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A goals and a models of safety management

Sept. 20, 2015

ASL (AVEX Safety Layer) is software for airline safety management.

From the very beginning there were two issues to be decided by AVEX Bureau before ASL development - a goal and a model of safety management.


1. With regard to management objectives, it seems quite clear - this is risk management, ie severity and likelihood of undesirable consequences.

It should be noted that the severities of the consequences and their probabilities have sound interrelation, and the probability is usually seen from the standpoint of common sense, that is, extremely rare events are considered as impossible, regardless of the consequences.

This could be illustrated by the St. Petersburg paradox, which was noted by Nicholas Bernoulli in 1713 - the desire to accept a risk decreases with increase of expectations (sum of win).

In relation to risk management, this means that rational decisions are not made on the basis of extremely rare or too frequent events, but rather on recurrent events with moderate consequences. If we consider the causal link between rare and recurring events, we can state the main goal of ASL as follows:

"TO PREVENT RARE EVENTS (serious consequences) BY MANAGING RECURRING EVENTS (tolerable consequences) BASED ON FORECASTING OF RARE EVENTS"

This solution has several advantages:

  • The consequences of recurring events are understandable for managers and can be determined with sufficient accuracy;
  • Targeted probability of recurring events may be based on the airline experience and may be supported by financial calculations;
  • Recurring events are familiar and understandable to staff, making it easy for them to participate in the management of safety;
  • Management of recurring events is operative / local in nature, and does not require significant expences from airline.


2. Safety management is usually seen as a compromise ​​between revenue ("useful product") and safety related costs (preventing or eliminating of consequences).

At the first glance, such a model of safety management seems obvious and correct. The following illustrations can be found in the *ICAO* documents (Doc.9859 and Doc.9803):



More attentive look at these illustrations could raise a question - whether the safety is not a useful product, and the production and protection have the common point only at the beginning, when there is no production, no protection? In other words, is there a conflict between "safety" and "useful product"?

Talking about a compromise, it is all about a conflict. The term "compromise" means a method of resolving a conflict through mutual concessions.

*ICAO* Doc. 9859 says about the balance between production and protection as a method of providing and promoting safety. But the use of the term "balance" does not eliminate the conflict model of the relationship, because it implies a balance of opposed interests.

Such relationships between safety and financial management is typical for many airlines where safety is seen as an additional financial burden to airline - allocated resources are obvious, but conversion of these resources into incomes has probabilistic nature and is not obvious. Indeed, it is very difficult to prove that one dollar spent 20 years ago, has prevented the loss of one million dollars last Friday. It will be even worse, if you succeded to convince CEO in the past to spend $ 500,000 for large-scaled safety measures.

In this case, all parties are confident that the financial interests do not always coincide with the safety, so CEO and the Safety Manager speak different languages.

Some explanation of such reality may be as follows - incomes, expense, costs and profits are expressed in monetary or equivalent values, but absolute safety objective - the protection of life - is priceless, as we know. In this sense, it is very difficult to compare financial interests and safety.

Fortunately, all major events consist of smaller ones, and they in turn of even smaller, so that on the way to the absolute safety objective there is a lot of local and practical targets that are quite amenable to financial evaluation.

For example, for a recurring event there can be determined their costs and actual likelihood. Thus, it is possible to adequately estimate the lost financial resource, so reduction in likelihood or severity of the consequences can be taken as the airline additional resource. The complete set and relationship of local safety targets will enable achievement of the ultimate safety goal.

This safety management model was taken for the development of ASL to eliminate the conflict of financial and safety interests. This approach is based on the maximum profit (* MP ), which consists of the actual profit ( AP ) and unplanned costs ( UC *) associated with undesirable consequences in operation (fines, payments, damages, etc .):

МP = AP + UC

At a constant value of the maximum profit, safety improvement (reduction of unplanned costs) increases the actual profit and competitiveness of airline.

In addition, safety improvements can save actual profit during the expansion of the airline on the less profitable segments of the market.

It is easy to show, that if the actual income is 90% of maximum value, then halving the probability of undesirable consequences will increase actual profit by 5%.

To implement such management mode in ASL, financial implications may be categorized to give an opportunity for financial personnel to participate in safety management.

Thus, ASL does not imply contradiction or conflict with the airline financial and economic divisions. Moreover, the absence of such contradictions is the basic condition for the effectiveness of the safety management system.






Contacts:
Tel: +380930322525
Email: avex@avex.pro