13 December 2023
Why do we care about resilience?
The relationship between safety performance, organisational risk and insurance premiums is evident. What is often less obvious to operators is why an insurer would care about resilience.
Safety Management in Aviation is classically based on the ICAO Four Pillars; Safety Policy, Safety Risk Management (SRM), Safety Assurance (SA), and Safety Promotion.
Management need to make decisions based on their understanding of risk; this is driven by the output of SRM and SA activity, which in turn are dependent on evidence from effective reporting, supported by a just culture. Safety Management Systems (SMS) are, therefore, reliant on effective application of the SRM cycle and SA cycle. During the recovery from the COVID crisis there was an emphasis on resilience and the search for the post-pandemic “new normal”.
The resilience metaphors and diagrams used to help drive the industry out of the pandemic were often linear, unlike the classic SMS cycle, they described responding to the situation, recovering, and eventually resetting the organisation to fit the changed operating environment. The resilient airlines were seen as those that adapted to rapidly changing operating environments. Thus, broadly speaking, resilience became characterised as something that an organisation does rather than something that it has. Whilst change is implicit in the classic SMS, during a paradigm shift, such as the pandemic, change must be explicit; survival meant significant change, and the ability to change meant survival. If resilience is about survival, why might an insurer be interested in the resilience of an organisation?
In describing resilient systems in the context of earthquakes, Professor Michel Bruneau described a resilient organisation or system as one that shows the following:
- Reduced failure probabilities
- Reduced consequences from failures, in terms of lives lost, damage, and negative economic and social consequences
- Reduced time to recovery (restoration of a specific system or set of systems to their ‘‘normal’’ level of performance)
These outcomes are a consequence of the following properties, which have become known as the 4R Resilience Framework:
- Robustness: strength, or the ability of elements, systems, and other units of analysis to withstand a given level of stress or demand without suffering degradation or loss of function
- Redundancy: the extent to which elements, systems, or other units of analysis exist that are substitutable, i.e. capable of satisfying functional requirements in the event of disruption, degradation, or loss of functionality
- Resourcefulness: the capacity to identify problems, establish priorities, and mobilise resources when conditions exist that threaten to disrupt some element, system, or other unit of analysis; resourcefulness can be further conceptualised as consisting of the ability to apply material (i.e. monetary, physical, technological, and informational) and human resources to meet established priorities and achieve goals
- Rapidity: the capacity to meet priorities and achieve goals in a timely manner, in order to contain losses and avoid future disruption.
To understand why resilience might be of interest from a risk perspective, it is useful to examine the concept from the other side of the fence: what are the consequences of a lack of resilience?
Robustness
Where an organisation is not capable of withstanding a given level of stress, it will suffer a loss or degradation in performance. This might be operational performance, but might equally be airworthiness performance, with an evident increase in safety risk. In the case of robustness, the key question is “does each part of the organisation have the processes and resources, to cope with the highest expected level of operational stress?”
Redundancy
An organisation without redundancy is unable to cope with the disruption, degradation or loss of function, whether the result of a lack of robustness or other issues. There is a tension between resilience and pure efficiency in that any aviation business redundancy is characterised by spare capacity, in other words to be resilient one cannot expect 100% utilisation of resources, whereas to be efficient, one should. From a safety perspective the most importance question is “does the organisation have any redundancy, and where does that capacity come from?” The last part of the question is key, as if redundancy is achieved by making, for example, the Head of Flight Operations and Flight Safety Manager fly the line, then there may be a loss of capability elsewhere and an associated latent safety risk.
Resourcefulness
The capacity to identify problems and mobilise resources once again requires spare capacity, and the solution highlights the tension between pure efficiency and resilience. The questions here are “do the management have the capacity to observe and identify problems?” And “are there rapidly deployable resources and funds capable of dealing with unforeseen business issues?”
Rapidity
In many ways this is the key capability, as in reality most organisations can reorganise and reallocate resources to meet unforeseen business needs, so each of the previous properties must be measured with a defined level of rapidity. For example, if an organisation is unable to implement change outside its annual budgetary and safety management cycles, then it cannot truly be described as processing rapidity. In this case the key question is “does the organisation have the ability to provide or divert long term financial and operational capacity inside its normal business cycle?”
From a safety risk perspective, the consequences of a lack of resilience can be significant, the diversion of resources in a very lean organisation can only have one effect, to reduce capability in the donor area. If the organisation does not have the processes in place to manage such change it certainly won’t have the capacity to generate them when dealing with unforeseen events. From a business risk perspective, the consequences of having spare resources not earning revenue can be the difference between profit and loss. This is, of course, the classic safety space of production and protection.
So why do we care about resilience?
The simple answer is that the ability to react to unexpected events takes capacity, and if an organisation does not have the resilience to redeploy assets, unforeseen risks can occur and become accidents.
The Walbrook Building 25 Walbrook London, EC4N 8AW
Author
Simon Harlow
Technical Director, Sirius Aviation Limited
Simon.Harlow@siriusav.com
Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 119013.