R2A Blog

February 13, 2014
Demonstrating Societal Due Diligence Using the Precautionary Approach

Arising from correspondence and discussion regarding earthquakes in New Zealand and bushfires in Victoria, R2A has been considering the possible application of the precautionary approach from a government regulatory perspective. The Venn diagram below is one result.

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January 22, 2014
SFAIRP not equivalent to ALARP

The idea that SFAIRP (so far as is reasonably practicable) is not equivalent to ALARP (as low as reasonably practicable) was discussed in Richard Robinson’s article in the January 2014 edition of Engineers Australia Magazine generates commentary to the effect that major organisations like Standards Australia, NOPSEMA and the UK Health & Safety Executive say that it is. The following review considers each briefly. This is an extract from the 2014 update of the R2A Text (Section 15.3).

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January 22, 2014
Operations Due Diligence vs Operations Risk Management

The meaning of the word risk has changed substantially over the last 20 years or so which has caused confusion in the operations risk management space. It used to refer to potentially catastrophic events for which insurance was normally purchased, a meaning which is still used by Factory Mutual and Lloyds underwriters.

In more recent times it has become associated with the term management, which has morphed it from the consideration of potentially catastrophic events to a process, which determines the optimum risk (upside and downside) outcomes, epitomised by the concept of ‘risk appetite’.

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December 13, 2013
2013 The Year in Review

December again and 2013 is rapidly coming to an end. As part of our end of year wrap up, here are some of the highlights that we would like to share with you.

The year started with drinks and canapés to launch the 9th edition of the R2A text, Risk & Reliability: Engineering Due Diligence. The event was well attended by industry colleagues and provided an overview of the general state of affairs in industry.

Following on from this success, R2A will be hosting another event on Thursday, 6th February 2014 from 3pm to 5pm. Richard will launch the 2104 update of the R2A Text. R2A has concluded that the risk and liability world is changing so fast at the moment that, until further notice, the text will be updated annually at least.

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November 29, 2013
R2A Event 2014

Following on from the success of our client and colleagues function in 2013, we will be hosting another event on Thursday, 6th February 2014 from 3pm to 5pm.

Richard will launch the 2014 update of the R2A Text.  R2A has concluded that the risk and liability world is changing so fast at the moment that, until further notice, the text will be updated annually at least.

Matters of interest include:

  • The introduction of the Rail Safety National Law which is complimentary but subordinate to the model WHS legislation.
  • The expected approval in the new year of the Engineers Australia Safety Case Guideline (3 Edition). This specifically rejects the Risk Management Standard (AS 31000) as being able to positively demonstrate due diligence for high consequence – low frequency events.
  • Why SFAIRP (so far as is reasonably practicable) can never equal ALARP (as low as reasonably practicable) legally.
  • The logical limitations of Monte Carlo simulation for demonstrating project due diligence.
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November 28, 2013
Managing Project Show Stoppers

Once or twice a year, R2A, as due diligence engineers, are called upon to investigate projects which have not gone well. Clients do not generally permit us to discuss such investigations, unless it’s a public inquiry of some sort, but there are common threads that emerge. For the most part R2A includes such learnings in our text, Risk and Reliability: Engineering Due Diligence.

Whilst some issues are peculiar to an organisation, the most common difficulty across projects seems to rest around an exclusive reliance on the Risk Management Standard (ISO 31000) as the basis to manage risk. For high consequence, low likelihood events (the potential ‘project showstoppers’) the Standard fails the test. The reason is simple; it is risk based not criticality based.

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November 28, 2013
EEA R2A Due Diligence Workshop Wrap Up

As a new addition to the R2A Consulting team, the timing of the recent EEA (Engineering Education Australia) and R2A ‘Engineering Due Diligence’ workshop was such that I was able to attend in my first few weeks of my new role.

Richard Robinson presented the workshop with eight participants from various industries and locations in Australia, which provided for interesting and varied discussion.

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November 20, 2013
Origins of the Legal Concept of Due Diligence in the model WHS act

The case that launched the negligence tide is generally recognised as Donoghue vs Stevenson (1932). Essentially this tested the responsibility of a drink’s manufacturer for a stomach ache resulting from a late discovered decomposed snail in an opaque soft drink bottle, purchased by one of two friends to share.  Until that time, the liability for a bad product rested with the contractual arrangement between the seller and buyer, not a third party friend with whom the drink was shared and who subsequently fell ill.

Interestingly, it was a split decision by the 5 judges in the UK House of Lords as to whether or not the case should proceed at all since the potential liability to the manufacturer lay outside the existing buyer-seller contract. The minority was concerned that a finding for the plaintiff would launch an uncontrolled avalanche of negligence claims in common law jurisdictions, a concern that has pretty much eventuated.

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September 30, 2013
Implications for designers using EG(0), The Power System Earthing Guide

The change from hazard based risk assessment supported by the risk management standard to the precautionary due diligence approach now mandated by most Australian parliaments has significant implications for designers, especially in the use of standards that use target levels of risk and safety such as EG(0) Power System Earthing Guide and IEC 61508 the Functional Safety Assessment standard as a design tool.

In previous blogs we have explored the implications of the hazard based approach using target risk criteria for land use safety planning purposes for hazardous chemical facilities. This blog looks at the implications in relation to the application of EG(0), the Power System Earthing Guide1. The guide appears to define risk limit targets consistent with the NSW Department of Planning guidelines as shown in the table and figure below.

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August 27, 2013
Risk Appetite

Boards are responsible for the good governance of the organisation and risk management is an essential aspect of this.

Diligently balancing competing priorities with limited resources requires an organisational expression of risks and rewards in the value system of the board. In the business community this has often been expressed as risk appetite meaning that an outstanding outcome can justify taking greater chances to achieve success.  In policy terms it means encouraging the organisation to select projects and programs with greater rewards for similar effort, and is to be applauded.  This is a positive demonstration of business due diligence.

However, safety has a different perspective.  Here often, the consequences of failure are so high that there is simply no appetite for it.  Instead, provided the situation is not prohibitively dangerous, the requirement is for (safety) risk to be eliminated or reduced so far as is reasonably practicable, a matter which can be forensically tested in court1.

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