Risk Management & Negligence - Due Diligence Essentials for Engineers

In this first episode of Season 5 of Risk! Engineers Talk Governance, due diligence engineers Richard Robinson and Gaye Francis provide an overview of their new booklet "Risk Management and Negligence - Due Diligence Essentials for Engineers". 

They discuss the importance of engineers to understand their responsibilities around risk management and due diligence, and the need to communicate this effectively to senior decision-makers. 

The booklet covers:

• You can’t always be right but you can be diligent
• What it means to be an engineer today
• The risk management swamp
• Methods to drain the swamp
• Due diligence domains

They also discuss this season’s theme of difficult conversations engineers need to have and their plans for an in-person event to further discuss this topic.

For further information on Richard and Gaye’s consulting work with R2A, head to https://www.r2a.com.au.

To purchase the new booklet, head to https://www.r2a.com.au/store/p/due-diligence-essentials-engineers-booklet

All other books are available at https://www.r2a.com.au/store

Gaye is also founder of women’s safety workwear company Apto PPE if you’d like to check out the garments at https://www.aptoppe.com.au

Transcript

Megan (Producer) (00:01):

Welcome to Risk! Engineers Talk Governance. In this first episode of Season 5, due diligence engineers, Richard Robinson and Gaye Francis provide an overview of their new booklet, "Risk Management and Negligence - Due Diligence Essentials For Engineers".

(00:20):

This and all books they mentioned are available on the R2A website via their online store (www.r2a.com.au/store). The direct link is in the podcast description.

(00:30):

If you'd like more information on R2A's work or have any feedback or topic ideas, please head to the website www.r2a.com.au.

Gaye Francis (00:42):

Hi Richard, welcome to a new season of R2A podcasts.

Richard Robinson (00:47):

Yes, and considering how many people and how fast they respond to our podcasts, welcome again, Gaye.

Gaye Francis (00:52):

Season five. (This season) we're going to do a little bit differently, aren't we? We're going to talk about, or hopefully talk about some things that some of the difficult discussions around risk and due diligence. Discussions that we think people need to have but aren't necessarily happening. But in this first session today, we're just going to talk about... We've had a very busy January and we have updated all of our textbooks and our booklets and also written a new booklet, which is very, very exciting. And this one in particular is aimed at engineers.

Richard Robinson (01:26):

That's correct. And what we thought we might do is just take you through the generic contents of it, just so you understand the points we're trying to make. And then touch on a couple of the things whilst we do it, because to sum up all this, we kind of get the feeling there's become a disconnect between engineers who seem to be increasingly working in silos and the senior decision makers, the directors, and the responsibilities that they have. And we are sort of doing some other work for other regulators and things like that. And that's become particularly apparent and some of the things that we were doing.

Gaye Francis (01:55):

I think it's also shown that we thought that everybody was on track and not on the same wavelength and the same page with these things, but there seems to be a step back or gone backwards a little bit in some of the management of safety and how it's communicated throughout organisations.

Richard Robinson (02:15):

Well, that's right. I mean, part of that was sort of because we were giving a course to Engineers Australia internally on engineers becoming chartered members.

Gaye Francis (02:24):

For the assessors.

Richard Robinson (02:25):

For the assessors. And one of the things that they expressed surprise about was how few engineers actually were aware of significance of the WHS legislation and why it was so important that engineers get it right. And from the point of view of their organisation why it was essential that everybody understood. I mean, we find it strange because due diligence for directors being able to pay your bills when they fall due is absolutely everything all directors focus on when you have to sign your ASIC reports every year to say that that's the case. And so all directors are particularly focused on it. And that same responsibility now applies to directors with regards to health and safety, which we think is entirely irrational.

Gaye Francis (03:03):

And so you would've expected that message to be propagated down.

Richard Robinson (03:06):

Through organisation, but that's not what seems to be happening.

Gaye Francis (03:09):

Correct.

Richard Robinson (03:10):

And we find that very confusing and that's one of the reasons why we felt this new book that was so important.

Gaye Francis (03:14):

I also think that there's a lot of emphasis put on a lot of organisations. We've talked about this in our other podcast as well as they have a health and safety department or our OHS department, and really they're only internal advisors. They are not responsible. As we said many, many times, safety is the responsibility of line management.

Richard Robinson (03:33):

And risk management is a line management function. And that has always been the case. That has never not been the case. I think that's something that's always mystified me as everyone keeps passing it out to somebody else

Gaye Francis (03:43):

And saying, by having this dedicated department to that, they're going to manage all of it. Now really all that they're doing is facilitating some of the processes that happen when some of those due diligence processes.

Richard Robinson (03:55):

And the line manager still has to make the decision or the directors depending on what the substance of the decision is.

Gaye Francis (04:00):

Correct, correct.

(04:01):

We thought we'd go through the contents (of the new booklet) anyway.

Richard Robinson (04:04):

Well, are you able to summarise the names of all these books now? Because I've forgotten? Well, not forgotten, but it'll come back to me when you've described it to me.

Gaye Francis (04:13):

I love being Richard's corporate memory sometimes. But anyway, the test! No change to the name of our big R2A text, which is based on everything. So it's "Engineering Due Diligence Concepts - Application, Tools and Techniques". Our Criminal Manslaughter one has remained unchanged, "Criminal Manslaughter - How Not To Do It (A practical guide for directors)". We did change the Project Governance booklet to "How to Prevent Catastrophic Showstoppers for Projects". And that was really about changing the language a little bit to say it's really those black swan events that we're trying to do those high consequence, low likelihood ones.

Richard Robinson (04:57):

And that's aimed at directors too.

Gaye Francis (04:58):

That's correct. That's aimed at directors. And then our last one...

Richard Robinson (05:03):

Which we spoke about last year (Season 4, Episode 5).

Gaye Francis (05:05):

We did, but it's had a little bit of a tweak and a name change. It's called "Risk Management and Negligence - Due Diligence Essentials for Engineers".

Richard Robinson (05:14):

That's correct. And to just give you the flavour of the contents, because this is part of this frustration we've got that engineers are being pushed into silos and they're not consciously thinking about what they need to do to provide information to the senior decision makers so they can satisfy the senior decision makers, the director's due diligence obligations for health safety and so forth. And we just found this particularly frustrating.

(05:37):

We don't understand why that's happened because we thought one of the consequences WHS legislation generally was that technical directors would appear. And I certainly remember that's a while ago. Now I can remember my youth, the heads of two of the Australian banks were both engineers. The fact that engineers have just been pushed out of all these senior decision making positions and it's all sort of gone to accountants and lawyers still, we simply don't get it when you live in advanced technological society when horrible things can happen.

(06:04):

Anyway, this (book's) now focused at engineers and in a sense, it's trying to get the engineers out of the silo, I suppose, and make sure they're thinking about how their information should be presented to the senior decision makers in a competent way. So Chapter 1 is...

Gaye Francis (06:18):

Be diligent. You can't always be right.

Richard Robinson (06:21):

And that's the point. I think a lot of engineers, I mean we had to do a lot of this expert witness stuff. When something bad happens, the engineers say, oh, it's all my fault. I should have got it right. And we said, no, no, no, no, no, no, no. What you needed to have done was demonstrated diligence. You cannot always be right. That's not possible. You have to be responsible for your own negligence. That's why you buy insurance. And if you're an employed engineer, why your employer buys insurance so that any harm that does happen, you could do the best you can to rectify it, but you can't always be right. You go through a process that demonstrates diligence for the matter that you're dealing with and the organisation has to sign off at it. That's just the way it works. You can't always be right.

Gaye Francis (07:00):

And I think that was one of the things, key takeaways I recently gave presentation mid last year, and one of the directors came up to me and she said, the thing I got out of your presentation was about process. Good governance and process.

Richard Robinson (07:13):

Correct.

Gaye Francis (07:14):

And if you do that, then you will be diligent.

Richard Robinson (07:18):

The core of that chapter is all about design. Get it right. Don't try to fix it afterwards. It's just wasting time, energy, and effort. You really are.

Gaye Francis (07:27):

I think the other key thing out of that is criticality not risk. It's about the critical things. Those high consequence, low likelihood things, which we've talked about in many, many, many of our sessions.

(07:39):

Chapter 2 or second section is: Being an engineer and what does that actually mean these days? There's a whole lot of constraints around you and know what you're good at, but also the environment and the context in which you work will have all of these constraints around you.

Richard Robinson (07:57):

But it's got a lot to do with engineering education again, because engineering education has always been focused on science and applied science. And so you were taught to be competent in how to solve and the gas equation or whatever it is, the issues that you're concerned about and how to design structure and so forth. But they never told you much about the context in which you found yourself. And I have always assumed that one of the purposes once upon a time was it was Corporate Membership. Now it's Chartered Engineer Status. But the reason for imposing that was that merely passing an engineering course and being competent in the science and knowing how to pass the exam didn't actually mean you were competent to design anything. And nor to put it in the context of what would happen if it went wrong and why you have to get it right.

(08:40):

And that's the due diligence part and the legal context part, all that sort of stuff. And most engineers, they learn about that. Well, probably the first two or three years if they've been chucked in the deep end and then they start going, I need to know a bit more about this and what do I have to do to get there? And that's the sort of stuff that we always thought Engineers Australia was going to focus on. But judging from the remarks of the Chartered Assessors, it perhaps hasn't been successful as it ought to have been.

Gaye Francis (09:09):

I think I've shared this story in another podcast, but as a young engineer many, many years ago, one of the things that Richard taught me first was it doesn't matter how technically brilliant or correct you are in your solution, if you don't get your politics right, you'll never get it over the line. And that's that communication aspect and understanding the solution that you're putting forward and the context in which you make that.

Richard Robinson (09:33):

Well, it actually goes a bit further than that because if you do want to prosper and you're in a large technological organisation and you've put forward a technical solution which doesn't satisfy your WHS legislation, you'll come a cropper for the first place. But conversely, if you get it right and you positively demonstrate due diligence in a way that the senior decision makers can rapidly sign off on, you are worth your weight in gold. You solve so much time and organisational frustration, you just simplify things instantly.

Gaye Francis (09:59):

And it results in action being undertaken.

Richard Robinson (10:01):

Correct. And being an engineer if you do this work and nothing happens... I mean the satisfying jobs for us, the ones where we know the result is that people went off and did things.

Gaye Francis (10:12):

Oh, and it made a difference. And you could see that it made a difference in the organisation.

Richard Robinson (10:16):

If it's just a matter of spinning the wheels. We don't want to work for those people again, do we?

Gaye Francis (10:20):

No. And we typically don't.

Richard Robinson (10:22):

We typically don't.

Gaye Francis (10:23):

So Chapter 3: The risk management swamp. You can see that Richard's had a little way with his words here!

Richard Robinson (10:32):

Well, this is the frustration engineers are having from their point of view. I mean, that's Sydney Decker, the psychologist from Queensland Uni, airline pilot turned psychologist. Now here's the line about there are so many safety rules out there that nobody really knows what they are, least of the people doing the job, which is blatantly absurd. So you've actually got to do things in a way which make common sense, that you're going to need to have a philosophy and an understanding and a reason behind it. And let's just try to remember the rules. It's not possible. Know all the rules. Now, it actually isn't possible. You have to understand the principles so that when you go and test for the rules, you realise: Ah, we got it right the first time.

Gaye Francis (11:05):

So that chapter goes through some of the difficulties I guess engineers have with the risk management domain and some of the theories and some of the ideas in that area.

Richard Robinson (11:18):

Particularly the tolerable acceptable risk argument, which has still become very popular with engineers and you can't do it anymore.

Gaye Francis (11:24):

I actually think that it's risen again. It sort of went quiet for a while and I think it's back with a vengeance. But anyway...That might be a whole other podcast.

Richard Robinson (11:34):

We could say too much there without too much trouble.

Gaye Francis (11:36):

And then Chapter 4 has to be: Methods to drain the swamp. So this one just goes through a whole lot of different methods to be able to do that. And I think we always say in our courses, in our books, in our consulting gigs, it's not one size fits all. There's a whole lot of different ways that you can go about doing this, and you've got to pick the one that is right.

Richard Robinson (11:57):

That solves that problem.

Gaye Francis (11:58):

Correct. Due diligence by design. How do you actually go about it?

Richard Robinson (12:04):

Well, that's the point. I mean, in the earlier chapter, being an engineer, we sort of make the point about the alliance of lawyers and engineers, and we've spoken about this number of times, David Howarth, the professor of Law of Public Policy, saying how the lawyers are actually copying the engineers. Because basically what happens with engineers, there is a problem or somebody wants to do something, what are the options and in the circumstances, which is the right option and why is it the right option? That's called doing due diligence. It doesn't matter if it's a commercial decision or it's a design decision, you go through the same process or it's a legal problem. And we don't understand quite why that's somehow gone missing again. Design by standards is usually indefensible because there's something that always goes beyond the standard.

Gaye Francis (12:49):

And I think a lot of organisations, this is the Standard, you design to that. But yeah, it's not getting the answers...

Richard Robinson (12:56):

Doesn't normally demonstrate due diligence.

Gaye Francis (12:58):

Correct. And then our last chapter in the book is: Due diligence domain. So it sort of goes through some safety, project, enterprise, environmental, and that sort of thing. So it's really the application of the due diligence process to a whole lot of different domains and the way that we've seen it work within industry.

(13:19):

So we're looking forward to this season of podcasts and having some of those difficult discussions. We'd really love to hear from you if you've got any big, big picture questions that you'd answered or Richard and I to have a chat about.

Richard Robinson (13:32):

The other thing that we're just a talking about was the idea that we might want to have some kind of, I dunno, it's not a conference? What actually is it?

Gaye Francis (13:40):

Yeah, let's call it a conference or a gathering for now.

Richard Robinson (13:43):

A gathering, yes. That's a term my son uses and I'm never quite sure what it means. But basically we think that the system and the engineers are missing the point to some extent, and we want to concentrate. And that's what you want the season to be about, those points that have been missed. So some of those points might be sore points in some places because we're basically criticising Standards Australia and the fact that Engineers Australia keeps encouraging all their engineers to give all this IP to standards. None of the American societies do that. If you're the Society of Fire Engineers in the USA, which I'm a member, you hang on to your IP. You sell your handbook, you do not give it to a third party free, and you do not volunteer your members' time.

Gaye Francis (14:26):

Yeah.

Richard Robinson (14:27):

Association of Mechanical Engineers don't do it. Civil Engineers. They just don't do it.

Gaye Francis (14:32):

I think there's the discussion about ALARP and SFAIRP, target levels of risk of safety, and the changed meaning of things that it seems to be happening in industry, but the methodology that it's used to show those particular concepts has not changed. So we want to have some of those discussions this year and we are thinking that maybe it's a bit more than a roundtable. It'll be sort of a conference or a one day seminar session and have some invited guests and speakers to that and see whether there's any interest.

(15:09):

So thank you for joining us today for our...

Richard Robinson (15:15):

I hope you enjoyed it too. Yes.

Gaye Francis (15:16):

I hope you enjoyed it too. For our first podcast for Season 5, and we hope you join us next time. Thanks, Richard.

Richard Robinson (15:23):

Thanks Gaye.