Blog Listings

One Year After the Deepwater Horizon Disaster – What Have We Learned?

2011-04-20T17:41:13+00:00

One year ago, BP’s Macondo well exploded, killing nearly a dozen people, injuring others, and spilling millions of barrels of oil into the Gulf of Mexico. The impact of the incident was far-reaching – in terms of the local economy, the price of oil, the wildlife affected and of course, the legislation surrounding the oil and gas industry. But what has really been accomplished in the past year?

The reformed Minerals Management Service, now known as Bureau of Ocean Energy Management, Regulation and Enforcement, has been working slowly to make offshore drilling safer for both people and the environment. Environmentalists don’t feel that enough has been done, and fear that only surface changes to minor legislation have been made – not nearly enough reassurance that incidents like the Macondo blowout couldn’t happen again. While United States Interior Secretary Ken Salazar insists drilling is now much safer, what have we really learned?

Accident rates for offshore drilling are lower in Canada and several other countries, in large part because stricter rules and regulations were implemented after major oil accidents. After the Deepwater Horizon incident, new rules were set in place governing well design, spill response and the environmental review process. Production was halted for months while the oil and gas industry attempted to implement the relevant changes, but without the proper resources, training, technology and regulations in place, it will be impossible to prevent another disaster.

One such resource includes effective risk management strategies. On the opposite end of the spectrum to ‘reacting’ to incidents, real risk management begins before any drilling takes place. With an enterprise risk management program in place, potential risks are assessed and controlled for, limiting the possibilities of accidents ever occurring. Similarly, a truly effective risk management program encompasses the entire lifecycle of a process – if any incidents are to occur, knowledge, including best practices and lessons learned, can be captured, stored and shared across departments, facilities and sites. This type of corporate consistency and knowledge-database can help ensure that future incidents of a similar type are far less likely to occur again.

The dangers to drilling, or even throughout the oil and gas industry as a whole, haven’t changed. What needs to change is how we predict that danger and mitigate that risk. The industry will never be truly safe, but with a culture shift towards holistic, enterprise risk management, we can work together towards safer processes. There tends to be a band-aid solution of looking at specific equipment and whether personnel is properly trained – but the fact that it took months for the well to be capped speaks volumes about the lack of preparation for a true emergency. With an all-encompassing risk management strategy, the industry and individual organizations can plan better, and be more proactive about risk management as a whole. Only then, will the oil industry be any ‘safer’.

How will the devastation in Japan affect the global supply chain?

2011-03-18T16:51:06+00:00

In everything from high tech electronics to automobiles, Japan is a major player in today’s world economy. With the initial hit to the Japanese stock market and economy, and the immediate concerns about clean water, adequate food and preventing nuclear catastrophe, the larger, longer-term picture is clearly taking a back seat to everything else, as it should. But for the rest of the world, watching the images unfolding out of Japan in horror, the concerns about the global supply chain are very real. As the Wall Street Journal just reported the impact spreads far beyond Japanese companies, with many manufacturers around the world, especially Taiwan, South Korea and Thailand scrambling for new suppliers as Japan regains its footing.

Japan has fingers in all aspects of global manufacturing, and remains a major supplier of various essential ‘goods’ around the world – cars, steel, semiconductors, electronics and more. Any interruption to the production and distribution has a ripple effect felt around the globe. While it’s difficult to say what the long-term effect will be on both Japan itself, and the rest of the world, it’s clear that the world economy, already on shaky ground and just beginning to recover, will be further defeated. Factory operations have been halted in Japan, power is in short supply, and transportation systems are in chaos. It could be weeks before production in certain areas resumes, and months before things get back to normal.

The rest of the world may be able to find new sources to fill the immediate gaps in the supply-chain, but what will that do for Japan? It may be crippled now from a devastating earthquake, tsunami and threatened with nuclear catastrophe, but I am certain that the Japanese will be resilient, as they have always been, in regaining Japan’s position as an economic and manufacturing superpower.

Does Russia’s Exploration in the Arctic Open New Risk?

2011-02-16T13:46:08+00:00

The exploration and production of oil is already one of the most dangerous jobs in the world, yet in order to meet the growing demands of new emerging economies we need to enter more precarious regions for new oil. So it was no surprise to read the New York Times yesterday and see that Russia is opening the Kara Sea in the Arctic for exploration. This presents a number of risks – some well established and others new to this uncharted territory. As the NY Times points out, for much of the year, the Arctic Ocean is in complete darkness with looming icebergs and gale force winds. Last year’s Macondo blowout was astounding in its scope and its speed, but there were no hurricanes or extreme weather conditions to compound the already catastrophic event.

I am not advocating a halt to advancement. We must go deeper underwater, into mountains or into areas ravaged with political, economic and often civil turmoil. What industry needs is a renewed focus on safety and risk management that is preventative, not reactive. What went wrong in the Gulf of Mexico is indicative of growing challenges facing the oil and gas sector as well as many of today’s industries. And those challenges involve effectively managing risk within increasingly technology-driven production, operational and business environments.

Most organizations lag far behind in implementing sophisticated risk management systems capable of dealing with today’s complex systems. Many are still attempting to manage risk with outdated tools and mindsets – treating risk and process safety management in a vacuum or in silos, and allowing differently facilities to identify and mitigate risk with no standardization. Unfortunately, managing risk and safety issues this way is no longer is effective; for one, it fails to identify and capture lessons learned across all facilities. This approach also prevents management from seeing and evaluating risk across the enterprise, hampering decision-making and the effective prioritization of budgets and resource allocation.

When companies can access risk management data from a central location, we are seeing a new behavior culture develop around the knowledge gained. For the first time, everyone can access and review risk and safety trends and consequently, gain a much better understanding of risk factors, and even model scenarios. We now have the technologies to develop better policies and procedures that will reduce catastrophic events. We can manage risk through a networked environment designed to capture and share lessons-learned, update current knowledge in real-time and monitor performance toward the goal of continuous improvement. Now, we must act responsibly and commit to evolving our behavior and culture to take full advantage of it.

Tragedies like Macondo motivate us toward the vision of a safer and more sustainable approach to what we do. When lives are lost, environments damaged and assets destroyed, it’s a wake-up call to push forward and make necessary changes to human systems, process and technologies to ensure this never happens again. As western oil companies take advantage of Russia’s willingness to explore the Arctic, I hope all of the lessons we’ve learned before are captured and leveraged to protect this fragile environment.

Should Auto Owners Just Expect Recalls To Be Common-Place Events?

2011-02-04T10:13:17+00:00

As a Risk Management Consultant and Quality Professional for the past 36 years, and the owner of a Toyota, I took my vehicle to a dealership after three incidents of near miss accidents and was arrogantly told by the service advisor that there was no problem – actually, I was told that the problem was my fault – that I should apply more heat in the winter months on the floor to dry my floor mats adequately. What could have been opportunity to realize their design deficiency, instead resulted in a poor customer service experience.

For years manufacturers have been placing the blame for these type of incidents on the sub-tier component suppliers instead of owning up to the fact that they refuse to involve those suppliers in the design evolution of product development in their business. And it felt to me that they were try blaming the consumers of their products themselves. It is time for these giants to own up to their design and manufacturing deficiencies and get on board with designing and developing truly safe, reliable and affordable products. Would the general public expect anything less in the medical services we receive?

The auto manufacturers that have let Joe Public down (and it’s far from just Toyota – can you think of any major auto manufacturer that has NOT had a recall in the past few years?) need to send their design and development lifecycle processes to sick bay and use available and proven risk management techniques to safeguard the public and their own financial well-being and reputation.

Where can they turn to obtain this level of support to prevent this on-going failure? The answer lies in finding and implementing a business risk management tool that encompasses design, development and manufacturing. This will allow auto manufacturers to properly understand how to translate customer expectations into vehicle design requirements, which can then be translated into key product component requirements, which in turn can be translated into critical manufacturing process characteristics.

This technique is called Quality Functional Deployment (QFD) and has been successfully implemented by many responsible, quality-conscious auto and general manufacturers around the globe, resulting in consistent, well-designed, reliable, high quality products. Auto manufacturers need reliable, adaptive software and service solutions that will allow them to conduct risk management activities with confidence. Put your foot down confidently on the brakes and stamp out poor performance products manufactured by companies that haven’t accelerated up to speed!

Aren’t Children Supposed to Be our Future?

2011-01-31T19:21:21+00:00

If the next generation of humans are supposed to be the most important, the most protected, and the most loved – why are we failing them? With a recent rash of children-related product recalls, on everything from teething rings to toys to pajamas, it would seem that manufacturers of children’s items are sending a clear message that quality for their littlest customers is not high on the priority list.

On Friday January 14^th the website http://www.usrecallnews.com/ tells a grim story – baby rattles, teething rings, toy mobile phones, footed pajamas and cribs are all being recalled for potential suffocation, strangulation, choking and ingestion hazards. It appears there are two opposite trends occurring simultaneously in the children’s marketplace in North America; first, we have the ever-growing popularity of local, hand-made, ‘green’, organic toys, clothes and baby gear; and second, we have a rash of cheaply made, often imported, quickly-recalled products geared towards children. Have we put our desire to save money ahead of the safety of our children?

As a parent myself, it’s disheartening to see the apparent disregard that manufacturers have in creating quality products for children. But as someone with inside insight into the manufacturing industry, I realize how difficult a complex production process can be, and how easy it is to mismanage the risk associated with producing ANYTHING, complicated or not.

Companies that produce products for the public, particularly those that could pose inherent risks to our smallest citizens, need to be sure they have a way to accurately identify, analyze and mitigate all potential risk. Enterprise risk management may be seen as something complex and investment-heavy, reserved for the most dangerous of processes and products, or something the financial sector deals with. But when you think of your most innocent of consumers, it’s worth the effort isn’t it?