Three Reasons Why Firms Won’t Use Leading Indicators To Predict EHS Incidents
In September 2017, two category 5 hurricanes churned from the Atlantic, rampaging across the Caribbean Islands, Central America and the US. Hurricane Harvey caused 77 deaths, resulting in damage estimated at $70 billion. Hurricane Irma followed suit causing 132 deaths and a predicted $63 billion in damages. In light of these natural disasters, how can measuring leading indicators play an important role in safety initiatives?
Traditionally, firms have limited themselves to measuring lagging indicators to report on a past incident, as enforced by EHS regulations. For example, on August 31, 2017, a fire broke out at the Arkema Chemicals plant in Houston, Texas, after nine chemical storage containers caught fire as a result of flooding. Hundreds of people within a 1.5 mile radius were evacuated. As a result, the EPA, under Section 114 of the Clean Air Act, requested for Arkema Chemicals to report on their risk management plan. Industrial accidents of this nature trigger a cascade of incident reports that feed into lagging indicators such as lost time injury frequency rate or compliance violation metrics.
In the case of leading indicators, firms are not legally required to measure these – yet, some forward-looking firms track them. Firms need to realise sooner rather than later, that effective health and safety risk management requires the use of leading indicators. If a construction firm, for example, identifies mobile equipment as a primary fatal risk, root cause analysis can help the firm identify ‘distances between equipment’ as a leading indicator to monitor, and as a result establish control limits for preventative action. Many EHS software vendors have recently enhanced their product to include measurements for predictive analytics. Enviance has increased the breadth of qualitative measurements in their calculation engine for incident management, such as equipment types, facility names, and roles of individuals. Last month, Predictive Solutions launched SmartWork, an incident management software application which allows for risk assessment with predictive insight tools. Whilst most EHS software vendors have business intelligence functionality which enables customers to create leading indicators, Cority, Enablon and Intelex, scored highest on this capability in the 2017 Verdantix Green Quadrant benchmark.
Why aren’t firms already using a wide array of leading indicators? There are three reasons. Firstly, the absence of regulatory pressure to disclose leading indicators means they have to be launched as a project by EHS leaders. Secondly, the algorithms to create leading indicators with strong predictive power have not been established. Thirdly, EHS teams lack the resources to aggregate data and run analytics. Given the barriers to successfully developing leading indicators we anticipate this will be a slow moving trend unless software vendors automate the analysis and EHS decision-makers have confidence in the predictions.