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Risk Management


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Managing Risk


Formal risk management practices should be mandatory for hazardous rotorcraft flight operations.


by Mark Ogden


Helicopters operate in a much more hostile environment than most other civil aircraft. They routinely fly in close proximity to obstacles, and are the only aircraft that can hover around buildings, where swirling winds can create unpredictable hazards. Consequently, they can benefit more than any other aircraft category from formal risk assessment and management programs.

In recent years, more flight operations have adopted formal risk management programs. Many operations managers say that safety is their primary concern, and that may be true, but ultimately, it all comes down to money. Some insurance companies will give them a break on their premiums if they adopt such a program, or sometimes the program is a prerequisite to insure them at all. Some managers view risk management as a pre-emptive move to put the company in a better legal position in the event of an accident and the inevitable lawsuit to follow.

This implies that risk management is not an end unto itself, but another useful tool to improve operational safety and efficiency, and could help helicopter operators improve their bottom lines.

Before we go any further, we should define ‘risk.’ Risk is a loaded word, because it means very different things to different people. Webster’s New World Dictionary defines it as ‘the chance of injury, damage or loss.’ This definition is a good starting point when applying the principles of risk management to any flight operation.

What we are really looking for here is ‘acceptable risk.’ For example, most of us are willing to accept the risk of being hit by a car when we cross the street to go to the market and shop for groceries. We know that when we leave for the market, we are in all likelihood coming back. Not everyone does, of course—the risk of being hit by a car when we cross the street is not zero—but it’s acceptably low.

The same principle applies to helicopter operations. We must determine just how much risk our operation is willing to accept, and whether certain monetary rewards outweigh risks, that for some operators might be unacceptably high.


Defining risk management

In any industry, the goal of achieving a totally risk-free environment is impractical and expensive. Organizations aiming for such a low level of risk, are likely to achieve nothing, will miss opportunities and ultimately will fail. Taking risks is not necessarily bad, and progressive organizations balance risk against opportunity. Operations managers and pilots must understand the nature of the risks they are taking and the possible consequences of those actions. This is where many operations fail.

Australia and New Zealand cooperated to produce a joint standard in risk management. This resulted in AS/NZS 4360:1999, which states, in part, that risk is the chance of something happening that will impact upon objectives. Risk is measured by combining the magnitude of potential consequence and the likelihood of those consequences occurring.

Risk management is an iterative process consisting of well-defined steps. When taken in sequence, the process supports better decision-making by providing greater insight into risks and their impact. The risk management process can be applied to any situation where an undesired or unexpected outcome could be significant or where opportunities are identified.

Poor risk management practices can be identified as factors contributing to accidents and financial collapses. Often, organizations transfer their risk through insurance, or rely on regulations as the basis for operations without seriously considering their risk exposure.

“For years we have avoided the responsibility for our negligent acts and avoided the chance of economic loss by purchasing insurance,” wrote Tom Chappell, an executive for CS&A Aviation Insurance. “This continues to be a very acceptable approach to minimizing business risk, but the premiums on all types of insurance have become more expensive and, in some cases, coverage is simply not available. It is this expense and lack of industry capacity that has caused the average business to ‘think outside the box’ and to develop less-expensive alternatives to insurance.”

The Australian Transport Safety Bureau identified poor risk management practices at both the organizational and the operational levels as some of the contributing factors in the Qantas Boeing 747 overrun accident in Bangkok, and more recently, in the Bell 407 helicopter accident in Queensland, Australia.


Taking a lesson from the military

Although management should not get directly involved in pilot decision-making , they do need to understand and appreciate what the helicopters are being used for, and in what environment. Conversely, while helicopter crews handle more immediate risk assessments in their day-to-day operations, they also need to be aware of the organization’s policies and objectives.

Kimberley Turner, director of Aerosafe, a company that specializes in the development of risk management policies and practices for aviation organizations, began her career in aviation risk management in 1996, when the commanding officer of the Australian Army’s 5th Aviation Regiment asked her to construct standard risk profiles for the squadron’s operations. Researching the request, she found that well-regarded airline and helicopter operators had not developed formal risk management practices. Turner believed that much of the aviation industry already had grasped the basic concepts of risk management.

“The objectives of what an organization wants to achieve by applying the risk management process need to be clearly enunciated,” she says. “These can be more strategic, long-term, big-picture considerations, including matching the operational and financial planning to the tactical considerations of an individual helicopter flight.”

Australian Army Aviation has been embedding formal risk management procedures in its decision-making processes since 1995. The Army’s experience in this area demonstrates that it is a continuous work in progress. Although regulation and training are important factors in reducing the occurrence of a wide range of hazardous conditions, those controls alone do not provide the basis for a robust risk management system. This is because they usually are the result of an accident or incident and are more reactive in nature.

Formal risk management must be intrinsic to an organization’s culture. Experience has shown that few organizations readily accept formal risk management practices initially. The Australian Army experienced institutional resistance to the development and introduction of formal risk management practices because there was a perception that it would create more paperwork.

Some in Army Aviation also thought that the organization had always managed risk well and, to a certain extent, this was true. But it also meant that many decisions that could have had huge implications for funding and force structure were being made by default, by very junior officers. Risk management needs strong support from the top, and must not be seen as another management fad.


Implementing a program

One of the key steps in the effective implementation of risk management within an organization is the development and provision of a suitable and purpose-built application system. The system provides the organization with robust risk management tools, methods and techniques to apply the process at the operational and business levels.

Other elements of effective implementation include education and training; risk reporting; audit and evaluation; and objective measurement of program effectiveness through a continuous process of review.

One of the first things an operator needs to understand is what the organisation does, the hazards it faces and what mitigating factors already exist. Focus groups or an audit team can collate this information. If the organization already has a hazard-reporting system, then that should be used to gather this information.

Next, the most common and practical method of understanding risk within an organization is to develop a risk management plan for a particular activity, task or function that may require special attention. Once this is done, and the managers understand, practice and support the process, risk planning gradually becomes an intrinsic part of the company culture.


Operational risk management

Operators should develop a system that involves formal risk management at each decision-making level, but the process should not be onerous. A symptom of this happening is when previous risk management plans get ‘photocopied,’ and no real assessment takes place among those involved.

Managers should start the process by reviewing each standard operation and establishing ‘standard risk profiles.’ These are operations that are considered normal and have acceptable risks.

Once these profiles are established, then formal risk management is only required for those operations that are outside the standard profile. For example, if a helicopter lacked a serviceable ILS, the crew would conduct a risk assessment and develop a risk management plan for the proposed sortie. This plan should examine the hazards and risks, and describe what is being done to address these hazards. Reviewing the risk profile after these so-called ‘mitigators’ are put in place is important to ensure that unexpected risks have not been introduced.

In this case, the unit may decide to mitigate the risk by ensuring other navaids were available, that the helicopter’s radar and navigation system were fully serviceable, and that the crew was experienced for this type of mission. Alternatively, the unit may decide to remove the risk altogether by not flying the helicopter in IMC until the ILS is fully functional. It all depends on the importance of the flight to the organization and what risks are considered acceptable.

Another approach would be to elevate the decision-making level. For example, only managers at the top levels should be charged with the final decision for taking on certain high-risk missions. Quarantining major decision-makers from responsibility is a very effective method of risk management.


Strategic risk assessment

An example of strategic risk assessment would be a company that is considering bidding on a contract supplying helicopter support to an oil exploration company. The contract may require servicing from a remote airfield and require a mid-sized helicopter, one the company would not normally be involved in operating.

At an operational level, the company would need to understand the requirements of the regulations and the customer, then assess the operational risks involved. These risks could involve navaid availability, weather forecasting, distances to be travelled, helicopter range, and so on.

Once the operational risk assessment is complete, a more strategic assessment is needed. This would mean including which helicopter type is best for the mission, how many helicopters will be needed to do the job, how much support will be needed, personnel requirements and overall cost. Both assessments must be reviewed in light of each other. The result would provide the basis of a business plan.

Safety by regulation has always been a dubious proposition because regulations represent compromises. Regulators are moving toward industry self-regulation and are demanding that operators develop ‘safety-systems.’

Not only is risk management a fundamental part of any safety system, it makes good business sense to incorporate such processes at every level within an operation, where accident prevention is so vitally important.

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