all of this together quite nicely.

Richard Robinson (01:49):

Yeah, we have two examples in there. The first was the Aral Sea, which during in the Soviet Union days, they decided to actually take the two rivers that kept the Aral Sea full and redirect them for irrigation to grow cotton, sort of a bit like the Murray Darling basin and growing cotton there, because cotton's a very water hungry crop. And the consequence of this was: Yes, it worked really well. Yes, they did grow a lot of cotton, but the consequence was the water and the rivers got used up, or one of them at any rate, and the Aral Sea basically dried out, which basically was an inland sea which affected a substantial area, it protected the desert and did all sorts of good things for the local community. And there was an awful lot of fishing going on and once obviously it dries up, no more fish and all those consequence flowed.

(02:34):

So that was just sort of an observation about criticality and failure to take the sort of test of foreseeability in what you might reasonably expect it to do something about it.

(02:43):

But the one that is a more larger scale, one is issue of global warming. Now climate change is a sort of one of those topics that everyone can get excited about. But if you just look at the CSIRO studies of seas around Australia in the last hundred years, it's increased by about a degree. What was never clear to me, I've got to say, whether it's global (warming), the climate's changes all the time. We used to have ice ages, so I never quite understood why people seem to think the climate in some way is fixed. Nobody's arguing over 10,000 years ago we had an ice age and we're apparently in a fairly warm period, but the climate continues to change and there are other things that affect it.

(03:15):

For example, when Krakatoa blew up, so far as they can tell, it reduced the temperature of the planet by about 1.2 degrees for a couple of years because the increased dust in the atmosphere just reflected more sunlight back. So the place cooled down. Although rely on Krakatoa to cool the planet or another event like that, is possibly not the way to manage things.

Gaye Francis (03:32):

Probably not. I think there'd be some better design solutions.

Richard Robinson (03:35):

And the example we give in the book. You've taken a criticality viewpoint, if it goes up by two degrees, everyone sort of says the water will rise by another half a meter or something like that, which perhaps won't be too bad. But after a couple of degree warming, nobody is really too sure what happens next. Because there have been times in planetary history where that occurs.

(03:54):

And then something like the Greenland ice sheet could melt, which would raise the water level something like seven meters. Now seven meter sea level increase in Melbourne for example would be serious. Now this is a critical issue and it's clearly credible. How likely it is? Got no idea. It's certainly possible. The temperature's increasing. It's certainly possible. But other things could happen. I mean, as I said, if another Krakatoa goes off the planet will suddenly cool. In fact, one of the articles I remember reading in the 1970s, pollution was so high it actually was cooling the planet because the particles in the air, and part of the problem we've had is actually cleaning the environment up! Which is sort of one of those reverse arguments that you don't really want to hear too much about.

(04:38):

But anyway, that actually leads on to say: Okay, it's a critical issue. If it happened, it would affect Melbourne, the capital of Victoria (Australia) violently. We've witnessed the cabinet in Victoria when we had a critical issue like the drought and the desalination plant. Just for record, we've got a desal plant in Victoria, it cost about $5.7b to build. It costs us $1.6 million a day and by the time we've finished paying it off, and if you're paying water rates in Melbourne, you will know about this. It's going to cost us about $25b when the time we've finished at the end of the procurement period. And we haven't taken any water from it. And you sort of got to go: Well, why do we have one of these things?

(05:19):

And the answer is it's a criticality driven argument. We had 10 years drought around Australia, particularly in Victoria, and this is around when they built the thing about 2010, if you come to a view as a cabinet that there's a credible possibility that if that 10 year drought continues, the drought continues another 10 years that a major Australian population center could actually run out of water, like what happened in South Africa, and you have the resource to fix it in some way, what will you do as a responsible cabinet?

(05:49):

The answer is you will put something in place to make sure it can't happen. A risk investment argument would say: Don't do it, it's not commercially viable.

Gaye Francis (05:59):

No. But the criticality and design...

Richard Robinson (06:02):

Basically says you have to do it.

(06:04):

So what happens if you apply the same argument the cabinet and the legislation says they're required to the possibility of Melbourne flooding due to global warming? The answer is what are the options that are available to you in a design term? The answer seems to be there are currently three possible options.

(06:21):

One is to put sun shields up at the Laggrangian L1 Point that's between the earth and the sun. It's a negative gravity point. NASA has costed this. It's in the trillions, Victoria can't afford it. Not going to happen.

Gaye Francis (06:37):

Probably not reasonable.

Richard Robinson (06:38):

The second option is to, and Cambridge University engineers have designed this, you squirt basically pollutants into the upper atmosphere to increase the albedo effect to reflect more sunlight away from the planet and cool it down that way. And for the most part it would just be lots more clouds because the whiter you can make it, it's like you'd be aware with snow that the dark spots collect the heat and therefore the dark spots grow where the sunlight gets reflected with the white snow. So if you increase the cloudiness of the planet, it'll reflect more heat into space. That would require putting balloons up and high pressure pumps. It's actually isn't that much water and it is actually entirely doable, but the cost is still in the multi biillion level. And there's some trials fiddling around with people trying to see what are the best types of chemical. Water vapor seems to be a popular idea, but you might want to enhance that slightly.

(07:32):

The third one, which is the cheapest one, which frankly some idiot American already tried, is that in the southern ocean, which is close to where we are, around Antarctica, every year you get this giant upwelling of, with the weather changes and currents and so forth, you get this giant up welling of nutrients that encourages algae. The krill will turn up and consume the algae and then the whales turn up and consume the krill. And if you put more fertilizer into these areas, you could increase the algal bloom violently. As I said, some American actually already tried this. You just picked a piece of ocean went out there with a ship and chucked a whole load of fertilizers to see what would happen. And yes, it created an algal bloom. Wasn't a particularly scientific experiment and all the scientists actually recoiled in horror, but theoretically this would work.

(08:22):

Now the consequences are to actually put ship loads of stuff down there in the billions of dollars, it's in the range, same range of costs as the desal plant. Now when you spend 5 billion on chucking fertilizer into the Southern ocean at different points to see what would happen, it will increase the algae, undoubtedly, that will increase the krill and the further consequence presumably would be fat whales. But these are one of the logical consequences of the argument. But this is actually something Victoria could afford and would change the climate because it would create a carbon sink and pull by the dead algae, the krill wouldn't consume at all. And imagine the whales, unless they breed their population that fast, couldn't consume all the krill, so all that would sink into the very cold ocean and it would just become a carbon sink. Now that would reduce the human impact of carbon. If the climate is changing naturally, which it likely is anyway, it obviously won't reduce that component. So there's some delicate balances that would have to go on here. And if you were going to do this, I'd seriously recommend some validation and verification of the entire process because if you did happen to send the climate into a total flip it so it went into an ice age, that would be frowned upon.

Gaye Francis (09:38):

Yes. It probably wouldn't be the success that you wanted it to be. <laughs>

(09:44):

So by using that example, I think Richard's shown that it really is about the criticality and the design options that you could put forward to test for reasonableness. And those design options are changing.

Richard Robinson (09:56):

Every day.

Gaye Francis (09:57):

Every day. We are just reflecting on how quickly a society's changing, but also the...

Richard Robinson (10:03):

The costing of the putting up the sunshades to cool the planet, you'd have these spinning discs of things, that was when Elon Musk didn't have SpaceX, and if he actually gets his big spaceship going, that cost of that activity would probably decline by order of magnitude compared to what NASA's original estimates were. So that just gives you an idea of how fast all this is changing.

Gaye Francis (10:28):

So 10 years maximum, these things have changed. So the options are available going forward are changing as well. But also the cost and the reasonableness, how easy things are to do is also changing. And I'm sure we've used this example many times about the personal pilotage units for pilots on big vessels. 15 years ago they were big, heavy, almost bricks, weren't they? Big laptops and required their own backpack. Whereas now it's tablet size, iPhone size, and as Richard says, the capability of all of this technology is also increasing.

Richard Robinson (11:10):

Well, particularly once you start throwing AI into the mix the way and the monitoring capability - I can't remember if we said in the last episode, I was just talking to my GP and he just the AI is better at diagnosing from CAT scans now than medical specialists are. And that only happened the last couple of years, just like that.

Gaye Francis (11:32):

And I think that introduction of robotics and AI is something that we're going to have to consider as engineers going forward and what space they can play on, what role they can play in the safety space in particular, but that might be a podcast for next season.

Richard Robinson (11:46):

The dangers of AI, another podcast, and the intellectual understanding of it would actually be useful. The idea that I'm going to have the opportunity to explain to Gaye what a collapsing wave function is and what Schrodinger's cat is all about, is one of the more interesting things to look forward to.

Gaye Francis (12:02):

Yes, I've been working with Richard for over 20 years and sometimes I still have to ask him to repeat himself on a number of occasions to figure out what he's talking about! But that's okay.

(12:14):

So I think that was sort of where we wanted to leave season three. Hopefully we've brought it all together, but the key takeouts from this is really that focus on criticality and design. Next season, season four, we are looking at probably doing some, or we'd like to do some sessions that are industry specific. So we're thinking dams, rail, aviation, possibly electrical networks and water dams maybe. But we'd love to hear any ideas that anyone else has got out there that they'd like to hear Richard and I have a little bit of a chat about for 10 minutes or so.

(12:53):

So thanks for joining us for season three. We hope you enjoyed it and hope you can join us for season four.

Richard Robinson (12:59):

Thanks, Gaye.

Gaye Francis (13:00):

Thanks Richard.

De-engineering of Technical Roles and Engineering Education & Philosophy (Season 2 Wrap)

Risk! Engineers Talk Governance
Season 2, Episode 10

In the final episode of Season 2, Richard and Gaye discuss the de-engineering of technical roles in organisations and engineering education and philosophy.

They reflect on their experience as expert witnesses at a recent hearing where technical knowledge was lacking in person, and they highlight the importance of having engineers involved in and/or advising on technical roles. They also discuss the de-engineering of organisations and the shift towards a more compliance-focused approach. They touch on the need for engineers to have a global view and the importance of questioning and thinking critically.  

Also discussed is the lack of emphasis on ethics in the engineering profession and the need for a holistic approach to problem-solving and the role of engineering philosophy in driving change. The episode concludes with a reminder of the importance of thinking and the need for engineers to embrace a philosophy of change.

 Read the full transcript below.

Episode transcript

Megan (Producer) (00:00):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers Richard Robinson and Gaye Francis wrap up a few topics they've discussed throughout Season 2 and chat about de-engineering in organisations and engineering philosophy. Please enjoy the chat and if you do give us a rating. Also, don't forget to subscribe on your favourite podcast platform. If you have any feedback or topic ideas, get in touch via admin@r2a.com.au and look out for Season 3.

Gaye Francis (00:37):

Hi Richard, welcome to our last podcast for Season 2.

Richard Robinson (00:41):

Welcome Gaye.

Gaye Francis (00:42):

Today we're not really sure what we're going to talk about. There's a few topics that we've sort of touched on in the podcast throughout this season and there's been some comments about de-engineering and engineering education, engineering philosophy, so we thought we'd make this a little bit of a mismatch.

Richard Robinson (01:02):

Well, and I think the core reason why it sort of popped up is when we were at the VCAT (Victorian Civil and Administrative Tribunal) hearing acting as an expert witness, the member actually asked the major hazards facility and the council and the major hazards regulator to provide information.

Gaye Francis (01:17):

Some technical information.

Richard Robinson (01:18):

Technical information. And what we sort of discovered was they all sent lawyers. There were no technical engineering type knowledge people there at all.

Gaye Francis (01:29):

Just clarifying that they weren't in the session, but our understanding was that the facility, the major hazard facility, had gone back to their technical people to confirm the understanding, but they were not represented as such at the hearings.

Richard Robinson (01:44):

And likewise with the major hazard regulator, the actual technical people giving the technical advice weren't there. They were being represented and interpreted by lawyers.

Gaye Francis (01:54):

Correct.

Richard Robinson (01:58):

And when it actually came down to the final hearing, in fact, I was the only technical expert witness there, which surprised me greatly because I would've thought the council, for example, would've thought to have their own technical expert witness and that was not the case. They were actually represented by a lawyer and a town planner officer.

Gaye Francis (02:21):

Who were both consultants to the council.

Richard Robinson (02:22):

Who were both consultants to the council.

Gaye Francis (02:24):

I think the other one was that they actually commented and said it during the hearing: Oh, we don't have that technical expertise.

Richard Robinson (02:31):

Correct.

Gaye Francis (02:33):

On a technical matter, which was a bit of a shock.

Richard Robinson (02:35):

Which was the whole point of the exercise. And obviously the town planner and the lawyer's knowledge of town planning, legal and past cases, and all that sort of thing, is obviously something which we had very little knowledge about and chose not to comment on at all. But when it actually came to the technical matters over-pressures and how these things would happen and what sort of controls you could put in engineering design and safety design, all these other matters, it simply wasn't considered, so far as we can tell from their point of view. Now, when you stand back and look at this, this is something that's been happening in local government for some time and we've noticed this all over the place. I mean, once upon a time you used to have the town clerk who did the administration and a municipal or city engineer who ran the outside things, but that means they also did planning permits, building permits and everything.

(03:24):

These days that's all been disaggregated and so now you have the building permits basically run by building surveyors and the planning permits run by town planners and you have no holistic overview of what can be done or how things could be done to manage things. And so when some curious recommendation, from our point of view, pops out to say the way to manage risk from an explosion overpressure is just to reduce the number of people that live there, rather than building the building so it can withstand and prevent the hazards from actually causing pain and suffering to people - it just wasn't contemplated so far as we could tell.

(03:59):

Now this is something that's been popping up all over the place. It actually has higher level consequences for your society. What seems to happen in local government, at least, is that all the engineers have basically been pushed into water and wastewater and sewage and stormwater, but they've all been pushed into silos. There's no overarching philosophy, engineering philosophy put in.

(04:21):

Now you might ask the question, what's engineering philosophy? I do have to report that as a group, engineers really haven't been that interested in the subject. I tend to mention it every now and then to you and you sort of roll your eyes at me, to be fair.

Gaye Francis (04:33):

Richard has been trying to write an engineering philosophy book and course for, I've been working with him for over 20 years and I think he's been trying to do it in all of that time since I've been working with him.

Richard Robinson (04:44):

Well, yes, and I keep trying different universities trying to get them interested and to say they're not particularly interested in me, but that's the way universities have gone - if you don't have a PhD these days, you really don't get much of a look into any of these courses, as we have discovered. It doesn't matter how intellectually useful, what you're saying is so far as we can tell.

Gaye Francis (05:01):

It is an academic qualification.

Richard Robinson (05:03):

Yeah, that's right. And I guess in that sense there used to be a fair transfer between industry and tertiary education and engineers. I haven't seen that occurring as much as it used to. I can quite distinctly remember I was at Monash as a student doing engineering, they actually appointed a professor who was definitely industry based and they did that as a matter of policy as I recall correctly. Whether that's still happening or not, I get the feeling it's not, I think academia has become very closed, let's put it that way.

(05:38):

Anyway, the point about all this though is you see what's engineering and what's engineering philosophy and what's engineering education about now? This is something I've had a bit to do about, I mean a long time ago before we started the risk engineering, well, it was the Loss Control section of the Management Branch of Victoria Division, which turned into the Risk Engineering Society, but we're also doing things running engineering education programs for engineers; CPD, basically, for engineers, and we got a lot of very interesting speakers, one of the talks was Bernie Callan giving me help on a couple of things too, because he was interested in the subject as well. But I also dug out some papers by Sir John Monash. He gave a very interesting paper on engineer education, his retiring address as the President of the Victoria Institute of Engineers, and he was explaining how the need for engineers to have sort of a global view on what was going on, and this was before he basically went off to the first World War and became a very successful General, because, again, he had a very global view of how things should be thought about.

(06:40):

Now, from my point of view, engineering philosophy has always been the philosophy of change, meaning if you don't like it, change it. And one of the characteristics of engineers, and I know I've talked to a number of spouses of engineers and one of the things they always observe about them, they've said, is when something they don't think is quite right, they go and fix it. They go and do something about it. That's one of the characteristics that they've always observed.

Gaye Francis (07:03):

I think it's a curiosity and ability to question things if you don't, you don't just take it as the status quo.

Richard Robinson (07:10):

But that's one of the problems we've been having with engineer education because we've been running some post-grad programs for different universities at different times and one of the things we've noticed is some of these graduate engineers we've been getting haven't been as curious or wanting to change as much. They just want whatever the information is so they can go and apply it, and want it to be a cookbook recipe and, if you like, that's one of the frustration we have with the whole ALARP business, from our point of view, there's a process; you use quantified risk assessment, use a target level of risk, if you don't satisfy your criteria, then you do something rather than sort of saying, is there something else that needs to be done?

Gaye Francis (07:45):

I think that's being extended more into industry as well. A number of clients that we talk to and potential clients that we talk to: What's the answer? What's the process to get the answer? And risk's one of those subjects that it's not a cookie cutter approach, it's not black and white. You will get subtly different answers to every problem you apply it to. And so you've got to think and thinking is hard (we touched on this in another podcast) and we've found that people want a process. What's the process that I need to do to get the answer? And I don't know whether it's because it's gone down a more compliance or an audit type process, black and white, it's right or wrong. But in risk it's not right or wrong. It's about thinking it through and putting in the best option that you can.

Richard Robinson (08:39):

Well, I think that's the point. Remember how we had promoted the Professor of Public Policy and Law from Cambridge University, David Howeth, and the point he made was, and this is where the big law firms in the UK and US have gone to, and that it's law as engineering and what he meant by that, and they're literally following the engineering design process: A client turns up they've got a problem or they want to do something, in the circumstances what are the options? Well, what are the options? And in the circumstances, which is the best? That's a straight-out engineering design option. It's not a cookie cutter approach in the sense of 'here's the process, we'll go through and we'll definitely get you the best answer', because you don't what the options are until you look for them. And then we don't what your circumstances are and so what might actually be the best thing to do at that time. And it can change.

Gaye Francis (09:27):

Yes.

Richard Robinson (09:29):

But that's the best advice you're going to get. Now that is what the Consulting Engineers used to do, but they've stopped calling themselves Consulting Engineers who've turned into Consult Australia. I don't quite understand what that is. And they've dropped their code of ethics. I mean for those of you don't remember these things, I do, but because I used to talk to Ben Fink, the Managing Director of GHD, he was very strong on this, to be a member of the ACA, the Consulting Engineers, the majority ownership had to be engineers who were corporate members of Engineers Australia. And the reason for that was to ensure that the code of ethics of Engineers Australia, the consulting engineering practice had to comply with the code of ethics of Engineers Australia, which basically said you had to put the interest of a client first. Once you just become owned by general shareholders, it's all about the money for the shareholders. Nobody cares about the ethics.

(10:18):

If to pull a plug on the job is the commercially intelligent thing to do for your shareholders, then you do that. Whereas from a consulting engineering viewpoint, you have to finish the job in the best interest of a client, even if it meant you might lose some money. And you can only do that if the majority of the directors are actually bound by a code of ethics. And then the question becomes what's a profession? Well, generally it's applying a code of ethics and if you can't apply a code of ethics, then what are you?

Gaye Francis (10:46):

But I think that has dropped down even in Engineers Australia, the code of ethics is not as promoted as it once was.

Richard Robinson (10:53):

Well, Ben Fink made it absolutely crystal clear to me, although he said there was three, although I think there's actually five. Stick to your area of competence, no kickbacks, he who pays you is your client, be responsible for your own negligence and give credit where credit's due. And wow, has that one been gone missing lately?

Gaye Francis (11:11):

Yes. And that was instilled in Richard and being Richard's business partner that had been instilled in me from a very, very young age as an engineer, young engineer. I think what we're also seeing, and maybe this is the reason why people are looking for more that cookie cutter approach and those systems and processes in place, is the idea that organisations are being de-engineered. We are coming across a lot of people in engineering roles or technical roles that don't have a technical background.

Richard Robinson (11:41):

Correct.

Gaye Francis (11:42):

And so they're looking for processes and systems to put in place to be able to understand, but they don't have the background to be able to question. Is that the right idea?

Richard Robinson (11:56):

That's one way of saying it.

Gaye Francis (11:59):

Of those in technical organisations. So we've come across quite a lot of people that are running big technical projects that don't have any technical background.

Richard Robinson (12:11):

It can be done if you have the right technical advice, but that means you're going to have the right people working with you.

Gaye Francis (12:15):

So it's about that team approach. Again, you can't do these things in isolation.

Richard Robinson (12:20):

I suppose there's two other points I'll just make in passing. There was this thing, I think it was the University of Wollongong actually who started it and then the medical faculties took it over, but one of the things they sort of said and it was a frustrations I had when I was doing engineering was that you were taught all this science basically and you were basically made an applied scientist, in effect, and all the ethics stuff and all the legal stuff that you need to know to be effective in practice, you learned after you'd got a qualification of some sort. And you'd just been pumped science at you and you didn't really understand what use it was going to be, and I've got to say an awful lot it wasn't of a great use the way my career went, it never made sense to me.

(12:58):

Now, the University of Wollongong, I think it was, decided that what they would do first was the first thing they ever give a bunch of engineers in first year the first thing you got was a design exercise and you found out what you needed to know in order to make it work. And then you need to work out, well, if I need to know this, I'd better go and study that. And that's what the medical faculty started doing. They take a bunch of first year students and show them some poor soul on a bed who's not well and they say: What's wrong with them?

Gaye Francis (13:26):

What are you going to do?

Richard Robinson (13:27):

And force them to understand what they needed to know in order to bring about a successful conclusion. I understand the medical, that's one of the reasons why we started an education branch in Victoria because we were trying to expand that sort of understanding to the local universities. Don't think it actually succeeded, although every now and then sometimes you see a spark of life in a different place you weren't expecting. But this overall philosophical view, it does seem to me to be important, still is. And the other way I think it might've popped up, if you start the engineering society as a whole, one of the consequences of trying to fix that is to start registering engineers. I would've preferred to be the other way around that the engineering philosophy was still endemic in society and the engineers weren't registered. But if the only way to actually get the engineering philosophy back into the system is to register them and force it back into the system that way, then that might be a necessary consequence. But I'm still not absolutely sure that's going to work.

Gaye Francis (14:23):

But that's not what they're using registration for engineers for. It's a liability.

Richard Robinson (14:29):

No... But it has that consequence whether or not that's what was intended. And certainly the way the engineers were going about it, it's more about being a status thing rather than a functional thing. Whereas I'm more interested functionally. But it's like us, we don't find that being registered in Queensland or Victoria is essential to us because from the point of view of signing off on the design, which is where the crunch really comes, we can't do that anyway. And by the time we've finished doing our due diligence approach, everybody's got to have agreed that it's a good idea and then the individual design flows from that.

Gaye Francis (15:01):

Yes. So I think taking all of this and wrapping up our last podcast for the season, it's really about engineering is about that philosophy of change and being able to change things. And to be able to change things, you've got to think.

Richard Robinson (15:16):

Well, Karl Popper in is a book Objective Knowledge, he makes the point, he gives an example of a mechanical engineer and said: Look, when you're designing a society, no mechanical engineer would design a car without testing it hard and running it through all sorts of things. You don't just get the design, get it right the first time and everything works. You work hard to make it function. I mean, (Elon) Musk just got his rocket off again, they both blew up, but the separation that got into space, it really is a progressive evolutionary design and I suspect the next one will actually get there. This takes time and it's hard work. Societal change and issues require the same effort. And for the life of me, I've never understood how that understanding which sort of exists in philosophy, generally, isn't understood to apply in engineering philosophy. Philosophical terms too. But that's just me, obviously not everybody frets about this stuff.

Gaye Francis (16:19):

Alright, so I think on that note, we might finish our podcast for today. Richard, Thank you for joining us for Season 2. We hope you've enjoyed it! And we will be back for Season 3 very soon.

Richard Robinson (16:33):

Thanks Gaye.

Gaye Francis (16:34):

Thanks Richard.

ISO 31000 The Risk Management Standard - The consequences for WHS/OHS legislation

Risk! Engineers Talk Governance
Episode 10, Season 1

In this final episode of Season 1 of Risk! Engineers Talk Governance, due diligence engineers Gaye Francis & Richard Robinson discuss one of the topics they are asked most: ISO 31000, the Risk Management Standard. 

They outline the consequences of ISO 31000 that it does not meet the requirements of the WHS Legislation/OHS Act in Australia & New Zealand, that organisations cannot keep using target levels of risk and safety to make safety decisions -- you can use it as a reporting tool.

Transcript

Megan (Producer) (00:02):

Hi. Welcome to the final episode of Season 1 of Risk! Engineers Talk Governance. In this final episode, due diligence engineers Richard Robinson and Gaye Francis talk about ISO 31000, the Risk Management Standard and its consequences, especially with relation to WHS legislation in Australia or the OHS Act in Victoria.

(00:31):

We hope you enjoy the episode. Please do support our work and subscribe to the podcast and give us a rating. Also, share it across your network if you know other people who may be interested. Also, this is episode 10, so please do check out the other episodes if you haven't done so yet. We look forward to bringing you Season 2. If you want to keep in touch with Richard and Gaye's work and their due diligence consulting, please do head to R2A's website. The details will be in the description and you can also sign up to their newsletter that will keep you up to date. Enjoy the episode.

Gaye Francis (01:12):

Good morning, Richard, and welcome to our podcast; Episode 10 of our first season. Very exciting. How are you this morning?

Richard Robinson (01:20):

I'm good. How are you?

Gaye Francis (01:21):

Good, good, thank you. We're doing this podcast remotely as we've both had the lurgy this week, so keeping away from each other. We thought we'd finish with something that's probably one of the things that we get asked about the most, and that's ISO 31000, the risk management standard and its consequences and the difficulties that this has, especially in relation to the WHS and OHS legislation and the contradictions there.

(01:50):

So Richard, I'll let you launch in and then I'll chip in as we go.

Richard Robinson (01:56):

Well, thank you Gaye. Look, the key point here, I guess that this has puzzled us for a long time because it's been going on for a long time now, is that the OHS Act started in the Victoria in 2004 and the model Act commenced in most jurisdictions in 2011/2012, Western Australia adopted last year (2022) and kiwi land (New Zealand) adopted in 2015. And the legislation's absolutely crystal clear in its objectives that the purpose of the legislation is to achieve the highest level of protection as is reasonably practicable for everyone. It's absolutely crystal clear and we were just talking about... we're doing some stuff on VCAT where we asked to read some case law and one of the points they're making of this that the high court's making at different points is that the more precise a parliament is about the intention of the legislation, the less room that the courts have to maneuver to interpret. If so, if the objective is absolutely crystal clear, then that's what you're supposed to do.

(02:49):

Now, what’s got us completely confused is ISO 31000; that process is contradictory to that (OHS) Act, at least when you're dealing with health and safety. And what puzzles us the greatest is that this confusion is sort of reflected throughout Australian Standards everywhere. Just to give you an understanding that there's no such thing as a target level or tolerable level of risk or safety because the legislation's quite clear you've got to achieve the highest level as you reasonably can.

(03:15):

Now, just to sort of emphasise that this is from the "Managing Health and Safety" handbook thing Standards' Australia, and it says, importantly: "Contemporary WHS legislation does not prescribe an acceptable or tolerable level of risk. The emphasis is on the effectiveness of controls, not estimated risk levels. It may be useful to estimated risk level for the purposes such as communicating which risks are the most significant or prioritising risks within a risk treatment plan. In any case, care should be taken to avoid targeting risk levels that may prevent further risk minimisation efforts that are reasonably practical to implement."

(03:49):

Now, that's an absolutely perfect restatement of what the intention of the Model WHS legislation is.

Gaye Francis (03:56):

And that's in the handbook of the Risk Management Standard. But if we read out what the process of the Risk Management Standard is, it's: establish the context, do a risk assessment hazard base, which is hazard risk identification, hazard risk analysis, hazard risk evaluation -- so that's your criteria and your tolerable and acceptable level of risk -- and then risk treatment. So the two things don't match up there.

Richard Robinson (04:21):

And the weirdest thing is, is that if you look at a Standard like the Network Safety Standard, AS 5577, which is mandated by a lot of regulators, it tells you to use the risk management standard approach. It's absolutely crystal clear about it, even though throughout the words it's saying at different times you shall, for example, initiate action so far as this reasonably practicable (SFAIRP) and then it goes on with all the things you should do. And I've forgotten exactly where it is, but there's one bit there where it says you shall eliminate hazards so far as reasonably practical, and if you can't eliminate them, you'll minimise them as low as reasonably practical. And then at the back it's actually got how to do a formal safety assessment. It basically tells you to comply with the principles ISO 31000 and to choose target levels of risk and safety and so forth, which is specifically against the will of all Australian parliaments. So we find this...

Gaye Francis (05:16):

So I think this is sort of showing that there's a mismatch, isn't there, between the things that the senior decision makers and the boards worry about, which is the WHS legislation and things like that. And I don't think there's any confusion there that they understand what their requirements are and the desire to be compliant with that. But the tools and the processes that the engineers are using to do the day-to-day work in organisations, the Standards is what is creating that confusion. And there's a mismatch between the two.

(05:52):

And what we've sort of found is it hasn't been fed down into the organisation yet. So as I said, the boards and the senior exec understand the requirements of the WHS legislation and what they have to do to achieve it, but because they've got all of these embedded processes and policies that often reflect the processes in the Risk Management Standard, and that's what the engineers are doing on a day-to-day basis, there's this mismatch and they've been trying to put the principles of the WHS legislation within their current framework. And I'm not sure that that's, I don't know that that's been successful.

Richard Robinson (06:28):

I'm sure it hasn't. Now, from the point of view of the engineers, I mean this office was central to the Engineers' Australia Safety Case Guidelines, which was signed off by the National Risk Engineering Society in 2016, I think. It was reviewed by a barrister in Queensland to make sure that it was tightened and consistent with the legislation and all the points we're making here, that was basically making. And what's got us completely stumped, I mean that Safety Case Guideline is a recognised, I think it was a... What actual term the Engineers' Australia used? Practice note. And so if you're a professional engineer working in Australia, you need to understand what the practice notes from intellectual body are saying because you're all wide up in court. And Australian Standard, well I giving you another quote, this is from Paul Wentworth, a partner of MinterEllison: "Engineers should remember that in the eyes of the court, in the absence of any legislative or contractual requirement, an Australian Standard mounts only to an expert opinion about usual recommended practice. In the performance of any design, reliance on an Australian Standard does not relieve an engineer from a duty to exercise here's or her skill and expertise".

(07:33):

So if you know that the legislation says this and you still choose to do it consistent with an Australian Standard, you are talking yourself into a very difficult place if it all goes wrong and all wind up in court. And you have expert witnesses like us acting against you. I suppose it even puzzles us even more because the whole point of the exercise is that Engineers' Australia is meant to be an intellectual body for engineers and engineering in Australia. And yet, and I don't understand why Engineers' Australia keeps encouraging engineers to put their intellectual property into Australian Standards and these Australian Standards are quite contradictory, and as resolved by the practice note from Engineers' Australia.

(08:11):

So there's something that's really mismatching here and not quite right that needs resolution. I don't know that we're going to solve this on the spot.

Gaye Francis (08:20):

What we're saying is Engineers' Australia could have a role in playing to promote what is best practice in the industry outside of Australian Standards and should be doing that.

Richard Robinson (08:31):

Am I allowed to have my little rant about...

Gaye Francis (08:32):

Yes, you can have your little rant.

Richard Robinson (08:36):

See, one of the thing I don't get too, apart from the curious matter of telling engineers to put the intellectual property into Australian Standards rather than to documents that belong to Engineers Australia... Because I've got to tell you, if you look at the American engineering institutions, they don't give up their intellectual property for free to third parties. But under the code of ethics, for example of Engineers' Australia, you've got to give credit where credits to you and Standards Australia just refer to organisations rather than individuals who actually put the intellectual time and effort into the damn thing. Unlike for example, NFPA Standards in the US. It's something I just simply haven't understood that Engineers' Australia keeps promoting Standards Australia like it's a kindred society. It's not, it's a commercial entity doing commercial things.

Gaye Francis (09:18):

Okay, that's your little rant.

Richard Robinson (09:21):

That's probably enough! I could go on but I don't think you need it.

Gaye Francis (09:24):

So if we bring it back to ISO 31000 and its contradictions, what we're saying is we've been advised on a number of occasions when we brief legal counsel for organisations that the ISO 31000 does not meet the requirements of the WHS and OHS legislation. And you cannot keep using target levels of risk and safety to make safety decisions; you can use it as a reporting tool, which is what that paragraph in the handbook says, as a useful tool. And there are ways out there that the engineers have specified that you can put your safety argument together to meet the requirements of the WHS legislation and until organisations realise the mismatch between what the board is trying to achieve and then the processes and policies within an organisation, I think this confusion will continue.

(10:20):

And I think we touched on it last week (Ep 9, The Contest of Ideas), Richard, one of the other confusions or one of the reasons for the confusions is we think that there's been a sudden increase in the number of people from the UK who used to practice in health and safety and risk in the UK coming to Australia after Brexit.

(10:40):

And there's been almost a going backwards... I thought we were way on top of the SFAIRP approach, but ALARP seems to be creeping into more and more processes that we see in organisations and they're trying to say that they're the same. And we've been categorically told on a number occasions by lawyers that they are not the same and you cannot use the same processes to achieve that.

Richard Robinson (11:09):

Yeah. What we've noticed is that, and this is sad because a lot of organisations have to go through this process. If your regulator, for example, calls up like 5577, a Standard that mandates basically ISO 31000 approach, well you're going to be stuck. You're going to have to do it twice. You're going to have to do it to demonstrate the highest level of precautions being achieved on the one hand and then order to get a license to trade, you're going to have to do the ALARP approach to satisfy the regulator. And that's quite regrettable, but that's the way...

Gaye Francis (11:43):

But until the two systems align, there's nothing else you can do, because otherwise you leave yourself open for litigation in the event that something awful happens.

Richard Robinson (11:53):

Correct. And you have expert witnesses like acts against you.

Gaye Francis (11:59):

That is true. Anything in closing comments, Richard, on ISO 31000 and its consequences?

Richard Robinson (12:07):

Oh, I did say before... It's not the whole document. I mean we were talking about IEC 61508, the functional safety assessment standard and it uses targets of safety to decide to do the SIL allocation upfront. That's totally against Australian legislation. I get that, that's not a particular issue. But that doesn't mean the other seven volumes are invalid. And once you decided what the level you'd going go for is, there's a whole lot of validification and verification processes in there.

(12:34):

So remember, it's not a Standard that's recognised good practice. It's the useful ideas in the Standards that are recognised good practice and therefore you must consider. And the same thing occurs with ISO 31000. There are a number of quite important things in there that are particularly useful. It's just that the basic processes acts against the fundamental purposes of legislation. I don't know how anyone doesn't quite get that, but that's the problem.

Gaye Francis (13:00):

I think we also touched on it last week is what we're saying is Standards and policies and things like that are good tools to have, but it doesn't stop an engineer from thinking. You really have to figure it out and use those things, and where Richard said the quote before. But you really have to take with a grain of salt what they say and make sure that it's applicable to what you're applying it to.

(13:27):

Alright. I think we might leave it there, Richard. Thank you for joining us for episode 10 of Season 1. We hope you've enjoyed the season and we will be back with another season soon. So until then, thank you for joining us.

Richard Robinson (13:46):

Thank you.