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Speech to the Human and Organisational Factors in the Oil and Gas Industries Conference - Manchester - 26 November 2010

Judith Hackitt CBE, HSE Chair

Leadership in the Major Hazard Industries

I am very pleased to have been invited to speak to you all at this conference today. I am sorry that I was not able to be here for all of the presentations yesterday. But I am very pleased to have heard Jim's presentation after dinner last night.

This morning I want to talk to you about the importance of leadership in major hazards industries: why it is so important, what it means in practice, examples of where it is being done well and examine some examples of where it has been missing. My proposition to you is that: the behaviour of the human beings who lead major hazard industries is the most critical factor of all and one which we often overlook when we consider human factors in relation to major hazards. We consider the behaviours of those who operate facilities and how, sadly, sometimes they make errors of judgment especially in emergencies or unplanned situations which then lead to disaster. We also consider and talk a lot about the culture of the organisation. But ultimately, it is the human behaviour of managers and leaders which determines the culture of the organisation. It is what they say and do as well as how they organise the structure and set rewards that determines the culture and influences the behaviour of everyone in the organisation.

Since becoming Chair of HSE over three years ago I have taken a special interest in this subject. Regulating the major hazards industries is an important and integral part of HSE's role - onshore oil gas and chemical industries, offshore oil and gas exploration and production and of course, the nuclear industry. We made specific reference to the importance of preventing catastrophic events in our new strategy which we published over a year ago. But my interest in the subject goes back further than this appointment. I have become increasingly interested in why it is that industries seem to have to learn afresh lessons that I thought had been learned many years ago.

One of the major issues here and one which I know you are already aware of is the importance of history. Some of the more recent tragic events which we have seen in these industries remind some of us who have been around for a long time of other events which have happened before and in the aftermath of which many people were heard to say: "We must learn the lessons because this must never happen again".

I want to refer to some of those events of the past in more detail this morning. I am sure that others will have already referred to some of these incidents and I know that Andrew Hopkins will speak specifically about Texas City later this morning.

In particular, I've included Flixborough because I regard it as my own personal "wake up call". I was a student at University in London studying to be a chemical engineer when the explosion at Flixborough occurred in 1974. Of course all of my fellow students knew from our chemistry lessons in school that reactions could run away, some of us had even had it happen to us during practicals, and we had all been taught about the importance of process safety in design as part of our university course. But there is something very different about seeing for real the scale of human life lost and the physical devastation caused by a major incident that creates a very different feeling towards the subject of process safety.

When I graduated and took up my first job in the chemical industry a year after Flixborough it was clear that the explosion and the extent of the tragedy had had an enormous impact. It was standard practice for young engineers throughout industry to be trained in Hazop and Hazan. Multi-disciplinary teams would pore over any change proposed to the process. It was standard practice to assume that every piece of hardware might fail and to discuss and explore what would happen if it did.

One of the reasons for highlighting both Flixborough and Piper Alpha in this presentation is to remind us that at the heart of both of these incidents lay a very similar problem. At Flixborough the design of the process was compromised when an unengineered bypass was put in place in order to continue to run the process when a reactor was taken out of service. In the case of Piper Alpha the design integrity of that installation was also compromised long before the tragic accident happened in 1988 - it occurred at the point when the platform, which was originally designed for oil production, was converted for use as a gas platform and the fire and blast protection measures were inadequate to deal with the contingencies of a gas production platform.

And Buncefield, I'll return to some of the lessons which have emerged from the 2005 explosion later in my presentation.

But at this point I want to offer you a summary of some of the key factors which we in HSE believe have been major contributors to the "decay"which has taken place in learning processes over the last 20 or 30 years in major hazards industries. Over simplified measures and targets have blinded managers and leaders to the really important measures of the true state of their assets. Lagging indicators -largely reporting trivial incidences of very minor injuries - took the place of real time measures of process performance and integrity. I have no doubt at all that this process was accelerated by the increasing remoteness of the process from the vast majority of people. This saw a shift to process operators monitoring and controlling processes via computer screens and increasingly complex process control systems that created a sense that the computer wouldn't let things go wrong.

Of course these technological advances brought great benefits of increased reliability, less excursions from normal operating conditions and so on. But the trade off to this was a growing sense of complacency that the sorts of problems which had happened in the past could not happen again and that they had been fixed. Over time the corporate memory of what can go wrong and the consequences of things going wrong and how important it is to avoid such catastrophic events fades. At the most senior levels there has been a growing lack of understanding and appreciation of the importance of process safety - the right questions have not been asked by the leaders because they, especially the next generation of leaders, did not realise  what needed to be asked.

There is also evidence of widespread devaluation at the top of engineering knowledge and input. Pressures to deliver reduced costs and better returns have placed requests for inspection and maintenance in the "problem"box. Shutting down a process to carry out inspection is resisted and schedules are pushed out. In many cases the value of preventive maintenance which we all learned a long time ago when Kaizen and Total Quality Management were very fashionable has been replaced by a drift back to "If it isn't broke then we don't need to stop to fix it". And when it is broke - let's just patch it up.

Perhaps the most obvious example of this has been highlighted by HSE's work in the offshore industry under the KP3 banner. Assumptions had been made in that industry during the 1990s about the length of time assets would be required to continue to operate. As oil prices declined and facilities were assumed to be approaching the end of their life, assets were not maintained, and safety critical systems were not properly tested. But what this failed to foresee was the subsequent hike in oil prices that encouraged continued operations and life extensions and which drove the postponement of much needed maintenance works because of pressure to produce. I am pleased to have observed a considerable improvement in approach from North Sea operators under the Step Change programme but let's not be in any doubt that this change must be for the long haul, there is no quick fix and move on.

I also believe it is important that the true role of those who are charged with managing safety is properly understood -especially by senior managers and leaders. Those whose job title is "safety management"are there to ensure that everyone else is playing their part in managing safety as an integral part of every person's job. It is not to do it for them and most certainly it is not possible for senior managers to delegate the leadership of safety to one director or individual. Acting as the conscience or the champion of safety within an organisation is one thing - fragmentation of functions to the extent that senior managers believe that safety responsibility belongs with someone else is another.

And finally in this analysis we must remember that all of the industries which we are here to talk about today have been subject to major change in ownership and the level of contractorisation of activity. Contractorisation leads to the potential for further fragmentation and possible confusion about who is responsible for what, including safety. Change of ownership is an increasing cause for concern, in that it is unclear what documentation and knowledge about critical issues such as basic design principles are passed on when assets change hands.

Back in 2008, HSE organised a major conference for GB-based major hazards industries called "Leading from the top". Unusually perhaps, our target audience was not engineers and technical specialists within the major hazards industries but the people at the top of the organisation - the most senior managers and directors. Our message to them was that there was a real need for everyone to take note of what had happened at both Texas City and at Buncefield. I had seen first hand whilst I was still part of the industry the ease with which people rationalised away - "this is a different sector to mine so there's nothing for me to take note of here". By bringing leaders of all the major hazards industries together at the same conference our message was loud and clear: "You are not as different as you think you are and you have all got lessons to learn from one another".

We used the conference as a platform to highlight the importance of measuring and reporting the right things and in particular we made clear that the right things will only be measured and reported if the senior managers in the organisation are asking the right questions and responding appropriately to the information when it is reported. Expressions of concern will not be forthcoming from lower down the organisational hierarchy if the response is to immediately seek out someone to blame or pin the problem on. Measurement of leading indicators of performance (which is a fundamental element of process safety) means that by definition you are measuring the signs that things are not going as well as they should and that disaster has not yet happened. If the: "not broke, don't need to fix it"mentality still prevails at the most senior levels no-one is going to take any notice of those leading indicators in a timely manner. To do this senior managers need to understand and respect the nature of the processes that generate their business' profits - to understand what can go wrong -no matter how unlikely and to appreciate what the human and business consequences of those things going wrong might be. Requests for money to descale and paint equipment, to test critical safety equipment are not expenditures with no added value or no return or purely for cosmetic purposes, they are normally a crucial element of assuring continued returns into the future through preserving the integrity of the all important assets. Unless the most senior levels of an organisation's management understand and factor this into their wider considerations, they can not satisfy themselves that they are leading the organisation in the right direction for the long term. What's more, they will not develop assurance and management systems which report the right things and they will not create an organisational culture which fosters the right human behaviours.

Our message to senior managers at the conference back in 2008 and reinforced by  all of our activities with major hazards industries since then has been about the importance of leadership -setting an example and setting the right tone. We state in our strategy that leadership is not just important - it is fundamental. Because without that leadership from the very top of the organisation none of the rest of the elements of a strong health and safety system will happen.

There are many books on the subject of leadership and much has been written in particular about whether or not there should be long handover periods between those at the top of an organisation. I am firmly of the view that the length of time taken to hand over the reins is less important than ensuring that the most important knowledge and learning is passed on. It is absolutely vital that in times of change leaders pass on to their successors - whether they are part of the same company or not - the important lessons of the past that have been learned both locally and more broadly from other similar industries. No matter how long the run of good "incident free"operation, no-one must ever become a leader in the major hazards industry without understanding and believing the realities of the processes they are dependent upon for their wealth creation - and the importance of listening to those who are closest to those processes when they warn of what might go wrong.

Whilst the consequences may be different in some respects, the parallels here with the financial sectors over the same period of time are worthy of reflection. Perhaps there is something fundamental we need to teach to all future managers and leaders about believing that things can go wrong -assumptions of continued, uninterrupted growth and ignoring of risks are dangerous management philosophies in any sector of the economy. The ability to think about the worst that can happen is not a popular idea in any field but I believe it is crucial. Unless leaders are able to think about and to envisage the consequences of things going wrong they will not take action to address and mitigate the risks of these events taking place.

I promised earlier that I would return to Buncefield as one of my case studies. You will all be aware that the process of investigating the Buncefield explosion and fire has been groundbreaking in a number of respects not least in the early publication of a series of reports on the findings as the Major Incident Investigation Board generated their findings. Earlier this year the prosecutions associated with this case reached their conclusion and HSE and its competent authority partners have recently completed a final report which is due for publication very soon. This report aims to highlight the major failings that caused the incident and to identify the key learning points which all industries should take note of and action. I wish I could tell you that there is something completely new in this report that we have not learned before -but that isn't the case. The report will highlight many of the points I have already made to you that we could and should have learned from past events.

The case highlights again the failure to understand major risks, a failure to provide adequate focus, resources or expertise to maintain safety critical barriers and a failure to respond to warning signs.

The significance of safety critical equipment was not recognised by the supplier, the installer, the maintainer or the user; repeated failures of equipment were not acted upon, increasing pressures from above onto operators and management made compliance with safety procedures difficult if not impossible.

Behind the physical failures of which we are all aware lay much broader management/leadership failures -a site fed by pipelines which operators were not in direct control of in terms of flows or nature of product, levels of throughput had been increased reducing the ability of site management and staff to monitor the status of receipt and storage of fuel. Those pressures were increased by a lack of engineering support from Head Office. Keeping the process running was the focus and the priority and process safety did not get the attention it needed. The warning signs were there but no-one asked the right questions and there was no effective assurance system to pick up the underlying problems.

I now want to turn to an example of good practice to show what can be achieved when leadership really happens. This is the case of an energy company - Scottish Power - which has learned lessons on process safety from the traditional process and major hazards industries. They have shown leadership in their willingness to learn from others outside their industry sector and in doing so have probably become the best in class.

Scottish Power adopted the principles of process safety management as part of their Operational transformation process. The programme was aimed at applying processes and procedures to the understanding of and control of dangers associated with Scottish Power's assets.

In the UK, Scottish Power, part of the Iberdrola group worldwide, is one of the big 6 energy suppliers with over 5 million customers and some 6GW of generating capacity. The energy generation business has some important features which differentiate it from other major hazards industries perhaps -not least the immediacy of their processes. Energy generators must react very rapidly to changes in demand and stay online to meet contracted commitments.
In adopting a new approach, Scottish Power has changed its operating philosophy from one that hoped that nothing unexpected or unplanned would happen that would prevent them from meeting their commitment to one based on building confidence throughout the organisation in their ability to deliver these commitments.

Their wake-up call came as a result of a major plant failure - the single coal conveyor at their Longannet power station collapsed due to a major mechanical failure that disabled the feed system to all four generating units for several weeks. As well as reengineering the conveyor system, they used this incident as a turning point to introduce a company wide system of real time KPI measurement against all critical components in their process safety management system. What's so different is that the system is visible to everyone in the organisation at all locations -operators, managers and board members. The system can be used to compare performance between sites by anyone - because they took the time to bring people together to agree a common set of parameters to measure so that meaningful comparison is possible. I have seen the system in action, the way it is used at all levels and the way in which it has changed the culture. What is clear is the crucial role that Board level leadership has played in bringing this change about. They embarked upon a change of approach which would not deliver instant fixes but would take time to embed - they established a fully transparent system where the actions and decisions taken at every level are visible to the entire organisation. The level of capital investment in hardware to effect the change was minimal but the investment of management time in leading the process to make it a reality was - and is - considerable. But they have already seen the business benefits - a dramatic increase in plant availability, huge savings in maintenance costs from fixing problems before they lead to failure, enhanced business reliability and reputation with their customers -and they have reduced the likelihood of a major incident.

If we look to the future, it is clear that we need to (re)generate a better understanding of risk and a greater commitment to building inherent safety into plant design and operation. Many of the plants and equipment which have already operated for many years will continue to be hugely important processes for the future. WE need many more leaders to adopt the Scottish Power approach to risks which they are already managing - a willingness to look again at familiar problems and processes with a fresh pair of eyes. And to consider new and innovative ways of making process safety in integral part of everyone's role.

I understand that re-learning lessons which should have been learned before is particularly hard because it requires acknowledging that there has been a failure of leadership and management in the past. But this is an aspect of human factors and behaviour which need our focus and our attention. Because, just as I have said that leadership is fundamental to building the right culture, it follows that the human factors which influence leaders and managers are fundamental to understanding the human factors and behaviours which occur at lower levels in the organisation.

A further element of the future challenge is to ensure that new and emerging technologies embark upon the path to full commercial scale with a proper and appropriate understanding of the hazards and risks in their processes. Carbon capture and storage is one such exciting challenge for the future along with offshore wind energy generation and of course new nuclear.

Carbon capture involves the collection, compression, storage and transportation of vast quantities of carbon dioxide from onshore generating plants to offshore geological storage in exhausted oil and gas wells. A familiar substance will be handled at pressures which make it behave very differently physically and chemically. If there is an unplanned release it will not behave as hydrocarbons do - it is denser than air and will sink and travel along at ground level rather than evaporate and disperse above ground. In large concentrations it will not explode as hydrocarbons do but it will be a very powerful asphyxiant. None of these factors should ever be considered as showstoppers or problems which limit our ability to innovate. But they are reasons to stop and consider how we encourage people to think about the risks at an early stage and design to address them as part of the commercialisation process. Simply hoping that the worst will never happen is not an option - history tells us that. So as you watch this short CCTV video of a large gasoline spillage that closes my presentation. As well as being shocked by the behaviour of these people faced with a hazardous leak of flammable gasoline, reflect also on what would have happened if this had been carbon dioxide or any other powerful asphyxiant. Human factors will remain an important subject in all major hazards industries and just like every other aspect of leadership we have to start with the behaviour of those at the top.

Updated 2012-01-17