Tim Worstall makes the following remark in response to a column by Polly Toynbee:
There was significant regulation here. What there wasn’t was responsibility. And a little more of the second can be very much more important than the first. Whether we call it the Clerk of Works, or professional responsibility, whatever, that one individual–and yes, making it one person does concentrate minds wonderfully–owns a project, the benefits and failures of it in that liability sense, tends to make things safer. On the very sensible basis that someone with their knackers potentially in the vice tends to pay attention. Box ticking doesn’t have quite the same effect.
This is absolutely correct.
In the wake of Piper Alpha, the regulations governing North Sea oil and gas operations were completely overhauled to address the many, many shortcomings that had led to the world’s worst oilfield disaster. One of them was to adopt what is known in the industry as a risk-based approach to safety, and put the responsibility to implement it on the shoulders of the operating companies.
What this means in practice is this. Each company must demonstrate, to the satisfaction of the UK HSE and – God forbid – a tribunal or court in the event of an accident, that the residual risks have been minimised to a degree which is As Low As Reasonable Practicable (ALARP). Residual risk is the term used to described the risks associated with a facility or operation which remain once mitigation and prevention measures have been implemented. This is important: playing around with highly volatile hydrocarbons is an inherently dangerous business, and there will always be risks associated with it. The requirement is not to eliminate risks entirely, as that would entail leaving the hydrocarbons in the ground, but to minimise the risks that remain once you’ve done all you can.
This is the principle of ALARP: “reasonably practicable” is an open term with no strict definition, but is well understood in the risk management industry. It recognises the fact that money spent on safety and minimising risks is a scarce resource and must be properly targetted. If open-ended safety obligations are demanded of an oil company, commercial operations will cease.
Most important is the word demonstrate, which is why I emboldened it. How a company demonstrates that it has minimised the risks associated with its operations is largely up to them, but the North Sea has developed a standard process (with associated tools and techniques) which all operators now follow. In short, it consists of:
1. Identifying potential hazards and the events they could lead to.
2. Identifying the consequences of such events should they occur, in terms of effects on humans, the environment, the asset, and the company reputation.
3. Identifying what can be done to prevent the event (preventative measures).
4.Identifying what can be done to mitigate the impact of the event, should it occur (mitigation measures).
5. How the company intends to manage the residual risks of their operations once 3 and 4 have been implemented.
This process focuses the minds of those charged with designing, building, and operating the installations to ensure the residual risks are ALARP, and can indeed be demonstrated to the satisfaction of anyone who may ask (e.g. regulatory bodies). I am heavily involved in this entire process as my day-job, and have been for years. I take the approach that if I find myself hauled in front of a court facing twenty to thirty years in an African prison for manslaughter, can I demonstrate that I did everything I could do minimise the risks associated with the installation? I am not exaggerating, I really do think this. In Nigeria I was responsible for signing off designs. Gulp.
By telling companies that they have to demonstrate their facilities and operations are as safe as they can be, and all potentially catastrophic scenarios have been thought of and addressed, it forces them to take responsibility for the complete design and operation. Moreover, it forces them to consider the installation as a whole, i.e. how the different systems interact with one another, and address the unique complexities of their particular situation.
The alternative system is one whereby clever people draw up a set of rules and regulations that must be followed, and if a company does then – in theory – the installation will be safe. This is called a prescriptive-based approach to safety. In effect it’s a giant box-ticking exercise, which involves little actual thinking on the part of the design engineers and allows them to shift responsibility to those who drafted the regulations if something goes wrong. As far as I am aware, this is how most industries are regulated: companies obtain a set of prescriptive rules and regulations and if they follow them to the letter, they are covered. Indeed, this is how the American Occupational Safety and Health Administration (OSHA) works, and this approach is applied to their own oilfields.
The shortcomings of the prescriptive-based approach are obvious, but a risk-based approach is more complicated and expensive to implement. However, the lessons from Piper Alpha might well be dusted off and re-learned in the wake of the Grenfell Tower fire. I highly doubt that the British building regulatory regime allowed banned cladding to be installed: I am reasonably certain that it was quite legal. However, they were clearly not suitable for the application, because nobody considered the cladding system as a whole as it was installed on that particular tower, and what might happen in the event of a fire. All they did was select a panel type that was approved by the regulations, comply with all the other regulations, and assume they were safe.
The problem with prescriptive regulations is that they cannot anticipate every scenario, and it only takes one unique application of a certain product or system to leave the whole thing prone to a catastrophe. Or course lessons will be learned from the Grenfell Tower fire and that particular gap will be closed, but others will remain so long as we insist on a prescriptive-based approach to safety. The irony is that all those people calling for companies to take greater responsibility for the works they carry out are likely to be the same people calling for greater regulation, which will inevitably be of the prescriptive type. The two demands are not compatible: either we tell companies to follow the regulations, or we tell them to proceed as they see fit but demonstrate to the regulators that they’ve done the job properly and take full responsibility if it later proves they haven’t.
My guess is we’ll end up with an unhealthy mess of both: companies told to follow regulations but also carry the can when those regulations prove to be inadequate, leading to increased prices, a lack of transparency, and yet more cosy partnerships and conflicts of interest between private businesses and those writing the regulations. None of this will make the public any safer.