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30 th International System Safety Conference Awards Luncheon The Business Value of Safety August 9, 2012 Atlanta

30 th International System Safety Conference Awards Luncheon The Business Value of Safety August 9, 2012 Atlanta. THE VALUE OF SAFETY. Macro Sales Stock Price Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings. THE VALUE OF SAFETY.

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30 th International System Safety Conference Awards Luncheon The Business Value of Safety August 9, 2012 Atlanta

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  1. 30th International System Safety Conference Awards Luncheon The Business Value of Safety August 9, 2012 Atlanta

  2. THE VALUE OF SAFETY Macro Sales Stock Price Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings

  3. THE VALUE OF SAFETY Macro Sales Stock Price Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings

  4. THE VALUE OF SAFETY Macro Sales Stock Price Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings

  5. THE VALUE OF SAFETY Macro Sales Stock Price Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings

  6. OBJECTIVES Can System Safety yield business and financial value? Is SMS the correct roadmap? Sikorsky’s legacy: Does it actually lower risk and earn money? Should this all be considered by our customers and their insurers?

  7. SAFETY CULTURE INDICATORS Chronic unease Safety seen as a profit centre New ideas are welcomed GENERATIVE Resources are available to fix things before an accident Management is open but still obsessed with statistics Procedures are “owned” by the workforce PROACTIVE CALCULATIVE We cracked it! Lots and lots of audits HSE advisers chasing statistics We are serious, but why don’t they do what they’re told? Endless discussions to re-classify accidents Safety is high on the agenda after an accident REACTIVE PATHOLOGICAL The lawyers said it was OK Of course we have accidents, it’s a dangerous business Sack the idiot who had the accident Presentation by Patrick Hudson of Leiden University to Bristow Safety Conference, Lagos Nigeria, Feb 2011

  8. CULTURE COMES FROM REPETITION SMS Basic Principles Leadership Risk Mgmt Assurance People Culture & Value

  9. Safety CULTUREStarted at the top

  10. “There are two things that must happen every day. First, every Sikorsky aircraft ever manufactured must land at the time and place of choosing of the pilot. Second, every employee must go home exactly as they came in, or better. We must be perfect in both cases.” Jeffrey Pino, President Sikorsky Aircraft LEADERSHIPPrinciples/values help make daily decisions

  11. CULTUREStarts at the top Safety

  12. LEADERSHIP

  13. HIGH RELIABILITY ORGANIZATION

  14. COMPETITIVE EDGE By protecting its employees and remaining dedicated to “doing the right thing”, Sikorsky has reduced its accident rates, workers’ comp costs and carbon footprint to become a company synonymous with strong environmental leadership, safety and environmental responsibility.

  15. REAL VALUEThe macro business case As a strong proxy for management quality, environmental, health & safety performance consistently correlates well with stock price performance. Innovest2005 Sikorsky Revenues ($ billions)

  16. We pioneer flight solutions that bring people home everywhere…every time™

  17. And we know it makes business sense…

  18. TACTICAL RESULTS 19

  19. WE CAN CALCULATE IT PRECISELY Avg Intervention Cost: $19,000 Avg NPV: $244,000 Avg DPP: 2.1 years

  20. TASK FORCE FORMED IN 1995 In 1995, a taskforce of fifteen Fortune 500 companies sponsored the development of a process and supporting tool set to determine the financial value of Safety investments: • Build an accepted business tool. • Apply an easy to use process. • Communicate value of Safety investments. • Improve performance by encouraging better decisions.

  21. RETURN ON HSE INVESTMENT BUSINESS TALK Finance/Operations Safety Earnings/EPS Accident rates ROI Property loss Payback Insurance premiums PVRR Fines and citations Internal Rate of Return No. of people trained Production rates Exposure Assessments Earnings/employee Near misses ROHSEI Net Present Value Behavioral Observations bridges Cost Benefit Audit findings the gap

  22. ROHSEI Analysis of SMS Develop and document the focus of the opportunity:

  23. Research/document relative numbers of accidents:

  24. Determine financial cost of an accident:

  25. Hit the calculations button:

  26. Present results to your management:

  27. MY CONCLUSIONS 1. Safety yields value. 2. This value can be calculated. 3. It should be considered by our customers and the insurance industry. 4. We’d love to share lessons learned. David Eherts PhD CIH VP and Chief Safety Officer Sikorsky Aircraft Corporation Stratford, CT USA Office: +1 203 386 8666 Cell: +1 203 895 0410 ( GMT – 5 ) email: deherts@sikorsky.com

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