Protecting the Brand

Each year brings major news stories that illustrate the terrible consequences of inadequate safety, risk management, and governance practices. 2012 is proving to be no different with a cruise ship catastrophe, mere weeks into the year. Almost immediately, criticism was rampant related to the practices of the captain and crew in the minutes following the event.

But this is not the first time -– nor will it be the last –- where events such as this shape opinions of consumers, erode trust, and potentially put companies out of business. In 2011, there was the ongoing crisis at TEPCO's Fukushima Nuclear Power Plant. Although precipitated by an earthquake and tsunami, TEPCO has been criticized for not heeding earlier warnings and better preparing for such an event. Lack of transparency as the crisis unfolded and a history of governance shortcomings, including a previous scandal over falsifying safety records, have helped make the environmental disaster one of Japan's worst business disasters. TEPCO posted a $15 billion net loss for its recent fiscal year, its stock hit all-time lows, its president resigned in shame, and its future remains uncertain. Analysts predict that compensation liabilities alone could top $100 billion.

In the United States, last year saw the worst mining accident in decades: 29 miners killed at Massey Energy's Upper Big Branch coal mine. In addition to the immeasurable impact of those fatalities on families and the local community, the impact on Massey led to its CEO resigning and the company being bought by a competitor. An independent report released in May 2011 concluded that Massey "operated its mines in a profoundly reckless manner," noting among other things that there were 515 citations for safety violations at Upper Big Branch in the year prior to the disaster.

Another big story in 2010 was BP's Deepwater Horizon oil rig explosion, which killed 11 workers, caused enormous environmental and economic damage in the Gulf Coast region, and cost the company billions of dollars in cleanup, litigation, and related expenses. Here again, the company and its subcontractors have been taken to task for poor safety and risk management decisions that contributed to the disaster. As with TEPCO and Massey, the damage to brand reputation was amplified by a history of safety violations and lack of good governance. To cite just one example, the company had racked up more than 700 safety violations at its Texas City, Texas refinery before an explosion there killed 15 workers in 2005.

An incident doesn't have to command 24/7 media attention like these examples to be disastrous for your company. Nor do catastrophes occur only to companies that flout regulations and fail to prioritize workforce safety and health. One small mistake, oversight, or unforeseen hazard can bring calamity even to companies with very strong safety and health programs.

The lesson here is that when it comes to workforce health and safety, every organization can and should strive always to "do more." That's why safety and health leaders in every industry have adapted the "continuous improvement" mindset, "zero defect" goals, and proven tools and processes from the field of quality management.

With the Costa Concordia accident, what were the leading indicators that precipitated this event? How many opportunities "to act" were presented for leaders to step in and "fix" the problem before this catastrophic event occurred? Only time will tell, after months of investigation, if we will ever be able to put the speculation to bed regarding this incident on the coast of Italy.

Posted by Todd Hohn on Jun 25, 2012