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David Mawdsley Senior Safety Advisor IATA

Hong Kong – 16/17 October 2007The Complexity of Aviation Safety Management

- Putting Ideas into Practice

Simplifying the Business of Integrated Airline Safety Management Systems

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The Complexity of Aviation Safety Management –Putting Ideas into Practice

Scope of Presentation

• IATA’s Safety Management Support System i.e. its Six Point Safety Programme

• IATA’s Operational Safety Audit programme (IOSA)

• ICAO and the Global Aviation Safety Roadmap from SMS Viewpoint

• SMS towards integrated Airline Management Systems (iAMS) implementation

• Questions and discussion

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200+ countries

150,000+ flight crew

200+ languages800+ airlines

1,350+ major airports

Aviation System Is Complex,Industry and Governments Must Work Together

21,000+ aircraft(Western built)

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Six Point Safety Plan “IATA’s Safety Management Support System”

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Safety Data Analysis

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Safety Auditing

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IOSA Programme

Global programme, built on ICAO standards and industry best practices;

Internationally recognized and accepted evaluation system implemented consistently

Goal : Improve Safety worldwideReduce Number of audits

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STATESSTATES

AIRLINESAIRLINES

Where does IOSA fit?

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One Audit per Airline (24-month Interval)

Audit Sharing Model

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Organization & Management System

Flight Operations

Operational Control/Flight Dispatch

Engineering & Maintenance

Cabin Operations

Ground Handling

Cargo Operations

Operational Security

Audit Scope

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What are the IOSA Audit Standards?Approximately 900 published operational standards and recommended practices in the ISM E2 (up from 735 in E1)

Focus: operational quality/safety management and oversight

Applicable to audits only; not regulations

Include requirements from ICAO and industry best practices

Bottom line: A well managed airline will meet IOSA Standards

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Audits Completed & Saved

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IATA Board DecisionIATA must become a Quality Association -

Any airline wanting to join IATA must pass an IOSA audit first

All existing Members must:Have committed to an IOSA audit by end 2006

6 IATA members did not meet this deadline

Carry out their IOSA audit by end 2007

Complete any corrective action and be Registered by end 2008

Maintain IOSA Registration by being successfully audited biennially

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Benefits from IOSA - AirlinesCapability for safer operations

Improved internal efficiency

Reduced numbers of audits

Codeshare and wet-lease opportunities

Reduced Insurance Premiums

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Benefits from IOSA - StatesStates can access IOSA Audit Reports

enhance and focus their own oversight activitiesuse IOSA in Foreign AOC and wet-lease determinations

Some States are mandating IOSATurkey, Chile, Egypt, Madagascar, and the Arab Civil Aviation Commission Nigeria, Jordan, Tunis, Mexico, Hungary and others are actively planning

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Summary of IATA Support For Airline Safety Management Systems

IATA supports SMS implementation through:Safety Data & Analysis ServicesIOSA Standards & Best PracticesIATA Governance Committees play key role in ensuring system is airline driven (OPC, Safety Group and IRM) and information sharing. Leading cooperative SMS efforts between industry, ICAO and regulators

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ICAO and SMSICAO calls for a systematic approach to ICAO calls for a systematic approach to managing safety managing safety Providers are responsible for Providers are responsible for establishing an SMS.establishing an SMS.States are responsible for the States are responsible for the acceptance and oversight of providers’ acceptance and oversight of providers’ SMS.SMS.Guidance on safety management Guidance on safety management systems is contained in the ICAO systems is contained in the ICAO Safety Management Manual (Doc Safety Management Manual (Doc 9859). 9859). IATA takes the Doc 9859 approach to IATA takes the Doc 9859 approach to SMS.SMS.

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The ICAO Global Aviation Safety Plan Objectives:

1. Reduce the number of accidents and fatalities worldwide irrespective of the volumes of air traffic;

2. Achieve a significant decrease in accident rates, particularly in regions where these remain high; and

3. No single ICAO Region shall have an accident rate* more than twice the worldwide rate by the end of 2010

* Based on a five year sliding average

Global Aviation Safety Roadmap

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Global Aviation Safety Roadmap – the ICAO Global Aviation Safety Plan

Contents:• Sets out a rationale and describes a general approach, based on

metrics and risk measurement.• Establishes 12 key focus areas• Objectives are described for each focus area for near and mid-term

accomplishment.• Emphasizes aviation safety enablers (measures already in progress)

in developing regions.

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GASR’s 12 Focus Areas: “The Roads”Focus Areas

StatesConsistent implementation of international standardsConsistent regulatory oversightNo impediments to reporting errors/ incidentsEffective incident and accident investigation

RegionsConsistent coordination of regional programmes

IndustryNo impediments to reporting and analyzing errors/ incidentsConsistent use of Safety Management SystemsConsistent compliance with regulatory requirementsConsistent adoption of industry best practicesAlignment of global industry safety strategiesSufficient number of qualified personnelNo gaps in use of technology to enhance safety

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Developing a Global Best

Practice Approach

NB. Global Aviation Safety Roadmap

now available on ICAO & IATA,website

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Focus Area 7 ObjectivesFocus Area 7 – Inconsistent use of safety management systems (SMS)

• Objective 7a – ICAO SMS standards published. Confirm need for formal (mandated) SMS across all sectors and disciplines of the industry.

• Objective 7b – Develop a plan for incorporation of SMS into audit process.• Objective 7c – Develop audit processes to assess operation of SMS function• Objective 7d – Implement review of SMS during audits.• Objective 7e – Define interface points between industry focus areas and develop a

plan for SMS programme integration across all interfaces.

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BP 7c – An organization’s SMS recognizes external interfaces and contains the necessary procedures to manage them effectively.

BP 7b – Audit processes drive consistency in use of SMS both within and across industry sectors and disciplines.

a. Communication processes in place

b. Procedures in place

a. Processes should be established within the SMS to ensure that regular communications take place between different sectors and disciplines to address safety issues across the interface.

b. Procedures should be established within the SMS to ensure that risk assessment of change takes place in an integrated manner.

a. Modified USOAP

b. IOSA standards Manual 2nd

edition Effective march 2007

c. Tailored audit processes in place

a. The ICAO USOAP audits implementation and application of SMS to drive consistency and application amongst states.

b. The IOSA process audits implementation and application of SMS to drive consistency within and across industry sectors and regions.

c. Other recognized programs audit implementation and application of SMS to drive consistency within and across industry sectors and regions.

a. Existence of organisation’s SMS as per ICAO requirement.

BP 7a – Organizations within all sectors and disciplines of the aviation industry have their own formal SMS.

MetricsBest Practices

Best Practices: Objective 7 - SMS

Maturity Model to Guide Gap Analysis

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o ICAO USOAP audit process covers the topic of SMSo SMS is regulated according to ICAO provisions and industry best practiceso States and Regulatory authorities facilitate the sharing of SMS best practice as it evolves

• Industry

o Organizations within all sectors and disciplines of the aviation industry including suppliers of goods and services that impact upon aviation safety have their own formal SMS

o Both internal and independent audits of the SMS take placeo All sectors and disciplines work together effectively in an integrated manner to manage risk across

boundaries.o SMS best practice is shared across sectors as it evolves

• States – National legislation/regulations require all sectors and disciplines to implement an SMS.• Industry – SMS implementation programs developed for sectors and disciplines not previously covered by

SMS requirements

Level 3 – Evolving –Changes in work

• StatesLevel 4 – Highly Evolved

• States – Current ICAO SMS requirements not implemented and not communicated to the industry• Industry – SMS Systems not implemented

Level 1 – Developing

• States – current ICAO SMS requirements are communicated to industry sectors/disciplines• Industry – SMS implemented in those sectors and disciplines for which it is currently mandated

Level 2 – Areas Identified for Improvement

CapabilityMaturity Level

Maturity Table: Focus Area 7 - SMSUse of Safety Management Systems

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o ICAO USOAP audit process covers the topic of SMSo SMS is regulated according to ICAO provisions and industry best practiceso States and Regulatory authorities facilitate the sharing of SMS best practice

as it evolves

• Industryo Organizations within all sectors and disciplines of the aviation industry

including suppliers of goods and services that impact upon aviation safety have their own formal SMS

o Both internal and independent audits of the SMS take placeo All sectors and disciplines work together effectively in an integrated manner

to manage risk across boundaries.o SMS best practice is shared across sectors as it evolves

• StatesLevel 4– Highly Evolved

CapabilityMaturity Level

Is your SMS this mature in Hong Kong? Is there a GAP?

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Introducing the “integrated” Airline Management Systems Guide

IATA Safety Group and its SMS task force recognise complexity of current airline organisations.

Air Carrier organisation is composed of a system of systems

Hence IOSA and GASR requires implementation of SMS for each operational function

Challenge more complex than introducing SMS

Numerous departments within each airline organization whose activities must be closely coordinated in order to realize the full potential of an SMS.

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Introducing “integrated” Airline Management Systems

(integrated AMS) Guide

Integrated-AMS (Corporate Governance)

Enterprise Risk (ERM) System

Safety Management System (SMS)

Quality Management System (QMS)

Security Management System (SEMS)

Supplier Management System (SUMS)

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‘Operational’

Business Unit e.g.

Maintenance Management System

Executive Team -Corporate Governance

CultureCulture

“integrated’’ AMS Conceptual Diagram

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Some Airline Characteristics for Senior Management to UnderstandFunctional

Includes Safety, Security, and Quality activities that are independent of operational functions but support the whole enterprise.

OrganisationalThe SMS, QMS, ESMS, and SEMS are organisational in nature

Cultural The cultural characteristics separates these four management systems from the other systems. They are cultural in that each employee must demonstrate healthy attitudes, behaviours, and self discipline that form the foundation for consistent personal performance.

“Dimensions”. Several management systems within the iAMS are three dimensional i.e. they are functional, organisational and cultural.

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How Complex is an Airline?Multiple management systems

At least 15 that support operations

Dispersed operationsProportional with number of destinationsMay be 150 locations for large international carrier

Many technical functionsLicensed employee groupsDiverse skills required

Highly regulated--overlapping State jurisdictionCivil Aviation Authority (CAA)Authority for Aviation Security Occupational Safety & Health (OSH)Environmental Protection Agency (EPA)Securities & Exchange Commission (SEC)

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What’s Our Challenge?

ICAO & Civil Aviation Authorities say “what” to do—but not “how” to organize the work!

CAA’s take a functional approach

So, what must we do?Understand the relationships between internal management systems – each airline is differentOrganize required work activities Document “how” these systems operateCommunicate to management team & employees

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Airline Management Systems Operational Systems

FlightCabinMaintenance Dispatch Ground HandlingCargo Documentation

Support SystemsPersonnel SupplierFinancialMarketingCommunicationsLegalOther Systems

These Systems are Two-Dimensional

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Operational Divisions are Two Dimensional

Organizational DimensionLeadership team & management staffOperational control and supervisionResource allocation—people, finance

Functional DimensionWork process design and documentationTechnical trainingControl of process & service quality

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SMS / QMS / SEMS / ESMSThree Dimensional Systems

OrganizationalCorporate support structureReport to “Accountable Executive”

FunctionalSafety, Quality, Security, & Environmental responsibilities

Cultural – Multiple ComponentsSafety CultureQuality CultureSecurity Culture“Green” Culture

Vice PresidentCorporate Safety

Security& Quality

Assurance

ManagingDirectorSafety

ManagingDirectorQuality

ManagingDirectorSecurity

ManagingDirector

Environment

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Four Trans-Organizational Systems

Safety Management System (SMS)Organized approach to managing safety (ICAO)Tools: Flt Data Analysis, Safety Reports, Investigations

Quality Management System (QMS)Organizational structure, responsibilities, processes, procedures, resourcesTools: Auditing, Voluntary Disclosure, Systems Coaching

Security Management System (SEMS)Organized approach to implement & manage security processesTools: Security Reports, Investigations, Training

Environmental Safety Management System (ESMS)Organized system to identify and manage environmental risksTools: Auditing, Investigations, Training, Coaching

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Risk Management - Two LevelsOperational Risk Management

A primary concern of State Civil Aviation AuthorityMajority of employees deal with operational riskSMS, SEMS, QMS, & ESMS are vehicles to identify, analyze, and resolve operational issues

Enterprise Risk ManagementOperational Strategic FinancialComplianceEnvironmentalCorporate Governance / ethicsProjects

Usually does not involve State Civil Aviation Authority

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Operational Risk Management

Risk Analysis Board(Dashboard)

Everyone sees safety statusManagementRegulators

Employees / Unions

DataFOQA/FDA/FDM

Ops AnalysisSafety Statistics

People ReportsFlight / Maintenance

Dispatch / CabinGround Handling / Security

Field Investigations

Airline Operations Maintenance Operations

Ground Handling

Recommend Action Plan

Implement Plan& Re-evaluate

AuditingInternal

Departmental QCIndependent QA

ExternalCivil AviationEnvironment

SecurityOSHIOSA

Operational Operational Risk Analysis Risk Analysis

OutputOutput to ERM to ERM model i.e. model i.e. Input Input into Enterprise into Enterprise

Risk ModelRisk Model

SMS / QMSSEMS / ESMS

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Operational Risk ManagementWho are the Players?

Safety, Security, Quality & Environmental TeamsCollect and analyze data, consult, assess risk, interface with regulatory agenciesDevelop dashboards to communicate key levels of risk exposure

Senior Leadership Team (Operations)Cascade risk management techniques throughout the operationDevelop and implement interventions to manage risk - four Options: Accept, Share, Mitigate, Transfer). Manage continuous improvement process

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Enterprise Risk Management

An IATA Perspective

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Enterprise Risk ManagementWhat does it really mean?

Managing risk of the entire company

An integrated approach . . . connecting the dots

Also referred to as “Integrated Risk Management”

Cross functional, not vertical approach

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ERM - A Cross Functional ApproachMinimizes exposure to risk

Enables Corporate Officers to see the big picture

Breaks down silos in the decision-making process

Enables transition from “reactive” to “proactive” environment and culture

Improves risk profile for insurance purposes

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ERM - Why?Board has an obligation to manage risk

Laws require it for publicly traded companiesAustraliaUnited StatesEuropeCanadaThailandUK

In general: it is good governance

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ERM - Senior Management Requirements

CEO and CFO required to state whether annual report accurately reflects the company’s financial picture

Cannot make this statement if you do not know what your operational risk is

Operational risk is a component of enterprise risk

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ERM Organisational Chart

Audit Committee

DIR FINANCE DIR LEGAL DIR HR DIR SECURITY DIR IT

Systems/Organiza

Cargo

Airside

Terminal

DIR OPERATIONS DIR RISK MGMT

CEO

BOARD OF DIRECTORS

Operational Risk

Risk Mgmt Committee

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An Example of ERM

Operational risk input is derived from Operational Risk assessment process

Operational Risk

**Taken from COSO Taken from COSO –– Committee of Sponsoring Committee of Sponsoring Organizations of the Organizations of the TreadwayTreadway CommissionCommission

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Next StepsAdopt the integrated - AMS approach

Use ERM to accomplish itIATA has developed ERM guidance for CEOs

Refine operational risk assessment toolsIncrease use of metrics & modelingEducate on the use of root cause analysis toolsTransition from compliance to systems mentality

Implement a Supplier Management System (SUMS)Framework for managing supplier products & servicesTwo dimensional – Organizational & Functional

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Next StepsTake a “big picture” view of risk

Make sure you comply with corporate governance laws

Create a risk management culture in every single employee

Show employees how they fit into the “big picture”

Know exactly what the impact of your operational risk is on overall financial performance

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Summary

ERM is essential because it will help you:

Achieve an integrated – Airline Management System

Improve efficiency

Reduce operational cost, including insurance premiums

Reduce exposure to risk

Improve your bottom line

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How will IATA Support iAMSimplementation?

Launched at IATA Ops Forum in April 2007 (multidisciplinary event) IATA training and workshops are launching iAMS.

Together with ICAO/Governments/Regulators per GASR/GASP.Joint efforts with IATA regional offices / country managers.IATA Training & Development Institute has developed the SMS training course (based on the ICAO SMS Manual for States) but has moved forward into (iAMS). IATA integrated-Airline Managent System (integrated-AMS) Manual for Air Transport Operations Edition 2007. (Order through the IATA website).

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Distribution of the “integrated” Airline Management Systems

(integrated AMS) Guide for this Conference)

IATA has authorized special distribution of 20 copies of the iAMS CD-ROM toolkit for this conference – this will be done on a one per “enterprise” basis.

Additional copies can be ordered through the IATA website www.iata.org.whatwedo/safety_security/safety

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Flight OperationsAircraft Engineering and MaintenanceOperational Control/Flight DispatchCabin OperationsGround HandlingCargo Operations

iAMS Implementation operational management systems –

IOSA Standard excellent for specific requirements of following two dimensional systems:

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Integrated – iAMS Corporate Governance Guidelines

Senior management commitment to safety, security and quality (policy)Functional organisational structure (organisation chart & senior management job responsibilities)Function and authority of Safety, Quality and Security managersEnterprise Risk Management SystemOperational Risk Management SystemCommunication responsibilities and toolsOrganisational documentation policy

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Integrated – iAMSImplementation Guidelines

1. Implementation of an integrated – AMS is a straightforward process and easily co-ordinated by the Chief Operating Officer or his designee per Corporate Governance Guidelines.

2. CAA will require specific operational management systems to be established and documented.

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iAMS ImplementationToolsIntegrated - AMS (Corporate Governance)

Enterprise Risk management (ERM) System

Safety Management System (SMS).

Quality Management System (QMS)

Security Management System (SEMS)

Supplier Management system (SUMS)

Environment Safety Management System (ESMS) – to be developed

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A Phased Approach to iAMS Implementation

A four Phased approach to iAMS implementation is proposed to manage the workload of introduction. Build on the best but identify the gaps.

Phase 1. Identify accountable people. Conduct gap analysis and prepare implementation plan.Phase 2. Focus on training and documentation requirements.Phase 3. Implementation. Safety hazard identification and risk management component. Proactive and predictive processes and tools for the (iAMS). Phase 4. Operational Safety assurance. Development of Acceptable levels of safety. Performance Indicators and targets. iAMS continuing improvement measures and emergency response plan

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Airline iAMS Implementation - SummaryPrepare airline wide action plan. Share experience with other airlines e.g. Air Canada and United airlines currently implementing iAMS, but beware of complexity.

Look down the “Roads” of the ICAO Global aviation Safety Plan and the Global Aviation Safety Roadmap – SMS in particular.

Establish and document in consultation with State Civil Aviation Authority. Harmonize with Regulatory Authority Safety Plan

e.g. UK CAA Safety Regulation Group.

Follow IATA SMS/iAMS guidelines, phased approach recommended.

Resource and Implement, Implement, Implement

And simplify the business of safety management!

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IATA – Leading Governments, Authorities and Airlines in Safety Initiatives

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Questions&

Discussion