It’s time to “Discover the Possible” at the AFPM National Occupational & Process Safety Conference. Beyond the program of interesting industry presentations and learning opportunities, Kestrel Management is looking forward to connecting with many of you in San Antonio.
AFPM National Occupational & Process Safety Conference
May 15-16, 2018
Grand Hyatt San Antonio
We welcome the opportunity to learn more about your needs and discuss how Kestrel helps our clients improve occupational and process safety performance; manage EHS and quality risks; and achieve regulatory compliance assurance. See you in San Antonio!
Kestrel is seeking an experienced professional with a strong safety compliance background to join our team. The ideal candidate will possess a deep knowledge of industrial safety procedures and how safety relates to process improvement to help our clients proactively manage their operational safety-related risks. The Safety Consultant will possess a strong understanding of OSHA requirements, as well as experience assessing, developing, and implementing OSHA safety programs in an industrial setting.
- Perform safety compliance program assessment, development and standardization
- Conduct assessments, training, and coaching for safety performance improvement projects
- Perform safety compliance assessments and implement follow-up corrective actions to ensure compliance with applicable regulations
- Conduct incident investigation and root cause analysis
- Work with a team to assess, design, implement and audit safety management systems and programs
- Design safety performance metrics to drive continual improvement
- Apply quality and process improvement methods and tools
- Support other Kestrel professionals to effectively manage and deliver projects
- Effectively steward and build client relationships leading to repeat business
- Bachelor’s degree in Occupational Safety preferred
- 3-5 years relevant experience working in safety for industry/manufacturing (chemical industry experience a plus)
- Strong knowledge of OSHA safety standards and programs
- Excellent communication, interpersonal, writing, and a variety of computer skills
- Analytical and problem solving skills
- Planning and organizational abilities
- Willingness and ability to learn and use technology – hardware and software – to meet client’s needs
- Willingness to travel, both within the U.S. and to international locations; must have or be able to obtain a valid passport after employment begins
Interested candidates should forward a resume and cover letter to email@example.com.
In recent years, companies have been generating vast and ever-increasing amounts of data associated with business operations. This trend has led to renewed interest in predictive analytics, a field which focuses on analyzing large data sets to identify patterns and predict outcomes to help guide decision-making. While many leading companies use predictive analytics to identify marketing and sales opportunities, similar data analysis strategies are less common in occupational and process safety. Although the use of predictive analytics is less common in the field of safety, the potential benefits of analyzing safety data are considerable.
Just as companies are currently using customer data to predict customer behavior, safety and incident data can be used to predict when and where incidents are likely to occur. Appropriate data analysis strategies can also identify the key factors that contribute to incident risk, thereby allowing companies to proactively address those factors to avoid future incidents.
Predictive Analytics: In Theory
Let’s take a step back and look at what predictive analytics is and what it does. Predictive analytics is a broad field encompassing aspects of various disciplines, including machine learning, artificial intelligence, statistics, and data mining. Predictive analytics uncovers patterns and trends in large data sets for the purpose of predicting outcomes before they occur. One branch of predictive analytics, classification algorithms, could be particularly beneficial to industry, especially when it comes to avoiding incidents.
Classification algorithms can be categorized as supervised machine learning. With supervised learning, the user has a set of data that includes predictive variable measurements that can be tied to known outcomes. The algorithms identify the relationships between various factors and those outcomes to create predictive rules (i.e., a model). Once created, the model can be given a dataset with predictive variable measurements and unknown outcomes, and will then predict the outcome based on the model rules.
Predictive Analytics: In Practice
Like many in the transportation industry, this railroad had experienced a number of derailments caused by broken rails. Broken rail derailments can have particularly severe consequences, since they typically occur on mainline tracks, at full speed, and with no warning of the impending broken rail. Kestrel was asked to create a predictive model of track-caused derailments on a mile-by-mile basis to identify areas of high broken rail risk so the railroad could target those areas for maintenance, increased inspections, and capital improvement projects.
Penalized Likelihood Logistic Regression
As described above, classification models learn predictive rules in an original data set that includes known outcomes, then apply the learned rules to a new data set to predict outcomes and probabilities. In this case study, Kestrel used a logistic regression modified by Firth’s penalized likelihood method to:
- Fit the model
- Identify eleven significant predictive variables (based largely on past incidents)
- Calculate broken rail probabilities for each mile of mainline track based on track characteristics
The final model calculates a predicted probability of a broken rail occurring on each mile of track over a two-year period. The results suggest that the final model effectively predicted broken rail risk, with 33% of broken rails occurring on the riskiest 5% of track miles and 70% occurring in the riskiest 20%. Further, the model shows that the greatest risk reduction for the investment may be obtained by focusing on the 2.5% of track miles with the highest probability of a broken rail. This ability to predict where broken rails are likely to occur will allow the company to more effectively manage broken rail derailment risk through targeted track inspections, maintenance, and capital improvement programs.
Implications for Other Industries
The same general approach described in the above case study can also be applied to other industries—using KPIs to determine predictive variables and incidents as the outcome. The process is as follows:
- Measurements for defined variables would be taken regularly at each facility or unit. Precision increases as the measurements become more frequent and the observed area (facility/unit) becomes smaller.
- Once a sufficient number of measurements has been taken, they would then be combined with incident data to provide both the predictive variable measurements and the outcome data needed for training a model. This dataset would be fed into a logistic regression or other classification algorithms to create a model.
- Once the model has been created, it can be applied to new measurements to predict the probability of an incident occurring at that location during the applicable timeframe.
Once predicted incident probabilities have been found, management would be able to focus improvement resources on those locations that have the highest probabilities of experiencing an incident. The classification algorithms also identify which factors have predictive validity, so management will know how improving those factors will affect the predicted probability of incidents occurring. In other words, they will know which factors have the strongest relationship with incidents and can focus on improving those first.
Industrial companies are generating and recording unprecedented amounts of data associated with operations. Those that strive to be best-in-class need to use that data intelligently to guide future business decision-making.
The versatility of predictive analytics, including the method described in this case study, can be applied to help companies analyze a wide variety of problems. In this way, companies can:
- Explore and investigate past performance
- Gain the insights needed to turn vast amounts of data into relevant and actionable information
- Create statistically valid models to facilitate data-driven decisions
What is ISO 45001?
ISO 45001 is a new international standard created by the International Organization for Standardization (ISO) that specifies requirements for an occupational, health & safety management system (OHSMS). It provides a framework for managing the prevention of death, work-related injury, and work illnesses. The ultimate goal of the standard is to help organizations proactively improve OHS performance and create a safe and healthy workplace.
Note that ISO 45001 provides guidance. It does not state specific criteria for OHS performance, nor is it prescriptive about the OHSMS design. It is a management tool for voluntary use by organizations to minimize OHS risks.
Why Is ISO 45001 necessary?
There are several reasons why the creation of an international standard to manage OHS performance is necessary:
- First and foremost, organizations are responsible for minimizing the risk of harm to all individuals that may be impacted by their activities. The standard aims to protect human lives by encouraging organizations to create a safer, healthier workplace.
- According to the International Labour Organization (ILO), there were 2.34 million deaths worldwide in 2013 as a result of worker activities. The greatest majority (2 million) are associated with health issues, as opposed to injuries. The economic burden associated with this number of occupational injuries and illnesses is significant. Organizations must manage all their risks—including OHS—to survive. Poor OHS management can result in loss of key employees, business interruption, claims, higher insurance premiums, regulatory action, reputational damage, loss of investors, and loss of business.
- Finally, increased globalization creates new OHS challenges. ISO 45001 is an international standard that promotes global conformity.
What are the key aspects of ISO 45001?
Many of the elements of ISO 45001 are the same or similar to those found in OSHAS 18001. However, there are additions and changes in ISO 45001 that differentiate the new standard.
ISO 45001 establishes new roles for the organization’s people. First, it emphasizes worker participation in the OHSMS. This includes ensuring that workers are competent and have the appropriate skills to safely perform their tasks. Second, the role of top management is different than in OHSAS 18001. Of note, a designated Management Representative is no longer required; however, those individuals in management roles are expected to take ownership and demonstrate a commitment to OHS through leadership. Top management must demonstrate direct involvement and engagement with the OHSMS by:
- Ensuring the organization’s OHS policy and objectives are compatible with the overall strategic direction of the organization
- Integrating OHSMS processes and requirements into business processes
- Developing and promoting an OHS culture that supports the OHSMS
- Being accountable for the OHSMS’s effectiveness
In addition to people, ISO 45001 follows a risk-based approach that advocates prevention. This requires identifying activities that could harm those working on behalf of the organization. A large part of this involves understanding the “context” of the organization, another new element of ISO 45001. Organizations must be able to identify all external and internal factors that have the potential to impact OHS management objectives and results.
To address risks and opportunities, there are new clauses related to hazard identification, as well. As with other sections of the standard, hazard identification becomes a process rather than a procedure and, importantly, considers all individuals near the workplace who may be impacted by the organization’s activities. ISO 45001 further outlines a more defined hierarchy for organizations to determine appropriate controls.
How does ISO 45001 fit in with other ISO standards and management system approaches?
ISO 45001 follows the same high-level management system approach being applied to other ISO management system standards (e.g., ISO 14001 and ISO 9001)—Annex SL. Because of this, the ISO 45001 requirements should be consistent with the other standards to allow for relatively easy alignment and integration into the organization’s overall management processes.
In addition, ISO 45001 takes into account other OHS standards, including OHSAS 18001, ILO-OSH Guidelines, various national standards, and the ILO’s international labor standards and conventions.
What is Annex SL?
As mentioned above, Annex SL is the structure for all new and revised ISO standards. It defines the framework for a generic management system—and is then customized for each discipline. This standard structure allows for easier integration between management systems and improved efficiencies. The major clauses for all ISO management system standards are identical under Annex SL and fall into the Play-Do-Check-Act (PDCA) cycle. Organizations who have already implemented ISO 9001:2015 or ISO 14001:2015 will be familiar with the Annex SL structure.
The table below outlines the main clauses in Annex SL, as well as the OHSMS-specific clauses. Highlighted areas indicate those sections that are significant changes/additions to the existing OHSAS 18001 standard.
What does this mean for OHSAS 18001?
As outlined in the table above, ISO 45001 does not conflict with OHSAS 18001. In fact, it expands and enhances the existing standard to improve integration of the OHSMS into the overall business. Once it is finalized, ISO 45001 is intended to replace OHSAS 18001. Much like other management system standards, current users of OHSAS 18001 will need to update their systems according to the requirements of the new standard within a three-year transition period.
When will it be finalized?
The current expected publication date is February 2018. Drafts will be available through local ISO members once they reach the public inquiry (DIS) stage and Final Draft (FDIS) stage.
Once it’s published, who should use ISO 45001?
The short answer is everyone. ISO 45001 is designed to be a flexible management system that can be implemented by any organization, no matter the size, type, or industry. As long as the organization has people who may be affected by its activities, an OHSMS has value in ensuring worker health and safety and fulfilling legal requirements.
Why should I do this? Why are management systems like ISO 45001 beneficial?
A management system is an organizing framework that enables companies to achieve and sustain their operational and business objectives through a process of continuous improvement. A management system is designed to identify and manage risks through an organized set of policies, procedures, practices, and resources that guide the enterprise and its activities to maximize business value. There are a number of reasons to implement a management system (see this article: https://kestrelmanagement.com/business-benefits-mgmt-sys/).
What do I do next?
- Get informed! Start reading up on ISO 45001. While the final standard may not yet be published, current versions can provide a good indication of what is to come.
- Identify gaps in your existing OHSMS that will need to be addressed to meet any new requirements. If you don’t have an existing OHSMS, review the requirements and determine what pieces you may already have in place.
- Develop an implementation plan. There is a three-year transition period once the new ISO 45001 standard is published (anticipated February 2018). Plan according to this timeline.
- Provide training. It is vital to ensure that workers and management are engaged in the OHSMS and that they are competent in any new skills/responsibilities that may be required.
- Put your plan into action. Update/develop your OHSMS to meet the ISO 45001 requirements and provide verification of its effectiveness to ensure certification.
BY: Stacey Pisani
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This is the fifth in a series of five articles on developing and maintaining a world-class compliance assurance program.
A well-designed and well-executed compliance assurance program provide an essential tool for improving and verifying business performance and limiting compliance risks. Ultimately, however, a compliance program’s effectiveness comes down to whether it is merely a “paper program” or whether it is being integrated into the organization and used in practice on a daily basis.
The following can show evidence of a living, breathing program:
- Comprehensiveness of the program
- Dedicated staff and resources
- Employee knowledge and engagement
- Management commitment and employee perception
- Internal operational inspections, “walkabouts” by management
- Independent insider, plus third-party audits
- Program tailoring to greatest risks
- Consistency and timeliness of exception (noncompliance/nonconformance) disclosures
- Tracking of timely and adequate corrective/preventive action completion
- Progress and performance monitoring
To achieve a compliance assurance program on par with world-class organizations, there are a number of best practices that companies should employ:
Know the requirements. This means maintaining an inventory of regulatory compliance requirements for each compliance program, as well as of state/local/contractual binding agreements applying to operations. It is vital that the organization keep abreast of current/upcoming requirements (federal, state, local).
Plan and develop the processes to comply. Identify and assess compliance risks, and then set objectives and targets for performance improvement based on top priorities. From here, it becomes possible to then define program improvement initiatives, assign and document responsibilities for compliance (who must do what and when), develop procedures and tools, and then allocate resources to get it done.
Assure compliance in operations. The organization needs to establish routine checks and inspections within departments to evaluate conformance with sub-process procedures. Process audits should be designed and implemented to cut across operations and sub-processes in order to evaluate conformance with company policies and procedures. Regulatory compliance audits should further be conducted to address program requirements (e.g., environmental, safety, mine safety, security). Audit performance must be measured and reported, and the expectations set for operating managers to take responsibility for compliance.
Take action on issues and problems. Capture, log and categorize noncompliance issues, process nonconformances, and near misses. Implement a corrective/preventive action process based on the importance of issues. Be disciplined in timely completion, close-out, and documentation of all corrective/preventive actions.
Employ management of change (MOC) process. Robust MOC processes help ensure that changes affecting compliance (to the facility, operations, personnel, infrastructure, materials, etc.) are reviewed for their impacts on compliance. Compliance should be assured before the changes are made. Failure to do so is one of the most common root causes of noncompliance.
Ensure management involvement and leadership. Set the tone at the top. The Board of Directors and senior executives must set policy, culture, values, expectations, and goals. It is just as important that these individuals are the ones to communicate across the organization, to demonstrate their commitment and leadership, to define an appropriate incentive/disincentive system, and to provide ongoing organizational feedback.
Maintaining Ongoing World-Class Compliance Assurance Program
The compliance assurance program must be a living, breathing program. As risks change, the program must be refreshed, refined, and redeployed. A Management System framework can help ensure operational sustainability. A Management System drives the auditing process and helps companies say what they will do, do what they say and, importantly, verify it.
Together, there is a real value at the intersection of a compliance assurance program and Management Systems. Management Systems define the internal controls that are in place to reduce risks, prevent losses, and sustain and improve performance over time through the Plan-Do-Check-Act (PDCA) cycle of continual improvement.
Testing and Monitoring
Testing, monitoring, and measuring are crucial elements of this cycle. Without them, it is difficult to understand what is working and what needs improvement. Robust testing and monitoring programs can serve as early warning systems for identifying potential compliance risks before they become enforcement issues.
Compliance should be tested and monitored throughout each level of the organization. A strong testing program will evaluate the results of the compliance risk assessment and assign compliance risks to the business units and processes where they are most likely to occur, creating clear lines of responsibility and accountability. Key risks and the related controls should be tested periodically using statistically valid sampling methodologies, and monitoring activities should be performed on an ongoing basis. Doing so produces trend data that provides the rationale needed for making changes to underlying business processes, as well as emerging risks.
Ongoing compliance excellence relies on top management, operations managers, EHS personnel, and individual employees throughout the organization working together to build and sustain an organizational culture that places compliance on par with business performance. Senior management must focus on the overall culture of the company in terms of taking the necessary steps to reduce risk and make prevention part of daily operations. While it may be impossible to eliminate all risk exposure, a solid risk framework, assessment methodology, and compliance assurance program can help to prioritize risks for active management, sustained compliance, and positive business impacts.
Read the other articles in this series:
BY: Stacey Pisani
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This is the fourth in a series of five articles on developing and maintaining a world-class compliance assurance program.
Audits provide an essential tool for improving and verifying compliance performance. Audits may be used to capture regulatory compliance status, management system conformance, adequacy of internal controls, potential risks, and best practices. An audit is typically part of a broader compliance assurance program and can cover some or all of the company’s legal obligations, policies, programs, and objectives.
There are a number of third-party auditing standards that offer guidelines for ensuring accurate, complete, and reliable EHS audits, including:
- The Board of Environmental, Health, and Safety Auditing Certifications (BEAC) Standards, 2008
- ISO 19011 Auditing Guidelines, 2002
- Auditing Roundtable Standards, 1993
- USEPA Auditing Policy, 1986, 2000
- Institute of Internal Auditors Standards, 1997
Companies come in a variety of sizes with a range of different needs, so auditing standards remain fairly flexible. There are, however, a number of audit program elements and best practices that can help ensure a comprehensive audit program:
Goals. Establishing goals enables recognition of broader issues and can lead to long-term preventive programs. This process allows the organization to get at the causes and focus on important systemic issues. It pushes and guides toward continuous improvement. Goal-setting further addresses the responsibilities and obligations of the Board of Directors for audit and oversight and elicits support from stakeholders.
Scope. The scope of the audit should be limited initially (e.g., compliance and risk) to what is manageable and to what can be done very well, thereby producing performance improvement and a wider understanding and acceptance of objectives. As the program is developed and matures (e.g., management systems, company policy, operational integration), it can be expanded and, eventually, shift over time toward systems in place, prevention, efficiency, and best practices.
Committed resources. Sufficient resources must be provided for staffing and training and then applied, as needed, to encourage a robust auditing program. Resources also should be applied to EHSMS design and continuous improvement. It is important to track the costs/benefits to compare the impacts and results of program improvements.
Operational focus. All facilities need to be covered at the appropriate level, with emphasis based on potential EHS and business risks. The operational units/practices with the greatest risk should receive the greatest attention (e.g., the 80/20 Rule). Vendors/contractors and related operations that pose risks must be included as part of the program. For smaller, less complex and/or lower risk facilities, lower intensity focus can be justified. For example, relying more heavily on self-assessment and reporting of compliance and less on independent audits may provide a better return on investment of assessment resources.
Audit team. A significant portion of the audit program should be conducted by knowledgeable auditors (independent insiders, third parties, or a combination thereof) with clear independence from the operations being audited and from the direct chain of command. For organizational learning and to leverage compliance standards across facilities, it is good practice to vary at least one audit team member for each audit. Companies often enlist personnel from different facilities and with different expertise to audit other facilities. Periodic third-party audits further bring outside perspective and reduce tendencies toward “home-blindness”.
Most common options for compliance audit team design include the following:
- Facility-based EHS Team
- Advantages – awareness of operations and specific facility EHS regulated activities
- Disadvantages – lack independence and objective outside perspective; may have some responsibilities for activities audited; likely to have limited regulatory expertise needed; likelihood of significant inconsistencies and variability from facility to facility
- Best use – routine and frequent inspections and monitoring, including progress checks on completion of corrective actions arising from other audits; desirable to have staff from other facilities participate on audit team; auditors should not audit their own departments or operations; may conduct and submit to corporate annual facility compliance self-assessments and assurance statements by facility management
- Independent Inside EHS Team
- Typically, from corporate headquarters (may include facility EHS representatives from other facilities)
- Advantages – improved independence from operations; likely to provide regulatory know-how and multi-facility perspective; consistency in audit methods and content likely across facilities
- Disadvantages – can be subject to limited independence and internal business pressures; may have limited perspective on best industry practices from outside organization; may not have up-to-date regulatory requirements awareness
- Best use – dedicated corporate EHS lead auditor(s) supported by subject matter experts on audit team; EHS personnel from other facility(s) participate on team for cross-facility learning; audit protocols maintained to be current; audits conducted annually at higher risk facilities; team review of facility self-assessments at lower risk facilities
- Third-Party Independent Audit Team
- Advantages – organizational independence; outside perspective and experience with compliance practices of other companies; auditor credentials and up-to-date awareness of audit methods and regulatory requirements; ability to bring specialized know-how, as needed; must meet client expectations for deliverable quality and timeliness
- Disadvantages – may not have organizational standing to ensure necessary cooperation and openness of auditees
- Best Use – periodic audit of the company’s audit program and process (5-year cycle); periodic compliance audits of selected facilities (3-year cycle), including auditing the completion of corrective actions initiated as a result of internal audits by corporate team; audits of company’s management system as part of compliance audits; done under attorney-client privilege
Audit frequency. There are several levels of audit frequency, depending on the type of audit:
- Frequent: Operational (e.g., inspections, housekeeping, maintenance) – done as part of routine EHSMS day-to-day operational responsibilities
- Periodic: Compliance, systems, actions/projects – conducted annually/semi-annually
- As needed: For issue follow-up
- Infrequent: Comprehensive, independent – conducted every three to four years
Differentiation methods. Differentiating identifies and distinguishes issues of greatest importance in terms of risk reduction and business performance improvement. The process for differentiating should be as clear and simple as possible; a system of a priority rating and ranking is widely understood and agreed. The rating system can address severity levels, as well as probability levels, in addition to complexity/difficulty and length of time required for corrective actions.
Legal protection. Attorney privilege for audit processes and reports is advisable where risk/liability are deemed significant, especially for third-party independent audits. To the extent possible, make the audit process and reports become management tools that guide continuous improvement. Organizations should follow due diligence elements of the USEPA audit policy.
Procedures. Describe and document the audit process for consistent, efficient, effective, and reliable application. The best way to do this is to involve both auditors and those being audited in the procedure design. Audit procedures should be tailored to the specific facility/operation being audited. Documented procedures should be used to train both auditors and those accountable for operations being audited. Procedures can be launched using a pilot facility approach to allow for initial testing and fine-tuning. Keep procedures current and continually improve them based on practical application. Audits include document and record review (corporate and facility), interviews, and observations.
Protocols & tools. Develop specific and targeted protocols that are tailored to operational characteristics and based on applicable regulations and requirements for the facility. Use “widely accepted or standard practice” as go-by tools to aid in developing protocols (e.g., ASTM site assessment standards; ISO 14010 audit guidance; audit protocols based on EPA, OSHA, MSHA, Canadian regulatory requirements; GEMI self-assessment tools; proprietary audit protocol/tools). As protocols are updated, the ability to evaluate continuous improvement trends must be maintained (i.e., trend analysis).
Information management & analysis. Procedures should be well-defined, clear, and consistent to enable the organization to analyze trends, identify systemic causes, and pinpoint recurring problem areas. An analysis should prompt communication of issues and differentiation among findings based on significance. Audit reports should be issued in a predictable and timely manner. It is desirable to orient the audit program toward organizational learning and continual improvement, rather than a “gotcha” philosophy. “Open book” approaches help learning by letting facility managers know in advance what the audit protocols are and how the audits will be conducted.
Verification & corrective action. Corrective actions require corporate review, top management-level attention and management accountability for timely completion. A robust root cause analysis helps to ensure not just correction/containment of the existing issue, but also preventive action to assure controls are in place to prevent the event from recurring. For example, if a drum is labeled incorrectly, the corrective action is to relabel that drum. A robust plan should also look for other drums than might be labeled incorrectly and to add and communicate an effective preventive action (e.g., training or posting signs showing a correctly labeled drum).
Action item closure. Address repeat findings. Identify patterns and seek root cause analysis and sustainable corrections.
Training. Training should be done throughout the entire organization, across all levels:
- Auditors are trained on both technical matters and program procedures.
- Management is trained on the overall program design, purpose, business impacts of findings, responsibilities, corrections, and improvements.
- Line operations are trained on compliance procedures and company policy/systems.
Communications. Communications with management should be done routinely to discuss status, needs, performance, program improvements, and business impacts. Communications should be done in business language—with business impacts defined in terms of risks, costs, savings, avoided costs/capital expenditures, benefits. Those accountable for performance need to be provided information as close to “real time” as possible, and the Board of Directors should be informed routinely.
Leadership philosophy. Senior management should exhibit top-down expectations for program excellence. EHSMS quality excellence goes hand-in-hand with operational and service quality excellence. Learning and continuous improvement should be emphasized.
Roles & responsibilities. Clear roles, responsibilities, and accountabilities need to be established. This includes top management understanding and embracing their roles/responsibilities. Owners of findings/fixes also must be clearly identified.
Funding for corrective actions. Funding should be allocated to projects based on the significance of risk exposure (i.e., systemic/preventive actions receive high priority). The process should incentivize proactive planning and expeditious resolution of significant problem areas and penalize recurrence or back-sliding on performance and lack of timely fixes.
Performance measurement system. Audit goals and objectives should be nested with the company business goals, key performance objectives, and values. A balanced scorecard can display leading and lagging indicators. Metrics should be quantitative, indicative (not all-inclusive), and tied to their ability to influence. Performance measurements should be communicated and widely understood. Information from auditing (e.g., findings, patterns, trends, comparisons) and the status of corrective actions often are reported on compliance dashboards for management review.
Degree of business integration. There should be a strong link between programs, procedures, and methods used in a quality management program—EHS activities should operate in patterns similar to core operations rather than as ancillary add-on duties. In addition, EHS should be involved in business planning and MOC. An EHSMS should be well-developed and designed for full business integration, and the audit program should feed critical information into the EHSMS.
Accountability. Accountability and compensation must be clearly linked at a meaningful level. Use various award/recognition programs to offer incentives to line operations personnel for excellent EHS performance. Make disincentives and disciplinary consequences clear to discourage non-compliant activities.
Deployment plan & schedule. The best practice combines the use of pilot facility audits, baseline audits (to design programs), tiered audits, and a continuous improvement model. Facility profiles are developed for all top priority facilities, including operational and EHS characteristics and regulatory and other requirements.
Relation to best practices. Inventory best practices and share/transfer them as part of audit program results. Use best-in-class facilities as models and “problem sites” for improvement planning and training. The figure illustrates an audit program that goes beyond the traditional “find it, fix it, find it, fix it” repetitive cycle to one that yields a real understanding of root causes and patterns. In this model, if the issues can be categorized and are of wide scale, the design of solutions can lead to company-wide corrective and preventive measures. This same method can be used to capture and transfer best practices across the organization. They are sustained through the continual review and improvement cycle of an EHSMS and are verified by future audits.
In our fifth and final article in this series, we talk about compliance program best practices and what it takes to maintain an ongoing world-class compliance assurance program.
Read the other articles in this series:
BY: Stacey Pisani
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All types of business and operational processes demand a variety of audits and inspections to evaluate compliance with standards—ranging from government regulations to industry codes, to system standards (i.e., ISO), to internal corporate requirements.
Audits provide an essential tool for improving and verifying compliance performance. Audits may be used to capture regulatory compliance status, management system conformance, adequacy of internal controls, potential risks, and best practices.
By combining effective auditing program design, standardized procedures, trained/knowledgeable auditors, and computerized systems and tools, companies are better able to capture and analyze audit data, and then use that information to improve business performance. Having auditing software of some sort can greatly streamline productivity and enhance quality, especially in industries with many compliance obligations.
The following tips can help ensure that companies are getting the most out of their auditing process:
- Have a computerized system. Any system is better than nothing; functional is more important than perfect. The key is to commit to a choice and move forward with it. Companies are beginning to recognize the pitfalls of “smart people” audits (i.e., an audit conducted by an expert + notebook with no protocols or systems). While expertise is valuable, this approach makes it difficult to compare facilities and results, is not replicable, and provides no assurance that everything has been reviewed. A defined system and protocol helps to avoid these pitfalls.
- Invest time before the audit. The most important time in the audit process is before the audit begins. Do not wait until the day before to prepare. There is value in knowing the scope of the audit, understanding expectations, and developing question sets/protocol. This is also the time to ensure that the system collects the data desired to produce the final report.
- Capture data. Data is tangible. You can count, sort, compare and organize data so it can be used on the back end. Data allows the company to produce reports, analytics, and standard metrics/key performance indicators.
- Don’t forget about information. Information is important, too. The information provides descriptions, directions, photos, etc. to support the data and paint a complete picture.
- Be timely. Reports must be timely to correct findings and demonstrate a sense of urgency. Reports serve as a permanent record and begin the process of remediation. The sooner they are produced, the sooner corrective actions begin.
- Note immediate fixes. During the audit, there may be small things uncovered that can be fixed immediately. These items need to be recorded even if they are fixed during the audit. Unrecorded items “never happened”. Correspondingly, it is important to build a culture where individuals are not punished for findings, as this can result in underreporting.
- Understand the audience. Who will be reading the final report? What do they need to know? What is their level of understanding? Not all data presentation is useful. In fact, poorly presented data can be confusing and cause inaction. It is important to identify key data, reports desired, and the ways in which outputs can be automated to generate meaningful information.
- Compare to previous audits. The only way to get an accurate comparison is if audits have a common scope and a common checklist/protocol. Using a computerized system can ensure that these factors remain consistent. Comparisons reinforce and support a company’s efforts to maintain and improve compliance over time.
- Manage regulatory updates. It is important to maintain a connection to past audits and the associated compliance requirements at the time of the audit. Regulations might change and that needs to be tracked. Checklists, however, may remain the same. Companies should have a process for tracking regulatory updates and making sure that the system is updated appropriately.
- Maintain data frequency. For data, the frequency is key. Consider what smaller scope, higher frequency audits look like. These can allow the company to gather more data, involve more people, and improve the overall quality and reliability of reports.
A well-designed and well-executed auditing program—with analysis of audit data—provides an essential tool for improving and verifying business performance. Audits capture regulatory compliance status, management system conformance, adequacy of internal controls, potential risks, and best practices. And using a technology tool or system to manage the audit makes that information even more useful.
BY: Stacey Pisani
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This is the third in a series of five articles on developing and maintaining a world-class compliance assurance program.
Compliance risk assessment helps to identify and assess risks related to applicable regulatory requirements. Internal and external events or conditions affecting the entity’s ability to achieve objectives must be identified, distinguishing between risks and opportunities. These risks are analyzed, considering the following:
- Size of the risk – where, how big, how often/many?
- Severity of the outcome – to what extent can it impact safety, environmental, operational, financial, customer relations, regulatory compliance?
- Likelihood/probability of each risk – how likely is the occurrence of a negative outcome, considering the maturity of existing controls?
Based on this assessment, management can prioritize risks, select appropriate risk responses (avoiding, accepting, reducing, sharing), and develop a set of actions to align with the entity’s risk tolerance/appetite. An acceptable level of residual risk is considered after selected improvements and controls are applied. From there, policies and procedures can be established and implemented to help ensure the risk responses are effectively communicated so operating managers and individuals can carry out their responsibilities.
A deeper dive compliance program assessment may be performed for those risks that are identified as the company’s most significant.
Compliance Program Assessment
A compliance program assessment looks beyond “point-in-time” compliance to critically evaluate how the company manages compliance programs, processes, and activities, with compliance assurance as the ultimate goal. Capability, capacity, programs, and processes to comply are examined as part of this review. Conducting routine process and compliance audits are also key components of a compliance assurance program.
Compliance program assessment should follow a disciplined and consistent process, resulting in an effective program that guides alignment of activities to an EHSMS for sustained compliance and continuous improvement. An essential part of the assessment, audits capture regulatory compliance status, EHSMS conformance, adequacy of internal controls, potential risks, and best practices.
Compliance program assessment enables a company to define and understand:
- Compliance requirements and where regulated activities occur throughout the organization
- Current company programs and processes used to manage those activities and the associated level of program/process maturity
- Deficiencies in compliance program management and opportunities for improvement
- How to feed review recommendations back into elements of the EHSMS to create a roadmap for sustaining and continually improving compliance
There are six phases associated with a compliance program assessment:
Phase 1 – Regulations, Requirements, and Applicability Analysis: Phase 1 focuses on identifying, organizing, validating, and understanding all of the requirements (legal or other) with which the company must comply. It provides an applicability analysis of the requirements to company operations by functional area and evaluates the associated risks. This stage engages representatives across the company who are responsible for activities subject to the requirements.
Phase 2 – Activities Analysis: This phase involves developing an inventory/profile of all company activities that may trigger the requirements identified in Phase 1. It asks the question, “What activities does the company carry out that are covered by the requirements?”
Phase 3 – Desired Compliance Program Standard: Establishing the company’s expectations for compliance program processes and controls—the desired condition—is essential. This “to-be” standard integrates Management System principles into compliance program management. Programs should examine relative risks and ensure that risk-based priorities are being set.
Phase 4 – Actual Compliance Program Condition: In contrast to the desired standard identified in Phase 3, Phase 4 is about describing the company’s current compliance program. It defines how the company performs the activities outlined in Phase 3 (along with who, when, and where)—the “as-is” condition. This is done in the same framework as the desired standard in order to compare them in the next phase.
Phase 5 – Gap Analysis: The gap analysis compares actual compliance program management against the desired standard. It evaluates compliance program management processes, controls, and maturity to determine if they are good as is, need improvement, or are missing. These gaps and opportunities provide the basis for the improvement actions developed in Phase 6.
Phase 6 – Improvement Actions: Phase 6 moves the process along to developing action plans and an approach for ongoing management review that will guide the compliance program development and improvement activities. Compliance program management review is established at the end of this last phase. If there is an EHSMS in place, program review information and action plan tracking can be integrated into that Management System.
As a whole, this process will help companies evaluate the degree to which:
- EHS compliance goals and objectives are set and communicated by management.
- Hazards and risks are identified, sized, and assessed, including an inventory of activities subject to the compliance requirements and the relative risks.
- Existing controls are adequate and effective, recognizing and addressing changed conditions.
- Plans are in place to address risks not adequately covered by existing controls.
- Plans and controls are resourced and implemented.
- Controls are documented and operationalized across functions and work units.
- Personnel know and understand the controls and expectations, and are engaged in their design and improvement.
- Controls are being monitored with appropriate metrics and compliance auditing and assurance.
- Information system is sufficient to support EHSMS-required functions (e.g., document management and control, action tracking, notifications, training tracking, task calendaring, metrics reporting). Information dashboards can be used for reports to management.
- Deficiencies are being addressed by corrective/preventive action and are being tracked to completion.
- Processes, controls, and performance are being reviewed by management for ongoing improvement, including the maintenance and continual improvement of the ISO 14001 and OHSAS 18001-certified EHSMS.
With this foundation, the next article in this series discusses audit program best practices.
Read the other articles in this series:
BY: Stacey Pisani
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This is the second in a series of five articles on developing and maintaining a world-class compliance assurance program.
The connection between Management Systems and compliance assurance is vital in avoiding recurring compliance issues and in reducing variation in compliance performance. In fact, reliable and effective regulatory compliance is commonly an outcome of the consistent and reliable implementation of a Management System.
A Management System is the organizing framework that enables companies to achieve and sustain their operational and business objectives through a process of continuous improvement. As shown, a policy is the foundation of the Management System. It establishes the vision and overall corporate expectations. Processes and standards set corporate expectations for performance. They establish what must be done to meet the requirements of the policy—but they don’t define “how” it will be done. Procedures, then, define “how” the processes/standards will be met and, thereby, meet the requirements of the policy. Finally, proof/metrics provide the measurable “proof of performance”.
A Management System is designed to identify and manage risks—safety, environmental, quality, business continuity, security (and others)—through an organized set of policies, procedures, practices, and resources that guide the enterprise and its activities to maximize business value. In its simplest form, a Management System implements the Plan, Do, Check, Act/Adjust cycle of continual improvement and addresses the following:
- What is done and why
- >How it is done and by whom
- How well it is being done
- How it is maintained and reviewed
- How it can be improved
The following table compares the attributes of a program with a “Compliance Only” emphasis against those of a “Compliance within a Management System” program.
Management System Standards
Industry standards are available to guide the design and implementation of the EHSMS. The most widely recognized and applied are the harmonized ISO standards—ISO 14001 (Environmental), OHSAS 18001 and draft ISO 45001 (Safety), and ISO 9001 (Quality).
The figure below depicts the standard Management System cycle of control and improvement. Two key procedures within this cycle that guide auditing involve understanding legal, regulatory and other requirements (under “Planning and Management of Change”) and evaluating compliance (under “Checking & Corrective Action”).
Each company’s Management System reflects its unique culture, vision, and values. To be effective and valuable, the Management System must be tailored and focused on how it can enhance the business performance of the organization. It must also be:
- Useful to people in the operations
- Intuitive—organized the way operations people think
- Flexible—making use of methods and tools as they are developed and documented
- Valuable from the outset—addressing the most critical risks and processes
- Linked to the business of the business (not “pasted on”), with ownership at the operational level
- A means to better align operational quality, safety, and environment with the business
There are a number of business reasons for implementing a well-documented Management System and associated support methods and tools:
- Establishes a common documented framework to achieve more consistent implementation of compliance policies and processes—addressing the eight core functions of compliance: inventories, permits and authorizations, plans, training, practices in place, monitoring and inspection, records, reporting.
- Provides clear methods and processes to identify and prioritize risks, set and monitor goals, communicate those risks to employees and management, and allocate the resources to mitigate them.
- Shifts from a command-and-control, centrally driven function (or, at the other extreme, totally decentralized and lacking adequate guidance and oversight) to one that depends heavily on teamwork and implementation of a common system, taking into consideration the necessary local differences and building better know-how at the facility level.
- Establishes a common language for periodic calls and meetings among managers, facility managers, and executives, which yields better goal-setting, priority ranking, and allocation of resources to the areas with the greatest risk or the greatest opportunity to add business value.
- Empowers facilities to take responsibility for processes and compliance performance without waiting to be told “what” and “how”.
- Enables better collaboration and communication across a distributed company with many locations.
- Enables the selection and implementation of a robust information system capable of tracking and reporting on common activities and performance metrics across the company.
- Employs a design and implementation process that builds company know-how, captures/retains institutional knowledge, and enables ongoing improvement without having to continually reinvent the wheel.
- Creates consistent processes and procedures that support personnel changes (e.g., transfers, promotions, retirements) and training of new personnel without causing disruption or gaps.
- Allows for more consistent oversight and governance, yielding higher predictability and reliability.
- Better ensures that employees and contractors return home from work safely every day and that the public and the environment are protected.
- Reduces incident costs and accrued liabilities and protects assets.
- Improves and sustains regulatory compliance and allows the organization to continually improve quality, environmental, and safety performance (employee, public, equipment, infrastructure).
The next article in this series will move on to identifying and assessing risks and the subsequent compliance program assessment.
Read the other articles in this series:
OSHA has issued a final rule updating its general industry Walking-Working Surfaces standard to protect workers from slip, trip, and fall hazards. The rule also increases consistency in safety and health standards for people working in both general and construction industries.
The final rule’s most significant update is allowing employers to select the fall protection system that works best for them, choosing from a range of accepted options including personal fall protection systems.
OSHA estimates the final rule will prevent more than 5,800 injuries a year. The rule takes effect Jan. 17, 2017.
Read the full press release.