Why has basic risk management practices not been followed?

Why has basic risk management practices not been followed?

For decades now we have seen attempts to introduce Quality Assurance measures with international standards and more recently risk management and business continuity management standards. Yet with all this talk we see time and time again failures in risk management that have lead to catastrophic preventable events.

One of the guiding principles of these standards is to learn from your and others mistakes.

I start with Beirut. I have only been there once, and that was very briefly. I was gobsmacked just how beautiful a city it was, with the Mediterranean Sea on one side, and the picturesque mountain backdrop on the other. To think that 2,750 metric tons of ammonium nitrate, a well known explosive was sitting where it was in any city is incomprehensible. Remember the IRA bombs, the Oklahoma bombing and the first attack on the World Trade Center in New York? All are examples of the explosive power of this material.

This was not just sitting there during unloading process which would be dangerous enough. No, this had been sitting there for 6 years! No wonder those that survived are so angry that the warnings given to successive governments were ignored. My bet it comes down to money. But what is the cost of not moving or safely disposing of it?

The cost to human life and the extent of damage to property, in an already struggling economy is going to be profound and paid for, for many many years. Help will not be as big as normal as other countries are fighting their own economic problems.

I am keen to learn the impact this event will have on the local insurance industry and just how many people and businesses were insured. Insurance of course being another form of risk management but to me the one of last resort.

But we cannot simply say that such failures in risk management are something that only happens overseas.

I was in the United Kingdom in February and the news night after night was coverage of the spread of COVID-19 through the aged care facilities and the mounting death toll among the most vulnerable in their society.

Did we learn from this? Obviously not. We had an outbreak in New South Wales and we saw the same issues play out there. Did we learn from that. Tragically NO.

Now we have circa 100 age care facilities in Victoria with COVID outbreaks. Only now after so many people have died causing untold grief to so many family members do we finally put what appear to be basic measures in place. It is criminal.

Like many Victorians this morning, after days of trying to work out how to ensure that our team are all safe, we follow the rules and keep our all our services not only here in Victoria but now all around the world fully operational I am angry and very disappointed.

Clearly we have been way to reactive and not proactive in fighting this disease and not made one mistake in the management of it but mistake after mistake which were so bleeding obvious, particularly if you had any understanding on what was happening overseas.

In among this, I did have a moment of pride in my children. My daughter, in particular is a focal strong i champion of equality particularly racism having lived in the US and seen it at its very worst.

While I too support equality for all, I felt strongly it was wrong to protest in public at the Black Lives Matter rally during a pandemic. I did not share my thoughts to any of the family on my feelings. This to me was a personal decision that each person as an adult should make. None attended in person. This did not lesson anyone’s belief in equal rights.

As a community, all of us in Melbourne and to a lesser extent Victoria are now paying the price for the failure after failure in basic risk management practices by government and many organisations.

We see this unfold while we are reminded on TV of the penalties for new laws on industrial manslaughter. Is not all of this a failure in safe work place practices?

Pandemics are not new. If you look at the history books there has been an average of 3 every 100 years and we had had SARS, MERS Virus, H1N1 Swine Flu, Bird Flu, Ebola, Zika Virus in the last 20 years. What did we learn?

Even if we did not have these warnings, we had months between the tragedy of what was going on in nursing homes in the UK to prevent this happening in Victoria. We had months between the rapid transmissions of COVID-19 in abattoirs in the US to put in measures to reduce or stop the spread. Some did some did not. We all now pay the price in some way or form, some much more than others.

It just seems to be closing the gate after the horse has bolted time and time again and doing too little too late.

While we are not suffering anything like the people of Beirut, I think we can be equally questioning and upset with government in this state. For anyone not to be honest and fully cooperative with the current inquiry into the failures has to understand and be told that this is completely unacceptable.

This cannot be just another case of hold an inquiry and hope everyone forgets about it. We need to learn and never allow these failures to happen again.

But I fear the failures will continue. We now see first hand the failure of the judicial system in Victoria with the person who allegedly smashed the head of a young police officer into the ground after being asked to put on a face mask not facing court till February 2021 and is meanwhile out on bail. This too is unacceptable and my heart goes out to that police officer and to all the other police officers having to deal with the COVidiots and a judicial system that is failing them and society.

Rant over, now back to work! We have a lot to fix, but as a society when will we learn the true value of good risk management and how a stitch in time really does save nine?

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Since posting this I have had many people contact me, many on the Beirut situation. Some cover the cause but most are on the issue of the risk from the same product in Australia.

According to these sources the product is transported through our major cities in trucks or by train in large quantities.

More worrying is the fact that Newcastle has a huge stockpile. This is what was reported by ABC News.

  • Between 6,000 and 12,000 tonnes of ammonium nitrate is stored at the Kooragang plant in Newcastle
  • The plant is within 800m of North Stockton residents and 3km of the Newcastle CBD
  • The operators says safe storage of the chemical is strictly regulated and audited

“That factory is only three kilometres from Newcastle’s CBD and only 800 metres from North Stockton residents,” said chemical engineer and community campaigner Keith Craig.

“It’s a totally inappropriate place to have such a dangerous material produced and stored, and it’s something we’ve been complaining about for many, many years.

Community groups in other neighbouring suburbs such as Mayfield and Tighes Hill have also strongly expressed their concern over the plant’s proximity for many years following several major ammonium nitrate explosions around the world.

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It has been many years since I have done any work with the company involved but back then they really took risk management and safety very seriously. Having said that, it only takes one mistake and ….

Thanks to all those that took the time to write or call.

3 responses to “Why has basic risk management practices not been followed?”

  1. Totally agree Professor Allan, about the need to be better prepared and the need for better management of risk to a new standard. For many years, senior Brokers were telling me that Brokers will become more like Risk advisers, and we have seen that gradually happen. The reason it has not more quickly happened is because seeking to reduce or avoiding risks costs money. Everyone wants to keep their costs down. It is very short term thinking because in the long term we end up paying even more. Dealing with Climate Change is a classic example. I do not know how we can make a seismic shift to a more management of risk focus and accepting that transferring risk to an insurer is only part of what we do, because more and more, we are finding it harder to find insurance solutions for every risk due to increasing loss ratios. Will the industry cater for Pandemics in the future? No, they will look to exclude. So who manages this threat in the future? Can we depend on Governments who will likely focus their efforts in the nest few years to austerity measures to pay the debt of the Covid recession we didn’t plan to have?
    I hope the LMI College will have a special course for Risk Management to be used by Brokers, concentrating on pure risks, but I fear the catastrophic events will remain the domain of Federal Governments, and they will not want to invest money in this area.

  2. I have heard, not sure if this is true, that Newcastle NSW is storing more than 4 times the quantity of Ammonium Nitrate in their Ports. Just have an adjacent warehouse fire there and watch a whole City blow up! The excuse we store it better will be tested then.

  3. riskov77 says:

    the tragedy in Beirut is terrible, due to non-compliance with security measures, negligence, such a tragedy occurred.

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