Source: E-mail dt. 7 June 2012


Risk Management Procedures and its Implications with respect to Manufacturing Industries


Dr. R. Karuppasamy M.Com., MBA, M.Phil., Ph.D., PLME

 Director, Management Studies, SNS College of Technology, Coimbatore, Tamilnadu, India




Mr. C. Arul Venkadesh MBA, PGDPM (IRLL), (PhD)

Assistant Professor – Department of Management Sciences, CIET College, Coimbatore, Tamilnadu, India





Safety management systems SMS can be defined as a coordinated, comprehensive set of processes designed to direct and control resources to optimally manage safety. SMS takes unrelated processes and builds them into one coherent structure to achieve a higher level of safety performance, making safety management an integral part of overall risk management. SMS is based on leadership and accountability. It requires proactive hazard identification, risk management, information control, auditing and training. It also includes incident and accident investigation and analysis. SMS is needed to help facilitate the proactive identification of hazards and maximize the development of a better safety culture, as well as modify attitudes and actions of personnel in order to make a safer work place. SMS helps organizations avoid wasting financial and human resources and management’s time being focused on minor or irrelevant issues. SMS lets managers identify hazards, assess risk and build a business case to justify controls that will reduce risk to acceptable levels. SMS is a proven process for managing risk that ties all elements of the organization together laterally and vertically and ensures appropriate allocation of resources to safety issues.




A SMS provides a systematic way to identify hazards and control risks while maintaining assurance that these risk controls are effective.  SMS can be defined as: a businesslike approach to safety. It is a systematic, explicit and comprehensive process for managing safety risks. As with all management systems, a safety management system provides for goal setting, planning, and measuring performance. A safety management system is woven into the fabric of an organization. It becomes part of the culture, the way people do their jobs. For the purposes of defining safety management, safety can be defined as:


The reduction of risk to a level that is as low as is reasonably practicable. There are three imperatives for adopting a safety management system for a business - these are ethical, legal and financial. There is an implied moral obligation placed on an employer to ensure that work activities and the place of work to be safe, there are legislative requirements defined in just about every jurisdiction on how this is to be achieved and there is a substantial body of research which shows that effective safety management (which is the reduction of risk in the workplace) can reduce the financial exposure of an organization by reducing direct and indirect costs associated with accident and incidents.


To address these three important elements, an effective SMS should:


• Define how the organization is set up to manage risk.

• Identify workplace risk and implement suitable controls.

• Implement effective communications across all levels of the organization.

• Implement a process to identify and correct non-conformities.

• Implement a continual improvement process.


Attributes of a Safety management system


Although the details and level of documentation of a SMS may vary, there are 11 fundamental attributes that will assist in ensuring the SMS is effective for any organization. The core attributes of the IHST’s SMS are:


1) SMS Management Plan

2) Safety Promotion

3) Document and Data Information Management

4) Hazard Identification and Risk Management

5) Occurrence and Hazard Reporting

6) Occurrence Investigation and Analysis

7) Safety Assurance Oversight Programs

8) Safety Management Training Requirements

9) Management of Changes

10) Emergency Preparedness and Response

11) Performance Measurement and Continuous Improvement




Integrating a coherent SMS can be done in incremental steps. This allows the organization to become acquainted with the requirements and results before proceeding to the next step. The following checklist is a guide in validating that the attributes of a SMS are implemented. Also included is a sample SMS that can be adopted for a small organization:


Management Plan


¨ Policies, objectives and requirements of the SMS are published

¨ Organizational structure and key individuals and responsibilities are defined

¨ Elements of the SMS are defined

¨ Expectations and objectives of the SMS are conveyed to employees

¨ A method to identify and maintain compliance with safety and regulatory requirements


Safety Promotion


¨ Senior management’s commitment to the SMS published

¨ Senior management visibly demonstrates their commitment to SMS

¨ Outputs of the SMS is communicated to all employees

¨ Initial and recurrent training is provided to all personnel

¨ Competency requirements are defined for those individuals in key positions

¨ Training requirements are documented and periodically reviewed

¨ Lessons learned are shared to promote improvement of the safety program

¨ Employee safety feedback system is established

¨ A “Just Culture” process is in place


Document and Data Information Management


¨ Safety policies, objectives and SMS requirements publicized

¨ Safety regulations that govern the organization identified

¨ Pertinent safety and regulatory information provided to all employees

¨ Documentation describing the systems for each SMS component consolidated

¨ Change control system in place for applicable documents

¨ Personnel are educated on changes in documents

¨ Obsolete documents are promptly removed

¨ Periodic review of documents


Hazard Identification and Risk Management


¨ Procedures exist to proactively identify potential hazards

¨ Potential hazards are considered when making changes within the organization

¨ Risk Management Plans are prioritized and approved by appropriate level of management

¨ Identified hazards are tracked for closure


Occurrence and Hazard Reporting


¨ Employees receive feedback on reported hazards

¨ Safety data analyzed

¨ Corrective actions monitored for effectiveness

¨ Hazards are monitored to identify trends

¨ A nonpunitive disciplinary policy in place for reporting hazards

¨ Provisions for anonymous submittals of hazards


Occurrence Investigation and Analysis


¨ Investigations conducted to determine root cause

¨ Person(s) conducting the investigation technically qualified

¨ Investigations identify what can be done to prevent future occurrences

¨ Both the immediate causal factors and the contributory factors identified

¨ Investigations include looking at organizational factors

¨ Acts of “omission” and “commission” identified

¨ Investigation reports provided to manager that has accountability and authority


Safety Assurance Oversight Programs


¨ Evaluations of operational processes conducted at regular intervals

¨ Checklists are utilized to conduct safety evaluations

¨ Contractor activities included in safety oversight programs

¨ Processes evaluated by a nonstakeholder

¨ Results and corrective actions documented

¨ Positive observations documented

¨ Findings categorized

¨ Results and corrective actions shared with all employees

¨ Available technology used


Safety Management Training Requirements


¨ Safety orientation for all new employees

¨ Competency requirements documented

¨ Training requirements documented

¨ Regularly scheduled safety meetings

¨ Key personnel continuously educated on safety management best practices


Management of Changes


¨ Operational procedures analyzed

¨ Changes in location, equipment or operating conditions analyzed

¨ Maintenance and operator manuals are posted with current changes

¨ Personnel are made aware of and understand any changes

¨ Level of management with authority to approve changes identified


Emergency Preparedness and Response


¨ Plan is readily available at work stations

¨ Plan is relevant and useful

¨ Emergency response plan periodically tested

¨ Be updated when contact details change

¨ Personnel briefed on the plan and their responsibilities

¨ Training in emergency response procedures provided

¨ Responsibilities defined for immediate response personnel

¨ Responsibilities defined for secondary response personnel

¨ Responsibilities defined for site security and accident investigation

¨ Procedures for next of kin notification

¨ Procedure for claims and insurance

¨ Procedures for aircraft recovery


Performance Measurements


¨ Safety performance monitoring used as feedback to improve the system

¨ Address individual areas

¨ Are SMART (Specific, Measurable, Achievable, Results Oriented, Timely)

¨ Linked to the organization’s business performance measures


Adoption of SMS's for Industry Sectors


There are a number of industry sectors worldwide which have recognized the benefits of effective safety management. The regulatory authorities for these industries have developed safety management systems specific to their own industries and requirements, often backed up by regulation. Below are examples from different industry sectors from a number of varied worldwide locations.


Civil Aviation


The International Civil Aviation Organization has recommended that all aviation authorities implement SMS regulatory structures.[6] ICAO has provided resources to assist with implementation, including the ICAO Safety Management Manual. Unlike the traditional occupational safety focus of SMS, the ICAO focus is to use SMS for managing aviation safety. Id. The United States has introduced SMS for airports through an advisory circular and other guidance.


The United States announced at the 2008 EASA/FAA/TC International Safety Conference that they would be developing regulations to implement SMS for repair stations, air carriers, and manufacturers. The FAA formed a rulemaking committee to address the implementation (known as the SMS ARC). The SMS ARC reported its findings to the FAA on March 31, 2010. The Report recognizes that many of the elements of SMS already exist in the U.S. regulations, but that some elements do not yet exist.[10] A draft of what the US SMS rule might look like was proposed by one trade association that participated in the ARC. Currently, the FAA is supporting voluntary pilot projects for SMS.


The Federal Aviation Administration has also required that all FAA services and offices adopt a common Aviation Safety (AVS) Safety Management System (AVSSMS).


The Federal Aviation Administration published a Notice of Proposed Rulemaking (NPRM) for the establishment of SMS for air Carriers. That NPRM explains that it is intended to serve as the foundation for rules that would later be applied to Part 135 operators, Part 145 repair stations and Part 21 manufacturers. Id. Several U.S. trade associations filed comments in response to the air carrier NPRM, including ASA  and MARPA Among these comments were arguments for developing separate SMS regulations for other certificate holders, in order to make sure that SM remains a usable tool for advancing safety (rather than a uniform but useless paperwork exercise). In addition, the Federal Aviation Administration has also filed a NPRM for SMS for airports, which would be separate from the rules for SMS for air carriers (consistent with the arguments of the trade associations).


Maritime Industry


The International Maritime Organization (IMO) is another organization that has adopted SMS. All international passenger ships and oil tankers, chemical tankers, gas carriers, bulk carriers and cargo ships of 500 gross tons or more are required to have a Safety Management System.[18] In the preamble to the International Safety Management (ISM) Code, the IMO states, “The cornerstone of good safety management is commitment from the top. In matters of safety and pollution prevention it is the commitment, competence, attitudes and motivation of individuals at all levels that determines the end result.”


Railway Industry


Transport Canada’s Rail Safety Directorate incorporated SMS into the rail industry in 2001. The Rail Safety Management System requirements are set out in the Railway Safety Management System Regulations. The objectives of the Rail Safety Management System Regulations are to ensure that safety is given management time and corporate resources and that it is subject to performance measurement and monitoring on par with corporate financial and production goals.


The effect of SMS in the rail industry has not been positive, as a 2006 Toronto Star review of Transportation Safety Board data indicated that rail accidents were soaring. Critics have argued that this evidence should preclude the adoption of SMS in the aviation sector. However, Transportation Safety Board data show that the accident rate in the rail industry has actually varied around the average over that 10-year period. Since the Toronto Star article was published, the accident rate has decreased. The Transportation Safety Board reported that “a total of 1,143 rail accidents were reported to the TSB in 2008, a 14% decrease from the 2007 total of 1,323 and an 18% decrease from the 2003-2007 average of 1,387” and also noted that, in 2008, rail incidents reported under the TSB mandatory reporting requirements reached a 26 year low of 215.




Safety management system facilitate the proactive identification of hazards and maximize the development of a better safety culture, as well as modify attitudes and actions of personnel in order to make a safer work place. SMS helps organizations avoid wasting financial and human resources and management’s time being focused on minor or irrelevant issues. SMS lets managers identify hazards, assess risk and build a business case to justify controls that will reduce risk to acceptable levels. SMS is a proven process for managing risk that ties all elements of the organization together laterally and vertically and ensures appropriate allocation of resources to safety issues




  1. http://www.ihst.org/Portals/54/SMS-Toolkit.pdf
  2. http://en.wikipedia.org/wiki/Safety_Management_Systems
  3. http://www.gpo.gov/fdsys/pkg/FR-2010-11-05/pdf/2010-28050.pdf
  4. http://www.aviationsuppliers.org/ASA/files/ccLibraryFiles/Filename/000000000572/2011-03-07%20ASA%20SMS%20NPRM%20Comments.pdf
  5. http://pmaparts.org/gvt/2011-03-07_MARPA_SMS_NPRM_Comments.pdf MARPA's Comments in response to the SMS NPRM.
  6. http://www.gpo.gov/fdsys/pkg/FR-2010-10-07/pdf/2010-25338.pdf
  7. http://www.imo.org/humanelement/mainframe.asp?topic_id=287
  8. New rules for aviation safety a flight plan to disaster, critics warn
  9. http://www.tsb.gc.ca/eng/stats/rail/prelim-2008/index.asp
  10. Notice of Proposed Rulemaking: Safety Management Systems for Part 121 Certificate Holders, 75 Fed. Reg. 68224 (November 5, 2010).
  11. Notice of Proposed Rulemaking: Safety Management System for Certificated Airports, 75 Fed. Reg. 62008 (October 7, 2010).
  12. The International Safety Management Code IMO Assembly Resolution A.741(18) – 1993.
  13. International Safety Management (ISM) Code 2002.