Profile your global risks

June 1, 2005
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I was working with a multinational pharmaceutical company when an FDA audit at one of the company’s main facilities resulted in a production shutdown of a major product. The CEO, fending off upset customers, regulators and stockholders, as well as questions from reporters, wanted to know what other risks might rear their ugly head. He asked the company’s EHS manager where hot spots were in facilities around the world.

The story has a happy ending: The potential public relations nightmare was mitigated and the company recovered, including its stock price. Mitigation of potential worker safety and health risks became embedded in the organization’s global business plan. Safety and health risks in places as far away from the home office as Indonesia, Vietnam, Brazil and China were now on the leadership’s radar screen.

So if your CEO asked you: “What worker safety and health hot spots do we have around the world?” how would you answer?

The answer: Develop a Global Risk Profile.

Why a Global Risk Profile

A Global Risk Profile is an executive summary that guides leadership in deploying resources to mitigate organizational risk. “Hot spots” in this case are key worker safety and health risks that could impact the continuity of the business.

A good litmus test is to determine whether a potential incident, resulting from a worker safety and health risk, could draw significant negative media attention to impact stakeholders, product production, revenues or the company brand reputation.

Familiar examples include: catastrophic loss of life (Union Carbide - Bhopal, India), loss of brand reputation (Nike Inc. - Vietnam), significant damage to the environment (Exxon-Valdez) and consumer product contamination (Perrier or Johnson and Johnson’s Tylenol incidents).

The Global Risk Profile should include the above hot spots as well as those noted in Table 1 (below), categorized by business unit facility, country and region.

Where to begin

1) Leadership commitment. Support from the top grants access to facilities, people and information throughout your global business units, allowing a Global Risk Profile to be most effectively and efficiently developed. Without leadership commitment, there will be no access or ability to develop a Global Risk Profile. So your first step: Secure leadership commitment.

2) Identify, assess and score. When leadership is committed to developing a Global Risk Profile, doors open to identify, assess, prioritize and score worker safety and health risks in facilities anywhere.

Don’t believe it? Call one of your non-U.S. facilities and ask the managing director for access to her facility to conduct an assessment of worker safety and health risks. Her first question: “Who has authorized this assessment and to whom will the information be disseminated?” If the answer is not corporate leadership, you won’t get in, or you’ll find key people are on holiday and information not available when you arrive.

3) Develop a global risk profile template. If you are a small- to medium-sized company without competent, in-house or regional safety and health resources, develop a questionnaire to be completed by the facility operations and human resources managers. Focus on operational functions as well as the basics of safety policies, procedures, regulatory inspection findings, incidents, fatalities, employee induction and training, medical pre-employment questionnaires/monitoring, noise monitoring, MSDS documentation, labeling, signage, etc. Results of the questionnaire will highlight potential hot spots for further investigation and scoring.

Most larger companies have mature global conformity assessment systems in place. In this case, the Global Risk Profile incorporates existing worker safety and health goals and objectives in business unit/facility business plans, individual facility risk assessment findings and action items, and global, corporate audit/assessment findings.

Use a scoring system compatible with existing conformity assessment scoring methods so leadership will be comfortable and immediately understand the results. Some companies use a green, yellow or red light scoring system, where the red light indicates a hot spot. Other companies use a numerical system, 1-5 or 1-10 scoring. A score of 4 to 5 or 8 to 10 indicates hot spots.

This profile should provide:

  • 1) Definition of the worker safety and health risk (who, what, why and when)
  • 2) Location of the risk (within the facility, business unit, country, region)
  • 3) Risk score
  • 4) Potential risk to business continuity
  • 5) Status of outstanding action items to control or mitigate the risk
  • 6) Individuals responsible, accountable and possessing the authority to complete action items
  • 7) Local tracking system in place

Most financial institutions have developed a Risk Register, integrating all business risks to be reported to stakeholders under the Sarbanes-Oxley Act. If the concept of a Risk Register is already embedded in your company, use the same terminology and scoring methodology for your Global Risk Profile to align worker safety and health risk as a business risk. Leadership understands business risk as defined under Sarbanes-Oxley.

4) Stress test your Global Risk Profile. Do not develop and disseminate the Global Risk Profile on your own. Stress test it with a trusted management colleague to ensure both format and content will work within the organization. When developing the template, tap into your trade and professional association colleagues for their expertise. The International Practice Specialty of the American Society of Safety Engineers has an extensive membership of global safety professionals. (www.asse.org)

You might need to rely on outside resources with expertise in Global Risk Profiling. They can assist in developing a template tailored to your company size, operations, staff numbers and risks. They also have the capability to collate and format data into a formal executive summary and report.

5) Develop a strategy for distribution. Your roll-out of a Global Risk Profile should include leadership introduction and a statement of purpose. This must be communicated to your leadership throughout global business units and facilities. Your strategy should also include resources (staff, financial, information systems, etc.) required at the corporate and business unit levels.

Communicating your strategy is as important as developing the process. If you don’t reach your target audience of leaders worldwide, again, there will be no access to facilities, people or information and your process will never get off the ground.

In your strategy, communicate additional benefits of the profile. It’s more than a worker safety and health risk exercise, developed as a top-down corporate monitoring tool for the CEO. A Global Risk Profile is a tool for local business unit heads and facilities managing directors to identify financial risks to the operations they personally direct. It also provides a snapshot of how their facilities measure up to others around the world.

Table 1. Worker Safety and Health Risks — Potential “Hot Spots” (partial list)

  • Regulatory non-compliance — facility/production process shutdown
  • Use of hazardous substances (asbestos, carcinogens, lead, mercury, biological agents, ionizing radiation, isocyanates)
  • Occupational illness and disease
  • Processes: exothermic reactions, potential for contamination, overhead cranes
  • Public access or exposure to hazardous materials, operations, transport/distribution or storage
  • High-hazard operations with the potential for one or more fatalities
  • Chemical and petrochemical raw materials, processing, storage, distribution, transport; including preventative maintenance, spills containment, self-inspections and emergency planning
  • Hazardous materials transport — truck, rail, air
  • Terrorism
  • Poor working conditions in developing countries (heat, light, work hours, child labor, sanitation, hygiene)
  • Contractor/vendor controls: poor working conditions of vendor/contractor employees
  • Business continuity implications if production/distribution/warehousing were eliminated due to an explosion, fire, evacuation, plant shutdown by regulators, etc.


Resources

1. British Standards Institute. Occupational Health and Safety Assessment (OHSAS) Series 18002: 2000 Occupational Health and Safety Management Systems- Guidelines for Implementation of OSHAS 18001. (London, England: British Standards Institute, 2002.)

2. Health and Safety Executive. Management of Health and Safety at Work, Approved Code of Practice & Guidance, L21. (Sudbury, England: Health and Safety Executive, 2002.)

3. International Organization for Standardization (ISO) 14000: 2004 Environmental Management Systems - Specification with Guidance for Use. (Geneva, Switzerland: International Organization for Standardization. Switzerland, 2004.)

4. Standards Australia. Australia/New Zealand (AS/NZS) 4801 Occupational Health and Safety Management Systems - Specification with Guidance for Use. (Australia: Standards Australia, 2000.)

5. Standards Australia/Standards New Zealand. AS/NZS 4360:2004 Risk Management (Standards Australia and Standards New Zealand, 2004.)

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