Risk averse or dangerously ambivalent?

Operational risks and safety must top the agenda in mining. This is the message from the 2018 Global Operations Risk Survey of Corporate Leaders

A survey conducted by DuPont Sustainable Solutions (DSS) – the 2018 Global Operations Risk Survey of Corporate Leaders – has revealed startling findings. Based on interviews with executives from more than 350 companies – with 60 percent representing high-hazard industries such as mining and metals – the results illustrate how company executives are not adequately identifying and preparing for risks that can have potentially catastrophic implications on business operations, employees and society.

Executives are dangerously ambivalent to implementing proper risk-governance measures across industrial sectors, despite overwhelming evidence of business disruptions that can occur from failing to manage risk, the DSS survey notes.

The annual survey benchmarks and measures the maturity of operational risk-management programmes in companies across numerous industries, and examines the challenges they face in effectively managing risk to improve business performance. Executives from more than 350 companies participated in the survey last year.

Johan van der Westhuyzen, DSS regional director for Turkey, Middle East and Africa, explains that while executives are well aware of the necessary characteristics and procedures for a successful risk-management programme, they are still failing to implement these critical measurements and requirements down to the front line of the organisation.

“We found that executives are not putting sufficient emphasis on high potential risks that can lead to large-scale incidents,” he says.

The survey indicated that executives seem to be allowing low incident rates to provide a false sense of security and are ignoring other indicators of potential significant events. While 78 percent of executives agree that low incident rates do not correlate to reduced risk, two-thirds of them acknowledge feeling satisfied when they see data indicating incident rates as zero to low.

“At the same time, onerous risk-management processes are failing to identity risks effectively, with evidence to support and confirm a growing disconnect between executives and personnel at the front line,” says Van der Westhuyzen.

According to the survey, executives agree that processes and systems alone do not manage risk to ensure operational performance, and that these need to be integrated, complementary and regularly reviewed.

Forty percent admit to challenges with implementing effective employee performance management, and internal procedures seem to be insufficient to manage current risks. A lack of integration in processes can also lead to failures in assets and safety processes, as well as an increase injuries or catastrophic events.

Tied to this is the fact that executives confirm a disconnect among personnel in managing risk. It was revealed that one quarter of executives feel front-line personnel are not aligned on top risks facing the company, but more than half (55 percent) do not feel senior executives are fully aligned on top risks facing the organisation.

Asset reliability, supply chain integrity and safety processes are also among the least-discussed topics in the boardroom. A gap in engagement between company leaders and front-line workers is critical to preventing and mitigating risks.

“In South Africa, the mining sector is facing a crisis in safety, which is having a negative impact on the already depressed sector that now makes up less than seven percent of the country’s economic output,” Van der Westhuyzen. notes.

It was concluded from the results of the survey that safety and proper risk assessment in the mining industry is of paramount importance to risk-averse operations and must be addressed holistically within the South African operating context. This can be achieved by focusing on cultivating a strong safety culture at all levels, upskilling employees and introducing new technologies that can reduce risk.