Managing the Corporate Beast

1. Managing the Corporate Beast Elevating the Management of Safety to the Corporate Level Through Enterprise Risk Management David T.Deveau, P.Eng., M.B.A., B.E.D.S. 2013 International Aviation Safety SummitWashington, DC - October 29-31, 2013

2. The presentation will • Examine gaps that continue to limit organizational integration of safety • Emphasize the importance of elevating safety to the highest levels of the organization • Offer a framework to help safety take its rightful place alongside other company priorities • Content • Problem Statement • The Evolution of Safety Management • Safety in the Risk Pantheon • Cautions, Challenges & Conclusions Presentation

3. Jazz • Fleet of 127 aircraft • Bombardier DHC8 100/300, Q400, and CRJ705 • 78 USA and Canadian destinations with 800 flights and 30,000 pax a day • Bases in YHZ (HQ)/YUL/YYZ/YYC/YVR • 5,000 employees • Contract flying for Air Canada, Jazz Charters, Jazz Safety Solutions & Other Services (Ground Handling, etc.) • Previously operated 757 a/c for Thomas Cook Canada David Deveau • VP, Safety Quality & Environment • Professional Engineer/MBA • Chair Safety Subcommittee of National Airlines Council of Canada (NACC) and Member of Safety Council of Regional Airline Association (RAA) • Principle: Jazz Safety Solutions Jazz & Presenter

4. Problem Statement

5. There is a lot of good news for safety • The profile of safety in aviation has grown over time • Safety management is more sophisticated than ever due to safety management systems (SMS) • There is increasing recognition that safety issues can be organizational in nature, and that safety itself needs to be managed at the organization level • This provides a much better basis for advancing safety governance than existed when safety was considered a purely operational consideration Good News

6. If good news…So what is the problem? • Safety still struggles to compete for status, attention and resources along side other corporate priorities (financial performance, commercial, etc.) • This is not because safety isn’t seen as important • For many at the top of organizations (outside the safety role), safety remains an operational enigma • Safety related risks just are not understood • Safety and business functions often don’t speak the same language • Top decision makers can find it a challenge to compare safety priorities with other business needs The Problem

7. What the Problem Looks Like The Problem

8. How Did We Get Here? the Evolution of Safety Management

9. Safety has evolved from reacting to accidents to proactively identifying and mitigating risks Evolution

10. Like other management systems, safety has evolved from being random to more predictive in nature (recently, SMS has helped with this evolution) Proactivity SMS

11. At the same time,safety silos are being replaced by integrated, cross-functional systems Integration

12. Although safety is more organizationally integrated than ever, it still hasn’t been integrated into organizational culture and governance as much as other management systems (finance, HR, etc.) System Evolution Financial Management Safety Management

13. A sure sign of how fundamental something is to an organizations success – and how valued it is in the organization’s culture – is how deeply it penetrates every aspect of how business is conducted • How would we recognize if safety “…penetrates every aspect of how business is conducted”?? • Safety can be found at EVERY level of an organization • Safety is treated the same way by senior leaders than other company priorities are • Safety has status in the organizational structure, in the business plan and on every agenda • Safety exists throughout the hierarchy of the organization Hierarchy

14. How far in the organization’s hierarchy does safety go? Hierarchy Gap?

15. How do you know If you have a gap at theCorporate Level?

16. Is safety leadership buried too deeply in the organizational structure for significant influence? • Are safety objectives and targets overshadowed by other business priorities in company strategic plans? • Is it a struggle to secure financial or other resources for safety improvements as soon as senior decision-makers become involved? • Is there over-reliance on regulatory non-compliance fear, bad press, scare tactics or other “safety cards” to get support for safety? • Do executives and the Board struggle to understand and compare the relative importance of safety investments compared to other business cases? Challenges

17. How do we address these challenges? • Put safety leadership at the executive level • Make safety a formal strategic priority, which ensures it gets its own objectives, targets, etc. • Create a common framework based on risk so that safety can be compared to other business issues on a relative basis (apples to apples) Strategy Finance Operations Safety

18. Safety in the Risk Landscape

19. Organizations must consider many varieties of risk • Financial and business risks are generally high on the executive and Board agenda and well understood • Safety is normally on the agenda, but not always at the same level as other topics • Buried or invisible (subcategory of other topics) • Only escalated to high levels when there are very serious issues, regulatory concerns, audits, etc. • Not understood outside safety and operational functions Corporate Risk What can we do to fix this?

20. Enterprise Risk Management (ERM) can be used to translate safety into a language that is understood by the exec/Board…so that they can compare risk topics • What is ERM? • A common framework to define, categorize and manage risks…regardless what type of risk • Provides a common risk language that can be understood by the exec/Board…regardless what type of risk • Creates a bridge between safety and business leaders • What does ERM include? • Risk taxonomy (structure describing risk areas) • Methodology to assess, and classify risks • A consistent way to report on the organizations risk profile ERM

21. What does a risk hierarchy look like? ERM

22. ERM Components • Risk definitions • Risk assessment tools • Risk tolerance policies • Risk Reporting Templates • Risk classifications ERM Components

23. Safety can then take its place alongside other priorities at the highest levels of the organization Part of Agenda HIGH LOW SEVERE Moderate Moderate

24. CautionsChallenges &Conclusions

25. Be Prepared • Many (most?) executives and Boards are not familiar with enterprise risk management – if they do not “buy in”, there is no value in implementing ERM (educate) • ERM systems will take expertise and work to design for your organization (get help if you need it) • With more profile at the executive and Board comes more interest and more expectations! • Be prepared for the truth – sometimes safety priorities are not going to be the most important (and that is OK) Cautions

26. Safety management is in better shape than ever! • However, there is still more to do for safety to be • properly understood at executive/Board levels • treated the same as other corporate priorities • One way to help push safety up the organizational hierarchy is to create a common risk management system for all risks (including safety) • Be prepared for the journey to the top! Conclusions

27. Thank You Questions?