Greg Smith, author of 'Paper Safe,' enlightens listeners about the intricacies of critical risk management. He emphasizes the necessity for organizations to focus on significant risks to prevent major disasters, especially in industries like shipping. The conversation also highlights the importance of imagination and critical thinking in safety audits, encouraging a culture of thorough analysis. Additionally, Smith delves into the challenges of navigating assumptions in safety practices, advocating for open dialogues despite time constraints.
Organizations must prioritize identifying and managing critical risks to prevent major accidents rather than merely focusing on safety activity metrics.
Developing a culture of imaginative problem-solving is essential for organizations to enhance their adaptability and preparedness for unforeseen risk scenarios.
Deep dives
Understanding Critical Risks
Organizations often struggle to grasp the concept of critical risks and critical risk management, which is essential for preventing major accidents. Numerous past disasters, such as the BP Texas City explosion and the Pike River coal mine tragedy, highlight the consequences of organizations overlooking critical risks in favor of focusing on less significant injury rates. These incidents illustrate that boards and management often fail to demonstrate the effectiveness of their safety systems and controls, leading to a lack of assurance concerning fundamental processes that could prevent catastrophic events. Emphasizing critical risks instead of simply measuring overall safety activity is vital for organizations to enhance governance and ensure their critical systems are functioning properly.
Normalization of Risk Perception
The normalization of risks within organizations can create blind spots, making it difficult for employees to recognize true critical risks until they manifest as serious incidents. The tendency to measure safety by activity levels rather than actual risks leads to a misleading sense of security where the same activities are repeated without acknowledging the evolving nature of risks. A critical challenge is that individuals on the ground often do not perceive growing risks as alarming, requiring heightened critical thinking and discernment to identify potential dangers. This normalization process is reinforced by poorly designed audits and compliance measures that focus on completing checklists rather than fostering a genuine understanding of risk dynamics.
The Role of Imagination in Risk Management
Effectively managing critical risks demands a high level of imagination from organizations to anticipate potential crises instead of merely reacting to outcomes once incidents occur. Over-reliance on consequence-based assessments can lead to a narrow focus that stifles creative thinking about possible risks, ultimately resulting in ineffective emergency responses and a lack of preparedness during actual crises. The distinction between risk and consequence must be reinforced, as organizational plans often falter when faced with unexpected scenarios, revealing a lack of real preparedness and adaptability. Organizations need to cultivate a culture that values imaginative problem-solving and learning from past experiences to ensure a more robust approach to risk management.
This is the third in a series of three podcast with Greg Smith, the author of the book Paper Safe. In this podcast Greg and I discuss the notion of critical risks and critical risk management from a legal and strategic risk management perspective. We hope that this podcast will make you more mindful and critical about how to think about critical risks in your organisation.
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