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In the spotlight: health and safety

World Cement,

The recent merger of Lafarge and Holcim has given global attention to an industry that underpins global growth – the cement industry – and in many regions business is booming. For example, Lafarge Republic, Philippines, expects to ramp up cement production by 17% in 2015 with the opening of new mills at its plants in Rizal and Bulacan. The new mill will also contribute to Lafarge Republic's commitment to sustainability as it reduces the plant's energy consumption by 40%. Also on the sustainability agenda of large cement companies, such as Lafarge, is health and safety.

The cement and lime industry requires meticulous planning when it comes to operational risk management, particularly in safety. Ensuring safety for employees and contractors remains one of the most important issues for an industry that can involve exposure to multiple hazards at any given time. Although health and safety is heavily regulated in most western nations, until very recently standardisation has been lacking, especially in the all-important area of reporting standards for employee health and safety. The World Business Council for Sustainable Development’s Cement Sustainability Initiative (WBCSD CSI) has now published a report that will allow a common platform for reporting industry-wide figures in order to compare the cement industry against others and to have proper benchmarking.

This is a step in the right direction for the cement industry. Quality standards and benchmarking that go beyond regulatory compliance are crucial for good progressive safety management. That said, there are still major companies out their struggling to comply. However, firms simply cannot afford not to comply. Poor compliance and poor risk management, both within the organisation and within the respective supply chain, lays the company open to major strategic and reputational risk. We are all too aware of global news stories, such as labour rights issues at FoxConn, the Apple supplier. This type of issue, if it goes on unmanaged, will at some point surface and cause major reputational and financial damage to those companies not taking steps to improve visibility and control of their operational risk. The classic example is BP Deep Water Horizon. A catalogue of unmitigated risks, process failures and fragmented governance led to a tragic incident impacting the lives of many and causing BP’s share price to plummet 50% in just 55 days.

A more recent example of non-compliance to the safety rules set out by state administrators is Honda USA, fined US$70 million for not managing their safety and operational risk to an acceptable standard, and for not reporting incidents to the NHTSA (National Highway Transport Safety Administration). The fine was plainly intended as a powerful message to the rest of that industry: non-compliance will not be tolerated where safety is concerned. Regulators are happy to make public relations cases out of these issues, which can really damage a company’s reputation. Honda has since issued a response to the fines, saying it has identified “several shortcomings in its compliance with NHTSA's Early Warning Reporting requirements”.

It goes to show that regardless of company size and standing, regulators are putting their foot down, with fines leaving black marks that companies will find difficult to remove and pivot back from. Many organisations in the cement sector must report to the relevant regulators, such as the HSE in the UK or OSHA (Occupational Safety and Health Administration) in the US. The industry is making strides in the right direction but culprits will continue to receive increasingly large and public fines. Firms should be aware that a lacklustre approach to operational risk and health and safety will always directly impact their bottom line, from lost time of works through to claims and litigation.

When it comes to health and safety, companies and the decision makers running them must drive social responsibility from the top. Ultimately it lies with the company board to inspire change and engrain values into the company’s ethos. Firms need to be conducting the right processes and procedures, as well as implementing the right technology. Improving the visibility of risk in your operations is vital; where is the risk happening and why is it happening? If you can access this information and view complex analytics all in one place, that is one of the main battles won – especially if it makes you aware of best practice procedures for your industry or your legal obligations in a particular country. As well as providing accessible information to those at the top of the chain, it is also important to provide the rest of the company with the tools required to manage the majority of safety hazards at source, before they become a problem.

Rivo platform.

Companies that have lacked the right technology in the past to provide that important mesh to hold together good governance and process can breathe a sigh of relief as now the technology is absolutely there to be embraced. They can now use the same system around the world for all of their operations and identify potential risks, yet tailor it to each nuanced region in terms of process and culture. Driving high user adoption with consumer grade user experiences means that decision makers can look forward to more and better data to drive decisions and, ultimately, safer operations.

Written by James Jameson, VP Product Strategy, Rivo.

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