Merlin Preuss

at the Manitoba Aviation Council

Winnipeg

March 3, 2004

• Opening Remarks
• A New Safety Policy
• Accountability
• The Accountable Executive
• A Safety Culture
• A Reporting Culture
• A Risk Management Culture
• A Quality Assurance Culture
• The Changing Role of the Inspector
• Transport Canada
• Conclusion

Opening Remarks

Thank you for providing me the opportunity to speak to you today.

We’ve come a long way since I spoke to you here last year about Building the Foundations for the 21st century. In 2003, Canada joined the world in marking the anniversary of 100 years of powered flight recalling the December 17th, 1903 flight of two brothers and bicycle makers from Dayton, Ohio. A little over five years later, at Baddeck, Nova Scotia, an engineer, J.A.D. McCurdy, started the story of Canadian flight in the Silver Dart.

Those pioneers created a magnificent heritage for aviation - a foundation that we continue to build upon today. Those pioneers were also risk takers. As we head into the second century of flight, our business has become one of managing risks. That’s what I’ll be talking to you about today.

MAC has advertised my participation as the person who is revolutionizing the way aviation is regulated in Canada and one of the Builders of the Foundations of aviation in this country. Whether or not you all agree with MAC’s assertion, the fact is that I have had a part to play in creating, promoting and following our strategic plan which has as its cornerstone a new way of managing risks in aviation. Implementing this new safety policy for the Canadian aviation industry in the 21st Century is, frankly, my first priority - my raison-d’être professionnelle.

A New Safety Policy

Civil Aviation has embarked on a journey with our industry partners, to implement this new policy as a way to reduce an already low accident rate to compensate for expected industry growth. Furthermore, this policy should address some of the demographic problems we are facing by increasing safety performance while at the same time reducing operating costs. I will go so far as to say that I believe the new policy will reduce the loss of life and property, increase public confidence in the safety of air travel, reduce government safety oversight costs, and improve industry profitability. It’s a natural evolution for us, but revolutionary in its approach.

Accountability

The first thing to change will be the accountability framework. Today TC intervenes at the operational level with audits and inspections of actual activities. Tomorrow, the first level of intervention will be at the systems level. Industry, and by this I mean all certificate holders, airports, air operators, AMO etc, will be accountable for day-to-day operations and will have the freedom to use the most cost-effective method of improving safety performance.

In short, what is being changed with the new policy is the accountability framework for managing risk. Changing the accountability framework is more about integrating the processes that already exist in most aviation organizations and less about creating new ones. For the first time, a clear link between safety performance and economic performance can be made under this policy. The old adage that “safety is good business” now has some clarity to it. Where such an approach has already been taken, safety and economic performance have dramatically improved.

While the basic principles seem simple enough, implementing them in the face of general opposition to change, skepticism and misunderstanding of the concepts is challenging. The primary reason for these difficulties is that the new safety policy demands cultural changes. The nature of these cultural changes and the objectives of these changes must be clearly understood if the new policy is to be successful.

The Accountable Executive

Cultural change must begin at the top of an organization - at the level of power, leadership and ultimate accountability. The new safety policy makes the person who has the power to impose a new policy, lead its implementation, fund it and sustain it, accountable for the safety performance of the civil aviation organization. The accountable executive is likely the owner or the Chief Executive Officer of the enterprise. For all intents and purposes, it is the person ultimately responsible for the profitability of the enterprise - from a TC perspective, it puts a face on the certificate.

A Safety Culture

Today, it has become almost a cliché to assert that safety is everyone’s business in a civil aviation enterprise. Where safety programs exist, they are under a safety organization to which everyone looks to, to assure safe operations. Under the new policy, not only will the legislative requirement for a Flight Safety Officer or Safety Program Manager be removed, the whole concept of being able to point to a person who is not involved in the operation as being responsible for safety performance will no longer exist. I’d go so far as to say that there should not be an organization with the word “safety” in its title within a certificate holder’s organization to drive the point home that cultural change is necessary if safety truly is to be the first priority for everyone.

There could be an organization to provide support services to the operational divisions. These support service would be things like risk and data analysis, internal audit, and report management and these support services would be provided at the request of the operating division. It’s those operational divisions that are rightly charged with the responsibility for safety performance.

By clearly placing responsibility for safety performance in the hands of all of the operating divisions, safety does become everyone’s business. Only then is it possible to create a true safety culture in an organization.

A Reporting Culture

It should go without saying that a safety culture exhibits a reporting culture. And we all know that quality risk management is based on quality information. Information must be free flowing within an enterprise and between the enterprise and its safety partners for this new policy to work. The reporting system must encourage and accommodate both the proactive reporting of hazards and the reactive reporting of incidents and accidents. Every report must be treated systematically and transparently, and not generate disciplinary action or any other form of retribution against the reporter where no willful malfeasance or negligence was involved.

The normal starting point to building this reporting culture is the creation of a disciplinary policy, which clearly delineates where immunity begins and ends. Within an aviation enterprise, this is simpler than one might assume. Immunity from TC enforcement depends on how TC learns of the event reported, the certificate holder’s reaction to the report and record in dealing with like reports, and the seriousness of the event reported.

Everything possible will be done to maintain the integrity of the disciplinary policy, keeping in mind that once an event impacts other jurisdictions, our approach must not conflict with other legislative requirements. Serious incidents and accidents often involve entities like the police or the coroner whose reports and the action arising from those reports are beyond the control of the company or TC. These are clearly outside the company’s or TC’s ability to provide immunity. Thankfully, these serious occurrences are rare and have little impact on creating a good reporting culture.

Once members of the organization feel free to report hazards, incidents and accidents, they will continue do so if they see results from their reports. This means that they must receive feedback on what is being done about the issues raised in the report.

A Risk Management Culture

For the new policy to work, every report must be subjected to a formal, documented risk analysis, which can have only two outcomes: (1) acceptance of the risk with or without mitigation strategies or (2) reduction or elimination of the risk. In the first instance, acceptance is documented and filed. In the second, a root cause analysis is required and a corrective action plan is developed to address the root cause or causes of the problem thereby reducing the risk to an acceptable level or eliminating it.

Under the new policy, the integration of formal risk management into an organization must go beyond the analysis of hazard, incident and accident reports. Making safety performance everyone’s responsibility represents a major cultural shift in most organizations. All decisions will be subject to a risk analysis. Operational divisions, including marketing, customer service and finance, which historically took decisions without consideration of the impact on safety performance, will no longer be able to do so.

A Quality Assurance Culture

Once a culture has been developed in an organization that encourages reporting and integrates risk assessment into all its decision-making, the next big cultural hurdle to overcome in implementing this policy is the human response. People tend to accept the easiest solution to a problem and not spend the effort to verify if the solution actually works.

Quality assurance happens at two levels: (1) the operational level and (2) the risk management system level. At the operational level, the process takes the form of follow-up on decisions to see if the decisions have addressed the risk and internal audits of the processes in place. At the system level, the process takes the form of a system audit ordered by the accountable executive. Harkening back to the discussion on the support service organization, the operational level quality assurance can be a service provided by this organization, but system level quality assurance cannot unless the sole task of this support organization is to provide quality assurance on behalf of the accountable executive.

The Changing Role of the Inspector

Under this new policy, the role of the inspector becomes more important than ever in that the inspector intervenes at the system level, rather than at the operational level. This means that systems put in place to ensure personnel competency, sound maintenance and engineering, and safe operations will be subject to inspection and audit, and the consequences of system failure are more dramatic, often affecting the certificate itself. However, the capability of TC inspectors to intervene at the operational level must continue to exist. Only when deficiencies are discovered at the system level, would intervention at the operational level be warranted. This is a clear manifestation of the change in the accountability framework where certificate holders will be more accountable for activities.

Transport Canada

The Government of Canada has been moving the Public Service to a more performance, risk based management system. Civil Aviation is well ahead in this area - in effect, we are walking the talk. Except for the profit concept, every part of the new policy I’ve just described to you has equal application within Civil Aviation as it does in the industry. Problems, hazards, incidents, occurrences, and accidents need to be reported and the associated risks analysed and appropriate action taken. Of equal importance is the risk analysis of changes to the safety framework, which include such things as the granting of exemptions, changes to the Aeronautics Act, regulations or standards, and changes to the inspection and audit policies. These risk analyses are now mandatory and you’ll be pleased to know that cost/benefit analyses are integral to this process.

A systems approach to managing risk will also be the main focus of Civil Aviation’s 2010 strategic planning document currently under development. I look forward to your input as this work progresses.

Conclusion

By now, you have probably given up waiting for me to talk about safety management systems. If I had to do it all again and go back to the first time we talked about revolutionizing the way aviation is regulated, I would have chosen another name. Safety management means different things to different people. In the TC context, it is all about changing the safety risk management framework as I have described here today.

Implementing this new safety policy carries its own share of risk, especially when the old policy has resulted in an excellent safety record. But future demographics indicate that the current safety framework is not sustainable, the current accident rate applied to a growing industry will reduce public confidence in the system, and current risk management practices, both inside and outside government, are not optimal.

Improved economic and safety performance after introducing this risk management approach is evident in companies like DuPont, Union Carbide, Shell and more recently Air Transat, clearly indicating that risks can be better managed in our industry. For civil aviation in Canada, the greatest challenge lies in the difficulty in making the culture changes necessary to make this policy effective, both in TC and the industry.

However, like those pioneering risk takers from the last century of flight, I believe that we are up to the challenges and that, together, we will continue to build upon a solid foundation as we move forward into the future. Thank you.