Why Risk Management Dominates EHS Priorities

We use a lot of lingo in environment, health, and safety (EHS) management to describe different metrics, approaches, technology, and best practices. There’s behavior-based safety (BBS), near-miss evaluations, at-risk behaviours, adverse events, and even—as one of the more cumbersome terms out there—outcome-and-behavior-based safety incentive programs (OBBSIP). What’s generally missing in conversations peppered with these terms is the fact that we’re often talking about different aspects of the very same thing: risk management.

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All of the terms I outlined above can be important aspects of a robust EHS program. They describe individual elements of a more proactive approach to EHS management. But one-by-one they fail to encapsulate the true value of risk management in EHS.

Though risk management hasn’t always been a large part of the EHS conversation, we’re finding that this is radically changing. Increasingly, manufacturers are embedding risk management approaches into their EHS programs, particularly from a technological perspective. Or, perhaps we should say they are trying to embed risk management into EHS software. It’s not as easy as flicking a switch, many are learning.

Risk Management Viewed as Central to Success

First, let’s look at the prevalence of risk management in EHS software these days. In LNS Research’s comprehensive survey we polled over 300 EHS professionals to learn more about the top priorities, challenges, and trends in EHS management in 2015. In assessing which areas of EHS software are viewed as most critical to success in EHS performance, risk management was the resounding answer: A full 78% of respondents name it as a top factor in ensuring EHS success.

This answer was also echoed among those who planned to implement EHS software within the next year. Of those polled, 66% expected that risk management would be the most critical area of EHS software in terms of fueling EHS success, the number one response.

However, while risk is prioritized by leading manufacturers the world round, effectively implementing software-driven risk management capabilities continues to be an elusive target. More than 65% of responses indicated data collection and analysis was another top priority, and when we asked businesses what were the top challenges in achieving EHS objectives, a quarter named poor collaboration across departments as a top priority, while just under 20% cited disparate systems and data sources.

All this points to the fact that while manufacturers prioritize risk management as the best way to boost EHS performance, technological challenges persist. And one point I mentioned above—poor collaboration across departments—points to perennial cultural challenges of course, but also implies that it is hard to get teams to work collaboratively on a cross-functional basis, a factor that--yes--resides in the "people' sphere, but can be either impeded or enabled by the right technology.

Having attended an array of user conferences for a variety of EHS software vendors in the past year and also having assessed their various solutions, I have identified a number of trends. One that stands out among them all is the fact EHS software vendors are responding to market needs and attempting to better incorporate risk management-based solutions into core offerings.

Additionally, vendors (and users, it should be noted) understand that risk management as an approach cannot be siloed and that its core precepts are common among all performance management approaches. For example, the underlying form and philosophy of risk management from an EHS perspective is not at all dissimilar from risk management in quality, or asset performance, or manufacturing operations, for that matter. And what we are seeing as a best practice among leading manufacturers is that they are attempting to devise an enterprise-wide risk management approach that enables them to address and mitigate risk across all of these operational risk management (ORM) programs.

Risk management ultimately needs to pervade all aspects of enterprise performance management, and in an ideal situation, all enterprise applications are unified within a single architecture that can assess and quantify operational as well as enterprise risk, while providing clear intelligence on how to improve risk management capabilities, thereby minimizing the chance of adverse and costly events.

However, with data collection and analysis as an underlying problem, it's not clear adoption, implementation, and effective use of EHS risk management software solutions has caught up with the need for such solutions just yet. But that’s not to say effective management of risk with robust analytics, real-time visibility, and actionable intelligence is not possible. Some leading manufacturers are demonstrating it, and it's only a matter of time before we get there.

Changing Risk Management Culture

Part of achieving complete cultural engagement in EHS-related ORM responsibilities will lie in defining roles and responsibilities for ORM-related processes. To address this gap we are seeing companies take the steps below to change the culture:

1. Identify risk management as a key corporate initiative supported by the executive leadership team.
2. Create an executive-level corporate risk management role.
3. Formalize the risk management process and integrate it into existing management systems.
4. Build cross-functional teams to support risk management across the organization.

In the coming weeks, look forward to more documentation, ebooks and infographics on ORM provided by LNS Research. What are your thoughts on the role of risk management in EHS and other operations? Let us know below.