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.

The Contest of Ideas - Has Australia gone backwards in embracing SFAIRP?

Risk! Engineers Talk Governance
Episode 9, Season 1

In this episode of Risk! Engineers Talk Governance, due diligence engineers Gaye Francis & Richard Robinson discuss the contest of ideas and if Australia has gone backwards in embracing SFAIRP. They also observe how many Australian Standards contradict WHS legislation/OHS Act and how Standards appear to be stopping people and organisations demonstrating SFAIRP.

Transcript

Megan (Producer) (00:02):

In this latest episode of Risk! Engineers Talk Governance, Due Diligence Engineers Richard Robinson and Gaye Francis, talk about the contest of ideas and ask if Australia has gone backwards regarding embracing SFAIRP method.

(00:19):

We hope you enjoy the episode. If you do, please give us a rating. Also subscribe on your favourite podcast platform and please do check out the other episodes. If you have any feedback, please let us know. All details for Richard and Gaye are in the description of the podcast.

Gaye Francis (00:38):

Hi Richard.

Richard Robinson (00:40):

Hi Gaye.

Gaye Francis (00:40):

Welcome to another recording of our podcast. Today we're going to talk about something a bit different than we really haven't talked about in our podcast before, and that's around the contest of ideas.

Richard Robinson (00:53):

That's quoting John Howard from 2017 when he pointed out politics is supposed to be about the contest of ideas and not a public relations exercise.

Gaye Francis (01:02):

And we're sort of talking about it in the context of (that) we've been doing a bit of soul searching lately about what R2A (Richard & Gaye's business) is and what we're doing and where we are going. And I think the key thing that R2A has really prospered from over the years is that thought leadership stuff in the risk and due diligence space. And where we've been and where we've come from and where we're going I guess as the most important things. And I think there's been some observations, especially after Covid and the way that business has done after Covid, we thought we'd all be back to normal, whatever that normal was and pre-covid conditions by now. But I think business has really changed forever. I'm not sure that we'll ever get back to the way that business was done prior to Covid.

Richard Robinson (01:47):

Yeah. And there's a lot of factors in that that we're not too sure about. But see, one of the things we've noticed that people aren't, well, for example, buying books the way they used to. At best, they absorb things online. Everything's become a lot more short-term-ism, I don't know quite the way to put it, but everything comes in short sharp snaps now. You don't buy. Reading "War and Peace" was probably never a particularly popular exercise, but it's only something that some of us did some of the time.

Gaye Francis (02:13):

I think it's called a "now" society, which my children are very much about a now society -- we want it now and we don't want to wait for anything. And if it doesn't get you attention for more than, if you need attention for more than five minutes, then that's about it. But everything wants to be, you're right, easily accessible and people want it now, the information now.

Richard Robinson (02:34):

Correct. And they want the solution now too. But as we've commented, thinking is hard. And if you can get it now, why bother?

Gaye Francis (02:44):

Very much so. Very much so. I think in terms of where we are as risk, we always say we are risk and due diligence engineers and due diligence engineers. But I think due diligence has really gone into the governance space.

Richard Robinson (02:58):

Yes. And as we're just pointing out this governance space up with John Clark would be particularly pleased for you to use.

Gaye Francis (03:06):

So the space of governance and you use due diligence I guess to demonstrate that you have been, that you're showing governance in areas of safety projects, operations, all of those things.

Richard Robinson (03:17):

And that's precisely where our two little new books (Criminal Manslaughter & Project Governance) were aimed at. They were aimed at the governance space in those two particular domains, which were there for extracts out of the larger R2A (Due Diligence Engineering) text.

Gaye Francis (03:27):

So I'm not exactly sure what's happening, but we do seem to be spinning wheels at the moment in the risk space anyway. And I think even the ideas that Australia embraced 10 years ago around the SFAIRP methodology and things like that, I think we've gone backwards.

Richard Robinson (03:46):

I think that's correct, and we've been trying to figure out why that might be the case. To some extent we're putting it down to Brexit and a sudden influx of English colleagues and relying on the notion that the UK Health and Safety sector says ALARP and SFAIRP are the same thing. Which is absolutely quite fascinating and it's certainly true, and we've had lawyers tell this to us. I mean in the WHS and OHS legislation, for example, they only define reasonably practicable. They say you've got to eliminate risks so far as reasonably practicable (SFAIRP) and if you can't eliminate to reduce it so far as reasonably practicable, but the legislation only defines reasonably practicable. And we've always noted quite correctly that if every reasonable practical precaution is in place, then the risk associated with the hazard will be as low as reasonably practicable. The difficulty we've always had is that the process you use to do these two things is quite different. And that if you do use the hazard and risk-based approach to demonstrate

Gaye Francis (04:43):

as low as reasonably practicable (ALARP)

Richard Robinson (04:44):

you come up with a different list of recommendations and an effort and a whole lot of things involved. And if you go around the way that's required in the WHS legislation, it's the basic engineering philosophy -- observation. The meanings and the method results are only consequences depending on which method you used, you will get different results.

Gaye Francis (05:03):

And I think that's what the health and safety executive said in the UK wasn't it, that the basis of the two concepts is reasonably practical, but they are different. I'm not sure about WHS or Work Health and Safety legislation in the UK, whether they actually define it the same way that we do.

Richard Robinson (05:20):

Oh they do! The 1974 Act has got SFAIRP in the legislation.

Gaye Francis (05:25):

But then as other practitioners say, how can you say that the two are the same when they've been defined for different purposes by different groups of people. And the way that you'll be tested in the courts after the event is the SFAIRP approach. So courageous is one of the words that we would use to say (they're the same).

Richard Robinson (05:43):

The "Yes, Minister" of (courageous) term. Yes.

(05:46):

Now to that extent and the contest of ideas R2A, we've tended to walk around this in a polite way. And what we've noticed is in order to get people to think our way, we have to get the lawyers on side first. And we've never had any great problem doing that, although beating people over the head with lawyers is not necessarily the best way to start a starting position in life.

(06:06):

But what we're basically sort of concluded, we're going a bit further than that. There are now so many Standards that contradict the WHS (&OHS) legislation completely that is setting organisations up for a fall. The ones that notably we talk about are ISO 31000, the Risk Management Standard. And since that's mandated by government in all sorts of places, the fact that it actually stops people from actually demonstrating SFAIRP stuns us.

(06:32):

But IEC 61508, the Functional Safety Assessment Standard, it still uses target levels of risk and safety. You're not allowed to do that.

(06:39):

AS 5577, the Network Standard, that one's a classic because it's in one paragraph, it says you shall eliminate hazards so far as reasonably practicable and if you can't eliminate them, you've used them as low as reasonably practical. And the one paragraph, it's just unbelievable.

(06:54):

And then you've got AS 2885, the Pipeline Standard. We've had lots of discussions with the pipeline people. And I have to say their ALARP is looking suspiciously like SFAIRP, but they've still got the confusion with the terms.

(07:05):

And EG 0. There's another blindingly complicated one. We've been sort of complaining about that for the last 10 years. And we don't quite understand because if you actually contradict The Act, you can't go around having standards contradicting Act. And that means Standards Australia and the Board of Standards Australia really needs to get its act together. And from our point of view, Engineers Australia needs to pick up the Board of Standards Australia. The whole point of the Engineers Australia safety case guidelines to point out what you needed to do.

Gaye Francis (07:31):

To demonstrate diligence.

Richard Robinson (07:32):

As engineers. And since that's your intellectual body telling you if you go with an Australian Standard and ignore the Engineers Australia code of practice, as far as I know, engineers are setting themselves up for a colossal legal fall, but people are doing these things.

Gaye Francis (07:50):

I think also that people are using the Standards as license to trade. And when your regulator's asking you to do one thing... But people have stopped thinking. Just because a regulator tells you to do one thing doesn't mean that all of those other obligations that you're required to do disappear.

Richard Robinson (08:07):

Our experience is that regulators don't get it right, regularly.

Gaye Francis (08:11):

And there's no downfall for 'em either. There's no,

Richard Robinson (08:13):

Well, they might be publicly embarrassed when it goes wrong, but it's the organisation that suffers and the board and the relevant board that suffers the legal test.

Gaye Francis (08:20):

So I think there's a lot of wheel churning and wheel spinning going on because it's creating so much work for organisations to do, that they're just missing the picture, the big picture of the things that they really need to do to get on with doing their business safely.

Richard Robinson (08:36):

Correct. And we're sort of agog! I mean from our point of view, due diligence is a governance exercise. You can't always be right, but what the courts demand of you is that you're always diligent. And that's why we have suggested on a number of occasions in the past, for example, the Risk Engineering Society should become the Due Diligence Engineering Society because that is the legal duty of engineers.

Gaye Francis (09:02):

To be diligent.

Richard Robinson (09:03):

To be diligent. It's never been the duty to be risk engineers. The duty is to be due diligent engineers.

Gaye Francis (09:09):

And I think just going on from the risk as well, you got to make sure that you're addressing the vulnerability what can actually negatively impact your business rather than just the threat per-se.

Richard Robinson (09:25):

Yes. Well that was Bob Browning, one of our previous associates went to a lot of trouble explaining that's a security point of view. It's not the threat that counts, it's how you're vulnerable to the threat that counts. And we just had an interesting conversation this morning with the water authority to the effect that we are not entirely sure, but that distinction between the threat and where you're actually vulnerable and that you have to demonstrate due diligence for that vulnerability is what you need to do. Sometimes just because of the practical application, you will address the threat, but that's not always the way that it's done.

Gaye Francis (09:58):

I think the example there was climate change, wasn't it? So climate change is obviously a threat to many organisations, upcoming risk, but how does it actually impact your business going forward and what implications does that have for your business or consequences? And that's what you need to address in terms of the resilience and the availability of your system that you going forward with.

Richard Robinson (10:23):

Correct. And I think that was the other thing which was interesting in the conversation was, you see, the engineers have basically made a feast of hazard risk analysis for the last 30 years. But there's a lot of other different ways to go about this. And the really weird thing about this risk business, and I sort of think we've talked about this before, none of the techniques that people apply are in error. They will all give insight. It's just that this risk thing, the risk space, is a multidimensional creature and you can slice and dice it in all sorts of different ways and you will get the different insight. Where the systems are coming unstuck, so far as we can tell, is that people aren't thinking through what is the analysis type they need to get the answer that they require in order to demonstrate in governance terms that they've been diligent.

Gaye Francis (11:06):

And by getting different insight, they'll give you different insight as you said. But what's the most useful insight? And I think in doing that, you also now have to understand what some of the downfalls for each of the techniques are. Some have different, well, they all have different benefits, but you've got to understand the pitfalls of those techniques as well going forward. So you know what the limitations are and what aspects may be missing from that understanding.

Richard Robinson (11:33):

Well, that's just coming back to the Standards business and there's that quote I give you from the 1939 (or) 1937, I can't remember which one, was Chairman of Victorian Division of Engineers Australia, who pointed at the Standards have two purposes in life: To prevent fools from their folly and rogues from their roguery. And so far as I can tell the points he was trying to make was, you need to think through from first principles as an engineer competently how it ought to be. And then you test back against the Standard to make sure you haven't done anything stupid. Even the Standards I'm complaining about that miss the point of the WHS legislation doesn't mean to say they're entirely in error. There's lots of good bits and pieces in there. Because, remember, it's not a Standard that's recognised good practice it's the relevant ideas in the Standard that's recognised good practice.

(12:14):

But the first one, that's fools from their folly. And practically, if you're trying to hang a contractor who's hashed up a job the quickest way to do it's to say you're rotten sod, you haven't complied with the Standard, you're toast. Well that's rogues from their roguery. But you never want to go there. You want to get it right the first time. Diligence doesn't mean you're hanging people. Diligence means you get it right initially.

Gaye Francis (12:36):

And I think that's the key thing about the due diligence process. It's supposed to get you to enable you to get on with things and make things happen, which is what engineers are about making... changing things.

Richard Robinson (12:46):

And due diligence makes things happen. Risk analysis stops things from occurring.

Gaye Francis (12:51):

That's correct. We had lunch with an associate a couple of weeks ago and said, due diligence is really about, it's the laxative, it makes things happen more smoothly. Hadn't quite thought about due diligence engineers in that way. <laughing> That was a very interesting analogy. And it is. It's supposed to make things happen and get on with things. You've only got limited resources, limited time, limited budget, and what is the best option or optimal option going forward to achieve the things that you want to achieve. So that's why it's super critical to identify what you're trying to achieve, what are your options to get there and what are the best ones in those circumstances?

Richard Robinson (13:39):

Which is what the WHS legislation requires of you. We don't get why people use the Risk Management Standard in contradiction to the legislation. To us this is more than just courageous because this is willfully doing it. The fact that government agencies demand the risk management standard process when the WHS legislation specifically tells you not to do it, is proper reflection on the code of practice, which is also an error. But I think that's the subject of another podcast.

Gaye Francis (14:04):

I think that might be the subject of another podcast. So we've done a bit of a venting session today and just the frustrations of where things are at, but there is a lot of confusion out there and I think it feels like industry has gone backwards with the acceptance of SFAIRP going forward. And the processes that were being implemented and now being eroded, I think. And there's been a lot more emphasis on quantitative risk assessment.

Richard Robinson (14:36):

Correct. Using target levels of risk.

Gaye Francis (14:37):

Using target levels of risk and trying to characterise it. And as we've said on many, many occasions in our podcast and anyone that's ever listened to us before, you ask two risk experts to go and characterise the risk associated with something, you'll always come up with two answers. So which is the right answer?

Richard Robinson (14:54):

And it's always better to be roughly right than exactly wrong, which happens a lot.

Gaye Francis (14:59):

So all that we would say going forward in this is be careful of Standards.

Richard Robinson (15:06):

Think!

Gaye Francis (15:07):

You need to think these things through. There's a whole lot of tools and techniques out there that are useful techniques, but you have to understand the limitations of it. And it's not a one-size-fits-all tickbox exercise when it comes to due diligence and governance.

Richard Robinson (15:22):

And when it comes to the crunch and you're an engineer, a code of practice from Engineers Australia, your intellectual body, unless the Standard is called up by statute of regulation, the code of practice from your intellectual body will always have a higher standing in court than an Australian Standard.

Gaye Francis (15:40):

So thank you for joining us this afternoon. We hope you found it interesting and we hope that you can join us next time. Have a great afternoon. Bye. Thanks.

Richard Robinson (15:51):

Bye.

White Island Volcano Eruption - NZ trial on alleged breach of Workplace Health & Safety laws

Risk! Engineers Talk Governance
Episode 8, Season 1

In this episode of Risk! Engineers Talk Governance, due diligence engineers Gaye Francis and Richard Robinson discuss the current New Zealand trial on the White Island Volcanic Eruption.

The White Island volcano erupted on 9 December, 2019 resulting in 22 deaths. Charges were brought against various parties involved alleging breaches in New Zealand's workplace health and safety laws.

This is one of the first big test cases of the WHS and Workplace Health and Safety laws in Australia and New Zealand. And the outcomes will be fascinating will set a precedence.

Transcript

Megan (Producer) (00:02):

Hi, welcome to this edition of Risk! Engineers Talk Governance. In this episode due diligence engineers Richard Robinson and Gaye Francis talk about the current trial in New Zealand regarding the White Island volcanic eruption and the charges brought against various parties under the potential breach of the New Zealand workplace health and safety law.

(00:29):

We hope you enjoyed the episode. If you do, please give us a rating to help spread the word. You can also check out other episodes in this first season. We also have all the details for Richard and Gaye and their business services in the description. If you have any feedback, please let us know.

Gaye Francis (00:49):

Welcome to another podcast recording session. We're a bit different today. We're doing this remotely. (Richard's) at home and I'm at home. But, we thought we'd record a podcast today on the White Island Volcanic Eruption and the trial that's commenced in New Zealand just recently in the last month or so.

(01:06):

A little bit of background. The White Island volcano erupted on the 9th of December, 2019, and 22 people were killed on the island during the eruption. WorkSafe has bought some charges against some parties involved, who own the island and operate. So I think there were 13 parties charged originally.

Richard Robinson (01:30):

Yes.

Gaye Francis (01:30):

And they've alleged to have breached New Zealand's workplace health and safety laws. In the proceedings today, it looks like that six have pleaded guilty so far. One party, the charges have been dropped. And then there's been six proceeded to trial.

(01:50):

So I think, Richard, you were just gonna give us a bit of an introduction on who those parties were and what the charges were, and then we'll go through some of the insight into what what we've been reading in the press reports.

Richard Robinson (02:04):

Yeah. What, what I found particularly interesting, and again, we're just reading the press on this one here, is that the island, it's actually privately owned. It was bought by some grandfather, stockbroker apparently some time ago, and he passed it on to his son and then the son passed on to his three grandsons. So the island's actually owned by these three grandkids. And they've tried at different times to make money out of the thing. And in the end, the only thing that came up with was having tours to the island. So that's what they've been busily selling.

(02:30):

Now, this is a hydrothermal eruption apparently, which I don't know too much about. I know very little about volcanism and those sorts of things, but basically these things apparently can be primed and ready to go. I mean, if you just think of... obviously it's a volcanic island and it's in New Zealand, and they're on the fault line. And hydrothermal basically means there's a pile of water down there, which is suddenly flash into vapor unexpectedly. And apparently when you listen to the volcanologists, it's a very difficult thing to predict. Although it was actually the case that the volcano was showing some energy and energetics, I think it was at level two activity. And I think level three means it's really underway. So the suggestion was that this volcanism was known, from some form of foreseeability viewpoint, which is what the basis of this action is. And in view of this knowledge or lack of knowledge, in the case of the owners and tour operators, they didn't bother to try and find out, apparently they didn't really understand that this thing was perhaps more closely ready to go than it could have been.

Gaye Francis (03:30):

I think that one, just before the proceedings started, the WorkSafe New Zealand chief executive said in one of his interviews: "This was an unexpected event, but that does not mean it was unforeseeable. And there is a duty on operators to protect those in their care". So they're saying exactly that. And I think one of the interesting things at the start of the trial was they started talking about risk assessment, had a whole lot of risk assessment experts in, and they were arguing about the likelihood of it, which was really quite interesting at the start and how likely an eruption was going to be. And I think, going back to that WorkSafe quote, although it was unexpected, it wasn't unforeseeable and it's now happened. So how do we move on from there?

Richard Robinson (04:16):

Well, it's interesting 'cause I remember, I was telling you, I was just looking at the part of the Wrongs Act in Victoria, it deals with negligence and all that sort of thing. And one of the things that it specifically makes the point is that you can have an obvious risk, but it can be rare. You know, the fact that something's rare doesn't mean that it's not obvious. And that you should know and do things about it. And, I think, what particularly interested you was, I mean, I was looking up, one of the parties that got the charges dismissed against them was their national emergency management agent. In fact, they could awarded $40,000 for their expenses for doing all the work. And that point you made, because what the judge said when they were dismissing it says that the NEMA, this nationally emergency management authority of New Zealand never deviated from its position before and after it was charged. That is (i.e.) they had a position, they'd thought it through, they did what they said they were gonna do, and they followed it through. And that was the point that you just made when we were talking about what we're gonna do here.

Gaye Francis (05:11):

And I think that that's the interesting thing, isn't it? And this is what we tell our clients when we do due diligence review for them. You can't always be right, but you can always be diligent. And by having a plan in place and having it thought through, and then acting on that plan, it shows a process, a governance process, which I think the WHS legislation was always aimed at. It was a governance process for organisations to demonstrate that they thought these things through.

Richard Robinson (05:38):

Well, remember that last expert witness case we were doing for that bushfire in South Australia for the South Australia Supreme Court. The lawyer was just asking us for the process. He wasn't asking whether the decision that they'd finally come to was the right decision. They were testing to see whether the steps they'd gone through were reasonable; that they had tried and they'd thought it through and they talked to the right people and maybe everybody got it collectively wrong, but that still didn't mean they weren't diligent.

Gaye Francis (06:02):

And I think that's one of the things that's coming out of the White Island volcano (case); they're saying, well, New Zealand has a volcano monitoring service, the GNS Science, but they weren't specifically engaged by the tour operators or the owners of the island to do a specific risk assessment -- whether that's the right term or not -- on the island, and the risk of actually running tours through the island. So they're sort of saying: Well, there was this expertise in the country, had they gained the information they needed to make a diligent decision about doing the activities that they wanted to do on the island.

Richard Robinson (06:42):

Yeah. It's interesting that whole risk business pops up again, remember the podcast on (language of) risk, we were talking about the fact that the courts used the term a different way -- after the event the fact is obviously certain. It's actually interesting because it was Kiwi (New Zealand) judges we were quoting, 'cause Frank Stocks put us onto those Kiwi judges and Kiwi cases where the Kiwi courts were making the point that, in court risk means the likelihood of the event that happened; in this case, this rare event.

Gaye Francis (07:10):

Mm. The volcano. One of the other interesting things was the first week sort of focused on that risk assessment process and the information that was sought or provided to the various parties about the volcano. And then the second part of the trial is focusing on what else could have been done. Which is really the focus of the WHS legislation or the Workplace Health and Safety legislation in New Zealand.

Richard Robinson (07:39):

But it's the point it's not who owns the hazard, it's who has control.

Gaye Francis (07:44):

And they were talking about apparently there was a shipping container put in place which could have been as a shelter in the event of a volcano, but the volcano apparently erupted very, very quickly and the likelihood of people being able to get to the shelter in situ was pretty unlikely. So now they're looking at what other controls can be put in place to be able to run these sort of activities there.

Richard Robinson (08:14):

Well one of the things that you were mentioning was the fact that the people weren't wearing special clothing. Obviously PPE is the lowest thing you'd ever think about, but one of the problems that the survivors have got is that their clothes melted into them because they were rather basically plastic.

Gaye Francis (08:29):

Wearing active wear rather than cotton clothing.

Richard Robinson (08:34):

I mean, even if you put people in cotton overalls and things like that and made sure they had big safety boots and things like that, you'd be making a clear statement to people that this thing's serious. You wanna think about it, you're just not a tourist snooping at something hoping it doesn't go off.

Gaye Francis (08:49):

Mm-hmm. Which is sort of the way that chemical plants and things like that can spill out toxic clouds and toxic materials. They sort of deal with that, don't they, when you go out onsite, you have to have the full long sleeves, long pants, cotton, so, as you said, it won't melt into you.

(09:09):

But as you said, that's way down the hierarchy of controls. But I don't know that the... they did talk about some engineering controls and I don't know whether they're reasonable or not, but they're talking about ballistic shelters and refuge shelters. And I know in bushfire terms, people are starting to look at that -- being able to shelter in the place if they get stuck, they can do that. Whether a shelter can be designed for a volcano, I'm not sure?

Richard Robinson (09:39):

Well, it's interesting that the army had been in in shiny suits and breathing apparatus to try and retrieve people. And they spent six days apparently in fairly trying circumstances doing the best they could. But, again, if you were put into a big shiny suit with some breathing apparatus, you'd probably think it was a pretty serious event, wouldn't you? Which you otherwise might not consider that to be the case.

Gaye Francis (10:02):

And I think that's part of it, isn't it? It's that information; was the right information shared with the owners and the tour operators and then with the actual tourists. I know when you do those dangerous activities, they sort of give you a waiver to say, I understand those things. But they have to be in layman's terms that the people actually understand, don't they?

Richard Robinson (10:25):

Well I don't think jumping out of an aircraft that anybody's in any doubt of it goes wrong, it's gonna kill you. I dunno if the clarity...

Gaye Francis (10:31):

I don't if you think about it that way when you're 20 though.

Richard Robinson (10:35):

Well, that's part of the point. I don't know if people have thought about it like that. And so it, it's gonna be an interesting thing to see where the Kiwis actually land. I've gotta say that.

Gaye Francis (10:43):

I'm not sure whether the ones that have pleaded guilty, whether they'll just involve fines or whether it'll be jail time. But as you said, this is really the first big test case, isn't it, of the WHS and Workplace Health and Safety laws in Australia and New Zealand. And the outcomes will be fascinating. I think. Will set a precedence going forward.

Richard Robinson (11:10):

Almost certainly.

Gaye Francis (11:12):

So we hope you found our podcast interesting today. A little bit different with Richard and me online together, and we hope you can join us next time. Have a great afternoon.

Richard Robinson (11:22):

Thanks Gaye. Bye everyone.

Gaye Francis (11:24):

Bye.

Rail Safety National Law - The confusion between it and the WHS Legislation/OHS Act

Risk! Engineers Talk Governance
Episode 7, Season 1

In this episode of Risk! Engineers Talk Governance, due diligence engineers Gaye Francis and Richard Robinson discuss the Rail National Safety law and the confusion with how it stands in relation to WHS legislation, and why if you satisfy the requirements of the WHS legislation, you have, in turn, satisfied the requirements of the Rail Safety National law. 

Access the full CORE conference paper.

Contact us for information on our Rail Safety workshop.

Transcript

Megan (Producer) (00:02):

In this latest episode of Risk! Engineers Talk Governance, due diligence engineers Gaye Francis and Richard Robertson talk about the Rail Safety National Law. This follows Gaye's recent conference paper presentation at CORE, the Conference of Rail Excellence recently held in Melbourne. We hope you enjoy the episode, if you do, please subscribe across your favourite podcast platform, give us a rating and also check out the other episodes. Enjoy.

Gaye Francis (00:37):

Hi Richard. Welcome back for another podcast session.

Richard Robinson (00:40):

Brisk, isn't it?

Gaye Francis (00:41):

It is very brisk today! Today we thought we'd talk about Rail Safety National Law, and this follows on from two things. We currently give a Rail Safety National Law and OHS legislation workshop through Engineering Education Australia. And I also gave paper recently at the CORE conference, Conference on Rail Excellence. And there was a lot of interest in that and SFAIRP. So what we'll do today is we'll outline what the legislation actually is, what it means, and how you go about satisfying that legislation. So it's almost a promo for the course and the paper which we will attach at the end of the session as well. So you (Richard) can do the formal part.

Richard Robinson (01:30):

And you'll just chip in as usual.

Gaye Francis (01:31):

That's the one!

Richard Robinson (01:32):

I got that plan.

(01:34):

Well, first thing is just to understand what the Rail Safety National Law is. Now, just from a philosophical viewpoint, it was explained to us by a bunch of lawyers. There are two basic ways to have harmonised legislation and we need this process because Australia's basically a federation; basically each state is its own little country. Like Victoria had its own Navy for a while. And when we federated, they gave up the minimum powers necessary to create the federation. And that's one of the reasons why we have high court, because we had state Supreme Courts, because they were the High Court in each of the little nations -- 'cause we had our own ambassadors to London, and all the rest of it. And when we federated, in order to put our Superior Court in, we called it the High Court, rather than stopping the term Supreme Court and changing it all around. One of the things we were supposed to sort out was rail safety or rail harmonisation. The legislation sort of says we're gonna have standard gauge and we could go through a little brief history of how we got to the different gauges if anybody's got a passing interest, as explained to me by a Queensland rail engineer a while back.

Gaye Francis (02:34):

But I guess what we're saying is that has yet to be achieved.

Richard Robinson (02:38):

But you see, if we wanted to harmonise rail safety, and literally last time I looked, if you're driving a train from Sydney to Melbourne, for example, and once you cross the border, what means "go" in one state, apparently means "stop" in the other state, which has always mystified me a bit and we haven't resolved that one yet. So kudos to train drivers, I think is the first point!

(03:00):

Now, if you want to get around this problem of harmonisation, you have to have an inter government agreement. And that means like GST, all the states, and all the ministers from the states of the Commonwealth all have to agree and sign to take it forward. And in terms of actually harmonising legislation, there are two core ways you can do it.

(03:20):

You can do it like the model WHS legislation where somebody creates a model WHS Act and everybody says: Yep, we'll adopt that model act and we'll make little additions or ammendments to it to suit ourselves, which is what's actually happened. Or you can do it the way they did the Rail Safety National Law, which is one parliament passes legislation and then all the other parliaments say: Yes, that's our legislation subject to these modifications.

(03:43):

Now in the case of Victoria, for example, the Rail Safety National Act that went through South Australia, which is the one everyone agreed to adopt, that was 191 pages. And the Victoria modifications is 160 pages, which tells you something about the way in which this implementation has been done.

Gaye Francis (04:00):

So there's a lot of confusion 'cause you almost gotta read both lots, both the South Australian Act and then the (Victorian) modifications to get a full understanding of what the law is in that particular state.

Richard Robinson (04:12):

Yes. And it gets really quite confusing. I mean even with the model harmonized WHS legislation, you know, they have Section 18 and then they put numbers after it when they insert their own thing. You know, so for example, in the Commonwealth Act, there's an expression in there that with regards to Department of Defense and nothing in this Act shall interfere with the defense of the realm, basically. Meaning that if we're at war then the WHS legislation, well and preparation for these things, which is what the Defense Department is, it has a certain weight on the scales, which other civilian operations wouldn't have.

(04:50):

Now, the whole point of the Rail Safety National Law was it was meant to implement the core concepts under the model WHS legislation as it applies to railways.

(05:02):

That gets particularly confusing, because when they sort of say: What's the difference? Well, you know, just for example, Section 48: If a provision of the Occupational Health and Safety legislation applies to railway operations, that provision continues to apply and must be observed in addition to this Rail Safety National law. So they're basically saying the WHS Act applies. The Rail Safety National doesn't stand 'instead of', it stands 'as well'. And if the provision of this law is inconsistent with the provision of the Occupational Health and Safety legislation, the provision of the Occupational Health and Safety legislation prevails to the extent of any consistency; which says it's superior to, quite specifically. And compliance with this Rail Safety National law, with any requirement imposed to the law is not of itself a defense of proceedings of an offense against Occupational Health and Safety legislation. And evidence of relevant contravention of this Rail Safety National law is admissible in any proceedings for an offense against the Occupation Safety and Health legislation, which basically means it's superior.

Gaye Francis (06:11):

The health and safety legislation is superior.

Richard Robinson (06:14):

So we find it all a little bit strange because one starts to wonder why on earth you bother having a Rail Safety National in the first place, if all it is going to do is to apply to rail matters as opposed to any other safety obligation. But obviously if two trains run into each other, or a level crossing accident occurs, the provisions of the WHS legislation still apply. So it's curious...

Gaye Francis (06:36):

Our understanding is that the rail regulators then have agreements with the health and safety regulators to prosecute under the OHS and WHS legislation for rail matters. Is that correct?

Richard Robinson (06:48):

Yes, except when you have a complicated matter like the level crossing accident of Wallan Victoria, whereas a New South Wales train running on ARTC tracks. So it's being heard in a Victorian Magistrate's Court.

Gaye Francis (06:58):

Yes, yes.

Richard Robinson (07:00):

Which means it's rather difficult to actually separate out who's gonna be responsible for these things.

(07:06):

But see the other point though, is that in most jurisdictions now, they've actually stuck Criminal Manslaughter provisions in under the WHS legislation. So if they wanted to get you under criminal provisions, they'd have to go under the WHS legislation, not under the Rail Safety National law. Although obviously the five years for recklessness, new or made or let it happens, still applies under the OHS or the...

Gaye Francis (07:29):

the Rail Safety or WHS legislation.

Richard Robinson (07:31):

Or both. The main differences as far as we can tell is that that the Rail Safety National law applies to rail safety work. It obviously creates the regular <inaudible> in Adelaide. And it obviously enables the accreditation of railways, the ARO and all sorts of things. And it promotes safety management systems as applied in the rail business. So that is sort of helpful, because otherwise how would you do that if you didn't have a separate separate Act? But the core duties are identical, and the WHS legislation takes precedence and all the terms and ways that we can see.

(08:11):

Now that sort of leads you on to: What are you actually then going to do? Well, our observation is that if you wanna satisfy your duties under the Rail Safety National law, you've basically gotta satisfy your duties of WHS legislation. There'd be very little point in just satisfying the Rail Safety National law and then being beaten to pulp under the WHS legislation, you would think.

Gaye Francis (08:29):

<affirmative>. So in our terms, we are really saying the SFAIRP approach (so far as reasonably practical) is a modern definition of SFAIRP, and in railway safety terms, it asks the question: If you're affected in any way by a railway network, passenger, driver, at a level crossing or a railway worker, how would you expect that network and rolling stock to be designed and managed in order for it to be considered safe? So we're really applying the SFAIRP process to any of those rail safety matters.

Richard Robinson (09:01):

Well, that's right. The duty (of care) is the same, so that's what you do. I mean there's a few other points we could probably make, but I actually don't know that it actually, you know, it actually comes back to our basic observation that the WHS legislation was a direct spin-off of due diligence as a defense against negligence in the Common law, and they elevated the Statute law and then they continued that elevation through into the Rail Safety National law, so it became far more peculiar and probably effective or focused, I suppose is probably the way to put it, to rail operations. And that's fine. We don't have a philosophical problem with that. But you know, it's a bit like, you know, when we had that incident in Wallan with that level crossing accident there, I mean, which jurisdiction? Well, it happened in Victoria, so it has to be in Victoria, even though, as I said, it's...

Gaye Francis (09:48):

...had different parties involved.

Richard Robinson (09:51):

All different parties. Yeah. So, yeah, it's complicated.

Gaye Francis (09:55):

So I guess that's the difference then between doing a compliance order or a compliance review with, you know, to each letter of the legislation and achieving the requirements of SFAIRP.

Richard Robinson (10:07):

Well, that's always been our point. There's no point in actually... I mean, I keep coming across lawyers who tell Boards that what you need to do is a compliance audit. And it's probably true that if you've done a compliance audit, it probably will be difficult to prove beyond reasonable doubt on a statutory basis, that the Board and the Board members were liable. Will that make their organisation safer?

Gaye Francis (10:30):

Probably not.

Richard Robinson (10:31):

And if you want to be safe, what you've gotta do first of all, is manage things to satisfy the Laws of Nature. Why won't the two trains collide? And then having done that and demonstrated to yourself in engineering or scientific or however terms you wish to think about it: How have you've done that? Functional safety terms, 61508, and so forth. What makes you confident that you've done that in a way which would satisfy post-event legal scrutiny? I mean, you may recall when we did the functional safety assessment on the I IEC 61508 for how two trains would get past each other in New South Wales on a single line track, your (Gaye's) first job, as I recall, was pretty much going through every crossing every time there was a...

Gaye Francis (11:12):

That trains could interact.

Richard Robinson (11:14):

Interact, yeah. Confirming that the watchdog would prevent that interaction from improperly occurring. I don't think it was one of your favourite jobs, but you did it! <laugh>

Gaye Francis (11:25):

And it did take a very long time.

Richard Robinson (11:27):

And I would remind you that in the times that when we were the certifiers and our signature R2A's signatures were sitting on the functional safety assessment in orange of who was then the train controller in New South Wales, there were no rail accidents in that time for any of the mechanisms that we are talking about under the, well, it was TOCS, train order control system, and then it turned to Tmax train management and control system.

Gaye Francis (11:50):

So with any of our rail safety jobs that we do, and in-line with the WHS legislation and the Rail Safety National law, we still always go through our four processes. What's our argument for completeness? Have we got all of key credible critical issues on the table? For all of those, what are the controls that you can put in place.

Richard Robinson (12:11):

The possible practical precautions, those things that can be technically done?

Gaye Francis (12:15):

And this is probably one of the things where railways fall down a little bit. They're very narrow looking in that they're not often looking for new technology and new solutions to apply to railways and the application to railways. But the legislation requires you to look for those further controls.

Richard Robinson (12:33):

Are we allowed to give that example of the GPS system on the trains in New South Wales? You see, without going through the detail of how R2A got involved in this thing, but basically what happened was that they put in this new train control system and it had a whole lot of checks in it and so forth, well, at least it was supposed to have it. And then they had a near miss incident. And apparently it was some redundancy in the software and the processing and all these sort of things. And it turned out that for various reasons, the IT people hadn't quite got the work done. And the near miss occurred, and I wasn't actually at the meeting, but I heard about it afterwards, that, you know, the question was: Well, we had a redundant system here, why didn't it work?

(13:14):

And the answer was from the IT people was: Well, we couldn't get it working, so we just let it go with just the one system. And apparently that was a fairly chill meeting. To cut a long story short, that's where R2A turned up. And the first thing we said: Well, you need a way to independently verify where the trains are. And the obvious thing to do, in this day and age, and this was 20 years ago now, was GPS. And everyone sort of looked at each other and said: Retrospectively and retrofitting GPS on all trains, the freight trains that traveled through New South Wales rural, that'd be hard! That'd be a long (process). How can we do that? Well, we quite literally found out a week later, in order to make the train control system work, you had to have good radio communications with the trains. In order to prevent ghosting between the radio towers i.e. having trains on the same frequency, talking on the same frequency, they have towers on different frequency with different geographic coverage. In order for the train to know which tower and which frequency it was talking to, it had to know where it was. And in order to know where it was, the radio engineers, the communication engineers had put GPS on the train.

Gaye Francis (14:21):

So this control already existed!

Richard Robinson (14:23):

Well, that function already existed. Which was just absurd. Now we only found that a week later.

(14:28):

So the next thing to do is to say: Well, let's do a trial. And the trial was basically whenever the driver pushed a push to talk, the GPS location was in code and sent off to train control. And that meant we could actually formulate a watchdog, which was a safety critical computer platform by the defense people in Adelaide, running a safety critical language called Ada, which was very small piece of software, which gave at least a good overview of what the train and train controllers were actually doing with the train management system. And that was the way in which it was certified. Which you (Gaye) spent a lot of your time sorting out <laugh>.

Gaye Francis (15:02):

And I guess that's the third step, isn't it? Determining what the reasonableness of each of those further controls is. You know, is it reasonable to do?

Richard Robinson (15:10):

Well then the (conference) paper, because we do a lot of work in marine pilotage, all the marine pilots have personal pilotage units these days, which have matured vigorously over the last 30 years. They're all battery controlled. You could quite literally give a driver a marine pilotage personal pilotage unit and the train driver would have a genuine, independent knowledge of where they were and if the communication <inaudible> working properly, what all the environmental factors around the track would be, where all the track gangs are and everything. And because the marine pilotage guys have got so good at, it's looking at, I think, all eight satellite systems now -- Galileo, the Europeans, the American GPS, the Russians, the Indians, the Japanese, the Chinese. There are so many satellite navigation systems and they know to their centimeter where they're, and they also have to put in, you know, G3 and G4 and G5 communications and they're all toughened up and robust to prevent hacking and all sorts of things these days. And to do that for train drivers, probably $3,000 a unit and probably at least $50 million to code all rails train and rail tracks to handle that sort of, where are we and what are we doing here sort of thing.

Gaye Francis (16:24):

But that's one of the other points, isn't it? Technology's become, or has advanced so much in the last 10 and 15 years that what may not have been reasonable 20 years ago may entirely be reasonable now.

Richard Robinson (16:37):

Ubiquitous, I think is the word you're seeking.

Gaye Francis (16:40):

Yes. And then the last step, of course, is to make sure you've got a quality control system to make sure that what you say you're gonna do remains in place and remains robust and effective.

Richard Robinson (16:52):

Yeah. People keep forgetting. I mean, safety means you don't want it to go wrong. But from a legal point of view, liability only rises because of inadequate, insufficient, or failed precautions. It doesn't arise because something's risky per se. That the nonsense. People keep talking about riskiness and I think, they don't what they're talking about. The question is SFAIRP'iness not riskiness,

Gaye Francis (17:12):

I don't know that SFAIRP'iness is actually a word, but...

Richard Robinson (17:16):

SFAIRP isn't a word either, actually <laugh>.

Gaye Francis (17:20):

So I hope you've enjoyed the podcast today. We just wanted to run through that there is some confusion with the Rail Safety National law and its interaction with the WHS legislation. But all the rail organisations that we've talked to said that if you satisfy the requirements of the WHS legislation, you have, in turn, satisfied the requirements of the Rail Safety National law.

(17:44):

So thank you for joining us again. Thanks Richard. And, we'll see you next time.

Richard Robinson (17:50):

Thanks, Gaye.

What do you mean by the term Risk? The language of, and confusion around, Risk.

Risk! Engineers Talk Governance
Episode 6, Season 1

In this episode of Risk! Engineers Talk Governance, due diligence engineers Gaye Francis and Richard Robinson discuss the language of risk, why confusion reigns in organisations, and why they avoid using the term of risk altogether.

Transcript

Megan (Producer) (00:02):

In this episode of Risk! Engineers Talk Governance, due diligence engineers Richard Robinson and Gaye Francis talk about the language of risk and why it's so imperative for people within an organisation to be on the same page when using risk management terms. We hope you enjoy the episode. If you do, please subscribe on your favourite podcast platform and also check out the other episodes within this season of the podcast. Also, give us a rating and if you are after further information, all the details for Gaye and Richard are within the description. Enjoy the episode.

Gaye Francis (00:46):

Hi Richard, and welcome to another podcast session.

Richard Robinson (00:48):

Hello Gaye. Good to be here.

Gaye Francis (00:51):

So today we're gonna talk about the language of risk and some of the confusion that it has and some of the double meanings, I guess, and that you need to be careful when you are using (the word) within your organisation. 'cause it can have different meanings for different people.

Richard Robinson (01:06):

It's a little bit more than just double (meaning)!

Gaye Francis (01:09):

<laugh>. A few more meanings then.

Richard Robinson (01:12):

It depends who you're talking to.

Gaye Francis (01:13):

That's right. So we actually have a section in our book, in the Due Diligence Engineer Chapter 2 of our R2A text, and we're gonna go through that today and then go through what, what the different definitions are, how people use it, and then how we get around that confusion and the sort of language that we've tried to move to, especially in line with the WHS and Environmental legislation that now requires so far as reasonably practical.

Richard Robinson (01:42):

What do you mean: How do we get around it? What we basically do is avoid the term risk as far as possible.

Gaye Francis (01:47):

Well that was our conclusion. Yes. But <laugh>, we might work up to that.

Richard Robinson (01:53):

Well, first of all, I was just gonna go through the five meanings that we understand risk to have as a term. And then when you see it in the term risk management and you see the way different people use it and the different ideas that they have when they're using it, well you can see how these two things get so mixed up and scrambled.

(02:10):

Now the first one is, and this is the way sort of more or less historically as it happens, is risk as a noun. Now, a long, long time ago, I was trained as a highly protected risk engineer by Factory Mutual in the US and when they talk about highly protected risk, they talk about the site itself, the insured site, the risk site, that's a noun, right. They started that terminology in 1840 and so Zacharia Allen, I can take you through the history if you're particularly interested, but possibly not!

(02:38):

But the insurance world has always used risk as a noun because they're basically talking about the insured site. That's what they mean. What happened basically when risk management started and all the engineers turned up with sort of subsequent enthusiasm, was they started treating the word risk as an adjective to describe the risk associated with the hazard. So it's a property of the hazard rather than the thing in itself. And that's where you get that simultaneous appreciation of likelihood and consequence.

(03:07):

Then if you wind up in court, which is, and there's some examples in our book from a (New Zealand) court to that effect. See, once you wind up in court the fact is the thing has happened. So when the court uses the term risk after the event, they're talking about the likelihood of that particular outcome. So they're just using it as a likelihood after the event. But when the lawyers are writing before the event, as in the WHS legislation, they're talking about the risk, you know, the risk to health and safety. What actually are they talking about? Because they're not talking about the way in which lawyers talk about it after the event.

Gaye Francis (03:39):

No, they probably refer to it more as the consequence likelihood, a simultaneous appreciation of.

Richard Robinson (03:44):

Well, certainly when you read Chris Maxwell's review of the 2004 OHS Act, he seems to have that confusion even though he specifically wanted to put in the common law view, which is the hindsight driven view, which basically says that everybody's entitled to an equal level of precaution, which is actually derived from the likelihood side only for particular nasty big things that happen. So there's a bit of confusion there.

(04:10):

Then you get risk as a concept involving future uncertainty, which is just sort of part of the human condition. I mean, what's gonna happen next? I mean, you know, apparently we're not gonna have the Commonwealth Games in Melbourne anymore. We just recently discovered, well that's future uncertainty. And we sort of know a few people involved in that project. And one wonders how, well, we don't know what's gonna happen, do we!?

(04:31):

And then there's the last one, which is the finance people are using, which confuses people even more and which the risk management standard, despite their profession about... they talk about risk and reward, but then they talk about negative risk and positive risk, which is kind of more confusing 'cause the reward side is the positive risk and the negative side would be what we would normally have termed pure risk.

(04:53):

Now, it possibly gets even more muddly when you actually talk about the term risk management, which everybody uses with enthusiasm because it depends on who you're talking to as to what they mean by it. Now we're basically sort of rattling... this is from a fellow called Dr. Ron Bromley who is one of my old bosses from yonks ago, when I used to work for M and M Protection Consultants. M and M Protection Consultants was the lost control division of Marsh McLennan, as one of the Americans put it to us when he jumped off the plane from America and said to the assemble of Australians, two thirds of the world is covered by water, the other third is covered by Marsh McLennan. <laugh> That had about the same effect on you as it had on us! <laugh> But Americans are sometimes enthusiastic in this regard. Anyway, he basically just said, look, if you wanna know what somebody means by it, just look at who they're and what they do with it.

(05:44):

So a safety manager, and that's sort of the person who sort of started to talk about risk management in the first instance, they were talking about maximising safety budgets, getting the greatest resources to the best works they can to minimise loss. That's what they in mind.

(05:58):

When you're talking about a risk manager, which was the next term that sort of popped up from the safety manager, well, they're out to maximise corporate profits.

Gaye Francis (06:07):

Yeah, there was more a corporate organisational approach.

Richard Robinson (06:12):

The problem is they probably didn't really understand the contribution of the sort of the physical management of risk to results in the way that the safety manager did because they were always fretting out what could go wrong.

(06:23):

Then you had the line manager who started using the term risk management and they wanted to maximise production objectives and maximize profits.

(06:30):

Then the legal advisor and lawyers, they sort of hopped in and started using the term risk management. What they meant by that they're out to manage potential conflicts and win court cases.

Gaye Francis (06:39):

So it became almost a liability management tool, didn't it?

Richard Robinson (06:42):

Correct. Disputes equals prosperity too. And sign off is difficult.

Gaye Francis (06:47):

For the law profession. Yes. <laugh>

Richard Robinson (06:48):

For the legal lawyers. That's right. But then the asset managers got a hold of the idea. That's one of the reasons why the risk management standard mutated from being strictly a downside risk asset management process and went upside downside. Well, they wanted to maximise investment returns and minimise downside risks. They wanted to maximize upside, minimize downside. Which gives rise to your frustration....

Gaye Francis (07:12):

The chance between zero harm and risk appetite. Because no one has an appetite for safety. Downside safety outcomes.

Richard Robinson (07:21):

Killing and maiming. Nobody's got an appetite for that. But if you're talking about upside downside, yes, you need a risk appetite statement.

(07:29):

Then you've got the underwriters, well they want to maximise underwriting profits, but that means they have a narrow approach. And I think what's happened is their approach was so narrow, basically they're being ignored now. I think they actually sort of dipped outta that one.

(07:39):

Then you've got the insurance brokers, well, they're out to get more clients and maximize profits, but affordable services only. I remember one broker telling me something along the lines, now look Richard, in order to get the business, we promised the earth and having got the business we conduct "a realistic reassessment of the insured's needs". <laugh>

Gaye Francis (08:00):

Not quite the way to do business. Or get the best... well gets them the best results!

Richard Robinson (08:04):

Gets the best result for them.

(08:06):

Then you've got board members, well, they're out to maximise profits, but they're also out to minimise personal liability. And when you look at the WHS legislation, well the big guys are still as we still seem to have the corporate veil working for them, but the small guys don't, from what we've seen.

(08:22):

And then you've got auditors. Well, their job's to confirm that reality matches history - the two things, history and reality align or what people are saying is what's actually occured are actually aligning. But this is a historical analysis. The past doesn't reflect the future. So if they're saying something about what happened the last five years, who's gonna say what happened in the last five years is gonna be reflective of the next five years. It just doesn't happen.

Gaye Francis (08:45):

No. So with all of those different meanings (of risk) to start with, and then the way that different people use it and organisations use it, then there is a huge confusion out there. So, you know, we often get the requests: Can you come and do some risk management for us or a risk assessment for us? And it's sort of like: Okay, what are you trying to achieve with this? And until you actually sit down and look through what they're trying to achieve and who's asking the question, it depends on sort of the process that we use.

Richard Robinson (09:14):

The call we got this morning about resilience. So people are using resilience both as a pre-emptive and a post-emptive strike, aren't they? They haven't quite decided, have they?

Gaye Francis (09:23):

No. But it all goes towards their risk management.

Richard Robinson (09:27):

The management of risk.

Gaye Francis (09:28):

Yes, of future uncertainty. So, like we were talking before, Richard and I try not to use the term risk and and risk management. So we often do issues workshops. And because the legislation, especially in safety terms, ask for all reasonable practical precautions so far as is reasonable practical, we often call them SFAIRP reviews.

Richard Robinson (09:51):

Correct. Well, that's the only way to do it. Because that is your legal duty.

Gaye Francis (09:54):

And it cuts through all of the knots associated with risk and people's preconcep... Can you help me out with the word? <laugh>

Richard Robinson (10:04):

Preconceptions.

Gaye Francis (10:05):

Thank you. Tongue twisted today!

(10:07):

...on what risk is. Because often they come with that and if they go to a workshop they're expecting for, typically in engineering cases, the consequence and the likelihood to be characterised.

Richard Robinson (10:21):

I'll have to try some more words on you. <laugh>. Transmogrification. How do you feel about that? <laugh>

Gaye Francis (10:26):

That's a very impressive word!

Richard Robinson (10:28):

<laugh>. Well, as you can see, our view about all this is that when you sort of have somebody who starts talking risk management, you've really gotta have a look at how they use the term if you really wanna understand what they're about. And our general experience is if you're sitting around the board meeting and somebody starts using the word risk management and they've all come from different career paths to get there, you basically have instant confusion unless somebody actually gets up and sorts it out.

Gaye Francis (10:54):

So I think for us, absolutely look at at risk as future uncertainty, but it really focus on the controls that you need to put in place to manage it. And then it really doesn't matter from which aspect you come for it, from what position you have or, you know, take you have on it, if you're focusing on what the controls are going forward, it should manage all of those things. It should be a liability management tool. It should improve safety. It should be able to give you good returns on investment. If you do all of that, if you're focusing on the precaution based approach.

Richard Robinson (11:31):

Well, it's a little bit more than that. It's actually, you know, 2000 years of western philosophy. But for some reason we keep forgetting the whole point is your fate isn't fixed. You can change it if you want to.

Gaye Francis (11:42):

That's true. <laugh> That was very deep on a podcast.

(11:48):

So what we're saying is just be careful with the language of risk. Understand who you're talking to. And some of these buzzwords are being used, as Richard said, resilience seems to be the new one, but it is a form of risk management, you're just trying to get the best out of your assets, and it's being required to deliver it. So just be careful around buzzwords and what you actually mean and dig deep enough to get that understanding.

(12:17):

So thank you for joining us again. We hope you found it interesting. We look forward to presenting another podcast in the near future.

Land Use Planning & Major Hazards

Risk! Engineers Talk Governance
Episode 5, Season 1

In this episode of Risk! Engineers Talk Governance, due diligence engineers Gaye Francis and Richard Robinson discuss land use planning and major hazards. They share some work they’ve been involved with and how design engineered controls are very reliable, and there are precautions and mitigations that responsible parties can put in place to protect themselves against major hazards facilities.

Transcript

Megan (Producer) (00:01):

Welcome to this edition of Risk! Engineers Talk Governance. In this episode, due diligence engineers Richard Robinson and Gaye Francis talk about land use planning and major hazards. We hope you enjoy the episode. If you do, please give us a rating. Also, remember to subscribe on your favourite podcast platform and check out the other episodes.

Gaye Francis (00:30):

Hi Richard, welcome to another podcast session. How are you today?

Richard Robinson (00:35):

It's good to be here.

Gaye Francis (00:37):

Now we are going to talk about today land use planning and major hazards. We've been doing a little bit of work in that space at the moment and some of the confusion around that. So where do you wanna kick off?

Richard Robinson (00:52):

Well, I think it might just be worth explaining R2A's current position and where we got to. Basically in Victoria, the 2004 OHS Act came in and from R2A's viewpoint, that changed the way in which land use planning around major hazards ought to be done. Up until that point, what everybody seemed to be doing was this quantified risk assessment using target levels of risk and safety. In Victoria, that's (1 x 10) - 7 /year for a single fatality. And in New South Wales, that's (1 x 10) - 6 /year for a single fatality. As well as some societal risk curves and things like that. Now, from our point of view at R2A after the Buncefield incident, that's where you had the giant vapor cloud explosion in the UK, which basically decimated the fifth largest oil storage facility.

(01:37):

And it might just be worth briefly explaining what that incident was, just so everybody understands the context of all this. Basically, they overfilled a petrol tank by 300 tons of petrol that splashed out into the bun, and there were a whole lot of reasons why that happened; people missing calculations and overflow, the switches which didn't work and a few other things. But the short answer was that about 10% of it turned into a vapor cloud. So that's 30 tons of vapor floating around looking for a problem. That 30 tons of vapor, up until that point, unconfined vapor cloud explosions weren't really deemed to be credible. What was expected to happen in those instances that you get a deflagration, that is a defined ignition source and the flame front would progress through the cloud, but at subsonic speeds; it wouldn't go supersonic and create a shockwave.

(02:26):

Obviously, if you're in the cloud when this was happening, that would be bad. But the detonation wasn't supposed to happen. Now this was a very odd collection of events. In order for the vapor cloud to hang around, you had to have the right atmospheric conditions. And then according to the Professor of Fire Engineering in Scotland, Dougal Drysdale, they'd pollard the trees. You know how when you try to mix chemicals up, you have to have a really interesting sort of shape of twisty things. And apparently the pollarded trees facilitated the mixing of the vapor. So that actually firmed the perfect stoichiometric mixture. So when it found the ignition source, which apparently was a fire pump, sort of ironically, the thing actually detonated, which was obviously, and you can see by all the factors that I've just articulated, a rare event by the definition.

Gaye Francis (03:16):

It wouldn't expect all of those things to come together in one sequence.

(03:19):

Very unlikely and very unlucky. Right. But the consequence was from R2A's viewpoint - and we kept talking with relevant major hazards and regulators in all states, especially Victoria and New South Wales - And they persisted in using the quantified risk assessment approach using target levels of risk and safety.

(03:37):

Where the likelihood just downgraded all of those incidents to say that it wasn't going to happen.

Richard Robinson (03:43):

Correct. Because it was so rare. They just pulled it back to the ten to the minus seven or the ten to the minus six fatality.

Gaye Francis (03:49):

And tick, we got our license to trade.

Richard Robinson (03:52):

Now the problem with all this is, and this is what Maxwell QC specifically said, now I'm actually summarising a conversation I had with somebody who'd been talking to him and an example he was giving, but he's sort of saying, look, it's like this; somebody lost an arm in a press somewhere and a workplace inspector turns up and said, "how the hell did this happen?", and you know, "This is an XYZ press that should have a guard". And the answer was, and under the old Act in Victoria at least you had to do a risk assessment and you could do a risk assessment using target levels of risk and safety, and you could multiply the likelihood by the consequence, and if it would be in the green zone, you didn't have to do anything.

(04:31):

Now, obviously the consequence didn't change. If you put your arm on the press, you lost it. The likelihood factor is determined by multiplying how often you do it by the probability of the event. And so if you only ever use the press every one or two years...

Gaye Francis (04:48):

The probability's really small; likelihood's really small.

Richard Robinson (04:50):

Yes. But you still lost your arm. <affirmative>. And one of the points about the Common Law and the OHS Act so far as we're concerned took the common law and elevated the statute law. It basically says; everybody's entitled to an equal level of protection. <affirmative>. So if you use that press at all, it doesn't matter if you use it 10 times a day or once a year, you are entitled to an equal level of protection. And that equal level of protection, the minimum, must achieve is recognised good practice.

Gaye Francis (05:15):

Yes.

Richard Robinson (05:16):

And that means it's consequence driven. So what happened to R2A was we kept trying to persuade major hazard regulators to adopt a criticality driven consequence, credible risk consequence approach. And they all kept using...

Gaye Francis (05:32):

Risk.

Richard Robinson (05:32):

Quantified risk assessments. And so R2A had to walk away from it.

(05:36):

The other point about that though was, and that's why R2A changed ourselves from being risk engineers to due diligence engineers, because that's what you're trying to demonstrate. And the only way to do that was to actually use the criticality driven vulnerability type approach.

(05:52):

Now, why we're interested in this and why the subject came up and Gaye's looking at me slightly strangely, but anyway, the reason why this popped up was that we got this request to have a look in Victoria at a couple of major hazard proposals that were nearby a major hazard facility. And it turns out very recently...

Gaye Francis (06:11):

Some developments.

Richard Robinson (06:12):

...some developments, very recently, that the area that you have to consider for major hazards planning purpose has suddenly increased.

Gaye Francis (06:22):

The contours have changed.

Richard Robinson (06:23):

The contour's changed. And nobody knows quite why this has happened.

Gaye Francis (06:26):

We have a bit of an inkling that they've gone... they're now being driven by the consequences rather than the likelihood.

Richard Robinson (06:33):

We think they're taking the credible worst case consequences. And the way you normally do that, from R2A's viewpoint, you do a zonal vulnerability analysis. You basically say, where's the largest energy storage on the site? Like a gas sphere, for example. And if that dropped as low, what's the credible worst case that could happen? And the consequence for that is, you then say; well, this is the credible worst case consequence from this site. You then look at where you are in proximity to that and design for that accordingly.

Gaye Francis (07:00):

They've still got a little bit of buffer in there because they're still taking a lot of their measurements from their boundaries.

Richard Robinson (07:06):

Correct.

Gaye Francis (07:07):

So there's a little bit of a buffer in there, but yes, they appear to be consequence driven rather than risk driven. The contours.

Richard Robinson (07:13):

We think so. We don't know so, because nobody's saying. <laugh>

Gaye Francis (07:18):

Very hard to get all of this confirmed.

Richard Robinson (07:20):

Absolutely. Cos all you get is a public summary of whatever the safety case with the major hazard regulator and the major hazard site is. And that actually doesn't tell you. And that is particularly frustrating. We at R2A very much support the view of the US Supreme Court Judge Louis Brandeis in his happy little book "Other people's money and how bankers use it" where he spells out; 'sunlight is the best disinfectant, there is no sunlight in here at all'.

Gaye Francis (07:47):

I think one of the... and I guess where we are coming from now... So yes, they've changed to that consequence driven, what appears to be consequence driven contours. What they're still doing though, is they're not applying the full precautionary approach that's been required by the OHS and WHS legislation. They're still concentrating their controls only in the controls of what they have. So they're not looking at the overall controls that could be put in place to deal with a major hazard facility, that all parties, reasonable parties or responsible parties could put in place.

Richard Robinson (08:23):

Correct. Because, you see, it's not the level of risk that's important. It's a level of control. I mean, if you want to be safe and live next door to a major hazard facility, you might be in an underground reinforced concrete bunker with its own air supply, which will be stupendously expensive and the amenity will be terrible.

Gaye Francis (08:40):

Very ugly!

Richard Robinson (08:41):

But you will be safe.

Gaye Francis (08:42):

Yes.

Richard Robinson (08:43):

That's not the issue. It's just a question of designing for what you've got. And what puzzles us is every site has problems. There can be flood,

Gaye Francis (08:51):

Cyclone,

Richard Robinson (08:53):

Lightning, bushfire, overlays. Designing for bushfires as one of the critical ones that people do now. <affirmative> You've gotta take into account. And the worst part about it is, and this is the bit that really bothers us, is that by not actually articulating this properly, they're leaving the people who are currently there potentially exposed. I mean, if you're dealing with explosions, the things you're really fret about. And I mean this is just a standard terrorist modus operandi, is that you put a bomb outside a building and you let it go 'bang' and if the glass isn't properly laminated and things like that, the glass just turned into shrapnel and pails everybody inside the building. And with an explosion, it's not so much the over-pressure that causes the biggest amount of grief.

Gaye Francis (09:32):

It's the shards of glass exploding.

Richard Robinson (09:34):

It's bits of materials that get picked up, tiles and things like that get flung out at high speed. I mean, that's what killed that poor girl Katie Bender in Canberra when they took the hospital down, remember? And they blew it up and the metal shard came flying across the lake and killed her. I mean, you know, you've got a plan for what the credible, critical worst case consequences are.

(09:54):

And so far as we can tell, all these municipalities that have major hazard facilities, they haven't been told what the credible, critical, worst case is. It's just opaque. And so anybody who's living there doesn't really know what they should or should not be designing for. And the council's actually not actually in a position, in terms of building and planning controls, to actually answer that question correctly. And what's probably something I don't think they fully comprehend... Whilst the OHS Act of Victoria and the WHS legislation in all the other jurisdictions, is the enabling legislation for major hazards. And whilst Ministers are exempt from the legislation, they make the rules. And local government elected counselors, I think are too, although I'd have to double check, that's a legal question. That doesn't invalidate the responsibility of the planners, designers, architects, engineers, all the other people from not providing appropriate safe (advice) consistent with their obligations.

(10:53):

And since, Victoria in 2020, Premier Andrews made Criminal Manslaughter, following the rules from the Common Law, admittedly it's gotta be on a beyond reasonable doubt basis. But what disturbs us about this is, we're fairly confident that the major hazards facilities and the major hazards regulator know what these credible worst case consequences are.

Gaye Francis (11:15):

And maybe not sharing the details with the responsible, other parties that really need to know about them.

Richard Robinson (11:21):

Well, yeah. Like the people who are actually at risk, for one! And it's a duty under legislation, you must consult. It's an offense if you do not consult at the front. So there's something really peculiar here that hasn't properly been addressed.

Gaye Francis (11:34):

But I think if all of the responsible parties take that role of what they can do, you're gonna make those developments so much safer than what they currently are. There's so much more that you can do outside of just what the major hazards facilities can do.

Richard Robinson (11:50):

Remember we did that place in Queensland all those years ago now where they had the hospice on the hill overlooking the

Gaye Francis (11:57):

Major hazard

Richard Robinson (11:57):

And they had four major hazard facilities. <affirmative>. And remember we turned up... You see, I do have a certain sympathy for the major hazard facilities because they're kind of cranky because they keep getting all these people building closer and closer to them.

Gaye Francis (12:09):

Yes. They have been there for a very long time.

Richard Robinson (12:11):

And I can see why they're frustrated. In this particular case, the hospice on the hill was there before the major hazard facility. So there's some moral...

Gaye Francis (12:19):

Yep.

Richard Robinson (12:20):

..there. But when we turned up to talk to them, the question we asked them; "Right guys," Cos they're so used to being beaten to a pulp by the community for creating dangers for the community. Right. And we sort of turned up and said, "Look, we gotta live together here. What do we have to do as a site to protect ourselves against the credible worst case consequences that you guys can produce?" And I remember them looking back at us saying, "You're not here to beat us up? You're just here to ask something?"

Gaye Francis (12:45):

"Did you really ask that question?" <laugh>

Richard Robinson (12:47):

"We're really here to find out what we need to do to protect ourselves against you from the credible worst case things you can do. That's in the interest of the major hazards facility and that's in the interest of the,

Gaye Francis (12:56):

the site.

Richard Robinson (12:57):

Tthe site and the people doing things. It's in everybody's interest. Remember we had to go and see the Deputy Premier about that one.

Gaye Francis (13:03):

But what was interesting about that was there were things that could be put in place, to make the facility safe or the site safe, against the major hazards. And it wasn't that complicated and didn't cost a lot more money when they were in the planning and the development stages to put in at a site that already existed.

Richard Robinson (13:23):

Well, I think it actually has a larger social implication too. Because one of the things we suddenly realised dealing with the council, and so forth, there were no engineers around. Council had just been de-engineered. Now this has all been decided by town planners and building surveyors. I don't think they had a clue about what could actually be done. And, I mean, I was trained as a highly protective risk engineer in the US with Factual Mutual all those years ago. I'll perhaps not go into too much history, but the whole point of the Factory Mutual system, it's an engineering underwriting organisation. You can't join the pool unless you have achieved and developed your site and facility to recognised engineered management standards. You simply can't join the pool. So the idea that you can't engineer this sort of stuff, it was just preposterous. It's been being done from Factory Mutual since the 1840s. And the idea that major hazards, regulators and councils aren't fulfilling their duties under our legislated obligations by our parliaments, I just find extraordinary.

Gaye Francis (14:18):

And I think they're, they're really doing themselves a disservice in and in the development stages or in the development of their communities as well because they're really relying on one set of controls that are often after the fact, and not concentrating on a set of precautions that could easily be put in place.

Richard Robinson (14:35):

Following the hierarchy of controls. There's something really peculiar. And the idea that people are actively breaching the legislation and knowingly doing so, well, perhaps, I wouldn't say knowingly, it's inadvertent, but from the way in Victoria passed the legislation, it is not just recklessness anymore - you knew or made or let it happen - it's also ought to have known.

Gaye Francis (15:00):

Yeah. And I think that makes a big difference.

Richard Robinson (15:02):

And, and I'm confident major hazards and the major hazard site, they have studied their site, they know what the credible worst case consequences are. And by spelling these inner and outer safety areas, they're actually ineffectively spelling out what they believe the relative consequence around the site would be. And that should enable appropriate design controls.

Gaye Francis (15:24):

And I think that's the summary of this podcast, isn't it? That major hazards have existed in our communities for a long time. There's some controls that are there, that they put in place. But there's a whole lot of other controls and precautions and mitigations that other parties, responsible parties, can put in place to protect themselves against these facilities.

Richard Robinson (15:44):

Design engineered controls are very reliable, robust controls, not emergency procedures. So if you're dealing with an explosion, I mean explosion of travel at the speed of sound.

Gaye Francis (15:53):

You're not gonna get anyone out in that time.

Richard Robinson (15:54):

It's 340 meters per second. Okay. The inner outer safety area is sort of between 300 to 1,000 meters. This is all going off in three or four seconds.

Gaye Francis (16:05):

But robust building designs and precautions you can put in place and they will be very effective.

Richard Robinson (16:12):

Always.

(16:13):

Otherwise you abrogate the entire basis of an industrial civilisation and 200 years worth of effort and it's quite peculiar.

Gaye Francis (16:21):

Okay. So that's sort of our summary. Don't sterilse a whole lot of land from major hazards facilities, just because you don't think there's other precautions that can be put in place, because there are.

(16:34):

So we hope you found our podcast interesting and we look forward to you joining us next time. Thanks, Richard.

Richard Robinson (16:40):

Thanks Gaye!

Regulations & Licence to Trade

Risk! Engineers Talk Governance
Episode 4, Season 1

In this episode of Risk! Engineers Talk Governance, due diligence engineers Gaye Francis and Richard Robinson discuss regulations and licence to trade, the difference between the two and some of the confusion and difficulties it's causing for organisations, especially in major hazards.

In their chat, they highlight the need for organisation to have their legislative requirements met and also their license to trade, and that managing and balancing both in an effective and efficient way is a big battle. And, ultimately, it doesn't work long-term to simply satisfy the regulator whilst ignoring the legal (legislation) issues.

Transcript

Megan (Producer) (00:02):

Hi,; welcome to this edition of Risk! Engineers Talk Governance. My name's Megan, and I'm a producer of the podcast. In this episode, due diligence engineers, Richard Robinson and Gaye Francis talk about regulations and licence to trade, the difference between the two and the confusion and difficulty it's causing for organisations, especially those that work in major hazards.

(00:35):

You can listen to the podcast across all major platforms, including Apple, Spotify, and Google. And if you enjoy the episode, we'd love you to give us a rating to help us spread the word.

(00:49):

Enjoy the episode. If you have any feedback, we'd love to hear from you.

Gaye Francis (00:55):

Good morning, Richard, and welcome to another podcast.

Richard Robinson (00:58):

Morning Gaye. We're just rolling on from the previous one, which we've never done before.

Gaye Francis (01:03):

That's all right. We thought we'd talk about regulations and licence to trade and the difference between the two and some of the confusion and the difficulties that it's causing for organisations, especially in the major hazards facilities. And the difference between that. So I guess where do we start?

Richard Robinson (01:26):

Well, I guess I'll explain what the issue is. Particularly this flows from the WHS legislation and particularly since the WHS legislation is the enabling legislation for major hazards and high risk work generally. And an awful lot of regulation has been made around this. Now, the difficulty you have is that the WHS legislation basically has a hierarchy of two in its hierarchical controls. You've gotta eliminate risks to health and safety, and if you can't eliminate them, you've gotta reduce them all so far as reasonably practicable.

(01:55):

But then when you go and look at what the regulators are doing, they're all using this risk-based approach. And particularly, for example, if you consider the hierarchical controls of most jurisdictions, most of 'em have got six (hierarchy controls). They talk about elimination, which is obviously the highest one, but then they usually go through substitution, isolation, engineering, administration, and PPE. I think that's one that's about six.

(02:17):

Now, the difficulty there is that the legislation's clear the hierarchies too. Eliminate or minimise, yeah. When you act as an expert witness, the thing you find out fairly fast in which we've always done and all the barristers and all the expert witness cases before all the Supreme Courts, which we've done these cases before, it's broken into three. You eliminate, you prevent it from happening. And if it does happen, you then reduce the scale of the outcome.

Gaye Francis (02:42):

Which is mitigations.

Richard Robinson (02:44):

Which is mitigation. So there's crash-worthiness in the cars and airbags, whereas for elimination is let's not have have cars and road at all. And prevention would be Elon Musk's self-drive cars because you don't have to rely on people after that. We'll just keep you away from the accident althogether.

Gaye Francis (03:01):

I guess what Richard's trying to say is the engineering aspect of hierarchy controls can work in all of those three. It can eliminate the hazard, can prevent it from happening, and it can mitigate the consequences. So it never quite made sense to us that hierarchy control of six or seven, because engineering could fit into a number of places depending on what you were talking about and what the control was.

Richard Robinson (03:27):

Well, it always did. That was one thing. I've never; it's never made sense to me why engineering was deleted from those other ones. I could never figure out why that happened. But from the point of view of the judiciary, it's only in three categories anyway. Now, the only jurisdiction we're aware of that's sort of got three categories is Queensland. Victoria's got four. Western Australia and New South Wales prefer the six, as does Comcare (Federal Government). Although I have noticed in New South Wales, they've been looking at obviously the Queensland version of three. But even that doesn't quite line up with the...

Gaye Francis (03:59):

Because they've still got substitution isolation engineering in that middle box. That level two. And then they sort of put their admin and their PPE in the lower level of a level three control.

Richard Robinson (04:10):

But the real point about this, and this is from the point of view of being expert witnesses, what this means is that in order to get a license to trade, you've gotta satisfy your regulator. So your regulator says, I want you to do these things, or they ask you to do prepare safety cases in certain ways. So you do all these things. But if you are filing that hierarchy control, that's very likely to be not consistent with the hierarchy control as articulated by the legislation.

Gaye Francis (04:35):

And I think a lot of the regulators are actually specifying in some of those safety cases and in those requirements of boards that the process is actually in line with ISO 31000, the risk management standard. And so not only are the hierarchy controls at odds with the legislation,

Richard Robinson (04:54):

And the common law as interpreted by expert witnesses,

Gaye Francis (04:57):

But also the process is in contradiction. So you've got organisations spending a whole lot of extra time doing something to get a license to trade, which doesn't necessarily meet their legal and their legislative obligations.

Richard Robinson (05:12):

Obligations.

Gaye Francis (05:13):

<laugh>, thank you. I was a bit tongue tied there for a minute. Um, so it's creating a whole lot of extra work for these people for very, very little value.

Richard Robinson (05:23):

But it's more problematic than that. You see if, and particularly in major hazards who've been using the quantified risk assessment approach. We're, we're about to, we're giving some pro bono advice to somebody at Melbourne, for major hazards, and the fact that, I think they, the major hazard regulated Victoria suddenly lifted their game and realised that it's all about consequence and the SFAIRP obligations, because remember, major hazards is enabled by WHS legislation. And so you get this silly situation that it really is bizarre. You're gonna have to spend all this money to get a license to trade, and then you have to do all again in order to make sure you satisfy your legal obligations under the common law and the WHS legislation or in Victoria, the OSH Act.

Gaye Francis (06:05):

And I'm not sure that the board and the senior executive understand that those two processes contradict each other.

Richard Robinson (06:12):

But they only understand when... Remember I told you about that... we were there for that rail operator. He was fretting about locos on Code Red days, diesel locos starting bushfires from the cinders from the stacks. And remember we had the lawyer on one side, the risk manager on the other side, and us from the middle, and we finished our little presentation and the GM looked to his lawyer and said, is what these two just said, right?

(06:38):

And the lawyer said, yes. That's the point at which he told us we were under privilege, and he turned to the risk manager and said: "Fix it".

Gaye Francis (06:46):

So from a top down viewpoint, and as risk advisors, I guess we always tell our clients to make sure that you satisfy your requirements of the legislation first...

Richard Robinson (06:54):

And get your lawyer standing with you once you're doing it.

Gaye Francis (06:57):

...to make sure that they agree with that. And then you do the extra parts, you know, by exception, that's required in the license to trade aspect.

Richard Robinson (07:06):

Correct. And you in that order.

Gaye Francis (07:08):

You do it in that order. And that sort of still brings you workload down, but if you do it the other way around or is two separate processes, you're potentially setting yourself up for a fall because you can come up with two very, very different results.

Richard Robinson (07:21):

Ah, but it's actually worse than that because if you've actually got yourself a risk manager, so-called who's taken responsibility for this thing, and therefore the decision maker, it actually creates a blockage to that understanding to the board. And that's been our experience of briefing the boards.

Gaye Francis (07:35):

Yes. That they don't have an understanding that there's two different requirements.

Richard Robinson (07:39):

You might recall we were just doing it for the very large international miner of which there were two on the planet from an Australian perspective, and we weren't allowed to speak to the board or senior management until the lawyer confirmed that what we were saying was the way to do it.

Gaye Francis (07:53):

Mm-hmm. <affirmative>. So getting in engineers...

Richard Robinson (07:56):

We did 13 briefing sessions, I think, didn't we?

Gaye Francis (07:58):

We did end up doing a lot of briefing sessions for him, so he was obviously happy with what we were saying and happy for his troops to do it.

(08:07):

But coming back to that, you know, I think there is a misunderstanding or a lack of understanding between the two processes and the requirements of that. And engineers, and I guess the risk advisors in organisations have that responsibility to bump it up to the people that can make the decisions. We understand that organisations have to work within their regulatory framework, but it can't contradict the requirements of the legislation either.

Richard Robinson (08:34):

And that happens more often than you might believe. So it's back to the original purpose of this. You need to do two things. You need to satisfy your duties, your governance duties under environmental, corporations law, WHS legislation, the mind of the corporation via the CEO

Gaye Francis (08:55):

And the board

Richard Robinson (08:56):

and whatever the organisation is. And in addition to that, you need to satisfy your regulator in order to get a license to trade. As it's been pointed out in the past, you know, being a board member and being in jail is not a good result.

Gaye Francis (09:12):

No. So we hope you found that chat. Interesting. We've got a few more chats that we will roll out over the next couple of weeks. And if you've got any comments or questions and other ideas, we're happy to hear.

Richard Robinson (09:27):

One of the points we're just having this chat, obviously, and we hadn't particularly planned this because it had been our experience that Gaye and I have these conversations and this office about various points sometimes to Gaye's surprise...

Gaye Francis (09:39):

Some random discussions, yes, do happen to in our office, Richard.

Richard Robinson (09:42):

Yes. But it actually is directed at critical issues that in governance terms that organisations have to live with.

Gaye Francis (09:51):

And you have to deal with both of 'em. You can't just satisfy you know, you need both, don't you? You need to be able have your legislative requirements met, but you also have to have your license to trade. So managing and balancing those two things in an effective and efficient way is a big battle for organisations.

Richard Robinson (10:11):

And I have to say, it's been our experience too, when you're working with clients where they've just been trying to satisfy the regulator, ignoring the legal stuff, it actually doesn't work long term. You just run into a wall.

Gaye Francis (10:21):

Mm-hmm.

Richard Robinson (10:21):

But anyway.

Gaye Francis (10:23):

All right. Thanks for joining us. Have a great afternoon.

Richard Robinson (10:26):

Thank you.

Role of Standards & Do They Meet Your Legislative Requirements?

Risk! Engineers Talk Governance
Episode 3, Season 1

In this episode of Risk! Engineers Talk Governance, due diligence engineers Gaye Francis and Richard Robinson discuss the role of Standards, why it's important to understand the different types of Standards, the information they contain, and why some Standards may not satisfy your legal obligations under the OHS/WHS legislation. 

Transcript

Megan (Producer) (00:02):

Welcome to this episode of Risk! Engineers Talk Governance. My name's Megan. I work behind the scenes as producer. In this episode, due diligence engineers Richard Robinson and Gaye Francis talk about the role of standards, particularly within the role of risk management and governance. We hope you enjoy the episode. If you do, please subscribe on your favourite podcast platform and give us a rating.

Gaye Francis (00:32):

Hi Richard. Welcome back to another podcast session.

Richard Robinson (00:36):

Okay, it's good to be here again.

Gaye Francis (00:37):

It's good to be here again. Today we're gonna talk about the roles of standards and some of the confusion that standards is creating and the different types of standards. We do outline this in our booklet "Criminal Manslaughter, How Not To Do It". So Richard's just gonna run through a quick summary of the different types of standards or have you got a bit of an introduction first, Richard? [I have a bit of an introduction first.] Go for your introduction.

Richard Robinson (01:01):

It's one of these important things. You see once upon a time, Australian Standards particularly was called by regulation and legislation. Now, one of the consequences of the OHS Act in Victoria and the harmonised WHS legislation around Australia is, we've been told this a couple of times by different lawyers, the parliamentary council's advice is that it's inappropriate to delegate the power of Parliament to unelected standards committees because if the committee changes their mind about something, then everybody's gotta follow because effectively it's got the power of Parliament behind it. Now, that was hammered into us when -- remember we did the dangerous goods review for defense and we were going around all the defense installations? We had a member of the Dangerous Goods Committee with us. And that fellow said, well, I'm on the committee. And so if we change our mind, it happens. And we sort of looked at him strangely and thought that can't be right. And that's why we found out about this question, the WHS legislation changing all this.

(01:51):

Now this is how the consequence of bumping down the role of standards. Because standards, if they're called up by regulation or by the Act, obviously have the same level of understanding. But after that, they got pushed all the way down. And I don't think it's something Standards Australia really has quite figured out yet. Now, the reason why it's also important is that people keep saying, well, I, if I've done something to the Standard, I must be good.

Gaye Francis (02:14):

I've complied with the Standard.

Richard Robinson (02:16):

I've complied, I must be good with the legislation. And the problem is that's not what the legislation intends. Now the legislation says you've gotta achieve the highest level...

Gaye Francis (02:25):

of precaution as is reasonably practical.

Richard Robinson (02:27):

That's right. Now it is true that the Act only defines reasonable practicability as one lawyers pointed out to us. But if that's the case, why does the intention of the Act say the highest level? Now it may be true that from a beyond reasonable doubt basis, the test of reasonable practicability would only be applied. But from a common law viewpoint, I would've thought the highest level that's reasonably practical would be the one that you'll be tested against.

(02:52):

Anyway, that sort of introduction then brings us to the question, what is a Standard? And the problem that we've noticed is that Standards, the fact that something is standard doesn't mean it's really a Standard. And that's really the problem. Now, historically, Standards have been developed in different ways and I'm just gonna read out the five standard types that we're aware of from our little book that Gaye mentioned before.

(03:16):

The first one is Standard as Measure -- weights and measures. I mean, what's a kilogram? You know, what's a lumen? What are those? [They're measurable things.] Yeah, measurable scientific things. Although the way they've been defining them lately is all in other physical properties like mass has now been defined in terms of energy just recently, follow from Einsteinian type things, which is really quite interesting. Well, the problem they had; they had this massive kilogram after the revolution in France and they had defined kilogram. And every time they measured it, after a few years, for some reason it was slightly decreasing. Only minusculely, but it was inconvenient! Anyway, nobody argues about Standards like that. They're not... it's not a moral question. They're factual. The next one was Specification Standards. And this is the one... Standards Australia was created by the engineers and it was particularly the engineering standards organisation.

(04:04):

And it was particularly a military thing in the sense that if you're manufacturing bullets, they have to fit the barrel or it's just kind of stupid. And so Specification Standards, they're not particularly arguable either. You know, they're sort of, either you're gonna meet the standard or you're not.

(04:18):

The next Standard is Standard is Rules. And that's like AS3000 wiring rules. Now AS3000 is a pretty good Standard. It's pretty robust sort of Standard. Okay. If you're building a house, you'd normally build it to AS3000. But as we mentioned another time, it's a Standard and that means it tends to inhibit thing and new developments from occurring. For example, I think I used this example another time, if you're wiring up a house, if you've gotta achieve the highest level of precaution you can, the home handyman fiddling with the wires of the roof space, doing them in.

(04:50):

And you might remember the Royal Commission we had where people were stapling the new installation. And people got killed. And the whole Royal Commission into that. Well, these days you could buy the house with power of ethernet, which uses extra low voltage wiring, 48 volts AC in the roof. All the lights could be power of ethernet. You can get 25 volt lumineers these days for the power of ethernet. A new building, a new house should probably be wired with extra low voltage wiring and not up to AS3000, 240 volt low wiring. That's what the legislation requires you to do. I'm yet to see a house that's been built because of the WHS legislation imperatives. But anyway... [Or it has to be thought through anyway] The point is this one does have some arguability, but for the most part, AS3000 is a pretty robust standard. And if somebody's doing something to that, you wouldn't normally argue the point.

(05:40):

But that leads on to Design Standards. And boy, (Australia's) Design Standards are arguable, because there's any number of ways, if you're an engineer, you could do Design Standards. The case that I'm thinking of in particular is... Remember there was that large digger? The big spinning rotary digger that got a crack in it? <affirmative> And um they imported a German Professor of Mechanical Engineering; I think he was a doctor. And he basically, he was a member of the... the German's have two mechanical design codes. And he was a member of one committee. And he chose to apply the standard with which he was familiar. And it went wrong. And so one of the big mining companies took it to Australian courts. And that, that's where that line comes out; now, engineers should remember that in the eyes of the court, an Australian Standard is only about recommended practice. You've gotta do better than that if you can. And they took him out for that reason. They took him down for I don't know how much cost.

Gaye Francis (06:39):

And that was because the second Standard that was there knew of this deficiency of the first Standard.

Richard Robinson (06:45):

And he was of that.

Gaye Francis (06:45):

And he was aware of it. And the second Standard addressed that deficiency and he chose not to adopt that for that particular purpose.

Richard Robinson (06:54):

Yep. And so that means design things... And that's the quote I've got here (reading from Criminal Manslaughter booklet). "Engineers should remember that in the eyes of the court, in the absence of any legislative contractual requirement, an Australian Standard amounts 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 his or her skill and expertise." And that's Paul Wentworth commenting on AS7000, which is the high voltage transmission standard.

(07:22):

That then leads you to the last category, which is the one that drives us crackers! And that is Technique or Method Standards like ISO31000 or the COSO Risk Management Standard.

Gaye Francis (07:35):

It's about a process; how to apply a process.

Richard Robinson (07:37):

A process.

Gaye Francis (07:38):

And it might or might not work for your organisation.

Richard Robinson (07:42):

Yeah. Such Standards, I mean I understand that you do need certain sorts of Standards like that, like Accounting Standards. If you don't have some kind of commonality, how can you compare and understand what's going on? But this is more a question.

Gaye Francis (07:55):

But they're almost guidance documents then, aren't they? Or methodology guidance documents of different ways.

Richard Robinson (08:00):

It's not Standard Standard. It's not like a Weights or Measures Standard. And so from my our point of view, I think we sort of came to the view that a lot of... When when somebody says: It's the Risk Management Standard, that's actually a marketing term. That's not a Standard. It's just an idea.

Gaye Francis (08:17):

And I think with the Standards, in particular the Design Standards and things like that, they're all re always retrospectively looking at it. They're what's been done in the past and it always takes Standards a long time to catch up. So it's not even almost recognised good practice. Sometimes it's recognised good practice three or four years ago when the Standard was written.

Richard Robinson (08:39):

Well the one that sort of, I mean this is historic because I haven't actually looked at it lately, but you see I was trained by Factory Mutual as I've pointed out (previously). They actually designed theSprinkler Standard for North America NFPA 11 or NFPA 13. NFPA 13 was in fact the Factory Mutual Standard. And they're a bunch of engineers and if they have an unfortunate incident, they get into their research facility in Norwood, Massachusetts, they rack it up and burn it down and find out what the sprinkler standard has to be to put it out. The Australian Standard AS 2188 on sprinklers is based on the fire offices committee of the UK, which is the insurance officers. And what they basically do is after a few buildings are burnt down, they sort of think, huh, maybe the Standards are not quite right, perhaps we should improve it. But it's not an Engineering Design Standard.

Gaye Francis (09:23):

So they haven't actually tested it the way in that Factory Mutual test it.

Richard Robinson (09:27):

Well they are doing it, and they've now got their research facilities. Australia's starting to do that. But there's been a tendency to sort of... these things kind of osmosed, they're not sort of engineered Standards in the the way the Factory Mutual certainly is.

Gaye Francis (09:39):

Mm-hmm. I think also in James Reason terms, and we talked about James Reason in a number of ways, we always think that Standard approach is the bureaucratic approach, isn't it? The base standard. You know, it's sort of that minimum thing that you must achieve. And the WHS legislation's really saying generative, what is the highest level of protection that you can achieve? Rather than just what the minimum standard is. And you know, it changes the question from: Is it bad enough that we need to do something about it creeping up to that standard level; to: Here's a really good idea, why wouldn't we do it?

Richard Robinson (10:12):

Correct.

Gaye Francis (10:14):

So, you know, Standards can be as useful or not. And, and I think everyone's got it that you have to comply with the Standard and we say to our clients sometimes when you're doing work, sometimes Standards actually aren't relevant to the piece of work that you're doing. But you have to have an argument as to why it's not relevant and you can still be diligent by not applying a Standard.

Richard Robinson (10:36):

Well, it's a long time ago now, but I was doing a, a job on an old folks' home and the reason was is because they'd installed it to what was then the Australian Smoke Detection Standard.

Gaye Francis (10:47):

So that was their fire alarm system.

Richard Robinson (10:49):

Their fire alarm system. And there was some old souls in this place who were doing various things like smoking when they shouldn't be in bits and pieces in their rooms and so forth. And the alarm kept going off and they kept evacuating the place and more people were dying from the evacuation process than

Gaye Francis (11:03):

More from heart attacks than from the alarms.

Richard Robinson (11:05):

That's right! And so we turned up and said, well, applying the Standard was not the right solution to the problem. It might be true for example in a student accommodation. But even there, I remember doing the work in the US all those years ago, you know, if you've got people waxing skis and doing wacky things that students do around the place, the fire alarm goes off regularly (and) after a while they just don't respond, they just ignore it. And that's even worse! You only ever want fire alarms to go off when there actually is an incident and then you want people to respond appropriately.

Gaye Francis (11:33):

So false alarms are worst thing that you can almost have.

Richard Robinson (11:37):

Well the 1937 Chairman of Victoria's Division of Engineers Australia got it right when he was talking about Standards, I think. He commented, I think it's one of those Kernots -- you know, the first professor of Engineering at Melbourne (uni) was a Kernot. I think, I can't remember it was a brother or son. I got a bit lost in those brothers. You (Gaye) live in a street in where your suburb, where all the engineering professors are lined up. I've gotta point out. But, he made the point that the Standards really only have two purposes in life: To prevent fools from their folly and rogues from their roguery. And the reasoning is, if somebody's made a mistake and you want to hang the poor sod, the quickest way to do it is say 'you rotten bastard, you haven't complied with the Standard, you are toast'. And that's rogues from the roguery. <affirmative>. But what you ought to be doing from an engineering design viewpoint is figuring out how you think it ought to be and then you check back against the Standard, which is the sort of cumulative history of good designs to test to see whether you overlooked something.

Gaye Francis (12:37):

That you haven't looked overlooked something. Yeah.

Richard Robinson (12:40):

That's fools from their folly. <affirmative>. And if you do that, that's the right way to do it. That's 19... when did I just say?

Gaye Francis (12:47):

1932. A long time ago.

Richard Robinson (12:50):

You know, it's almost a hundred years ago. And we're still arguing about what is the utility of a Standard and we're still misusing them.

Gaye Francis (12:55):

Just going back to your story about the older folks' home and you're realising that the Standard, or the Building Code, wasn't appropriate for that case, but you could put in place things that were in-line with the intent of the Standard.

Richard Robinson (13:10):

Correct. And that's what we did.

Gaye Francis (13:11):

To make sure, because you're looking at the function of it. You wanna evacuate people and make sure that if a fire does occur that the residents are notified and accordingly. So what you can do is you can actually put the first alarm to the nurses' station, which is what you believe I did. Someone then had time to go and have a look to make sure there was a fire and it wasn't just somebody, you know, who'd burnt their piece of toast or whatever before the full evacuation alarm went off. So you just have to think these things through and it's not just the automatic: The Standard says this, we'll do this without thinking these things through. I think standards are stop people from thinking what needs to be done. And I think you've said it at the start of this podcast, was they're really become almost inhibitors to what can be done better. You know: 'This is what the Standard says, so that's all I'm going to do'. Whereas the legislation asks you to put in place what's reasonable, practical, and the reasonableness of some of those things that are emerging now is becoming more and more reasonable than it was 10 years ago, for example. And some Standards are still 10 years old.

Richard Robinson (14:13):

Correct. I mean that's one of the reasons, I mean I think in this sense, Engineers' Australia's abrogated its role to some extent when they basically just gave all intellectual property over to Standards Australia, breaching the Code of Ethics of Engineers' Australia, by-the-by, because there is a duty to give credit where credit's due. The NFPA Standards, for example, the members of the committee are listed by name and which organisation they work for and who the alternates are, in Standards Australia, it's just organisational. You have no knowledge of who's on the committee or what they've done and who's ultimately responsible for this thing. But that transparency question just isn't there. I just find the whole thing incredibly annoying. And it inhibits engineers from doing their role and their duty under all this legislation that's popped up. It's really gonna be fascinating with the Registration of Engineers, which is popping up everywhere, just how well that's gonna roll out. Cuz I don't really think people have been thinking this through. But you know, we'll see.

Gaye Francis (15:12):

We'll watch that with interest.

(15:15):

So I guess for this podcast, what we're saying is Standards aren't necessarily wrong, but you need to be aware of the different types of Standards, the information that they contain, and be careful that they may not satisfy your legal obligations under the OHS/WHS legislation.

Richard Robinson (15:33):

Especially ISO 31000. But that's probably its own podcast, I think.

Gaye Francis (15:39):

Yes. I think we might cover that topic at a different session. So have a great day everyone. Thanks for joining us again.

Richard Robinson (15:45):

Thanks everyone.

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.

SFAIRP vs ALARP

Risk! Engineers Talk Governance
Episode 1, Season 1

In this episode of the podcast Risk! Engineers talk Governance, due diligence engineers Gaye Francis and Richard Robinson discuss the difference between SFAIRP & ALARP.

ALARP versus SFAIRP is still creating a lot of confusion within the risk industry and organisations, this discussion clarifies the difference and why organisations must work towards SFAIRP.

...the Act actually goes to some trouble and the precursor tool is the Victorian OHS Act 2004 has it in there… a particular clause or section that says you must achieve the highest level of precaution as is reasonably practicable.  So whilst it doesn't define SFAIRP, it does define reasonably practical. And then another portion of the Act says you've gotta achieve the highest level that you can and that's what the SFAIRP principle's all about.

Transcript

Megan (Producer) (00:02):

Hi & welcome to Risk! Engineers Talk Governance. My name's Megan and I work behind the scenes on the podcast, but also with hosts Richard Robinson and Gaye Francis on their businesses. R2A Due Diligence Engineers and also Apto PPE Women's and Maternity Workwear.Please enjoy this first episode of season one of the podcast, Richard and Gaye talk about SFAIRP and the difference between it and ALARP.If you enjoy the episode, please subscribe so you don't miss future episodes. Also, help us out and give us a rating if you do enjoy it so we can help other people find the podcast on this topic.The podcast is available on all podcast platforms. Please enjoy this episode and if you have any questions or any ideas or feedback, please let us know. Enjoy.

Gaye Francis (01:23):

I'm Gaye Francis, and with me today is Richard Robinson. We are both directors at R2A and today's topic is ALARP versus SFAIRP. I feel like we've talked about this a number of times, Richard, but welcome.

Richard Robinson (01:30):

And we've talked about for ever Gaye and welcome. And welcome Megan, who is our producer sitting in the sun over there and quite enjoying herself.

Gaye Francis (01:31):

On a beautiful Melbourne Autumn day. So I guess, where do we start for ALARP versus SFAIRP? There's so many conversations and people that say that there's no difference between the two.

Richard Robinson (01:43):

Well, interesting enough, and probably this might be the way to introduce it... I was giving a briefing on behalf of Rio Tinto for that national tailings dam conference, and they had a, he'd have to have been a criminal lawyer, giving advice. And one of the things he pointed out, because all the engineers were carefully saying, well, look, we're not lawyers - we don't interpret the legislation. But one of the things this lawyer pointed out was that so far as reasonably practical (SFAIRP) isn't defined in the WHS legislation, but reasonably practicable is. And we've been thinking about this for some time because obviously the legislation says you should eliminate hazards so far as reasonably practicable. And if you can't eliminate, (you) should reduce them so far as reasonably practice, which is the SFAIRP part. But if the legislation doesn't define SFAIRP, can you actually use the term?Now what we sort of realised was there's another aspect to the Act and the Act actually goes to some trouble

(02:34):

...and the precursor tool is the Victorian OHS Act 2004 has it in there even though we haven't adopted WHS legislation in Victoria. But this element is a particular clause or section that says you must achieve the highest level of precaution as is reasonably practicable.So whilst it doesn't define SFAIRP, it does define reasonably practical. And then another portion of the Act says you've gotta achieve the highest level that you can and that's what the SFAIRP principle's all about.So far as we can tell, the Act actually does (define SFAIRP), and I'd be particularly interested to see if there's any lawyers out there who could actually have an opinion about this because I think this is actually really quite important.

Gaye Francis (03:18):

So it really sets out what the intent of the legislation is and what the principle of SFAIRP is, rather than putting in the black letter of the law sort of stuff.

Richard Robinson (03:19):

Yes, that's correct. And the way legislation works, if you do get a case, the first thing the lawyers do is say go through the legislation and say what did the legislators intend? What did the parliaments intend when they put that clause in? And you're not always (or) all together clear. And when you listen to the lawyers and the judgements and so forth, they're basically interpreting the words from parliament. Now, again, it's a bit hard to know what parliament actually intended, but we've always assumed that it came from the common law. That's what Michael Toma says in his books, which we're willing to go with. And he's, uh, something of the guru in WHS legislation. And if it's coming from the common law, then it's coming from Lord Atkin, the Brisbane born English law lord from 1932 and Donahue versus Stevenson.

Gaye Francis (04:02):

Which is all about due diligence.

Richard Robinson (05:01):

It's all about due diligence and it was all about the principal reciprocity.I think I mentioned to you, I just found fairly recently an article by a Canadian law professor, which was a bit of a surprise to me cause I forget why I was tracking through looking for something, because I'd come to the view that Atkin was actually talking about the parable of Good Samaritan when he asked the question and who, in law, is your neighbour?And I didn't realise this, but the, well, certainly the high court judges or the House of Lords in the UK when they're doing a judgment, they actually write notes out, in case, I guess, one of them gets sick and another judge has to take over for some reason they've got this case study of what they've done and how they've done it and what they've discovered, and all these sorts of things. And this Canadian law professor's going through Atkins notes about this particular case. And he is absolutely crystal clear. He was given the reading on the Parable of the Good Samaritan. And quite literally that was why he concluded in the formulation of his neighbor principal.

Gaye Francis (05:03):

So the intent was clear.

Richard Robinson (05:38):

The intent was clear and the way he said it was clear.How did he put it? "The rule that you ought to love your neighbor becomes a law, you must not injure your neighbor". And the lawyers' question, "who is my neighbor?", that's the lawyers' question that's asked in the 2000 year old question. These lawyers have always been with us. You know, we're not gonna escape them in our lifetime. The lawyers' question, who's my neighbor receives a restricted reply. And the restricted reply is along the lines that you must take reasonable care to affect anybody you know, knowingly or unknowingly, that you should have thought about. And that's what the Parable of Good Samaritan's actually about. So it's just a principle that shows up everywhere.

Gaye Francis (05:43):

So we've gone sort of a little bit off tangent just a little bit, but that's not unlike us, Richard!So if we go back to SFAIRP versus ALARP, there is clearly a difference. And they're defined by different people.

Richard Robinson (05:59):

Well, Andrew Hopkins from ANU, he basically goes on about it to some length too. Uh, I didn't realize he's now an emeritus professor and according Ravi Nijjer, he's actually in high demand overseas at speaking engagements making the same point that there's no nothing in law, the ALARP principle just doesn't exist. And your duty's to achieve the highest level you reasonably can.

Gaye Francis (06:23):

So ALARPs been used in the risk business for a long time now, 30 years plus. And it really just talks about the hazard doesn't it; the level of hazard, the level of risk.

Richard Robinson (06:35):

And...

Gaye Francis (06:37):

Is it acceptable or tolerable; it's measurable in some way. And as we've said many, many times, it's a human construct of what people think the likelihood of those things are.

Richard Robinson (06:51):

Well, I think it goes a bit further. I think what they were trying to do, and I've gotta say a hidden history, I was probably guilty of this too, but what they were trying to do was make it a scientific concept, you know, the laws of nature so that there was something you could physically measure. But has been pointed out by lots of people, one of my former partners, Derek Viner, pointed it out too. You send two risk experts out there to go and assess the risk associated with a circumstance or situation. If it was truly a scientific concept, they'd all come up with the same answer.

Gaye Francis (07:17):

They do not.

Richard Robinson (07:19):

They never do. Unless you use an identical process, in which case you've just done the same thing twice. And everybody would know that because when you're sitting around a risk workshop doing risk assessments, nobody agrees.

Gaye Francis (07:49):

No, it's very, very hard to get consensus from the group. Everyone has a different perspective on what that is, especially when you're talking about what the likelihood is. So, I mean, for us, the SFAIRP principle is all about the precaution, the level of controls, the level of precautions and mitigations that are in place. So it's all about what needs to be done to manage the particular hazard rather than the level of risk.

Richard Robinson (07:52):

Correct. And the legislation's quite clear. You've gotta achieve the highest level of control you can.

Gaye Francis (07:59):

So for us, there is a clear difference. And I think some of the confusion comes out in that people are trying to define ALARP and define SFAIRP in a way that sort of matches their processes.

Richard Robinson (08:14):

Well, frustration of all this all came around because of the tolerability risk study by was it to Frank Layfield, I think it was, in the UK. And he tried to make risk into a scientific concept, and that was because he was listening to scientists, rather than talking to engineers, I think.Because the engineers always tried to meld the two. The scientists look at the laws of nature. The lawyers look at the laws of man. But the people who live in the sandwich in the middle are always the engineers. And I, for some reason, haven't quite understood, that engineers don't quite understand that they're the meat in the sandwich.

Gaye Francis (08:48):

They've gotta make it all work.

Richard Robinson (08:49):

We've gotta make it all work. And the problem with being an engineer is you're attached to the laws of nature.I mean, if you just talk about a financial problem, you can always argue about it in court after the event, whether you were reasonable or not. Because you haven't killed or maimed anybody. You might have damaged them commercially, but it wasn't a death matter. Whereas when you're dealing with a structure or a fire that failed to be controlled or something like that, people die. So you've gotta manage the laws of nature and get it right. Nobody's gonna forgive you for it if you get it wrong.I mean one of the things that really put me off, I think I just mentioned to you, I was, for some reason looking up the Registration of Engineers in Victoria and the person who signs off on the Code of Ethics and the interpretation of the Code of Ethics that they were opposing on registered engineers in Victoria.

(09:31):

The first point it says it is know the law. And then it goes on to speak about the Wrongs Act. Now I learned about the Wrongs Act 30 years ago when I was doing some expert witness thing. And a lawyer mentioned it to me, I didn't know anything about it. Anyway, it contains a thing called the Occupiers Liability Act, which shows the duty of care you have towards somebody who comes into your premises like a shopping center or something like that. And it's the common law duty of care. And it actually lists the principles that defined in pretty much the WHS legislation what constitutes reasonable practicability. It lists consequence, likelihood, and all these other factors. You know, it's a degree which you've got control and so forth.Now I've always quoted the Occupiers Liability Act and the consolidated version of the Wrongs Act.

(10:11):

In all the cases you would recall that I've done this. And you used to look at me and say, "Why is Richard including that?" And the answer was because the lawyers told me to. Um, and yet this lawyer is saying the first principal, the Code of Ethics is know the law. You can already see that somebody who spent a fair bit of time fiddling around with getting advice from lawyers. The legal opinion you're getting varies quite substantially. How on earth are the engineers meant to know about all this legal stuff? And yet that's the first duty as a registered engineer in Victoria. That is a stupendous. Let alone all the technical standards and things like that, that you have to consider.

Gaye Francis (10:47):

I think they're trying to make it so complicated with that sort of stuff. I mean, for us, SFAIRP is a governance principle in that it wants everybody that has the ability to control the hazard to work together to get the highest level of protection. I, for me, it's just some of the legislation and the standards and all of that stuff around it, which we will cover in another podcast, I'm sure...

(11:13):

They're trying to make it so complex. But if you look at it from a top-down governance viewpoint, it's about getting all of the parties in the room, all of the key stakeholders in the room that has the ability to control this hazard to agree on what the highest level of precaution is. It's not allocating blame somewhere that it's a single person's responsibility. It's everybody's responsibility.

Richard Robinson (11:37):

Well, it actually knocks the issue of a confident person around a bit, which has been a particular popular thing to put in legislation because if you need the collective wisdom rather than just one person signing off, how do you do it? And as that Professor Sidney Dekker points out from Brisbane University, he's an airline pilot turned psychologist, there are so many rules out there now and that's one of the problems with standards. I mean, there's so many, so much stuff out there. It is not possible one person to know at all anymore. It just isn't possible. And the problem with that is if you're coming bottom up and you're expected to know it all, well you can't. And that's the same thing with that first question, the regulator on the Code of Ethics Victoria or Code of Practice for registration of engineers; it is not possible for an engineer to know all the law that this, obviously lawyer, was speaking to.

Gaye Francis (12:25):

So I mean, from our viewpoint, there is a difference between ALARP and SFAIRP. ALARP is hazard focus and if you've seen any of our presentations we go through that in quite a bit of detail of why that's the case. And the SFAIRP principle is really about looking at the controls that can be put in place to make sure that the hazards are managed appropriately.

Richard Robinson (12:46):

It's all about the controls. And that was the other point. Remember how we demonstrate that we like single-line line threat barrier diagrams as a way to construct an argument that'll go from the workers and the people actually doing things, to the board and all the lawyers, and everybody else in between that gets hold of things. But one of the things we do with our threat barrier diagrams now is we put in precautions that are the responsibility of others in a different color so that you can see that the sequence of control is going through the hierarchy. The hierarchy in the legislation is eliminate and then reduce. And the hierarchy in the common law is eliminate, prevent and then mitigate. And most of the regulators are completely confused cause they've got four or more, generally up to six, which just leaves everybody in a state of confusion.

Gaye Francis (13:31):

It does.

(13:35):

So that brings us to the end of our podcast for today. If you'd like any more information about ALARP versus SFAIRP, we do cover it in our Criminal Manslaughter booklet, which is available on our website (www.r2a.com.au). Thank you for joining us and we hope you can join us next time.

Richard Robinson (13:53):

Thanks Gaye. Thanks Megan.

Introducing Risk! Engineers Talk Governance

Risk Engineers Talk GOvernance
Special episode

In this special introduction episode of Risk! Engineers Talk Governance, meet your hosts Gaye Francis and Richard Robinson who outline their due diligence engineering experience and why they are starting the podcast .

Transcript

Gaye Francis (00:00):

Good morning and welcome to our podcast Risk! Engineers Talk Governance. I'm Gaye Francis and Richard Robinson's here and is my business partner.

(00:09):

How you going this morning, Richard?

Richard Robinson (00:10):

I'm particularly well Gaye, although it is a bit chilly.

Gaye Francis (00:12):

It is a bit chilly here in Melbourne. Winter has definitely arrived.

(00:18):

So this first podcast is really an introduction to what we're going to do. We'll introduce ourselves, what we do, what we hope to cover during the first season of the podcast, and some of the episodes that we'll cover, and just a little bit of chat so you get to know Richard and me.

(00:36):

We're not particularly good at introducing ourselves. So I'm gonna have a go at introducing Richard and then he'll have a go at introducing me. Richard's a career risk and due diligence engineer. He's been in the business for over 40 years. He works across a whole lot of industries, Rail, Road, Marine, Chemical, Water, Gas, Electricity... you name it. He's been there and done that. So Richard's really seen as one of the world leaders risk and due diligence business.

(01:07):

I've been working with Richard at R2A for over 25 years and started as a grad engineer. So we've worked together a lot. Richard also does a lot of courses through Engineering Education Australia, as well as in-house courses of our own on risk and due diligence and project due diligence and governance. And we also have a couple of booklets that we've co-authored together- Criminal Manslaughter, Engineering Due Diligence, and our new one Project Governance.

(01:34):

So, Richard Richard's been in the industry for a long time. He does have a little bit of a warped sense of humor and you need to get to know him a little bit better. My sister actually worked with us many years ago and she said he reminded her of Mr. Bean and some of his tall lankiness and his jokes.

(01:54):

So, that was a pretty nice introduction, Richard. So I'm hoping for the same.

Richard Robinson (01:59):

Well, good morning everyone. <laugh>. This is Gaye Francis, my business partner, now of about 20 years, although we've been working together for close to 30 years as she pointed out. In that time she got married and had two kids, Charlotte and Amelia. And I've gotta say at this point, the husband got displaced abruptly on her phone by the kids when they arrived!

(02:22):

Just to give you an idea, one of the first things I said to her when we first met, she was asking what this risk business was about and I said, well, think about it. There are three key terms, they are eek, e and oops. And she said, well, yes, I can add a fourth term to that. And that is grrr, which mostly happens when you're working with older males. So she's had a few life experiences like that, I understand <laugh>.

(02:46):

Possibly the other thing which I found most entertaining about her is that she actually trained as a chemical engineer. And when she went into industry, and I had personal experience with this 'cos I was there, she discovered she was actually allergic to chemicals, which is, and I have to point out actually never gets old <laugh>.

Gaye Francis (03:03):

It's a bit embarrassing, but I, I must admit, some of the things that I've done at R2A has got me outta my comfort zone and challenged me, no end. I'm actually scared of heights and I've climbed up the side of the ship, a side of a ship out in the strait and in Tasmania and many other places around Australia. I've also climbed up onto the top of the stadium here in Melbourne to look at some roofing issues. I got the phone call to go and do that at site inspection. Richard was actually interstate and he said, can you go and do this site inspection for me? And I said, I'm wearing a skirt dress today. So raced down at lunchtime to buy pants and went and did this site inspection in the afternoon on the top of, um, yeah, a stadium roof.

Richard Robinson (03:43):

You never mentioned that you actually bought pants, you just complained that there was a problem.

Gaye Francis (03:47):

I wasn't gonna go into a site inspection like that! So yes, I've been taken out of my comfort zone a number of times.

(03:54):

So as we have said, we're business partners and we've been working at R2A for 30 years, and are career risk and due diligence engineers. We stayed in the industry and been boutique consultants, I guess, for that time. In that, I think we like to help people to solve their problems. You know, the risk business industry has become very complex. And there's a lot of resources going into it, and I'm not sure that organizations are getting bang for buck for what they're putting into it.

Richard Robinson (04:26):

That's completely the case. I mean, basically so far as we can tell, the OHS business in particular has turned into an industry, that that's sort of got a life of its own that's just quite independent of all corporate objectives and things like that. Which so far as we can tell is costing an awful lot of organizations an awful lot of money for very little result.

Gaye Francis (04:44):

And I guess our point of difference is that we come from the common law viewpoint of what would be expected to be done in the event that something happens. Which is very, very different from just applying the risk management standard, for example. So we sort of combine those two, come with a due diligence process to make organizations look at what their risk issues are and more importantly, what they have to have in place to, to manage these things.

Richard Robinson (05:12):

Yeah. It actually goes a bit further than that because one of the curious things about us, and I know a number of people have been very surprised by this about us, is that if we to figure out that we're not achieving things because, perhaps sometimes the O H S faction has particularly well entrenched and we haven't been able to get the lawyers to actually correct matters, we simply walk away. It doesn't matter, people paying us good money, if we can't achieve anything worthwhile, then we won't keep doing it. And we've walked away from major regulators in both major jurisdictions and in federal regulators who so far as we can tell, weren't applying due diligence out as expressed in the common law, which is what turned up in the WHS legislation.

Gaye Francis (05:50):

So yes, we're a little bit different in that way, but we love what we do and we really do feel that we make a difference with the people that we work with.

(05:59):

So why this podcast? So we, we've done a number of webinars, but we get asked interesting questions all throughout our work. And so we thought this podcast might be a format to be able to explore some of those issues that people ask us questions about consistently. So some of the things that we've got as our hot topics to talk about in this first season are ALARP versus SFAIRP, which is still creating a lot of confusion within the industry and organizations.

Richard Robinson (06:34):

Perhaps what confuses us the most, I mean, it all sort of popped up in 2004 in Victoria after Maxwell QC reviewed the WHS Act in Victoria, and then it got transferred into the whs legislation in most jurisdictions in 2011, 2012. But it's still causing grief and difficulty and it's generally with the technical parties, not the legal side of things; lawyers understand it quite well.

Gaye Francis (06:55):

And they're trying to align the two and there are key differences between the two terms, but people are saying that they equate to the same thing. Many industries are saying that they're equating to the same thing.

Richard Robinson (07:07):

Well, it is true, a rose by any other name. And a lot of people have been basically defining ALARP as SFAIRP, but we don't understand why you bother to do that. You might as well make it clear there was a difference and that you've changed and effectively moved to the right place.

Gaye Francis (07:21):

Mm-hmm. <affirmative>. So another (topic), we get a lot of discussion points on is standards and how standards are used. And they're really backwards looking; they're written retrospectively and they're not forward looking.

Richard Robinson (07:35):

And the way Australia's been using standards lately, we are actually going backwards. Because under the whs legislation for example, it's quite clear you've got to achieve things 'so far it's reasonably practical'. That is, if you can do better than the standard, than you've gotta get there. So the standards are merely the starting point, if you're talking about a technical standard, you can't design by standards and have useful innovation. And so we, as far as we can tell, innovation is being suppressed in way by the use of standards

Gaye Francis (08:03):

And the comment of a lot of organizations "we've always done it that way" doesn't roll anymore. No, you can't do that. You've gotta always look forward. What else can we do?

Richard Robinson (08:13):

To the extent that you have control, you have to demonstrate that you've done the best that you can.

Gaye Francis (08:19):

And that's for all parties involved in the process, not just, you know, a single party.

(08:25):

Code of practice in the ISO 31000, there's a mismatch of ideas there and that's unfortunate.

Richard Robinson (08:33):

ISO 31000 has done a lot of damage to Australian industry in the last 20 years. And since it's now inconsistent with the legislation, we don't understand why people are still basically designing to it. An awful lot of governments trying to do it too. And this just doesn't make sense anymore.

Gaye Francis (08:47):

Regulations and license to trade. One of the interesting things there is the requirements of the regulators are often or, or can be, um,

Richard Robinson (08:57):

Inconsistent.

Gaye Francis (08:58):

Inconsistent. Thank you Richard. With the, the legislation. So, some organizations are actually having to do two processes to get one for a license to trade and then to meet their statutory obligations.

Richard Robinson (09:12):

Yes. Particularly when the regulators got it wrong. Um, it's one of these things, if you want the license to trade, you got to satisfy the regulator. If you want to satisfy the legislation you often have to do something different. And that's when we often have to walk away from a regulator when they don't recognize that.

Gaye Francis (09:25):

So many of these topics and some of our regular listeners to our webinars and (other resources) will have heard us say this and we've sort of tiptoed around some of these subjects over the last 10 years as to, not to offend anyone, but I think as we go further and further in this legislation, as Richard says it's been in Victoria since 2004 and in most of the rest of Australia since 2012, we're now 10 years down the track plus and we're still facing some of the issues that you would expect to see in the first couple of years of this legislation.

(10:04):

A couple of other interesting topics that we have on the cards is risk appetite and zero harm and organizations trying to relate those two ideas of risks. They're actually two different risk models.

Richard Robinson (10:16):

Yeah. And the confusion is mostly at board level. I don't think the troops have the confusion. It's mostly at board level. And we've briefed a number of boards lately where they simply didn't understand. And so far as we can tell, they've been taking their advice exclusively from management consultants. Um, and that's

Gaye Francis (10:33):

Not the technical view

Richard Robinson (10:34):

And there's been no technical view. And when you live in advanced technological society, that doesn't make a lot of sense.

Gaye Francis (10:39):

<affirmative>. And the language of risk and the complexity of it and how people are actually using some of the words.

Richard Robinson (10:47):

Well, just risk alone, it's a mess. I mean, the insurance world talks about it as the now, and most technical people think of it's likely and consequence simultaneously, but when you're in court and it's all gone wrong, and the facts are certain it's a particular instance, and you really talk about the likelihood of that particular instance occurring. And so when people use the word risk, everyone's confused.

Gaye Francis (11:07):

Mm-hmm. <affirmative>.

(11:08):

So they're some of the hot topics that have been our standout items and concern I guess over the last 10 years and what people have ome to us and said 'we'd like to know more about this'. But we really want this podcast to be a timely, interesting session. So if any of our listeners have got any ideas and things that they'd like to discuss

Richard Robinson (11:29):

Well, people that they'd like us to interview. Probably in the second season we expect to be actually interviewing various people in various (organisations) who've had particular frustrations, particularly when somebody's, for example, adapted the mismanagement standard to the septe process. That's crime prevention through design. There's some weird things going on out there that make no sense.

Gaye Francis (11:49):

<affirmative> and even industry specific things. So the topics that we've sort of outlined go across the industries, but there are some issues of concern and issues facing specific industries that are relevant there as well.

Richard Robinson (12:02):

Probably particularly important. So just people understand. Uh, I mean, um, just before Covid, R2A together with the Victorian Bar sponsored the professor and law and public policy out of Cambridge, David Howth, and the reason why we're interested in him is he's got a book of out of law and engineering, and the point that he makes on his presentations is that what the lawyers are actually doing, at least the big UK and US firms, is that they're actually adopting and deliberately studying the engineering design process. Because basically the point he makes is if you're a lawyer, and it's what happens with engineers, and somebody turns up with a problem or something they want to do, and then basically what you're saying is in the circumstances, these are the options, and which one in all your circumstances is the best and that's the best way forward.

(12:44):

And that's just the base act in engineering design process, um, and which the engineers have been doing now for a very long time. But which seems to be sort of a 10 year transition for the for the lawyers. We certainly came across this long time ago with a lawyer from Baker Mackenzie, and he made the point, there are two types of lawyers out there: those who will tell you what the law is, and those who say, in the circumstances, what are your options and which is the best? So certainly a lot of lawyers in Australia have been thinking about it, although we haven't necessarily seen all the law firms adopting it.

Gaye Francis (13:15):

<affirmative>. So that's sort of an overview of our podcast season one. We hope you can join us the next couple of episodes. And as we have both said, if you'd like us to talk about anything in particular, we'd love to for you to drop us a line. So have a great day and we hope to see you next time.