To Grok or Not? Using AI for Risk Management & Governance Decisions

Risk! Engineers Talk Governance
Season 7, Episode 2

In this episode of Risk! Engineers Talk Governance, due diligence engineers Richard Robinson and Gaye Francis how AI in Risk Management?

Richard begins with a deep-dive into how large language models work, and where they fall short. He explains why AI systems are sophisticated inference engines rather than true reasoning machines, and why that distinction matters enormously for high-stakes decision-making and risk management.

The conversation covers the parallels between AI and Monte Carlo simulation (great for likely scenarios, unreliable for rare critical events), the growing wave of fabricated legal citations produced by AI tools, and why the common law system itself mirrors how large language models operate.

Gaye and Richard then bring the discussion back to governance and what does responsible AI use look like for boards and organisations? Who carries liability when a decision is based on AI output? And how do you ensure the sources AI cites are actually real?

They conclude by agreeing that AI is a powerful tool for gathering information faster than ever before, but it demands that essential second layer of human thought, verification, and documented decision-making. 

They reiterate that thinking, and SFAIRP, is hard.

Access the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:01):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers, Richard Robinson and Gaye Francis discuss AI in Risk Management.

(00:12):

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):

Good morning, Richard. Welcome to another podcast.

Richard Robinson (00:36):

Hi Gaye. I wonder if it's going to go like last time?

Gaye Francis (00:39):

Let's hope it goes a little bit more smoothly.

Richard Robinson (00:42):

I'm actually going to take a bit of a book on whether you're going to Finland this year at Christmas.

Gaye Francis (00:49):

We'll have to wait and see. Depends how well I can plan. But today's podcast, we're going to talk about AI because we get asked lots and lots of questions on this.

Richard Robinson (00:59):

In the Risk Management space.

Gaye Francis (01:01):

In the risk management space, how it's used, etc. So we're going to title this one to Grok or Not. And Richard's been doing some research, so he's going to give you a bit of a brain dump first and a summary of things. And then we're going to talk about how it's used in the risk management space.

Richard Robinson (01:19):

Well, this originally popped up because a couple of weeks ago I spent the weekend trying to get some of our old software going, in particular, the simulation in supercard for Singapore. Now, that simulation basically put down all the ship tracks and then it basically fired different ships at different speeds doing different things to see if you threw enough ships at it for long enough for it to tell you where the potential collision points were. But it was a bit of crude sort of simulation. And it was obviously under 32 bits. So as Apple moved on, it was Apple software, we couldn't use it.

(01:51):

But anyway, because we're now onto M4 computer chips and these things are so powerful, you can actually get an emulator and run the old interface and the old software and it's faster than it was before. But every time I sort of started doing this, strange things happen.

(02:04):

So I just kept typing into (AI), if this thing happens, what's the problem? What happens next? And obviously what was I thought the Apple AI was coming back with answers. But I commented to you, this thing was coming back with really good answers. I mean, I was asking very complicated questions like I'm running an M4 and I'm trying to use a UTM simulator with System 10 and Supercard and this thing isn't working and it's giving me this message. What's the answer? And it came back three answers. One of these, probably if this is the problem, this is the problem, do this, do that. And it all worked.

(02:35):

It wasn't until I was reading later, they suddenly realised that Apple had done a deal with Google and it adopted Google's main AI, Gemini, to run the core answers from Apple. And that had happened in January this year (2026). And it commenced. Apple are paying a billion dollars a year, I think, to Google for the privilege. Although Google is currently paying Apple $20 billion a year for being able to put Google on Apple instruments.

Gaye Francis (02:58):

I have noticed that there's a lot more Google reminders and sign up for Google and sign in.

Richard Robinson (03:03):

It's getting very annoying.

Gaye Francis (03:04):

For Google and Apple machines.

Richard Robinson (03:05):

It's getting very annoying.

Gaye Francis (03:06):

Yes.

Richard Robinson (03:06):

But that meant I suddenly had to have a look at what was the AI actually doing and where was it coming and what was it doing? Now, I mean, you listen to these podcasts. Anyway, I found this podcast by a fellow called Gary Marcus. He's being interviewed by financial people. And he'd been apparently in the AI business for the last 30 years or something like that. And what he was pointing out is in the last 10 years, all the AIs are basically focused on large language models. Now effectively, what you've got to do to think about that is it's basically scraping the internet. And as the new AI has come up, they scrape more and more. But the logical inference engines from his point of view, they're not actually thinking.

(03:43):

And the example he gave, which I thought was kind of entertaining was when Tesla was trying to get their software going up in the early days, it's an inference engine in the sense that what you do is you throw a whole lot of experiences at this thing. So it looks for cars, bikes, pedestrians, and things like that, and it gives them all the scenarios in which these things could happen. So when it's looking at something, it picks the scenario that's most like that, and then that tells it what to do. It's not thinking through what should be done of itself. And the example it gave was some Tesla guy was at an airport somewhere, and he said, "Well, I'll show you how it works." And he called the Tesla to go somewhere to come to him. And the first thing he did was take out an aircraft because it'd never been told about that you shouldn't run into aircraft and it wasn't in the database so it didn't recognise what it was. And that means it's just an inference engine.

(04:32):

And then he went on to explain that human cognition is a bit like that because the example he sort of gave ... Well, he gave it, but it was my inference from it. But when you drive to work in a car, you drive there and you wouldn't even remember when you stopped at a red light, you just get there. And it's only every now and then when something strange happened. You sort of go, "What the hell is going on? And do I have to think about this? " And he said, there's an extra bit where you're actually thinking about something as opposed to just sort of doing what's in background and that you know. And he said, basically these large language models from his point of view is the background thinking. It's not the high level thinking, the actual reasoning path.

Gaye Francis (05:08):

So it's giving you information that then you're supposed to think about to interpret into your context.

Richard Robinson (05:14):

It's the new and novel experience. If it's a repetitive routine experience, a large language model will get it right because you're scraping the internet for all the circumstances. So if it says the right way or the best way, if you take the top 10 people that have written English grammar or something like that, this is how they'd express what you'd want to say. So that's what it does.

(05:33):

He then sort of points out, I think that in 2024, I think the US courts had 300 cases where people misquoted cases because the lawyers use an AI to bring the case law together, and I think last year it was 600 cases so this is going exponentially. And so there was one particular case, and he was talking about how these bits of information get disconnected, but the AI had sort of said, well, you're obviously looking for this and you want this, so I'll actually construct an artificial case and put it in the reference. <laughs> So he was having quite a good time pointing it out and basically saying is that most of the time the AI is going to get it right just because if that's the way the world's done.

(06:12):

Now, in terms of that simulation, for example, we had a pretty dumb simulation. It was just sort of basically delaying the start, but every object was just every ship object was just moving around at a more less constant speed and so forth. Whereas with the power of these things, we could actually program the AI to actually be each ship and to actually slow this ship down or put helms on a sleep or put the guy watching out the front or the radar.

Gaye Francis (06:37):

Different weather conditions.

Richard Robinson (06:39):

You can manipulate it. But obviously that wouldn't, unless you ran the simulation for several hundred years, you wouldn't find all the bad things that could happen, but you could do that theoretically and obviously the more powerful these things get. And that's what you then went on to say because Apple's just done this deal with Google.

Gaye Francis (06:55):

Does that come down to similar to your Monte Carlo simulations that it's really good for predicting and helping you with the most likely scenarios?

Richard Robinson (07:04):

Correct. Very much so.

Gaye Francis (07:05):

And the things that happen all the time, but what it's going to miss is those credible, critical long tail events potentially, because they're rare and they don't happen very often.

Richard Robinson (07:14):

And they require thought.

Gaye Francis (07:15):

And they require thought.

Richard Robinson (07:17):

Well, the other thing which then struck me, which I hadn't actually thought of, but when I was just reflecting on our various experiences with the legal system, the adversary of legal common law system, actually, to one extent, acts like a large LLM, a large language model, because what happens is all the lawyers and barristers work out all the case law that's relevant to the particular situation they're looking at. And so if that's the case and this case law comes up for this particular circumstance, this is what the outcome should be. But then the judge or the jury, more likely the judge mostly in a common law case, actually acts as the higher level thinking saying, "Well, is that right?" The lawyers have put it all together, they put the case together. This is the facts. This is what the case law suggests is what the large language model saying should be the outcome, right?

(08:04):

Now, that actually could be done because that's what the lawyers are doing when they use a large language model to sort of dream up the case law. I mean, what the lawyers ... There's no reason why you shouldn't ask the AI to search all the case law and tell you which case is relevant. There's nothing wrong with that. The point about it is don't rely on it.

Gaye Francis (08:21):

But what you're saying is it's a tool. And I think Megan, our producer used that as an example today. When she's doing the podcasts and putting the transcripts together, you can use AI to get your basis, but you've got to put in human effort to make sure that the terminology is correct, that what you and I say, the AI has picked up, but also that it's verified what it refers to and it hasn't just put in something that sounds like what we thought we said.

Richard Robinson (08:47):

Yeah. And you've got the same problem marking those postgrad units of Swimburne that we do. I mean, one of academia's main problems in life is, particularly if you're dealing with postgrad students, was this original thought or how much has the AI had a benefit in here?

Gaye Francis (09:03):

And I think part of the stuff with the due diligence process that we're going back to, it's that documentation and the governance processes around how AI is going to be used.

Richard Robinson (09:14):

Well, it's interesting because you might remember, we sponsored the professional and public policy officer from Cambridge and he was pointing out, one of the examples he gave was the impact of computer aided design. And he said that the real advantage of computer aided design, there used to be draftsman who drew things up, but a lot of them lost their jobs, but didn't sort of just disappear. They turned into CAD operators. And I said the real advantage of the CAD operator and the whole system was that is that the engineers could test more ideas faster than having everything done manually. And if that's what AI does, because I can see that you could test a whole lot of ideas faster using AI, but that means you're acting as the second order brain and using the AI to help you get there. But I don't think people have been thinking about it like that.

Gaye Francis (09:58):

And I think that's when we've been and talked to boards because we get asked particularly by boards, what's the use of AI and how are the liabilities associated with if we take something that AI says and do that or implement it, who takes responsibility for that decision? And I think it does come back to that human interface, isn't it? So you're really using AI as a tool to get the information to then make an informed decision.

Richard Robinson (10:27):

So far as you can.

Gaye Francis (10:28):

So far as you can. And you're then asking, all right, how do I document that decision? I think part of the importance of AI will be when you use AI is to document the decision why you've gone with that and where you've got your sources from.

Richard Robinson (10:44):

And verifying the source is real and not just something that AI dreamed up as as an inference machine.

Gaye Francis (10:50):

And as older people have been industry and haven't had the technology available to them, we automatically do that. But I've got a daughter who started high school this year and she had to do some research. And when I asked her where she got that information from, the first thing that pops up on your screen is the AI summary ... And you had to explain to this 12-year-old that, well, you actually have to go and look at where the source came from and then does that source seem real and does it match up with other sources.

Richard Robinson (11:19):

And how many kids do you think are getting that advice?

Gaye Francis (11:22):

I'm not sure. But she got a bit of a lecture on that. And then I got an eye roll to say that was a lot more work than she expected to have to do for her homework.

Richard Robinson (11:31):

Quite. You better reward her with a holiday to Finland. That's what she wants. <laughs>

Gaye Francis (11:36):

But I think that's where the trap with AI is going to come in. We've talked about it as a tool, whereas organisations are looking to use it as the answer. And I don't think AI is there at that point to use it as the answer.

Richard Robinson (11:56):

No, I think that's probably right.

Gaye Francis (11:59):

So from a due diligence perspective, we'd say absolutely continue to use AI, use it as a tool, get the information that you can out of it, but it still requires, as you said, that second level of thought.

Richard Robinson (12:10):

It still requires thinking, which is hard.

Gaye Francis (12:13):

Which is hard. And I think that's all of this stuff. It's really tricky to do. Thinking is hard and demonstrating SFAIRP is hard.

Richard Robinson (12:24):

Yeah. And document in a way, which is pithy, but useful is hard. Actually, it's not that hard, but it does require clear thought.

Gaye Francis (12:31):

Clear thought. Clear and transparent thought. Yeah.

Richard Robinson (12:34):

Yep.

Gaye Francis (12:34):

All right. So we hope you found AI interesting and we look forward to you joining us next time. Thanks, Richard.

Richard Robinson (12:40):

Thanks, Gaye.

Rail Safety National Law Pressures & the SFAIRP Approach

Risk! Engineers Talk Governance Podcast
Season 6, Episode 2

In this episode, Risk! Engineers Talk Governance, due diligence engineers & R2A Co-Director’s Richard Robinson and Gaye Francis answer a listener’s question on the Pressures of Rail Safety National Law and the SFAIRP Approach.

They explain how WHS/OHS legislation takes precedence over the Rail Safety National Law, clarify the "no double jeopardy" principle, and discuss how Australia's federal system led to harmonised rail safety legislation.

Their discussion also covers:

• The SFAIRP (So Far As Is Reasonably Practicable) approach and what it means for operators

• How regulators assess safety cases as a "license-to-trade" rather than sign-off approval

• Why documenting decisions—especially what you've chosen not to do—is crucial

• The importance of living documents and regularly revisiting safety governance

• Aligning legal, design, and commercial pressures through proper due diligence

They finish by stating that while the regulatory landscape is complex, the due diligence process itself is straightforward: maintain robust governance, engage the right stakeholders, document your reasoning, and keep processes current as circumstances change.

Richard and Gaye present workshops (public and in-house) on Rail Safety. Get in touch if you’d like to learn more.

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 answer a question they received on the topic of Rail Safety Pressures and the SFAIRP Approach.

(00:15):

We hope you enjoy their chat. If you do, please give us a rating and subscribe on your favorite podcast platform. If you'd like more information on R2A's work or have any feedback or topic ideas, please head to the website www.r2a.com.au.

(00:32):

Also, there's tickets available to meet them live in Melbourne or online. Details are in the podcast description.

Gaye Francis (00:41):

Hi Richard. Welcome to another session of our podcast.

Richard Robinson (00:43):

Good to be back again.

Gaye Francis (00:46):

Today we're going to address one of the questions that we got in our Q and A with R2A, and I'm just going to read the question out. As we've said in our introductory podcast, a lot of discussion and questions were generated from our previous podcast session, Season 5. So this one came through:

(01:07):

"I've been listening to your podcast in pursuit of better understanding risk due diligence, rail safety national law, and duties of engineers. Some topics are hard to rationalise. For example, the relationship and hierarchy of rail safety national law versus, for example, the Victorian OHS Act. Also, what is and isn't required when it comes to due diligence."

(01:27):

So that's a pretty open-ended question there that we've got. And there's a number of points that can be covered.

Richard Robinson (01:34):

Well, first of all, we better actually sort of go through the hierarchy question of the legislation, and the OHS Act and the WHS legislation always takes priority. And the Rail Safety National Law is basically a subset. And the Act is quite clear that if there's a conflict between the two, then the WHS/OHS legislation will take or be superior - take precedence.

(01:54):

However, there is no double jeopardy. You can only go down once. And chiefly the Rail Safety National Law... And this is one of these interesting things, the way in which they've gone about this. Because we're a federation, we had to harmonise legislation. I mean, when we federated, the states only gave up the minimum powers to achieve the constitution. So we had appointed the new high court, we gave up defense to a federal body. We gave up custom exercise to a federal body, but everything else, oh, and we went to standardised railway lines too, which we'll been working on for the next a hundred years. But anything else, you have to have an inter-government agreement. And so the rail safety national law was one of those attempts to get into government agreement, the same way we did GST and the Model OHS/WHS legislation.

(02:38):

Now, there's two ways of getting harmonised legislation. You either have a model act, which everybody says, we'll adopt the Model Act by each parliament plus the edits. Or you say one parliament passes the Act, and then everybody adopts that Act as passed by that parliament with edits. And that's the way we did it for Rail Safety National Law. So the South Australian parliament passed the legislation and everybody then has an application Act where they adopt that legislation with edits. In the case of Victoria, those edits equal the size of the South Australian legislation, which is a little bit sad, but that's another matter.

Gaye Francis (03:11):

Whereas some of the other states just changed the name of South Australia to their own states.

Richard Robinson (03:16):

More or less. Yes. Now what the rail safety legislation basically does is adopt the SFAIRP approach. And apart from saying that the WHS legislation, OHS Act, are superior, but there's no double jeopardy. But then our regulators went and did a deal with each other, both the safety regulators and the rail regulators, they got a heads of agreements, so ONSRA (Office of the National Rail Safety Regulator) which is set up by the Rail Safety Act.

Gaye Francis (03:45):

National Law

Richard Robinson (03:47):

Basically has the heads of agreements with all the safety regulators, and they explained that it's all about efficiency. And so presumably if something bad happens, they're going to decide who's going to prosecute.

(03:59):

The next thing that pops up because of SFAIRP, which I don't think we've talked about particularly, which is actually really rather important. You see once upon a time, and that's why a lot of people would like it to go back to being.

(04:11):

If your regulator said what you were doing was okay, you had sign off. Under the SFAIRP deal, that doesn't happen. SFAIRP says it's an objective test, which you have to sort out and your regulator's more concerned about the process that you've undertaken rather than necessarily the final result. Now, obviously they're unhappy with the final result, they're going to start asking you to prove why it's reasonable in the circumstances, but it's still your call in that sense. You want your regulator to be there with you, but if you go wrong and you go down in court, even if the regulator's embarrassed, it's no skin off their nose, per se.

Gaye Francis (04:49):

So the regulator's no longer taking any responsibility. So if you deliver your safety case, for example, to the regulator, they're almost just an interested party that's had a review of it and giving you some feedback.

Richard Robinson (05:05):

We see nothing wrong with what you propose.

Gaye Francis (05:08):

The classical lawyer question when you ask them: Is what I've done okay?

Richard Robinson (05:12):

That's correct. Yeah. So it's become really rather complicated. And I have to say, I don't fully understand because remember in some jurisdictions, they've kept their Electrical Safety Act. Like Queensland, for example, retained their Electrical Safety Act when they introduced the Work, Health and Safety legislation. And they basically say that when you're dealing of electrical matters, you've still got to do SFAIRP and so forth. But that falls under the Electrical Safety Act. And so now you've got this sort of competing hierarchy. Like Marine Safety National Law is another one where the WHS legislation has moved into the Marine Safety National Law, but that's obviously in a different domain again.

(05:47):

And so you've got all these sort of interesting legislative frameworks. Although so far as we can tell, and again, this becomes a very legal question because as we have commented in other places, planning law for example, doesn't seem to really respond to the WHS Act, whereas we were under the impression from what we're being told by various legal counsel, WHS is a governance document, and it's meant to take precedence.

Gaye Francis (06:13):

And I think it depends on which court you're in, doesn't it, as we said. But I think the planning one, we might leave to another podcast.

Richard Robinson (06:20):

And treat it very delicately too.

Gaye Francis (06:22):

Very, very careful discussion. I guess what the regulators are using it for is if they're not signing off or approving the safety cases, but they're almost using it as a license-to-trade as a competency type of exercise.

Richard Robinson (06:37):

I think that's probably right.

Gaye Francis (06:39):

So we've had that discussion before about your safety case argument and the relationship with the regulator is almost a license-to-trade approval process.

Richard Robinson (06:51):

Yes. You've demonstrated in the governance sense that you're competent to do the business. Whether they're actually making individual decisions properly, not their call, unless you've obviously got something patently daft. But when you're talking about... You will have already met the Standard, that's not the argument. The question is how much better than the Standard was reasonable in the circumstances.

Gaye Francis (07:12):

I think the regulator also has a role because they are getting all of those safety cases in and having a look through. You can get an idea of where the industry is as a whole, and they're sort of benchmarking across the industry of what organisations are doing.

Richard Robinson (07:27):

Well it's a bit like the (Victorian) Powerline Bushfire Safety Taskforce with which we were both members and you followed up on the (Committee). I mean, that introduced new controls, which therefore became recognised good practice, at least in Victoria and all the other jurisdictions then sort of started looking and going, Ooh, should we be doing that? And there's reasons why they may not. For example, if you're further north, you get more humidity, so you just don't get the dry condition you get in South East Australia. But yeah, you've got to think it through and you've got to have your arguments.

Gaye Francis (07:58):

And I think that leads onto that last bit of that question: What is and isn't required when it comes to diligence. I think the diligence or the due diligence approach is really the governance approach and the process that you go through to come up with the argument and your position of where you are in terms of safety.

Richard Robinson (08:14):

Well, but that's what those lawyers were telling when they first introduced the WHS legislation. It was a governance act, and it was intended that if you weren't able to comply with this Act, it intended you shouldn't be in business. That's what we were told was the stated purpose of legislation. And I don't think we've seen anything to change that position, have we?

Gaye Francis (08:33):

No, no, I agree. And as we've said before, it's about the control. It's what you can do in the situation. What is reasonably practicable that you can do. I always tell our clients that it's more important to document why you're not going to do something, that you've considered a particular course of action and you're not going to do it and these are the reasons why. But it's something that you've got to continue to revisit, and it's about having the governance processes in place. Make sure you've got the right stakeholders that you're engaging with, make sure you've got a process, a robust process that you undertake and make sure it's documented. But don't do it and put it on the shelf for 10 years.

Richard Robinson (09:12):

Correct.

Gaye Francis (09:12):

Because the goalposts change. And so you've got to make this is a living document. This is a living process that has to be revisited on a regular occasion or when circumstances change.

Richard Robinson (09:25):

That's right. And that's one of the reasons why you re-do your safety case and how often do you do it? Obviously, it depends on how rapidly things change in your environment, but if new technologies emerge, then you should be considering them.

Gaye Francis (09:35):

Yeah. So I think what we tried to capture today was one of the questions that we had from our listeners, and we appreciate any of those. So if you've got any questions, please shoot them through. But it's not simple. There are SFAIRP pressures coming from all different ways. There's different legislation. The rail safety and the WHS or OHS legislation aligns pretty well, but there's other legislation that it's not as coupled as that.

Richard Robinson (10:03):

Correct.

Gaye Francis (10:04):

There's your different stakeholders involved and you're getting pressures from commercial pressures, regulatory pressures, environmental pressures. So there's a whole...

Richard Robinson (10:12):

Legal liability pressures. I mean, one of the things we always point out is you really need your lawyers and your designers to align. If they're not aligning then for the life of (us) we don't understand how you demonstrated due diligence in a way that would satisfy your directors' obligations under these Acts.

Gaye Francis (10:29):

So again, cooperative process rather than competitive process, but the due diligence process and governance process that we sort of undertake will get you out of that hole.

Richard Robinson (10:42):

And it's not actually that complicated. It's the other thing. Maybe we do it so often, but to us it's actually relatively straightforward. Where you get stuck is if you start following a Standard which is "do it this way" and you just miss the process. It does require thinking.

Gaye Francis (10:57):

It does require thinking. Absolutely. And that clear thinking, not just thinking.

Richard Robinson (11:04):

I hope that's what I intended, Gaye. <laughs>

Gaye Francis (11:06):

I hope so too. So I think on that note, we might wrap this podcast. So thank you for joining us again, and hope you listen next time.

Richard Robinson (11:15):

Thank you.

Difficult Conversations Engineers need to have about Risk

Risk! Engineers Talk Governance
Season 5, Episode 2

In this episode, Richard Robinson and Gaye Francis this season’s theme of "Difficult Conversations Engineers Need to Have About Risk". 

Key discussion points include:

• Risk is multidimensional. 

• Risk covers a big domain that has lead to confusion.

• There are three different types of risk, but R2A’s focus is typically on safety risk and project risk – downside risk.

• Commercial industry like to focus on upside, downside risk (risk and reward, risk appetite and innovation), but Engineers should focus on downside risk.

• Innovation and Risk Management is good but not at the expense of zero harm and the WHS/OHS legislation.

• Often innovation is the solution to the problem but cannot compromise safety.

• Innovation cannot be encouraged as the focus of Risk Management.

• Safety risk shouldn’t been seen as an obstruction; safety is non-negotiable.

• Don't just choose one technique because if you do, and particularly if you ignore the WHS legislation requirements, you're going to set yourself up for a pretty serious fall. 

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 theme of this season: Difficult Conversations Engineers Need to Have About Risk.

(00:18):

We hope you enjoy the chat. If you do, please give us a rating and subscribe on your favourite podcast platform. If you'd like more information on R2A's work or have any feedback or topic ideas, please head to our website www.r2a.com.au.

Gaye Francis (00:38):

Hi Richard.

Richard Robinson (00:39):

Hi Gaye.

Gaye Francis (00:40):

Welcome to another podcast session.

Richard Robinson (00:42):

It's good to be here.

Gaye Francis (00:43):

Excellent, excellent. We're going to touch on the theme of this series, which is the difficult discussions that engineers need to have concerning the issue of risk, or the subject of risk. And we have covered this sort of stuff in some of our earlier podcasts, but I think it's worth going back to that risk is multidimensional.

Richard Robinson (01:04):

That's right. There's no one way to cut to the risk, whatever it is. It's a multidimensional thing. And depending on which technique or idea you use, you'll get different insight. And one of the problems with the word risk, we just cover such a big domain, now everyone's confused. Which leads on to your little frustration just recently with a journo.

Gaye Francis (01:21):

It does. So R2a was asked to provide some input into an article on risk management for Create (Engineers Australia magazine). And so we gave them the stuff that we usually do and sort of pointed out that there were three different types of risk, but our focus is typically on safety risk and project risk.

Richard Robinson (01:41):

And that's just actually downside risk. Which is there's no prospect of gain as opposed to what commercial people like to do, which is the upside, downside risk. Risk and reward is usually the way that's formulated. And which gives rise to the risk appetite statements, which we've mentioned earlier.

Gaye Francis (01:57):

And after that, and the article was drafted, it came back from the editorial that they wanted to be more of a focus on getting past risk adverse responses to enable innovative change. And I found this really interesting and a little bit disappointing, I guess, from an engineering viewpoint because that's typically not what engineers do in their day-to-day business. For me, that's more about an entrepreneurialship -- looking at what ideas you can do and innovation and overcoming some of the risk issues. So risk in that sense is a by-product.

Richard Robinson (02:33):

Yeah, that's right. So the risk reward profile. I mean, we're just talking about it just before the session to try to explain what we're talking about here, but it's a bit like, well, the example I gave, if you're building a bridge, you don't put the site officers under the bridge despite the belief of the engineers the bridge will not fall down during construction, which is what happened in Westgate and crushed the people in the huts below. And also the engineers were on the bridge that went down with it. They didn't believe it was going to fall, and all the calculations and all the evidence you would've asked them said, no, the bridge is going to stay up. But you just avoid avoidable risk if you can. Versus the situation with cars, driving cars around. Everybody knows that driving cars, relatively speaking, is quite a dangerous thing to do, but the benefits we get from driving cars is so great that we all decide that we're going to keep doing it.

Gaye Francis (03:18):

Hopefully by abiding all the rules.

Richard Robinson (03:21):

Well, yes. And as new innovations come in, for example, self-drive cars, I mean, the whole thing was if you drink and drive, you're a bloody idiot. Well, once the car will take you home... you don't worry about it. It's not a problem!

(03:31):

So innovation is good. So it depends what you're trying to achieve. So we're not against the innovation and risk management, but part of our problem is we keep coming across people who keep talking about risk solely as this upside risk and reward thing without realising the zero harm, which is basically what most engineers do most of the time, I have to say, it's got to be safe. And safe doesn't mean free from all risks. Safe means that the balance, the value you get from it, outweighs the disbenefits.

Gaye Francis (04:01):

That's correct. And I think by encouraging that risk appetite model and being risk adverse, or not getting responses back that are not risk adverse, it's sort of missing that aspect. And it was sort of evident when we did the course for Engineers Australia chartered assessors and their view on things was only between 1% and 3% of engineers interviewed as part of chartered status and risk is a component of that, understood that the WHS or Work Health and Safety legislation was actually relevant to their job.

Richard Robinson (04:45):

Because as we were just sort of commenting, I mean people keep talking about risk assessments. What the legislation demands is risk design assessments and that you've been diligent in the design options. It doesn't mean free from all risk. It just means in the circumstances you've demonstrated diligently that every reasonable practical control is in place.

Gaye Francis (05:03):

So I think the innovation comes in, first of all, you've got to understand what your problem is, and often the innovation is in the solution to that problem.

Richard Robinson (05:11):

Correct.

Gaye Francis (05:12):

And so there's this balance then to work it up about, well, what are the benefits that you get? But you can't do it if safety is compromised.

Richard Robinson (05:23):

Correct.

Gaye Francis (05:23):

If it's prohibitively dangerous, that solution or innovation cannot be implemented.

Richard Robinson (05:28):

That's correct. Until you figure out away around that prohibitively dangerous aspect, which may well require innovation in itself. I mean it's like necessity is the heart of innovation and things like that. I mean, it's a bit like watching the Ukrainians fighting a war. They have been innovated because they had no choice. And if you talk about risk assessments and things like that, innovation, overcoming the problems, well, they've got a lot of problems and then...

Gaye Francis (05:53):

They're trying to work out which are the best options to go for.

Richard Robinson (05:55):

And they're working on the same option with regard to the US politics at the moment, which has got enormously complicated.

Gaye Francis (06:00):

Just bringing it back to an engineering example. And you've seen innovation over time. You think about 30 years ago, 50 years ago, in underground mining, somebody had to go out underground, let off the charge when they were pretty close.

Richard Robinson (06:17):

They'd drill holes, charge the holes, fire the holes, muck it out and do it all again. The Air League miner. Never saw a plump air league miner in my life.

Gaye Francis (06:25):

And then technology progressed that the charges could be filled and everything and then let off above the site. And now it's all done remotely, is my understanding. At an operation center remote from the mine location. That's technology that's overcome some of these safety issues.

Richard Robinson (06:48):

It's like the personal pilotage unit for marine pilots, which trains could consider. It's like the low voltage power ethernet and LED lightings and roof spaces, which we've talked about. These are all innovations which will save lives. They're good ways to do things and, I imagine, are faster, cheaper, and more economic too.

Gaye Francis (07:10):

So it's not that R2A and Richard and I are saying don't do some of this innovation stuff, but you can't encourage this as the only way to do risk management.

Richard Robinson (07:22):

Correct.

Gaye Francis (07:23):

I think some of the discussions that Engineers Australia, and even in the title of their conference for 2025: Turning Risk into Opportunities. Now, you can't turn all risk into opportunities if you understand all the different risk types.

Richard Robinson (07:40):

But that doesn't mean to say when you look at it, you won't consider all the options and test, which in the circumstances makes the most sense. And I think that's where we get a bit frustrated, is that by making an all opportunity and in effect saying that anybody sort of into safety risk is just an obstruction that doesn't make sense. It just doesn't make sense. You have to consider all those aspects.

Gaye Francis (08:01):

It's a non-negotiable, safety. And we see it being pushed down, pushed down, pushed down. And sometimes some of the solutions that are put in place are to the detriment, safety detriment, of other people.

Richard Robinson (08:15):

Correct. And well, that's the court case I'm actually involved at the moment, which we perhaps won't talk too much about, but the question of the neighbourly exposure to the hazards, it's good for the business, but not necessarily good for everybody else.

Gaye Francis (08:29):

So when you're considering safety, not only do you have to consider your own workers, but you have to consider the other people that are affected by it. And I think that's where Richard and I come from the majority of the time.

Richard Robinson (08:44):

Yep. Well, we could go back and redescribe this again, I guess, but I think the key point is it's this multidimensional thing. Don't just choose one technique because if you do, and particularly ignore the WHS legislation requirements, you're going to set yourself up for a pretty serious fall.

Gaye Francis (09:00):

Or other people up for a fall as well. So yeah, don't not consider the innovation and the benefits of risk and opportunity, but forefront should be safety and the consideration of that.

(09:17):

So thanks for joining us today, short and sweet today, but thank you. And I feel better now. Thanks, Richard.

Richard Robinson (09:23):

A pleasure Gaye.

AI (Artificial Intelligence), Robots, Controls & Liability

Risk! Engineers Talk Governance
Season 4, Episode 2

In this episode, Richard Robinson and Gaye Francis discuss controls and liability when it comes to AI and robots. 

OHS/WHS legislation require achieving the highest level of hazard control that is reasonably practicable. AI/Robots present potential controls to address many safety issues and can be implemented to improve safety. 

They discuss a number of examples where AI and robots are already enhancing safety and removing people from dangerous tasks, and when it comes to due diligence, organisations would need to demonstrate why it is not reasonably practicable to use them. 

The chat also covers how AI provides situational awareness and information to support human decision-making. Quality assurance processes are still necessary to ensure the robustness of AI-generated information. 

And that the use of AI technology also raises questions about liability, ethics, and morals.

Access the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:01):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers Richard Robinson and Gaye Francis discuss controls and liability when it comes to AI and robots.

Megan (Producer) (00:16):

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

Gaye Francis (00:34):

Hi Richard, welcome to a podcast session.

Richard Robinson (00:36):

Hi Gaye. Welcome back.

Gaye Francis (00:38):

We're going to talk today about AI, robots, controls and liability. And this sort of pops up as that we've given a number of board presentations and some of our clients have asked us, there's a lot of AI coming, robots coming, how do we have to implement them in our business and what does it mean for us? And I think from our engineering due diligence perspective, it's all about control. AI and robots both present potential controls to address safety issues of concern and how can they be implemented to improve safety.

Richard Robinson (01:17):

And this is the leading thing. And one of the points we keep hammering is that the legislation and OHS/WHS legislation is crystal clear in its objective. You've got to achieve the highest level of hazard control that is reasonably practicable. And it's perfectly obvious that AI in its many manifestations are going to enhance things. And the example that we most obvious is the self-drive cars. And we have a lot of clients that drive long distances. I mean the elimination options just to do everything...

Gaye Francis (01:43):

Remotely or over the phone.

Richard Robinson (01:46):

Over the phone and that sort of stuff. But if you're actually tried to run serious meetings, you've got to decide after a while, if you really want it to work, you should try to do it in person. And so if you've got to drive long distances, what's the way to do it? Now traditionally the way to do it if you had to drive out of hours is make sure you take two people and one person keeps the other one awake. The other option is to put a self-drive car, which is basically a form of AI, to help you get there. And if you start nodding off or something strange happens, it will start doing things. I don't suppose it's going to have a sharp object and poke you or anything like that...

Gaye Francis (02:18):

Elbow in the arm!?

Richard Robinson (02:20):

Whatever the previous version was. But you'll get advice that something's got to happen and if you truly did fell asleep, it'd just pull over the side of the road and stop and everyone else just keep passing past you rather than you becoming a hazard in self. Now that's a form of AI and I don't actually know any clients so far has actually deliberately brought Teslas to achieve this outcome. But it's something I think you'd have to say why you didn't do it if you were called up after the event and a horrible car accident that could have been prevented.

Gaye Francis (02:50):

And that's the question, isn't it? People are asking in terms of is it reasonably practicable in terms of AI and robots and you've got to show why it's not reasonable at a time.

Richard Robinson (03:02):

Correct. And it will change. It's one of the points why standards are ineffective because they're lagging indicators and the mandatory aspects of putting AI in cars that'll take several years to get there after it's proven to be beneficial.

Gaye Francis (03:17):

I think one of the difficult concepts that the clients that we work with are grappling with is the liability issues associated with AI and robots. Who takes responsibility, as you said in the event that there's an accident afterwards. And the way that we've sort of seen it implemented at this stage is there's always a secondary function.

Richard Robinson (03:40):

Correct. It's the backup. It's not the prime. It's like the watchdog we did for the railways in New South Wales. There's a GPS watchdog checking where the trains are and if they get to a certain proximity to the watchdog will bark. Now that's a hardwired thing. There's no intelligence in there at all. But obviously just looking at such a system and you say, how could this be has if it had AI? Well presumably it would actually look at all sorts of other factors where track gangs are, who's doing what over there, what the weather conditions are, and provide the driver with further knowledge and assistance beyond just what it currently does.

Gaye Francis (04:14):

I think that's one of the real strengths with it. It's the provision of that situational awareness and information that then people, humans can make informed decisions.

Richard Robinson (04:25):

Well, it's like when we talk about the marine pilots, which do a lot of work for, I mean they have this personal pilotage unit these days, which is their own independent app aid, but it's got apart from satellite navigation, it's got all the GPS weather forecasting and all sorts of things. And if a sudden squall was coming their way rather than the pilot of having to positively check all the time what the weather's doing, now they'll just sort of say a new weather report, the squalls coming faster than was anticipated.

Gaye Francis (04:52):

So that information's just presented rather than the pilot actually having to go and look for it.

Richard Robinson (04:57):

Correct. So all these sort of improvements and so forth that you might get, you can just sort of see... I mean we had the other discussion about you are a parent in a house with a kid and you disappear off to the toilet and the kid's found a knife and is heading towards the power point. Well, it'd be nice if a AI chirp and said kid with knife approaching power point or something.

Gaye Francis (05:17):

I could just imagine the robot flashing lights, "kid approaching". The other place that we've seen it is probably in your personal space in that specialists are using AI as a diagnostic tool.

Richard Robinson (05:35):

Yes. Well the R2A board requires that I have annual medicals and you're talking to your GP after all the usual tests for the year. And I dunno why the conversation popped up, but for ultra scans and all these other sort of tests that you do, I sort of said, isn't AI going to affect the medical? He said it already is. He said a specialist, the AI ability to detect from ultrasounds and things like that to detect a pattern or anomaly is now better than the humans are. Obviously the trick is of course that it's still a human then comes and looks at it and decides whether or not it should be reported and so forth. So the actual decision-making process remains with the human, but the actual first cut of the 'what does this mean?', the AI is obviously doing a very, very good job.

Gaye Francis (06:24):

We sort of talked about this before and with AI presenting such robust information, I guess there is a tendency or there is the potential that humans can become a little bit lazier and just rely on the information that's provided.

Richard Robinson (06:40):

But if the AI information is better than the human can give beyond reasonable doubt, it's going to happen very fast.

Gaye Francis (06:49):

So where does that leave individuals and organisations in the liability space? If you just say we've relied on that, don't you have to have some sort of quality assurance processes and proof that says that that information is robust?

Richard Robinson (07:05):

But what you're doing is flipping it around. Whereas previously it was the human supported by the AI, now it's the AI being supported by the human. That's where it gets tricky and how that move's going to happen, I don't know. I mean it's like we're talking about the roads and the rule on the sea. The mariners have told us a number of occasions. I mean big ships have an inordinate capacity to stay away from each other. You don't need special rules for the most part. And one of the reasons why I said the rules existed was so if you did have an incident and you do have to decide who's responsible and who's going to pay for what, here it is written down, even though most of the time it's not particularly relevant.

Gaye Francis (07:42):

So it's to assign liability.

Richard Robinson (07:46):

It's to assign liability a lot of the time. And I suspect that's going to keep going for some time. I understand now that the numbers say that if all cars were self-drive to a Tesla standard, there will be less accidents on the road.

Gaye Francis (07:59):

Okay. That's an interesting stat.

Richard Robinson (08:00):

That is a bit of a problem. But how would you make the shift from assigning personal liability to a driver to the AI? Does that mean all Tesla pays for all accidents here and after?

Gaye Francis (08:15):

I don't think they'd sign up to that one.

Richard Robinson (08:17):

I don't think they would either.

Gaye Francis (08:19):

That's a paradigm shift

Richard Robinson (08:21):

It, it really is.

Gaye Francis (08:22):

And you can see that's going to happen. I don't know how the actual turn is going to finally flip it one way or the other, but it will be an interesting space. But I think from our viewpoint as due diligence engineers. And when we talk to our clients, it's really about considering those other options. And we sort of haven't touched on robotics, but robotics are in a similar sort of space in that we've seen clients using robotics to take the human element out of doing some dangerous works. For example, some water utilities were using drones to do their water sampling so their people didn't have to work over water. So that took away the drowning potential. You've seen it with the clearance divers.

Richard Robinson (09:09):

Oh yes. If you're at sea in a big sea and you think your propeller's failed or something, then it's easy to send down an ROV, a remotely operated vehicle, to have a look, presumably managed by the diver, before you send the diver down. You only send the diver down when you really need to. First of all, you're going to have a look with a machine.

Gaye Francis (09:27):

So I think that's when robots are very, very useful.

Richard Robinson (09:32):

Well, the rather depressing part about all this was sort of the Ukraine war that we sort of touched on briefly because the Ukrainians are very rapidly developing electronic warfare is obviously rocketing along. The jamming of satellite signals and GPS signals and those sorts of things, so things can't navigate. So the other way to do it is to program whatever drone you've got. So if it picks, for example, a Russian tank in the distance, it doesn't care about the sequence anymore. It can see the tank, it knows what to do, it knows how to do it and it just goes and does it. But that sort of remote control weaponry is a kind of scary idea. But I think that's where we're heading very fast.

Gaye Francis (10:12):

Oh, that's totally scary. And then where do the liabilities, and I mean the ethics and the morals come into that? Which I think is a whole different podcast around that sort of stuff. And where do we start taking responsibility for some of those technologies?

Richard Robinson (10:30):

I think Ukrainians have a fairly clear view of what they intend.

Gaye Francis (10:36):

Maybe not in the war space, but hopefully in the engineering and the technological space, AI and robots can be used for improving safety for organisations.

Richard Robinson (10:48):

I'm sure that'll be the case.

Gaye Francis (10:49):

I think there's still some questions to answer around the liability issues that potentially can arise for the use of the technology. And I think somehow that there's going to have to be some more robust work around quality assurance and making sure the information that you're getting is robust to make those informed decisions and going forward.

Richard Robinson (11:10):

Well, the other one that we've mentioned a couple of times is that Sydney Decca fellow from Queensland Uni, I think it is. He's a pilot turned professional psychologist. And he just points out in passing that there are now more safety rules out there that nobody, at least of all the person doing their job's got any clue about. But you can sort of imagine, I don't know whether you want it on your hard hat, but the AI sort of camped in your phone, keeping an eye on the surroundings and if it sees something, which it gets a bad feeling about, it will alert you to it. So you don't really have to know all the details because it's not possible. So if you start doing something, and we've seen lots of things where people, they've been doing the job that way for years, but when you go and look at it says, well you're a bit lucky here that you didn't get hurt. And if you had an AI watching it, it would've of chirped up the first time he tried to do it that way.

Gaye Francis (11:55):

I think you're still going back to the value in it at the moment is around that situational awareness and giving the person information to make informed decisions.

Richard Robinson (12:05):

And alerting you to something which you're still got the decision to make. It's not doing it for you.

Gaye Francis (12:11):

Yeah. Alright. Thanks for joining us today, Richard. I hope everyone found that interesting. I'm sure this is a space that will proceed at speed over the next...

Richard Robinson (12:24):

We will be revisiting this for we hear some particularly new or novel implementation that hasn't happened before.

Gaye Francis (12:30):

So thank you again and we'll see you next time.

Richard Robinson (12:33):

Thanks.

Design trumps Risk Assessment - R2A’s VCAT Hearing Success (as Expert Witnesses)

Risk! Engineers Talk Governance
Season 3, Episode 2

In this episode, Richard and Gaye discuss their recent success (as Expert Witnesses) at VCAT (Victorian Civil and Administrative Tribunal) and how design trumps risk assessment. 

They discuss their case involving an application for a building permit in the outer safety zone of a major hazard facility. WorkCover advised against building two new dwellings due to increased population and societal risk. However, Richard and Gaye, as expert witnesses, argued that proper safety and design measures, such as laminated windows and steel roofs, could mitigate the risks. 

The VCAT decision supports R2A’s position, and emphasises the importance of, working out the credible worst-case scenarios and then designing for it. 

You can listen further about this VCAT hearing in Season 2 episodes 1 & 2.

Read the episode’s full transcript below.

Episode transcript

Megan (Producer) (00:01):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers Richard Robinson and Gaye Francis discuss their recent success at VCAT (Victorian Civil and Administrative Tribunal) and how design trumps risk assessment. We hope you enjoy the episode. Please give us a rating if you do also subscribe on your favorite podcast platform.

Gaye Francis (00:26):

Hi Richard, welcome to another podcast session.

Richard Robinson (00:28):

Hello Gaye. Good to see you again.

Gaye Francis (00:30):

Good to see you. We do see each other often.

(00:34):

Today we're going to talk about our VCAT success and our safety and design issue, again. We have covered this a number of times in a couple of other episodes, particularly in season two, which we did in episode 1 of season two, which is callled "Safety and Design, and then episode 2 of the season 2, we discussed "The Demise of ALARP in Major Hazards". We have finally got an outcome from VCAT that we were expert witnesses for and it was in our favour, which was a part of surprise, I think?

Richard Robinson (01:11):

I'm not sure about that. I mean, I think from our point it was the only logical outcome, but it's very encouraging for the legal system to support that position.

Gaye Francis (01:20):

But it was against other decisions... the decision that Member Whitney made was different... she came to a different conclusion than other VCAT.

Richard Robinson (01:31):

Correct. She had to roll the system and she had to make particularly clear that she'd done it in the way that if somebody appealed to the Supreme Court, it would be likely to survive the experience. But that's what competent members do.

(01:46):

Now, just for the record, if anybody's interested, the decision, date of the order is 12th of March, 2024. The citation is Nasralla v Hobsons Bay City Council [2024] VCAT 212. That's if you want to look it up because all this information's available publicly and so you can go and look it up if you wish.

(02:09):

It's actually an 88 page decision, which for VCAT is a true monster, and about two thirds of it is to do with planning law and the application of the way in which the major hazards advice and how it was represented and so forth was put forward.

Gaye Francis (02:23):

Just before you go on, it's probably worth just giving a quick summary of what the case was. So it was the application for a building permit to provide two new dwellings on a piece of land that only currently had one old house on it. So it was to upgrade that to two new dwellings. However, it was in the outer safety zone of a major hazard facility in the Hobson Bay area (in Victoria, Australia). And so it did have a formal planning overlay on it, but WorkCover, not as a responsible authority but as an advisory authority, went against building the two dwellings. And that was (because) it increased the population at that site.

Richard Robinson (03:07):

So it was a societal risk argument, but the current house normally would have four persons present in it and all other things being equal, if you build two houses, you'd have eight persons present and presumably if you didn't do anything, they'd be subject to the equivalent level of risk, which means there'd be eight people at risk rather than four people at risk. And that was the advice from major hazards.

(03:26):

Now, the trick about major hazards was, I remember, previously they used to do it on a target level of risk basis, like the likelihood of killing a single person on one by 10 to the minus seven per annum and then plotted a risk curve. And this area, this region used to be beyond that boundary. And so the business for knocking down an old house and putting up two units or two houses was a very popular activity. And indeed the blocks on either side of this particular house had just that done to it. So it wasn't as though the young people who were developing the site were doing anything new or novel. And what was particularly grueling for them was that they'd gone through the whole planning process and then as the last gasp, the council had written to major hazards and major hazards had changed their planning or advice. And so rather than doing on the individual risk contour had said it's a credible worst case scenario, it's basically a kilometer away from this site if you're in there, no go.

Gaye Francis (04:21):

Yeah. So they changed it to consequence basis, which we've discussed in previous podcasts.

Richard Robinson (04:28):

Now, as I said, it was an 88 page decision and took six months and we were a little bit puzzled as to why it was taking so long. But when we looked at the comprehensive nature of the decision, it became pretty clear why the member had done it that way because she was trying to cover all bases and prevent any further things, issues coming back, particularly in appeal to the Supreme Court.

(04:49):

Now, as I mentioned earlier, about two thirds of the judgment was to do with planning matters and it's probably a more comprehensive view of planning matters. Now we're obviously not lawyers and we're certainly not comprehensive in planning law, but from our reading of it, and if anybody's interested in that application of planning law in Victoria, it's one of the more comprehensive ones that I've seen.

(05:12):

It also included a thing to do with the appeal to governor and council, which was, I have to say, completely new to us because I'd never seen that one before. And that seems to be because if you're dealing with somebody having to appeal to Supreme Court, that's a pretty expensive thing. And so in the case of hardship or something like that was involved and there was a general policy issue involved, which is the case in this situation -- other people had had houses rejected and other people had had houses approved depending on the whim of the previous different members making decisions. It had to be that comprehensive.

(05:47):

Now, what particularly pleased us was the core decision, which I got to say from our point of view as well, is the last 20% because there were a number of appendices in the decision as well, was that WorkSafe had gone for consequence. They'd said there's an inner safety area and an outer safety area, which was I think was...

Gaye Francis (06:06):

300 meters and a kilometer.

Richard Robinson (06:09):

This building was inside the outer safety area, but not inner safety area. And after an awful lot of yelling and screaming with the regulator and the major hazard facility concerned, everybody agreed that the credible worst case in that outer safety area was broken windows, which is in the safety case summary from 2018, basically from overpressures and things like that. There was no suggestion that there would be missiles coming out of the plant that could get that far or any of those sorts of things.

(06:40):

Now, what slightly confused us was that nowhere in all this had anybody considered safety and design to deal with what was now a known credible consequence driven hazard. And the core issues from our viewpoint where if you're inside the house and an explosion overpressure comes your way, if the windows blow in and it turns into shrapnel, and this is a well-known terrorist modus operandi, you could get impaled and the correct way to design against that is to put laminated windows in there. And one of our associates in New Zealand, Dr. Frank Stocks, was busily designing the new Auckland Airport. And amongst other things, he was fretting about people leaving explosives around and they were busily putting laminated windows around the place to deal with that hazard. So this is a recognized good practice, although I've got to say it's not anywhere in any particular standard per se, although that's not true for high explosion major facilities.

Gaye Francis (07:34):

But not for domestic purposes.

Richard Robinson (07:37):

That's correct.

(07:38):

And the other hazard, which we were concerned about was that if you put a tile roof in the area and you have an explosion overpressure coming your way, tiles and things sitting on top, gargoyles, whatever attractive thing you want to put on your roof, get knocked off and then these things fall to the ground and can obviously hit people on the ground and around them. And we said tin roofs or steel roofs, colorbond roofs, are a better way from a design viewpoint. And if you did both these things...

Gaye Francis (08:04):

then that would address the two hazards.

Richard Robinson (08:06):

Yeah, the credible critical consequences. And in any event, the event would be rare because that's the whole point of the major hazard safety case regime and nobody's in any doubt about its rarity. So that part wasn't a question. And if you did these things, it wouldn't actually provide the design. Now, what was really odd from our point of view is when we reviewed the plans, it looked like they had almost designed for this particular hazard, even though at the time...

Gaye Francis (08:31):

it hadn't been on the radar.

Richard Robinson (08:32):

It hadn't been on the radar, because it had a steel roof. I mean, if you're against big hailstones breaking tile roofs up, a steel roof is a much superior way to go.

Gaye Francis (08:41):

And I think that's modern design anyway. There's not many houses that design with, well, not in our (Melbourne suburban)area anyway that have...

Richard Robinson (08:48):

Well, it's normally more economic to put a steel roof on, colorbond, and that was already specified. Whilst it wasn't on the plan, shown on the plans, the advice from the owners, the Nasrallas, was that the architect advising had already said we planned to put laminate on the windows, but that was from thermal (perspective) it wasn't on the plans...

Gaye Francis (09:09):

It was an efficiency, heat efficiency viewpoint.

Richard Robinson (09:12):

So that was going to be there anyway. And then when we looked at the plans and completely to our surprise on the second floor, the only place where there might've been a window facing the plant, which where you get the reflective wave and the greater pressure, there was no window there, it was just a blank wall. And if I've been asked to design a building to deal with that pressure wave, that's what you would've done. We were obviously quite surprised by this and we could sort of just say, look, if you were going to design for the hazard as spelt out by the major hazard facility as certified in effect by the major hazards, these are the controls you put in place. And they were already there.

(09:53):

And after the 88 pages, Member Whitney said, I agree. And didn't even require the planning permit to be changed beyond that which had already been agreed to by the council since all those controls that we would have expected to be in place had already been agreed to be there.

(10:13):

Now the reason why this is so important, and Gaye's just nodding her head wisely over there, is because the business of working out what the credible worst case concept is and then designing for it is clearly, according to VCAT, the way forward.

Gaye Francis (10:33):

And this would appear to be the first decision that's been made on that basis.

Richard Robinson (10:38):

Correct.

Gaye Francis (10:39):

So that makes it really interesting because that gives councils and organisations or councils that have major hazard facilities in their municipality, an additional tool that says: Well, we can actually design and have houses in these areas in these outer safety zones because there's precautions available to deal with them. So it's almost putting, and I don't know whether this exists formally, I don't think it does, it doesn't appear to be a major hazard overlay on any of the planning permits or planning procedures that we can see. But it's really interesting that some of these things haven't been put forward for new buildings and new dwellings in areas with major hazard facilities.

Richard Robinson (11:26):

And it's something we haven't understood. I mean, as we pointed out, in our opinion, it actually doesn't make much sense. Because if you're in a bushfire overlay, you have to design for bushfires. If you're in a earthquake zone, you have to design for earthquakes. If you've got a serious windstorm around, you have to design for windstorm. What you have to do is design for whatever location you find yourself. And that's something which we hammer in our texts and everything else that, I mean, if you live near a major hazard facility, you've got to take it into account that's just obvious. And the closer you are, the more you've got a design for it. And so the example we give, if you're immediately adjacent to it, you might wind up in an underground, reinforced conquering bunker with its own air supply without a view or anything. It'll be fiendishly the expensive and one would imagine you wouldn't want to live there. But it would be safe.

Gaye Francis (12:14):

So there's things that you can do. So the safety and design element, and I think just from a town planning viewpoint, all of those things hadn't been taken into account. Now, I don't know whether there's not the expertise in council to deal with these things or engineering designs to be able to bring that into it.

Richard Robinson (12:31):

Councils have been pretty much de-engineered in the last 20 or 30 years.

Gaye Francis (12:35):

But we were the only technical people involved in this particular case.

Richard Robinson (12:39):

Yeah, and that was a bit of a surprise to me too because there was no expert witness.

Gaye Francis (12:43):

For the council.

Richard Robinson (12:45):

Or for the major has facility or for that matter major hazards. The only people that actually turned up were people representing the legal aspects.

Gaye Francis (12:54):

And the policy position.

Richard Robinson (12:55):

And legal policy aspects. So overall, I mean there's some larger issues and probably the subject of another podcast, which could be sort of talked about here, I suppose the one that puzzled me the most in which we hammered in there significantly... You see what frustrated us if you didn't improve the design at all and just left the existing house there, the four people living in the existing house were subject to broken windows and bits being blown off the roof, i.e. relatively, they were in a more dangerous situation than the eight people in the new houses that were designed for that hazard. And so it was lower risk to develop than not to develop.

Gaye Francis (13:35):

So from our viewpoint, you're potentially setting people up for a fall by not approving improvements.

Richard Robinson (13:43):

Well, that's correct. And that's not in the council's interest, it's not in the people who live there's interests and it's not in the interest of the major hazards facility. So how that situation could arise in the first place is something that we just didn't get.

Gaye Francis (13:54):

So from our viewpoint, I think it was a pretty straightforward decision and the solution was very, very obvious. But it was a very lengthy and difficult complex process to go through to get two new dwellings approved.

Richard Robinson (14:12):

Well, yes, that's right. Although I have to say part of it's we started online and when we actually went to the VCAT hearing in person, I think that did bring things to a head and get everything functioning a lot faster.

Gaye Francis (14:25):

So I think we are pretty chuffed with ourselves that we got a good result for the Nasrallas and safety and design was the way to go.

Richard Robinson (14:39):

Well the other interesting thing was that there had been a number of appeals to the Supreme Court on this whole matter and the way it should be done. And the Member Whitney is obviously very much aware of that and actually tried to address all those cases because she lists all the previous cases that might be the case. And we know one of them, which we've be doing for another client, that had gone to Supreme Court has been sent back to VCAT, <still outstanding> our imagines that this decision may influence those further outcomes, but that remains to be seen.

Gaye Francis (15:07):

Alright, thanks for joining us today and we'll see you next time.

Richard Robinson (15:11):

Thanks.

The Demise of ALARP in Victoria Major Hazards (and the continuing debate on ALARP vs SFAIRP)

Risk! Engineers Talk Governance
Season 2, Episode 2

In this episode of Risk! Engineers Talk Governance, Richard Robinson and Gaye Francis discuss the continuing controversy surrounding ALARP (As Low As Reasonably Practicable) and SFAIRP (So Far As Is Reasonably Practicable) and explain why they believe there is a difference between the two concepts. 

They also recap (further to Episode 1 Season 2) their experience at a recent VCAT case in Victoria where major hazards were assessed based on consequence rather than quantified risk. They conclude that ALARP no longer exists in Victoria - something they're very happy about. 

Please note, it is important to consult with your legal counsel and if they're comfortable with the approach and the method for technical issues.  Contact us if you’d like a chat.

The Role of Risk Managers in Project Governance. Does your organisation need one?

Risk! Engineers Talk Governance
Episode 2, Season 1

In this episode of Risk! Engineers Talk Governance, due diligence engineers Gaye Francis and Richard Robinson discuss the role of risk managers and who the function of risk actually belongs to within an organisation. And why having a really good risk advisor (internal or external) on your project makes a huge difference.

Transcript

Megan (Producer) (00:02):

Hi. Welcome to the latest edition of Risk! Engineers Talk Governance. My name's Megan and I work behind the scenes as producer of the podcast. In this episode, due diligence engineers Gaye Francis and Richard Robertson talk about risk managers and their role in organisations, in particular, their role in project governance.

(00:29):

The podcast is available across all podcast platforms, including Apple, Spotify, and Google. And if you like the episode, we'd love you to give us a rating just to help us spread the word.

(00:43):

Please enjoy this episode and if you have any feedback, please drop us a line.

Gaye Francis (00:50):

Good morning, Richard.

Richard Robinson (00:51):

Good morning. Yeah, good morning Megan.

Gaye Francis (00:53):

All ok for Monday morning. Today we thought we'd talk about risk managers and the role of the risk manager in organisations and projects. And part of this has led on from our book launch of project governance, which we're actually doing later in the week, and the role the risk manager plays in projects in particular. There's a lot of infrastructure projects going on in Australia at the moment and a lot of jobs being advertised, asking for risk managers and risk advisors.

(01:28):

For us that seems a bit of a strange request in risk management because we've always understood that the function of risk belongs with a line management function and belongs with the project director in the case of projects, or the board and the executive management team. So it's a line management function of business as usual.

Richard Robinson (01:46):

That's correct. So unless the risk manager, so called, is line management, then they can't be the risk manager, the best they can ever be as a risk advisor on whose advice line management can rely when they're talking their area of expertise. But to actually say that risk management is a separate function, we think is fundamentally a failure of corporate governance. And that seems to be happening an awful lot around Australia.

Gaye Francis (02:10):

That's right. So as you said, they can facilitate the process. They can provide advice. But what they can't be responsible is for the risk or the risk register for the organisation or the project.

Richard Robinson (02:26):

They can maintain it, but they're not the decision makers. And all the legislation that's been happening later and has just been focusing on that point. I mean the corporation's law basically says that directs have to demonstrate diligence that they can business can pay bills when they fall due. The environmental legislation has always been like that. And obviously the WHS legislation, we've been informed by various lawyers that the whole point of the WHS legislation was a governance document. And the intention was that if businesses couldn't comply with that legislation, they should be put outta business. Now, the idea that you appoint a risk manager to facilitate that compliance that's, or the function seems reasonable, but the actual decision making, the responsibility, which is the whole point of legislation, is Board, CEO and depending on the function of project manager or general manager or whatever you're doing.

Gaye Francis (03:15):

Yeah. I think one of the interesting things in the, the project space as we said was that there's been a lot of risk managers being advised for big infrastructure projects and there've been a request for to look at risks and opportunities. So there's still some confusion around what project due diligence or project governance's about. Most of the benefits for projects have actually been stated up front and you're doing a downside risk assessment to make sure that they don't manifest or impact those critical success outcomes.

Richard Robinson (03:47):

Before any of these big projects get up, and that's admittedly what the large Commonwealth government review seems to be about now, there's meant to be a proper upside downside to work out what all the value that this project will provide, like a new freeway or a new high speed rail. You do all these assessments and studies to sort of confirm what the commercial benefits and the societal benefits will be. But that's all done up front. When you actually decide to implement it and you go to spend the money, you're now basically having an argument about why you won't achieve the things that have been agreed to be achieved.

Gaye Francis (04:16):

So there's usually very little opportunities that can be wrung out of a project once it's sort of been specified what it is. And I think in the delivery team in particular, and unless you understand what those critical success outcomes are for the project overall, then it's really hard to do your delivery. One, you might get some minor benefits, opportunities in relation to, you know, you have really good weather, for example, so you say some of your contingency on wet weather. But they're relatively small compared to potential showstoppers that have the chance of threats that have the chance to impact on....

Richard Robinson (04:57):

And that sort of leads onto the point. I mean, our experience has been, and we were talking about that in other webinars and things like that, but our experience has been that the successful projects, and we've never had one which hasn't gone successfully adopting our, you know..

Gaye Francis (05:12):

Governance approach.

Richard Robinson (05:14):

Governance approach. But the ones we've watched, if there's been a risk manager in the place, they've tended to be ditched if they're acting with people like us around. I can remember that large road project, which we perhaps possibly won't talk about in great detail, but they'd imported at great expense this risk manager - about $2.5 billion project - they imported a risk manager at great expense from the UK. And when we were running the high level risk workshop with all the senior decision makers from the three large organisations, it was just being done in the morning. We were doing criticality, downside risk assessment with the promised upside risk position. And he kept talking about upside, downside risk. It took a couple of hours, but they've just chucked him outta the room and said just forget it.

Gaye Francis (05:58):

He was still trying to do the opportunities.

Richard Robinson (06:01):

That's been the case with all the big projects that we've done. Remember the large project in Queensland, they had two competing projects in that tunnel and we ran our vulnerability workshop coming top down and we were told afterwards that's the reason why they won it. Because the government's agencies were so impressed that all the things that they didn't want have happened. They knew what the benefits were already. That's why they'd asked the tenderers...

Gaye Francis (06:21):

to achieve...

Richard Robinson (06:22):

...to do the job. That, but we convinced them that they had the best grasp of what would make sure that none of the bad things, the downside stuff, would occur.

Gaye Francis (06:31):

And I think sometimes upfront getting all the stakeholders to agree on what all of those upside benefits are is half the battle. And being able to articulate that.

Richard Robinson (06:40):

Well, you remember that all the studies we have done, the owners or the final asset owner, and what their critical success outcomes are, is quite often different to the contractor's who wants to deliver on time, on budget and to spec, and so forth.

Gaye Francis (06:57):

Whereas the project performance one's about functionality. What if we're gonna get improved travel times, improved conductivity and we're gonna get all of these other benefits to be able to move for the infrastructure projects.

Richard Robinson (07:09):

Well, that's the other point. But if you've got this risk manager, they're doing upside downside on the contractor's side, against whom is their upside being against and tested? It's obviously against the owner or the client because that's the only place where they can extract further funds from their point of view. If they delivered on time and budget to spec, the only upside they can get is more money.

Gaye Francis (07:30):

From their client. Or done quicker.

Richard Robinson (07:31):

Yep. Or or they finish it earlier. But that's a positive benefit for everybody. Whereas you watch some of these contracts and then you see there's some inspected thing and there's a large couple of projects around Melbourne involving tunnels where some contamination was found and the delays in costs and the ultimate cost in that case to the government, and that means the taxpayer, was stupendous.

Gaye Francis (07:53):

Yeah, yeah. And that should have been identified way upfront.

Richard Robinson (07:58):

Yes. And I can't believe that wasn't a known issue, that would've been...

Gaye Francis (08:02):

But if you take the risk aspect of it and rather than just saying from criticality viewpoint, you know, is this credible and critical? The answer is yes. Well, we'll manage it from a governance viewpoint. If you take a risk look at it, yes, it has potential for high consequence, but what's the likelihood?

Richard Robinson (08:20):

You might remember that government, the cabinet in confidence project that we stopped and we're still not allowed to talk about.

Gaye Francis (08:27):

Yes.

Richard Robinson (08:28):

After we round a workshop.

Gaye Francis (08:29):

So we probably won't talk about it in this podcast, Richard.

Richard Robinson (08:33):

Possibly not.

Gaye Francis (08:36):

So from our viewpoint the role of... We don't think organisations really need a risk manager. It should be part of business as usual.

Richard Robinson (08:45):

Correct. Line manager is the risk manager.

Gaye Francis (08:47):

You should have risk advisors. And they can be internal or external. It doesn't really matter. And they need to understand a number of processes that can be undertaken, because it's not a one size fits all, tick box exercise, black/white.

Richard Robinson (09:01):

And just do not keep using the risk management standard. We cannot believe how many people are getting into trouble just using that, particularly from project point of view.

Gaye Francis (09:10):

So by having these good people around you that can advise you on projects, they can help you manage the process, they can help you manage the risk register or the precaution register, but they don't own it. And what we've found is sometimes when the risk manager owns the risk register or the precaution register, as we like to call it, the responsible people walk away from it and they make it so complicated that it's really, really tricky to understand and difficult to understand. And so they overcomplicate the risks' register...

Richard Robinson (09:48):

So the senior decision makers do not get it.

Gaye Francis (09:50):

No. And so your risk register for a project should be in the tens, not in the hundreds. If you've got a risk register as an organisation, as a project, that has hundreds of items on it, you miss the point.

Richard Robinson (10:04):

Correct. Cause it's not the big ones that will to kill the project. And we just find that what happens if you've got one of these sort of professional risk managers in there, you get such ginormous risk registers that the important thing is get lost in the dross. And senior management doesn't find out until it's too late.

Gaye Francis (10:19):

And as we said, they're the ones responsible for making the decisions. So, part of it, some of these topics build on each other. And then I guess that's a then a reporting discussion and mechanism of how the credible, critical things, the high level things, get escalated to the right level. And we don't see that done particularly successful at organisational, project level either. As we said (they) mainly have really, really big risk registers, hundreds of items instead of tens of items. So how do you make sure the important things get up to the people that do need to make the decision? Cuz as we said the risk management does not make the decision on what needs to be done to manage those risks.

Richard Robinson (11:01):

What seems to happens, the risk management turned into its own industry and it doesn't always necessarily act in the best interest of the business or the projects. And from our point of view, the effort and the costs that are going into these process, particularly when you create this own empire, I suppose, is just simply not commensurate with the value of the organisation's getting. And it's something we just have not understood. And it's never made sense to us. I can fairly say, over the last 30 or so years. And every time we've come across it, I suppose the risk management functions tends to suffer some slings and arrows. But that's perhaps what happens?

Gaye Francis (11:39):

So I hope you found our discussion interesting. This is sort of one of the topics that annoys me a little bit that this is not as valuable as it could be. Because if you've got a really good risk advisor in your organisation or on your project, it just makes a huge difference. You don't necessarily have to spend, you know, it's not a necessarily a 30 hour a week or a 40 hour a week job to maintain it. But at the right time, you get the right advice from people who know what they're doing.

(12:11):

So thank you for joining us again, and we hope to see you next at the next podcast. Have a great day.