2 Introduction
The Turnbull report
2
sets out current best practice guidance to UK companies for internal control and
risk management; an extract is provided in Appendix 1. This implicitly requires clear and explicit
arrangements for the management of Safety, Health and Environmental risks. These are fundamental for
safe operation and are a cornerstone for the organisation’s ‘licence to operate’; they should include
effective control and assurance processes. These arrangements will include policies, procedures and
defined organisational arrangements and responsibilities. They will have education and training
arrangements to seek to ensure awareness and maintain the necessary knowledge and skills to mitigate
the defined risks. Further, they will have auditing arrangements to provide assurance on how well the
organisation is managing its SHE risks and to identify opportunities for improvement. In the US, through
the commonly named Sarbanes-Oxley Act, the importance of all assurance functions has become far
greater with defined responsibilities on directors and managers for the identification and disclosure of
risk. The practice set out in this toolkit is considered to be consistent with those requirements and while
the examples of incidents referred to are UK based the principles are universal.
In spite of good intentions and arrangements, even well run organisations have major incidents
affecting people and assets. In addition to the human impact of these incidents, they have a significant
adverse impact on the financial performance of their business due to interruption, diversion of
resources, reputation and increases in insurance premia.
There are many examples where if policies and procedures had been properly followed incidents
would have been avoided. Also, deviation from prescribed arrangements is rarely a one off event; in
fact such deviation has frequently become custom and practice either in response to personal desires to
get jobs completed quickly or worse to meet management prescribed incentives. This practice not only
results in injury, death or environmental incidents but also, increasingly it leads to personal and
corporate prosecution resulting in fines and potentially imprisonment
3
. Such prosecutions could impact
either the company, any individual in the company or both.
How do these situations arise? The Board or owners, and directors of companies have genuine
objectives to achieve high standards. Managers and employees want to operate in a safe environment.
The Board or owners approve the organisation’s overall policies and arrangements for their discharge
through the Chief Executive. Responsibilities might be delegated throughout the organisation including
temporary workers (through contractors or interim workers hire) to a greater or lesser extent through
explicit responsibilities. The efficacy of these arrangements might be monitored through defined
measures, e.g., SHE performance and the results of audits. However, how does each individual who
has delegated some of their responsibilities to others gain assurance about that responsibility? How
does each individual gain assurance that they are doing all they need to do to meet the requirements
of policy and procedure? What is the assurance process? How does the Board (or owners) really know
that their good intentions as set out in their policy have been converted into effective processes? How
well are the risks understood and managed?
2 The Turnbull Report—Revised Guidance for Directors on the Combined Code
<http://www.frc.org.uk/documents/pagemanager/frc/Revised%20Turnbull%20Guidance%20October%202005.pdf>
3 Examples of recent prosecutions arising from major incidents.
Transco Gas Explosion, Larkhall, 1999 <http://www.hse.gov.uk/press/2005/e05114.htm>
Conoco Phillips Humber Refinery Explosion, 2001 <http://www.hse.gov.uk/press/2005/e05089.htm>
Waste Transfer Company Fatality, Wandsworth, 2004 <http://www.hse.gov.uk/press/2005/e05076.htm>
Shell UK Exploration and Production Brent Bravo Fatalities, 2003 <http://www.hse.gov.uk/press/2005/e05059.htm>
Clariant Life Science Molecules Serious Injuries, flintshire, 2003 <http://www.hse.gov.uk/press/2004/e04178.htm>
Sovereign Rubber Ltd Injuries and Fatality, Stockport, 2001 <http://www.hse.gov.uk/press/2004/e04063.htm>
Page 5