Key Performance Indicator

Topics: Risk, Risk management, Management Pages: 4 (1439 words) Published: May 21, 2013
The Implementation of Effective Key Performance Indicators for Major Hazard Enterprises Ian Travers, Head of Chemical Industries Strategy Unit, Hazardous Installations Directorate, Health and Safety Executive, UK The UK Health and Safety Executive (HSE) considers that the development and adoption of Key Performance Indicators (KPIs) using both leading and lagging indicators to measure and monitor the effectiveness of major hazard risks is an essential part of an organisation’s management arrangements. These indicators are separate to, and distinct from, measures of personal safety such as lost time incident rates as the focus has to be on major hazard risk. Successful management of major hazard risks and success in business cannot be separated. Effective KPIs should be considered the ‘currency’ of risk management. Decisions made throughout an organisation relating to the management of major hazard risks, and especially decisions made by senior executives, need to be made in the light of sound information on the current status of risk and risk controls within that organisation. KPIs for major hazard risks are necessary because systems of risk control and measures in place to prevent a major accident will deteriorate over time, sometimes without and apparent prior warning. Senior managers tend to have an over-optimistic view of the robustness of the systems and arrangements in place to prevent a major accident and are often unsighted to the erosion and deterioration in those systems. Senior executives can become over reliant on technical experts and do not always know how and where to challenge what they are being told. Within some organisations, people tend to be rewarded only for reporting ‘good news’ on performance and are often praised and rewarded for finding ‘work arounds’ for problems and difficulties that may actually compromise safe operations but against which they may not be competent to judge their actions. HSE’s experience of the barriers that prevent...
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