Safety that boosts the bottom line01 February 2007

In a world where the failure of even a modest-sized steam boiler can cause millions of pounds' worth of damage, as well as injuries and even fatalities, the management of risk should always figure high on the agenda of any business.

And yet major incidents still occur. The explosions at the Buncefield oil depot, now more than a year ago, still remain very much at the forefront of people's minds. Buncefield cost local firms more than £70 million. Twenty-five businesses were seriously affected by the blast and, of those, sixteen had to relocate.

"After a major incident which significantly interrupts a company's operations," says Andrew Miller, risk control surveyors manager, Allianz Cornhill Commercial, "up to eighty per cent of companies that do not have an effective disaster recovery plan never recover and cease trading within eighteen months."

Nobody has summed up the cost of such occurrences better than Sir Stelios Haji-Ioannou, chairman of easyGroup and self-styled 'serial entrepreneur', who is quoted in an HSE document investigating accidents and incidents as saying: "If you think safety is expensive, try an accident!"

Indeed, according to Tim Mapstone, health and safety manager, Allianz Cornhill Engineering, "common wisdom has it that, for every £1 a business spends on insurance, it can be losing between £8 and £36 in uninsured costs".

And Bureau Veritas UK's chief engineer Alex Carmichael describes an accident on site as "a thousand times more expensive than safety". Nor does he just mean the direct financial consequences. "There is also the brand damage to the company name. And it's very hard to get rid of a bad image."

The perceived dilemma, of course, is that, however much an organisation does to protect itself from such incidents, it can always do more. At the same time, statutory, regulatory and operational requirements set the standard to a large extent. If a company is compliant in these areas, it is meeting its obligations and the likelihood of an incident is greatly reduced.

Phil Moore, Zurich Risk Services' head of engineering department, stresses that a key part of best practice is not just about clients ensuring the safety of their equipment and people, but also encompasses the obligation for engineer surveyors to be safe while visiting a client. "At the start of a contract, we work with the client to ensure safety on site and to work within their rules. This is essential, as there are 50,000 sites across the UK that we inspect, with different regulations. Our surveyors have to comply both with our requirements and their rules - for example, regarding working in enclosed spaces - so the two must dovetail together. We want our engineers going on site fully briefed and unlikely to be in a non-compliant situation."

As far as accidents are concerned, he acknowledges that these will occur from time to time.

"We investigate every one of them, of course, and even share our findings with our competitors. This enables us to reinforce our views about particular areas of risk or allows us to experience new situations, which we can then address before they become a potentially recurring problem." Yet the avoidance of such incidents through regular, planned engineering inspections, carried out at the highest levels of competence, is always the goal - and that goes beyond compliancy with rules and regulations.

Ultimately, it is about an organisation establishing a close alliance with those responsible for carrying out the engineering service inspections. Not only does this make certain that the appropriate levels of insurance cover and 'risk engineering' solutions are in place. It also creates the right environment for safety awareness at a wider level.

As Mapstone puts it: "Where best practice is fully implemented and sustained, an organisation can create a culture of minimum effort to achieve minimum exposure to risk, for maximum output."

From Allianz Cornhill's point of view, best practice requires engineering companies to ensure the following:

Suitable and sufficient risk assessment to identify the hazards associated with the adjusting, using, cleaning, maintaining and inspecting of the equipment.

A documented safe system of work should also be in place. This details what needs to be done, by whom and how. Those working should be appropriately supervised and the system monitored by audit. It is also best practice to identify whether examination by a competent person is required, either as a risk control measure or as a statutory requirement.

Employees should be suitably trained and authorised as competent to do the work. They also need the right attitude to safety.

When it comes to the actual inspection of high-risk equipment, Health and Safety regulations require this to be carried out by competent persons - namely engineer surveyors. Their duties are to examine the equipment in accordance with a raft of regulations (see box), generally to ascertain if it can continue to be used in safety, and issue a report of examination.

"Clients are required to ensure that engineer surveyors are made aware of hazards on their site," adds Mapstone, "and of emergency arrangements for the site, in the event of fire, or a need for first aid, or other urgent situation."

The core function of the engineer surveyor is that of identifying risk factors and reporting these to the client. In theory, that sounds straightforward enough, but, as Carmichael, points out, having equipment taken out of commission for engineer surveyors to gain access to it can be problematic.

"Some equipment - a passenger lift, for example - requires very little preparation prior to an engineer visit, whereas a boiler is a different matter, bearing in mind that it has to be removed from service so our people can get inside and carry out an inspection.

"Part of the problem, in this instance, is that such equipment is typically involved in a production process," he points out. "We have to come to a suitable accommodation with the client in order to make this happen in a timely fashion, which is really achieved at grass roots level by our engineers establishing good working relationships with the works manager, so he understands that this is a necessary procedure and ultimately in the best interests of the client as well."

Building such relationships - "workable agreements", as Carmichael defines them - is far easier on a large site where engineers may be in attendance for a few days or weeks at a time, or even permanently located. Also, the range and volume of equipment may constitute a potentially substantial risk, which is more readily recognised by the client. "On a smaller site, the risks are correspondingly fewer and achieving that accommodation can be more challenging," accepts Carmichael. "The response at Bureau Veritas has been to schedule our engineer surveyors' visits up to four weeks in advance, so they are planning well ahead. They are even making appointments, so the client has direct prior warning and so, hopefully, is suitably prepared when the visits take place."

He acknowledges that not all companies take their health and safety responsibilities as seriously as they might. Often this is because they are too involved in the day-to-day activity on the site and fail to appreciate the potential dangers. "We have had an incident where a boiler exploded at a factory and caused a great deal of damage. No one was present when it happened, so fortunately there were no injuries. What is clear is that people may not always be aware of the hazards that surround them and the problems these can cause. Partly, it's because the danger may be unseen. Just like gas and electricity, for example, you can't see the pressure that builds up inside a boiler. That's why it's so important that the proper inspection and maintenance programmes are put in place and complied with."

There can also be a tendency for companies to rely on engineer surveyors' examinations of equipment to identify defects in the first place. "This was never meant to be the situation. The maintaining of adequate maintenance standards is, of itself, of equal importance, irrespective of any inspections. You have to have both."

Where weaknesses are identified within a client's business, says Moore, they will try to address these as best they can. "We would argue that, by talking to us, they can draw on our experiences elsewhere, such as where there may have been failures and defects in particular types of equipment."

Another area highly relevant to risk appraisal is the attitude of management towards workers - and vice versa - as this can determine the manner of use or abuse of machinery, or other property. Disgruntled employees may have what they consider to be unresolved grievances, and hence low morale, which impacts on the way in which they perform their jobs. The best organisations tackle these issues and seek to create an ethos where staff and management communicate effectively and honestly to resolve differences and encourage a positive climate, based on mutual trust and respect.

But what are the likely effects on employees who feel they are operating in a less than safe environment? "If they think employers don't care about their health and safety, are they likely to care about the job?" asks Mapstone. A negative feedback cycle, he says, is the likely outcome.

Conversely, a strong commitment to best practice creates "a sense of well-being, which promotes positive feedback. Where this is fully implemented and sustained, an organisation can create a culture of minimum effort to achieve minimum exposure to risk, for maximum output".

Health and safety initiatives that are well led by the most senior person in the business, and maintained over time, clearly impact upon the well-being of individuals and hence that of the organisation. "The HSE uses the phrase, 'good health and safety is good business'," Mapstone concludes. "It's got to be a truism."

Links to more advice and information:
The Health and Safety Executive (HSE) www.hse.gov.uk
The Safety Assessment Federation (SAFed) www.safed.co.uk
The International Association of Engineering Insurers (IMIA) www.imia.com
The United Kingdom Accreditation Service (UKAS) www.ukas.com

SOE

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