Thanks For the Feedback!

Thank-you for taking the time to send in your thoughts on this Blog.

The recommendations, after careful consideration of ALL points of view, are:

-have more root cause analysis case studies of topical incidents

-the links to download sites for reports on incident investigations is good

-introduce articles that document new theories and perspectives on systems thinking; problem solving and performance improvement

- heads up on opportunities to attend Industry Speaker Events (let us know and we will share)

- introduce book reviews (not sure if we will do this one often)

- Expert comment from interviews on major incidents (we will be talking to you when an incident breaks in your sector)

-The links to Newspaper articles for major Incidents is a good resource

-Profiles based on interviews with Industry Experts (what they see as the emerging issues)

It is a pretty big re-focus ...

Some of the things we will get onto as we head into the end of the year but most of the new material will not start to appear regularly until end of Jan 2009

Thank you again for the calls and e-mails; keep us posted on your thoughts as the new material starts to filter into the blog.

Are Aussie Financial Regulators on the Ball?

“Clearly the Government needs to stop dithering and politicking in the face of this full-blown financial crisis and breakdown of regulatory framework. It needs to get bipartisan support and quickly set up an inquiry staffed with the best minds available and briefed on how to best handle the avalanche of collapses that is upon us. New laws, new regulators, new people and a new approach are required to meet the greatest challenge to the financial system since 1929.” Looks like Michael West thinks that more can be done.

In today’s SMH opinion he then goes on to state “ASIC and the ASX let these paper-shufflers and their fast imitators, Allco, MFS and Centro, get away with whatever they wanted in pursuit of their fast buck. They granted myriad waivers from normal disclosure and, even as financial stocks began to get the death wobbles, have refused to force them to produce management agreements over their satellite stocks.

In a study released in April last year, RiskMetrics found externally managed entities (satellite stocks such as Macquarie Airports, Macquarie Infrastructure Group and Babcock & Brown Infrastructure) accounted for 14.3% of waivers granted in the study period (July 2005 to December 2006).”

Regulation of critical lines of supply is a legitimate government function; it is recognised that in some cases individual corporations may be restricted in their practices; with a view that the greater community can have faith and confidence in the fundamental strength of our major institutions, in this case our money supply.

While clearly the US is facing a much bigger crisis than we are here in Australia, if we fail to take the lessons learned from the US experience and sure up our own regulatory processes we are clearly negligent.

REFERENCES:

http://business.smh.com.au/business/governments-and-regulators-can-blame-themselves-20080918-4jfx.html?page=1
http://www.issproxy.com/
http://blog.riskmetrics.com/

Santos Clean Up Bill Could Be A$830 Million

The United Nations Environment Program and AusAid have released a study that estimates the cost of the East Java clean-up cost to Santos could be as much as 10 times higher than has been reported to the Stock Exchange.

The front page of the Financial Review reports today that the new estimated clean-up cost is now in the order of A$830 Million.

Santos has not admited liability for the drilling accident but they did report to the stock exchange that they had made a provision of A$88Million for the clean-up.

The drilling accident that occured in 2006; it resulted in a “mud volcano” that has now affected 1800 hectares of East Java.

Over 75,000 people were affected by the accident and none have yet been paid compensation.

The new clean up estimate is based on a solution that would transport the mud 14 Km to the ocean and create a new wetland.

REFERENCES:

www.afr.com.au

Complexity – Driving Up Costs & Hindering Growth

Executives recognise that complexity is hurting their businesses growth prospects and is driving up costs was the findings of an extensive Bain & Co study. Complexity is considered a critical issue for over 70% of the executives surveyed.

The biggest part of the challenge for service companies is identifying the real cost of complexity and then eliminating it for reduced costs and more strategy implementation flexibility.

For manufacturing complexity sits around in store rooms as unsold product and piles of re-worked scrap; for service industry enterprises, like banks; telecommunications and information technology providers, the problem is less obvious but just as big a driver for increasing costs.

The good news is that eliminating complexity can simultaneously lead to process change that allows your most profitable customers to receive superior service says Mark Gottredson and Andrew Schwedel of Bain & Co.

They recommend a process that identifies your most profitable customers followed by a process review to eliminate complexity so that you can focus on them delivering the superior service.

The steps in the process are:

1. Calculate what complexity is costing you, and this can be huge. In one insurance company a case manager could realistically only process 4 policy applications per day, half the process performance of its competitors for the most profitable customers. Within a year turn around times had been cut in half and the improved performance lead to significant premium growth.


2. Find out what your customers truly value. Product complexity can be an indicator that you do not know what your best customers truly value; Bain & Co suggest a process for listening to them. A supermarket chain found that their customers got annoyed that the shelves were often empty of the core products they went shopping for; so instead of increasing product range they reduced product range and increased shelf space for the items they did stock. Given 5% of the products in a supermarket can represent up to 95% of the sales this has proven to be sales growth driver.


3. Remain Vigilant. All enterprises operate in a changing environment, customers and competitors do not remain static so a process of continuous review and adjustment delivers results.

REFERENCES:

http://www.bain.com/bainweb/home.asp

Qantas “failing to meet its own standards”??

The Australian newspaper reported today that “The Civil Aviation Safety Authority has ordered Qantas to improve its aircraft maintenance systems to head off "emerging problems" after a special review found the airline was failing to meet its own standards.”

At first this seems to intimate that Qantas aircraft maintenance is failing but in the same report it notes CASA did not find an increase in the rate of incidents over more than year and said the number of monthly air safety incident reports was about the same.

There was no statement that indicates Qantas failing to meet its own standards was failing to meet any regulated standards.

If Qantas standards were above industry average it is worth considering if this move by CASA is a discouragement for airlines to set themselves high standards?

Up-date on the Qantas exploding oxygen bottle incident is that "There's nothing at this stage that the ATSB can identify that could have been done to prevent this, (the exploding oxygen bottle) we don't really know why the bottle failed - that's the key question for the investigation."

Even more good news for Qantas is that Mr. Walsh of the ATSB said "As far as we can tell from all the information that's available to us the crew have pretty much done a textbook response," it must be good news that Qantas has demonstrated a good standard, a ‘textbook response’ when an incident that apparently could not be avoided occurred - well done!

It may be a bit rough on the Qantas brand to have the findings of the “special review’ reported a headline grabbing perception that has not been backed up with any identified hard data. Nothing has been presented that indicates that standards have dropped at Qantas.

If you are interested in reading the detailed "exploding oxygen bottle" report from the ATSB you can download it from here
http://www.atsb.gov.au/publications/investigation_reports/2008/AAIR/pdf/AO2008053_Prelim.pdf
The abstract page is here
http://www.atsb.gov.au/publications/investigation_reports/2008/AAIR/aair200804689.aspx


REFERENCES:

http://www.theaustralian.news.com.au/story/0,25197,24274725-601,00.html
http://www.theage.com.au/news/news/qantas-tank-explosion-could-happen-again/2008/08/29/1220121086829.html

$75 sale - 1 Million customers details; includes sample signatures

An e-bay computer purchased for £35 ($75.00) came with the added bonus of bank records for 1 million American Express, NatWest and the Royal Bank of Scotland customers.

The bank records included bank account numbers, phone numbers, mothers' maiden names and signatures.

The surplus computer sold on e-bay did not belong to any of the banks but belonged to Mail Source, a data processing company which has recently purchased Graphic Data a financial data processing firm.

The Graphic Data web site proudly announces their new owners: “The document processing business of Graphic Data UK Ltd has been acquired by MailSource UK Ltd with effect from 1st April 2008. MailSource UK is a well established and regarded supplier of innovative, technology driven solutions for outsourced digital mailroom management and document management services.”

Graphic Data are listed as suppliers on the UK government portal and profile them selves with “Our quality-assured, best practice solutions encompass the entire document lifecycle, from digital mailroom, through automated document workflows to archiving and storage.”

Given Graphic Data’s core business is to hold financial information for banks and other organisations the value that can be leveraged from the April acquisition must now be severely challenged.

It is not that the British don’t take data security seriously last year; Nationwide Building Society was fined nearly $2 million after a laptop containing private customer data was stolen from an employee's home.

Given the risk to brand, profit and regulatory penalty it is worth noting that it is not only the UK banks that are struggling with data-management failures; the UK government admitted in November it had lost confidential records for 25 million Britons who receive child benefit payments, and in January, the Ministry of Defence revealed that a laptop with details of some 600,000 people interested in joining the armed forces had been stolen from a naval officer.

The first time a major adverse outcome happens it could be an accident; the second time it happens there is a good chance your processes are playing a part in this – the third time … well we have all the evidence we need that it is our business processes that are producing the outcome.

The good news is if it is your business process that is contributing to the problem you have control and corrective action options – it is your business process, you can change it right now and start reducing the risk of there being a repeat failure.


REFERENCE:
http://www.smh.com.au/news/technology/customers-bank-details-sold-on-ebay/2008/08/27/1219516507005.html
http://www.graphicdata.co.uk/
http://canadianpress.google.com/article/ALeqM5iYgBHThaj1Z6LZYf4N8mJU5mte9w
http://www.planningportal.gov.uk/england/government/en/1115314841753.html

AUD$8.1 Million Fine - Unsafe Aircraft

If you were flying American Airlines during the busy Christmas period you were most likely very happy if your plane got off on time and grateful that you made it to your Christmas parties on time.

If you knew they were able to be so available and meet their schedule because they had delayed their maintenance of the airplane you may have been just as happy to wait a couple of hours.

CBS News reports:
“The Federal Aviation Administration said Thursday it is seeking $7.1 million from American Airlines for continuing to fly airliners after safety problems were reported and for drug-testing violations.

The Texas-based airline delayed repairs on two MD-80s — a mid-sized airliner — after problems were reported with their autopilot systems and flew them 58 times in violations of federal regulations, the FAA said. "The FAA believes the large total amount of the fine for these violations is appropriate because American Airlines was aware that appropriate repairs were needed, and instead deferred maintenance," the agency said in a statement.

"In intentionally continuing to fly the aircraft, the carrier did not follow important safety regulations intended to protect passengers and crew."

It is difficult to believe that airline executives could consider the safety risk and an AUD$8 Million fine worth it but they clearly did; these types of regulatory requirements are no secret in the airline industry.

New York Times reports that American Airlines “deliberately flew two planes 58 times in December with broken parts that made them unsafe to operate under certain conditions and “not airworthy.””

When things escalate to the level that "not airworthy planes" are being sent out full of passengers and crew 58 times, then you are asked to question the level of commitment to good governance.

The culture should have presented other evidence of environmental inducements encouraging indifference to compliance and good practice.

If there ever was a an event that would prompt you to consider making some real cultural change paying off an $8 Million fine should at least cause some pause for reflection.

REFERENCES:

http://www.cbsnews.com/stories/2008/08/14/business/main4351627.shtml?source=RSSattr=Business_4351627

http://www.nytimes.com/2008/08/15/business/15safety.html

http://news.bbc.co.uk/1/hi/world/americas/7562165.stm

The Privacy Issue - Chief Justice Gleeson

While the Privacy legislation that is currently under review (see earlier posts) may be seeking to increase regulation and penalties for SME’s; Justice Gleeson appears to suggest that the boundaries of what is “private” may need to be rolled back; rather than expanded.

The National Press Club was the venue for the Chief Justice of the High Court, Justice Gleeson to deliver his final public address. During this address he said that he had begun to change his view that "certain things … were self-evidently private". "The ground seems to me to be shifting," he said.

"I used to think that having a telephone conversation was normally private. But you can't walk down the street without hearing a number of telephone conversations, some of them with people speaking loudly because of the noise of the surrounding traffic … "When you look at the kind of information that people publish about themselves, it makes you wonder." Justice Gleeson said.

Graham Greenleaf, an expert on privacy and information technology law at the University of NSW, said that legal definitions of privacy were "not static" and new technologies had enabled people to be increasingly willing to disclose information that would once have been considered private.

"The widespread availability of communications technologies that allow individuals to publish information about themselves that can be accessed by others is unprecedented in our society," Professor Greenleaf said.

The Privacy issue does not look like it is going anywhere so ensuring that the business process that provides governance for how information on Suppliers, Customers and Employees is collected stored and used is likely to become a much bigger issue for Enterprise size organisations and SME’s alike.

REFERENCE
http://www.smh.com.au/news/national/privacy-laws-out-of-date/2008/08/20/1218911828266.html?sssdmh=dm16.330153

http://systemic-resilient-precision.blogspot.com/2008/08/press-delete-data-security-breaches.html

http://systemic-resilient-precision.blogspot.com/2008/08/privacy-act-changes-increase-data.html