Operational risk: key failing for machine safety risk assessments

We’re always shocked to read a news story about someone losing a finger or a foot – or worse, their life – while on the job. But even more shocking is the fact that these incidents are not uncommon in New Zealand workplaces.

Sixty three workers died in accidents in 2018, only slightly down from 80 in 2017. 110 passed away in 2019, which dropped to 66 in 2020.

Worksafe New Zealand Graph – Fatalities

Image from Worksafe New Zealand website – August 2021

So, why are workplaces becoming negligent again? In many cases, the issue lies not with those on the floor, but with those in management. This is referred to as operational risk.

What is operational risk?

Operational risk includes the uncertainties and hazards a company faces in its day-to-day business activities. When it comes to machine safety, this risk stems largely from human factors: the mistakes or failures of personnel responsible for risk management.

Risk is pervasive in manufacturing organisations, particularly on the plant floor. What is often overlooked is that many large-scale disasters, employee injuries or deaths can be linked to issues that were ignored at ground level. 

While company directors may think they are aware of their obligations to health and safety, it is all too often the case that they are in fact unintentionally oblivious to the reality of the situation – that is, the ‘real’ risks that occur on a day-to-day basis.  

Unfortunately, ignorance is no defence for directors if an accident occurs on a site they are responsible for.

New attitudes towards operational risk 

The Pike River disaster in 2010 was a horrifying example of what can happen when company directors fail to understand the complexities of health and safety. 

The Health and Safety at Work Act 2015 has attempted to resolve this by increasing the penalties for negligence and placing greater responsibility on directors rather than just their companies. The Act forces company directors to do their own due diligence in reducing workplace hazards, rather than simply outsourcing them. WorkSafe also makes everyone accountable to some extent for hazards they see around them.

Since 2016 however, statistics have begun to swing back in the opposite direction. Recent surveys on company attitudes to health and safety have found complacency is creeping back, suggesting that those at the top are once again leaving risk management to those at the coalface. 

WorkSafe’s former chief executive Nicole Rosie has stated that there is a ‘stagnation of attitudes towards health and safety’. 

“The real risk is, you think you’ve made the change and you take your eye off the ball.”
Nicole Rosie, former Chief Executive, WorkSafe

The truth behind operational risk: you don’t know what you don’t know.

Directors (and other officers) must take a critical approach to health and safety insights. Relying on information from health and safety officers seems logical – but relying solely on this information is highly problematic. 

An incident report may cite employee negligence as the reason for an incident – but this is only the tip of the iceberg. Employee behaviour is a reflection of organisational culture and is the responsibility of leadership. 

In order to fully mitigate workplace hazards and risks, those in management must first obtain the health and safety knowledge that allows them to ask the right questions of the right people and to obtain credible information. 

The health and safety of employees shouldn’t be an after-thought. Rather, it should be a means of protecting a company’s two most important assets: its people and its reputation. 

Simply put: it’s the responsibility of those in management to set the scene for effective risk management. This is achieved by having a competent safety risk management plan. Only then can an organisation work toward creating and sustaining a safety culture that relies on process-based thinking to ensure success.

What are the consequences of neglecting operational risk?

Machine safety incidents can be expensive. A local occupational health and safety incident can result in a crippling fine, while a plant-wide accident that results in injuries or death can spell the end of the company altogether. 

When a serious incident occurs, it can usually be traced back to a singular cause. For example, this could be a poorly-monitored area, a fall hazard that wasn’t identified, machinery that lacked proper machine guarding and so on. In most cases, these adverse events almost always point to a specific concern that arose on the plant floor.

As a director, it is crucial to take ownership of implementing and maintaining an effective risk register and ongoing risk management plan. Operational risk is as crucial as any other business risk, including strategic risk (not operating according to a model or plan) and compliance risk (not operating in accordance with laws and industry regulations).

How can you overcome operational risk?

The Health and Safety at Work Act 2015 made it clear that boards need to lead from the top to ensure workplaces are productive and safe. This includes putting strategies in place that will foster a better health and safety culture within their organisations.

One of the major factors influencing machine safety risks is human behaviour. Reducing risk begins with improving health and safety performance. This, in turn, begins with modifying behaviour. Any process that relies on human behaviour is destined to fail. 

The behaviour of workers can and must be modified. This is the responsibility of the management team. There should be a focused approach to identify and classify behaviours which can lead to errors. 

Proactive solutions, rather than reactive solutions are key to workplace safety. A well-defined plan that includes regular risk and hazard assessments, audits, and inspections is essential for identifying and managing potential hazards and undesired outcomes ahead of time.

Regular machine safety assessments can help to assess and rank hazards, identify their impact, their likelihood, and potential frequency and define strategies to mitigate these risks. This will ultimately contribute to improved workplace production and performance. 

The right risk management plan is one that ties both real and potential adverse events to bottom-line costs.  While risk management may seem tiresome to those on the plant floor, the consequences of negligence are dire. 

Further information can be found in the TEG Risk Guide to Machine Safety Risk Assessments.

Contact TEG Risk today to discover how we can help you address the operational risk factors in your workplace.