In view of the recent accidents, Railtrack has announced a new approach to risk management. Christine Seib reports.
In front of any other crowd, the danger of vicious heckling would have been overwhelming. But, in front of a crowd of risk managers who understand better than anyone the risks companies take, Sebastian Bull dared to bring up the Hatfield rail accident.
Railtrack's acting finance director was speaking at the Association of Insurance and Risk Managers' (Airmic) 37th annual dinner on Wednesday. It was unlikely his speech on Railtrack's new approach to risk management would have received anything other than a gracious response, given the understated luxury of the Royal Lancaster Hotel and the decorum of the black-tied crowd. But in front of any other group of train-travellers it would have been electrifying.
A short, or long as the case often is at present, stop on any train platform shows that commuters are still outraged over significant delays, quick-change timetables and compensation confusion due to Railtrack's programme of rail repairs following the incident at Hatfield in October. Four people were killed and 30 injured on the GNER passenger train that was heading from London to Leeds at a speed of 115mph. The disaster is believed to have been caused by a broken rail. It came a year after the collision at Paddington that claimed 31 lives.
Bull said the railway industry had been shaken to the core by the tragic events. "It will be of no comfort to the victims and relatives of those who were involved in these terrible accidents but, statistically, rail travel is still one of the safest forms of transport," he said. "I regret that many of you here tonight will be experiencing a period of significant disruption to what had become an expected level of service. Delays will continue for a little longer but it's vital that the work being undertaken is completed. Regrettably, we cannot guarantee that incidents will not occur in the future, as risk is always present in any transport system. Our job is to ensure that this risk is minimised to the greatest practical extent."
Bull said insurance was as much about risk acceptance as risk avoidance. "It goes without saying that we at Railtrack certainly appreciate the value of our insurance programme," he said.
He said Railtrack was not willing to take all responsibility for the two disasters and could not resist a snipe at the media's coverage of its performance.
"The media reaction to the terrible accidents, and towards Railtrack, was extreme," Bull said. "However, the scenario could have been even worse, if the industry and its insurers had prevaricated in the response to the incident."
He said the railway industry's response to third-party claimants, through the Claims Allocaiton and Handling Agreement regime (CAHA), had been very effective.
He said Railtrack had successfully applied the basic principles of good risk management by maximising the opportunities from considered risk taking, while controlling the downside. But Bull also said Railtrack had since made changes to improve its performance. "Most notable has been the adoption of a much more structured approach to the whole question of risk control and the assurance that is required by the investment community and the general public," he said.
Railtrack has conducted a thorough risk analysis, starting with its core goals and has ranked the risks that could impact on these core goals in order of importance, Bull said. This led to the formation of the Risk Review Group, which has agreed a managable number of key risks that have been accepted by the Railtrack board as significant. Now, Bull said, it was a matter of embedding an ongoing risk management culture into Railtrack's day-to-day business.
In finishing, he said, not surprisingly, that Railtrack would be glad to see the end of the year 2000. "In many respects, Railtrack and the railway industry will be glad to put it behind us," he said. "We're determined that the lessons learned will contribute to a safer, bigger and better railway."
Airmic chairman Alan Fleming was well qualified to follow Bull onto the stage; he is head of insurance and risk management at Railtrack.
He also praised CAHA and said other organisations could learn from Railtrack's handling of claims following the crashes. "[CAHA] allowed the industry and its insurers to get on with the job of dealing with the claimants in a swift and reasonable way without incurring horrendous lawyers fees," Fleming said. "I believe that a similar claims protocol where, by prior agreement, the insurance industry, in the early stages of a disaster, rallies round a lead party who deals with the aftermath without prejudice to liability could greatly benefit other commercial sectors and industries."
And he also had a dig at the media, which enhanced the impression that Railtrack felt it was being unfairly picked on. "I've been fortunate in my career to work with some very reputable organisations," he said. "I therefore have a fair basis of comparison of management standards in other organisations and, contrary to the impression which seems to have been generated by the media, there are some enormously talented and capable managers in senior positions both on the technical and the commercial side of the Railtrack organisation."
Finally, he said Airmic and the Association of Local Authority Risk Managers were working on a UK risk management standard, which could be adopted internationally. The standard should be available next year.
