Hong Kong 2007 1
Hong Kong 2007 2
David Mawdsley Senior Safety Advisor IATA
Hong Kong – 16/17 October 2007The Complexity of Aviation Safety Management
- Putting Ideas into Practice
Simplifying the Business of Integrated Airline Safety Management Systems
Hong Kong 2007 3
The Complexity of Aviation Safety Management –Putting Ideas into Practice
Scope of Presentation
• IATA’s Safety Management Support System i.e. its Six Point Safety Programme
• IATA’s Operational Safety Audit programme (IOSA)
• ICAO and the Global Aviation Safety Roadmap from SMS Viewpoint
• SMS towards integrated Airline Management Systems (iAMS) implementation
• Questions and discussion
Hong Kong 2007 4
200+ countries
150,000+ flight crew
200+ languages800+ airlines
1,350+ major airports
Aviation System Is Complex,Industry and Governments Must Work Together
21,000+ aircraft(Western built)
Hong Kong 2007 5
Six Point Safety Plan “IATA’s Safety Management Support System”
Hong Kong 2007 6
Safety Data Analysis
Hong Kong 2007 7
Safety Auditing
Hong Kong 2007 8
IOSA Programme
Global programme, built on ICAO standards and industry best practices;
Internationally recognized and accepted evaluation system implemented consistently
Goal : Improve Safety worldwideReduce Number of audits
Hong Kong 2007 9
STATESSTATES
AIRLINESAIRLINES
Where does IOSA fit?
Hong Kong 2007 10
One Audit per Airline (24-month Interval)
Audit Sharing Model
Hong Kong 2007 11
Organization & Management System
Flight Operations
Operational Control/Flight Dispatch
Engineering & Maintenance
Cabin Operations
Ground Handling
Cargo Operations
Operational Security
Audit Scope
Hong Kong 2007 12
What are the IOSA Audit Standards?Approximately 900 published operational standards and recommended practices in the ISM E2 (up from 735 in E1)
Focus: operational quality/safety management and oversight
Applicable to audits only; not regulations
Include requirements from ICAO and industry best practices
Bottom line: A well managed airline will meet IOSA Standards
Hong Kong 2007 13
Audits Completed & Saved
Hong Kong 2007 14
IATA Board DecisionIATA must become a Quality Association -
Any airline wanting to join IATA must pass an IOSA audit first
All existing Members must:Have committed to an IOSA audit by end 2006
6 IATA members did not meet this deadline
Carry out their IOSA audit by end 2007
Complete any corrective action and be Registered by end 2008
Maintain IOSA Registration by being successfully audited biennially
Hong Kong 2007 15
Benefits from IOSA - AirlinesCapability for safer operations
Improved internal efficiency
Reduced numbers of audits
Codeshare and wet-lease opportunities
Reduced Insurance Premiums
Hong Kong 2007 16
Benefits from IOSA - StatesStates can access IOSA Audit Reports
enhance and focus their own oversight activitiesuse IOSA in Foreign AOC and wet-lease determinations
Some States are mandating IOSATurkey, Chile, Egypt, Madagascar, and the Arab Civil Aviation Commission Nigeria, Jordan, Tunis, Mexico, Hungary and others are actively planning
Hong Kong 2007 17
Summary of IATA Support For Airline Safety Management Systems
IATA supports SMS implementation through:Safety Data & Analysis ServicesIOSA Standards & Best PracticesIATA Governance Committees play key role in ensuring system is airline driven (OPC, Safety Group and IRM) and information sharing. Leading cooperative SMS efforts between industry, ICAO and regulators
Hong Kong 2007 18
ICAO and SMSICAO calls for a systematic approach to ICAO calls for a systematic approach to managing safety managing safety Providers are responsible for Providers are responsible for establishing an SMS.establishing an SMS.States are responsible for the States are responsible for the acceptance and oversight of providers’ acceptance and oversight of providers’ SMS.SMS.Guidance on safety management Guidance on safety management systems is contained in the ICAO systems is contained in the ICAO Safety Management Manual (Doc Safety Management Manual (Doc 9859). 9859). IATA takes the Doc 9859 approach to IATA takes the Doc 9859 approach to SMS.SMS.
Hong Kong 2007 19
The ICAO Global Aviation Safety Plan Objectives:
1. Reduce the number of accidents and fatalities worldwide irrespective of the volumes of air traffic;
2. Achieve a significant decrease in accident rates, particularly in regions where these remain high; and
3. No single ICAO Region shall have an accident rate* more than twice the worldwide rate by the end of 2010
* Based on a five year sliding average
Global Aviation Safety Roadmap
Hong Kong 2007 21
Global Aviation Safety Roadmap – the ICAO Global Aviation Safety Plan
Contents:• Sets out a rationale and describes a general approach, based on
metrics and risk measurement.• Establishes 12 key focus areas• Objectives are described for each focus area for near and mid-term
accomplishment.• Emphasizes aviation safety enablers (measures already in progress)
in developing regions.
Hong Kong 2007 22
GASR’s 12 Focus Areas: “The Roads”Focus Areas
StatesConsistent implementation of international standardsConsistent regulatory oversightNo impediments to reporting errors/ incidentsEffective incident and accident investigation
RegionsConsistent coordination of regional programmes
IndustryNo impediments to reporting and analyzing errors/ incidentsConsistent use of Safety Management SystemsConsistent compliance with regulatory requirementsConsistent adoption of industry best practicesAlignment of global industry safety strategiesSufficient number of qualified personnelNo gaps in use of technology to enhance safety
Hong Kong 2007 23
Developing a Global Best
Practice Approach
NB. Global Aviation Safety Roadmap
now available on ICAO & IATA,website
Hong Kong 2007 24
Focus Area 7 ObjectivesFocus Area 7 – Inconsistent use of safety management systems (SMS)
• Objective 7a – ICAO SMS standards published. Confirm need for formal (mandated) SMS across all sectors and disciplines of the industry.
• Objective 7b – Develop a plan for incorporation of SMS into audit process.• Objective 7c – Develop audit processes to assess operation of SMS function• Objective 7d – Implement review of SMS during audits.• Objective 7e – Define interface points between industry focus areas and develop a
plan for SMS programme integration across all interfaces.
Hong Kong 2007 25
BP 7c – An organization’s SMS recognizes external interfaces and contains the necessary procedures to manage them effectively.
BP 7b – Audit processes drive consistency in use of SMS both within and across industry sectors and disciplines.
a. Communication processes in place
b. Procedures in place
a. Processes should be established within the SMS to ensure that regular communications take place between different sectors and disciplines to address safety issues across the interface.
b. Procedures should be established within the SMS to ensure that risk assessment of change takes place in an integrated manner.
a. Modified USOAP
b. IOSA standards Manual 2nd
edition Effective march 2007
c. Tailored audit processes in place
a. The ICAO USOAP audits implementation and application of SMS to drive consistency and application amongst states.
b. The IOSA process audits implementation and application of SMS to drive consistency within and across industry sectors and regions.
c. Other recognized programs audit implementation and application of SMS to drive consistency within and across industry sectors and regions.
a. Existence of organisation’s SMS as per ICAO requirement.
BP 7a – Organizations within all sectors and disciplines of the aviation industry have their own formal SMS.
MetricsBest Practices
Best Practices: Objective 7 - SMS
Maturity Model to Guide Gap Analysis
Hong Kong 2007 27
o ICAO USOAP audit process covers the topic of SMSo SMS is regulated according to ICAO provisions and industry best practiceso States and Regulatory authorities facilitate the sharing of SMS best practice as it evolves
• Industry
o Organizations within all sectors and disciplines of the aviation industry including suppliers of goods and services that impact upon aviation safety have their own formal SMS
o Both internal and independent audits of the SMS take placeo All sectors and disciplines work together effectively in an integrated manner to manage risk across
boundaries.o SMS best practice is shared across sectors as it evolves
• States – National legislation/regulations require all sectors and disciplines to implement an SMS.• Industry – SMS implementation programs developed for sectors and disciplines not previously covered by
SMS requirements
Level 3 – Evolving –Changes in work
• StatesLevel 4 – Highly Evolved
• States – Current ICAO SMS requirements not implemented and not communicated to the industry• Industry – SMS Systems not implemented
Level 1 – Developing
• States – current ICAO SMS requirements are communicated to industry sectors/disciplines• Industry – SMS implemented in those sectors and disciplines for which it is currently mandated
Level 2 – Areas Identified for Improvement
CapabilityMaturity Level
Maturity Table: Focus Area 7 - SMSUse of Safety Management Systems
Hong Kong 2007 28
o ICAO USOAP audit process covers the topic of SMSo SMS is regulated according to ICAO provisions and industry best practiceso States and Regulatory authorities facilitate the sharing of SMS best practice
as it evolves
• Industryo Organizations within all sectors and disciplines of the aviation industry
including suppliers of goods and services that impact upon aviation safety have their own formal SMS
o Both internal and independent audits of the SMS take placeo All sectors and disciplines work together effectively in an integrated manner
to manage risk across boundaries.o SMS best practice is shared across sectors as it evolves
• StatesLevel 4– Highly Evolved
CapabilityMaturity Level
Is your SMS this mature in Hong Kong? Is there a GAP?
Hong Kong 2007 29
Introducing the “integrated” Airline Management Systems Guide
IATA Safety Group and its SMS task force recognise complexity of current airline organisations.
Air Carrier organisation is composed of a system of systems
Hence IOSA and GASR requires implementation of SMS for each operational function
Challenge more complex than introducing SMS
Numerous departments within each airline organization whose activities must be closely coordinated in order to realize the full potential of an SMS.
Hong Kong 2007 30
Introducing “integrated” Airline Management Systems
(integrated AMS) Guide
Integrated-AMS (Corporate Governance)
Enterprise Risk (ERM) System
Safety Management System (SMS)
Quality Management System (QMS)
Security Management System (SEMS)
Supplier Management System (SUMS)
Hong Kong 2007 31
‘Operational’
Business Unit e.g.
Maintenance Management System
Executive Team -Corporate Governance
CultureCulture
“integrated’’ AMS Conceptual Diagram
Hong Kong 2007 32
Some Airline Characteristics for Senior Management to UnderstandFunctional
Includes Safety, Security, and Quality activities that are independent of operational functions but support the whole enterprise.
OrganisationalThe SMS, QMS, ESMS, and SEMS are organisational in nature
Cultural The cultural characteristics separates these four management systems from the other systems. They are cultural in that each employee must demonstrate healthy attitudes, behaviours, and self discipline that form the foundation for consistent personal performance.
“Dimensions”. Several management systems within the iAMS are three dimensional i.e. they are functional, organisational and cultural.
Hong Kong 2007 33
How Complex is an Airline?Multiple management systems
At least 15 that support operations
Dispersed operationsProportional with number of destinationsMay be 150 locations for large international carrier
Many technical functionsLicensed employee groupsDiverse skills required
Highly regulated--overlapping State jurisdictionCivil Aviation Authority (CAA)Authority for Aviation Security Occupational Safety & Health (OSH)Environmental Protection Agency (EPA)Securities & Exchange Commission (SEC)
Hong Kong 2007 34
What’s Our Challenge?
ICAO & Civil Aviation Authorities say “what” to do—but not “how” to organize the work!
CAA’s take a functional approach
So, what must we do?Understand the relationships between internal management systems – each airline is differentOrganize required work activities Document “how” these systems operateCommunicate to management team & employees
Hong Kong 2007 35
Airline Management Systems Operational Systems
FlightCabinMaintenance Dispatch Ground HandlingCargo Documentation
Support SystemsPersonnel SupplierFinancialMarketingCommunicationsLegalOther Systems
These Systems are Two-Dimensional
Hong Kong 2007 36
Operational Divisions are Two Dimensional
Organizational DimensionLeadership team & management staffOperational control and supervisionResource allocation—people, finance
Functional DimensionWork process design and documentationTechnical trainingControl of process & service quality
Hong Kong 2007 37
SMS / QMS / SEMS / ESMSThree Dimensional Systems
OrganizationalCorporate support structureReport to “Accountable Executive”
FunctionalSafety, Quality, Security, & Environmental responsibilities
Cultural – Multiple ComponentsSafety CultureQuality CultureSecurity Culture“Green” Culture
Vice PresidentCorporate Safety
Security& Quality
Assurance
ManagingDirectorSafety
ManagingDirectorQuality
ManagingDirectorSecurity
ManagingDirector
Environment
Hong Kong 2007 38
Four Trans-Organizational Systems
Safety Management System (SMS)Organized approach to managing safety (ICAO)Tools: Flt Data Analysis, Safety Reports, Investigations
Quality Management System (QMS)Organizational structure, responsibilities, processes, procedures, resourcesTools: Auditing, Voluntary Disclosure, Systems Coaching
Security Management System (SEMS)Organized approach to implement & manage security processesTools: Security Reports, Investigations, Training
Environmental Safety Management System (ESMS)Organized system to identify and manage environmental risksTools: Auditing, Investigations, Training, Coaching
Hong Kong 2007 39
Risk Management - Two LevelsOperational Risk Management
A primary concern of State Civil Aviation AuthorityMajority of employees deal with operational riskSMS, SEMS, QMS, & ESMS are vehicles to identify, analyze, and resolve operational issues
Enterprise Risk ManagementOperational Strategic FinancialComplianceEnvironmentalCorporate Governance / ethicsProjects
Usually does not involve State Civil Aviation Authority
Hong Kong 2007 40
Operational Risk Management
Risk Analysis Board(Dashboard)
Everyone sees safety statusManagementRegulators
Employees / Unions
DataFOQA/FDA/FDM
Ops AnalysisSafety Statistics
People ReportsFlight / Maintenance
Dispatch / CabinGround Handling / Security
Field Investigations
Airline Operations Maintenance Operations
Ground Handling
Recommend Action Plan
Implement Plan& Re-evaluate
AuditingInternal
Departmental QCIndependent QA
ExternalCivil AviationEnvironment
SecurityOSHIOSA
Operational Operational Risk Analysis Risk Analysis
OutputOutput to ERM to ERM model i.e. model i.e. Input Input into Enterprise into Enterprise
Risk ModelRisk Model
SMS / QMSSEMS / ESMS
Hong Kong 2007 41
Operational Risk ManagementWho are the Players?
Safety, Security, Quality & Environmental TeamsCollect and analyze data, consult, assess risk, interface with regulatory agenciesDevelop dashboards to communicate key levels of risk exposure
Senior Leadership Team (Operations)Cascade risk management techniques throughout the operationDevelop and implement interventions to manage risk - four Options: Accept, Share, Mitigate, Transfer). Manage continuous improvement process
Hong Kong 2007 42
Enterprise Risk Management
An IATA Perspective
Hong Kong 2007 43
Enterprise Risk ManagementWhat does it really mean?
Managing risk of the entire company
An integrated approach . . . connecting the dots
Also referred to as “Integrated Risk Management”
Cross functional, not vertical approach
Hong Kong 2007 44
ERM - A Cross Functional ApproachMinimizes exposure to risk
Enables Corporate Officers to see the big picture
Breaks down silos in the decision-making process
Enables transition from “reactive” to “proactive” environment and culture
Improves risk profile for insurance purposes
Hong Kong 2007 45
ERM - Why?Board has an obligation to manage risk
Laws require it for publicly traded companiesAustraliaUnited StatesEuropeCanadaThailandUK
In general: it is good governance
Hong Kong 2007 46
ERM - Senior Management Requirements
CEO and CFO required to state whether annual report accurately reflects the company’s financial picture
Cannot make this statement if you do not know what your operational risk is
Operational risk is a component of enterprise risk
Hong Kong 2007 47
ERM Organisational Chart
Audit Committee
DIR FINANCE DIR LEGAL DIR HR DIR SECURITY DIR IT
Systems/Organiza
Cargo
Airside
Terminal
DIR OPERATIONS DIR RISK MGMT
CEO
BOARD OF DIRECTORS
Operational Risk
Risk Mgmt Committee
Hong Kong 2007 48
An Example of ERM
Operational risk input is derived from Operational Risk assessment process
Operational Risk
**Taken from COSO Taken from COSO –– Committee of Sponsoring Committee of Sponsoring Organizations of the Organizations of the TreadwayTreadway CommissionCommission
Hong Kong 2007 49
Next StepsAdopt the integrated - AMS approach
Use ERM to accomplish itIATA has developed ERM guidance for CEOs
Refine operational risk assessment toolsIncrease use of metrics & modelingEducate on the use of root cause analysis toolsTransition from compliance to systems mentality
Implement a Supplier Management System (SUMS)Framework for managing supplier products & servicesTwo dimensional – Organizational & Functional
Hong Kong 2007 50
Next StepsTake a “big picture” view of risk
Make sure you comply with corporate governance laws
Create a risk management culture in every single employee
Show employees how they fit into the “big picture”
Know exactly what the impact of your operational risk is on overall financial performance
Hong Kong 2007 51
Summary
ERM is essential because it will help you:
Achieve an integrated – Airline Management System
Improve efficiency
Reduce operational cost, including insurance premiums
Reduce exposure to risk
Improve your bottom line
Hong Kong 2007 52
How will IATA Support iAMSimplementation?
Launched at IATA Ops Forum in April 2007 (multidisciplinary event) IATA training and workshops are launching iAMS.
Together with ICAO/Governments/Regulators per GASR/GASP.Joint efforts with IATA regional offices / country managers.IATA Training & Development Institute has developed the SMS training course (based on the ICAO SMS Manual for States) but has moved forward into (iAMS). IATA integrated-Airline Managent System (integrated-AMS) Manual for Air Transport Operations Edition 2007. (Order through the IATA website).
Hong Kong 2007 53
Distribution of the “integrated” Airline Management Systems
(integrated AMS) Guide for this Conference)
IATA has authorized special distribution of 20 copies of the iAMS CD-ROM toolkit for this conference – this will be done on a one per “enterprise” basis.
Additional copies can be ordered through the IATA website www.iata.org.whatwedo/safety_security/safety
Hong Kong 2007 54
Flight OperationsAircraft Engineering and MaintenanceOperational Control/Flight DispatchCabin OperationsGround HandlingCargo Operations
iAMS Implementation operational management systems –
IOSA Standard excellent for specific requirements of following two dimensional systems:
Hong Kong 2007 55
Integrated – iAMS Corporate Governance Guidelines
Senior management commitment to safety, security and quality (policy)Functional organisational structure (organisation chart & senior management job responsibilities)Function and authority of Safety, Quality and Security managersEnterprise Risk Management SystemOperational Risk Management SystemCommunication responsibilities and toolsOrganisational documentation policy
Hong Kong 2007 56
Integrated – iAMSImplementation Guidelines
1. Implementation of an integrated – AMS is a straightforward process and easily co-ordinated by the Chief Operating Officer or his designee per Corporate Governance Guidelines.
2. CAA will require specific operational management systems to be established and documented.
Hong Kong 2007 57
iAMS ImplementationToolsIntegrated - AMS (Corporate Governance)
Enterprise Risk management (ERM) System
Safety Management System (SMS).
Quality Management System (QMS)
Security Management System (SEMS)
Supplier Management system (SUMS)
Environment Safety Management System (ESMS) – to be developed
Hong Kong 2007 58
A Phased Approach to iAMS Implementation
A four Phased approach to iAMS implementation is proposed to manage the workload of introduction. Build on the best but identify the gaps.
Phase 1. Identify accountable people. Conduct gap analysis and prepare implementation plan.Phase 2. Focus on training and documentation requirements.Phase 3. Implementation. Safety hazard identification and risk management component. Proactive and predictive processes and tools for the (iAMS). Phase 4. Operational Safety assurance. Development of Acceptable levels of safety. Performance Indicators and targets. iAMS continuing improvement measures and emergency response plan
Hong Kong 2007 59
Airline iAMS Implementation - SummaryPrepare airline wide action plan. Share experience with other airlines e.g. Air Canada and United airlines currently implementing iAMS, but beware of complexity.
Look down the “Roads” of the ICAO Global aviation Safety Plan and the Global Aviation Safety Roadmap – SMS in particular.
Establish and document in consultation with State Civil Aviation Authority. Harmonize with Regulatory Authority Safety Plan
e.g. UK CAA Safety Regulation Group.
Follow IATA SMS/iAMS guidelines, phased approach recommended.
Resource and Implement, Implement, Implement
And simplify the business of safety management!
Hong Kong 2007 60
IATA – Leading Governments, Authorities and Airlines in Safety Initiatives
Hong Kong 2007 61
Questions&
Discussion