The practice of safety in the chemical industry has changed and matured significantly over the past several decades and will continue to evolve. Taking a glimpse into the future based on current trends is a good place to start a dialogue on what those changes might be. Preparing for the future is never an exact science but even an inexact attempt is better than no preparation at all. That said, let me outline some trends I see based on my extensive consulting and field experience in chemical safety that might impact you.
First, and possibly foremost, safety excellence is growing in its critical importance to the chemical industry. Safety mishaps always have been an expense and negative influence on production — but in the future they also may provide the basis for more and more stringent legislative and regulatory actions. The past decade has seen safety regulatory agencies turn from a cooperative stance to an enforcement mentality, increasingly focusing on catching and punishing the worst offenders rather than encouraging the best performers.
Regardless of any changes the Trump administration makes, organizations will seek to stay off the radar screen of regulatory agencies. The best way to do this is to have excellent lagging indicators for safety. Even though we are discovering the limitations of lagging indicators in helping to improve performance, they remain the holy metric to regulators. The very nature of lagging indicators will tempt some chemical manufacturers to manipulate the numbers; regulators will look closely for such issues. Organizational leaders will begin to take a more active interest in such metrics as they hear of others in their ranks being punished for offenses they once could blame on subordinates. Safety performance and measurement will become an issue for the boardroom as well as the safety department. Savvy leaders will turn to their engineers and other subject matter experts (SMEs) for advice on improving performance to shape lagging indicators.
The Trump administration most likely won’t reduce the emphasis on safety but will change the methods for achieving it. Expect regulatory agencies to reemphasize former programs such as the Voluntary Protection Program and others that encourage a partnership between regulators and organizations to further safety efforts and technologies. Such programs increase the positive reinforcement for excellence and reserve punishment for more willful and flagrant offenders. Any changes from the new administration won’t be immediate and lawmakers could resist them, leading to even more delays. So, organizations can hope for a relaxing of punitive measures in the future but should stay mindful of current realities.
Other Key Drivers
Another important impetus for an enhanced emphasis on safety will come from organizational leaders who will focus more seriously on so-called “major operational risks” (MORs). These risks will include safety issues but also critical environmental and financial threats. MORs are the risks that potentially could cost the whole business. As such, they head the priority list for stockholders, directors of publicly held firms and owners of private enterprises. Very few organizations turn over the management of these risks to the safety department. Some assign top executives to manage each of them. Others are forming teams or committees to oversee the risk management efforts. Chemical engineers will serve as key members of such committees; their technical knowledge is crucial to successfully manage MORs.
Insurance companies are driving the focus on MORs as well. As they sense the high potential impact of such events on traditional coverage, umbrella coverage and public relations, insurers are attempting to help their covered organizations protect themselves. As of now, most major insurance carriers don’t agree on a clear single path to such protection — but a growing list of suggested steps is beginning to show similarities. Many of these steps closely resemble or exactly match safety efforts. This expansion of safety efforts from simply preventing occupational injuries to averting other high-impact events will have one of two effects: It will either expand the traditional definition of safety and greatly impact the scope of the safety department, or it will change the organizational design of overall risk management, bringing it closer to the boardroom and further from simply being a delegated assignment.
Additionally, more major players in the chemical industry will insist on safety excellence from their contractors and suppliers. Most of these chemical makers either are very good at safety or have convinced themselves they are. As such, they don’t want to dilute their safety programs and cultures by mixing in contractors and suppliers with lower levels of safety performance. Good safety programs and metrics will become not just desirable but necessary to get contracts with the big boys. Major petrochemical firms will use safety as an additional screening criterion to select those with whom to contract. Some already are doing this on a lower level — such screening will increase and become more stringent. In the next few years, no other area of excellence will compensate for poor performance in safety when bidding on projects or supplying major firms.