Friday, 2 January 2015

The Cost of Uncertainty


The recent downturn in the price of oil has sent shock waves through the Oil & Gas industry worldwide. The prolonged and steady fall in value since June has left the industry with an end of year price of less than $60 per barrel. There are many ways to look at the cause and effect equation of this, for many countries that import oil this signals good news with the price of fuel tumbling in recent months. In fact any industry that requires fuel to operate should be reaping the fruits of this crude oil tumble in value. The international politics of this current situation is seismic, the UK with than 1.8% of the world production is dually concerned, also it furthermore highlights the precarious wealth enjoyed in Aberdeen – what will the city do after the Oil & Gas is finished? 

If this is the political effect of the drop in value, what is the upstream cost to the safety of those working within this dangerous industry?

When shares tumble companies usually look to streamline operations in various fast and arguably effective ways. Reduce the workforce, stop hiring, and reduce training and development are all viable options to weather the storm.  All of these have produced disastrous safety consequences in the past however, both financially and reputational. There can be no uncertainty; safety and profit should never be confused. Lord Cullen emphasised this in his enquiry after Piper Alpha, and the same charge was given to the Deep Water Horizon platform. NASA has also felt this pain periodically with major shuttle losses within their space program in different decades, both with the same charge - compromising safety because of profit. CEO’s should be under no illusion that the message they give to their executives is resonated through the managers and magnified throughout the installations. This is especially prevalent during a period where the mainstream media appears to be fuelling concern for the future of the industry in the UK. Strong and dynamic leadership is imperative, as many working in this sector will be counselling caution for the forecasted growth uncertain times lay ahead. This uncertainty can be the final component needed to create the conditions required for a big accident. BP felt this pain with their CEO’s confusing ‘every dollar counts’ message, which was the precursor for the Macondo blow out. 

In fact many of the biggest accidents experienced in industry are found in the company of investment cuts and uncertainty.

This current downturn should not be the catalyst for a compromise in safety training; in fact we believe it can have a contribution to the cost effectiveness and profitability long term. Effective Human Factors training has many benefits; the Aviation industry knows this and regardless of fluctuation in share prices all aviation pilots and cabin crew must complete regular Crew Resource Management (CRM) training. Since mandatory CRM training was introduced this industry as seen a huge reduction in near misses and accidents, the upstream effect of this improved profit projections. When this training is applied alongside simple and effective management software the result is a safety culture that understands the human element contributing to accidents. 


There is a secondary gain from a safety culture; a reduction in accidents is an increase in profits. In these challenging times this can only be seen as a positive?  

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