About this Post
There are two main points to take away from this post.
- It is best to look at risks in your business in terms of causal pathways. Causal pathways are most easy to understand when viewed in a modified bow tie, and
- Language is important. Consistent use of the terms and elements in modified bow ties applied to Operational Risk Management is critical to achieving risk minimisation,
It is possible, using a modified bow tie (MBT) diagram, to improve your identification of Causal Pathways. A Causal Pathway is the flow of events from Root Cause to loss sustained (Outcome).
Causal pathways are identified by understanding the risk framework in which a business operates. The Operational Risk Mentoring (ORM) team have found that using modified bow ties – based on pre-work can quickly summarise the:
- Causes – which are stopped from progressing by –
- Preventative Controls – which can fail and lead to –
- Incidents – which are reduced in severity by –
- Mitigating Controls acting as layers of protection which lead to –
- Outcomes form these Pathways.
A business with a concise library of bow ties for each main incident type has a solid foundation for providing all personnel – particularly tactical and strategic decision makers (supervisors & senior managers) – with good information to use. The approach that the author has found most effective is to use a modified – rather than traditional Bow Tie analyses. Operational Personnel and Decision Makers are expected to implement controls as part of performing their tasks. The modified bow tie view confirms the nature and type of control to have in place and helps everyone in the business understand WHY a control is in place. Knowing the “why” can greatly improve commitment to diligently implementing the requirements of controls.
Bow Ties – Current / Traditional vs Modified
To set the scene it is worth understanding a bit more about bow ties when applied to Operational Risk.
Bow tie shaped – with multiple “dimensions” of losses from each central node.
The central node of the bow tie is a “Hazardous Event”. A situation which will lead to an unwanted outcome for the business.
Figure 1 – Current Bow Tie View (after Rausand 2011)
Triggers to a hazardous event.
Each Hazardous event is described as arising from one or more triggers. These triggers are typically developed by a team of personnel guided by a site based or external facilitator. This normally leads to the triggers being described in detail and applied to the specific situation being analysed. This has a vice – in the fact that a large library of bow ties typically get developed for a business – and there is little consistency in the language used to describe the triggers, hazardous events, or final consequences. With so many terms applied it is not possible for infrequent users (the Tactical and Strategic Decision Makers in the business) to easily understand what is written, and so expected of them to control Operational Risks.
Hazardous events lead to consequences.
Once preventative (proactive) barriers (controls) fail or are defeated – the hazardous event will progress to one or more of a number of consequences. Mitigation (reactive) controls are described for each consequence.
Many consequences connected to one Event.
It is common in bow ties that there is a consistent “shape” with 10 or more Triggers on the left and a similar number of Consequences on the right.
Multiple dimensions of consequence shown for each Hazardous Event.
Consequences in a bow tie are normally multi-dimensional. In this case each dimension fits into a logical type of loss. So a Vehicle incident for example will have – Safety (acute injury); Health (chronic ongoing pain); Reputation (negative media); Environmental (hydro carbon or carried goods spills), and; Business (financial losses) Consequences shown on a single bow tie.
A Modified Bow Tie (MBT) Approach
Peter Standish, the founder of ORM, has worked with a range of businesses to develop a modified approach to developing Bow Ties – that builds on the strengths of the traditional approach (clear visualisation of which controls are Preventative or Mitigating ) but which simplifies the view to more clearly describe Causal pathways.
Causal pathways run from a root cause through failing Preventative Controls to an Incident (the point where control is lost or a Hazardous Event occurs). After the Incident has occurred the flow of the causal pathway proceeds to Mitigating Controls arranged in layers of protection.
The success or failure of each layer of protection changes the severity of the outcome. First layer – Reactive Controls – guide the causal pathway to a low consequence Outcome. Second layer – Recovery Controls – reduce the severity but still lead to a significant loss type Outcome. The failure of all layers leads to a worst case Outcome from the incident.
Taking this approach does make the bow tie view look much less like a bow tie – with typically many more root causes than outcomes (so the diagrams are taller on the left than the right).
Causes which initiate a flow of events towards an unwanted outcome are shown on the left of the diagram.
Causes of harm can be identified through historic data reviews and by prospective loss analysis. The ORM team recommend applying business models to the analysis – particularly the Nertney business model which collects causes into one of four dimensions:
- Human Error (People related);
- Equipment (Plant related);
- Controlled Work Environment – Organisational – relating to the general arrangements of work, application of resources, communication and provision of management, and;
- Controlled Work Environment – Physical – which applies to causes arising from the location and general setting of the business
Figure – Nertney Wheel of Safe Production.
Based on a review of over 5,000 serious and fatal incidents ORM have compiled a set of generic root causes aligned with the Nertney wheel of Operational Readiness / Safe Production. There are some 120 generic root causes – which then after detailed analysis on a site lead to <200 root causes for even large, complex businesses.
Another advantage of using a business model (such as the Nertney Wheel) is that it helps guide the selection and implementation of controls – which typically vary according to the nature of the Cause being constrained.
Research on incidents has also found that there is a finite number of causes that face a business – with the potential to generate up to 200 unique causes for each business. Having this finite number of causes means that there are 200 unique ways of starting off down a causal pathway – which is a quantum that is much more manageable and easier to understand than the typical business risk register with over 1,000 risks identified.
From these Causes, Incidents can arise. There is a good maxim to follow …
Select a relatively small number (typically about 15 to 20) incident types for the business.
Think of the Newspaper test (after Warren Buffet and Bill Gates) – modified to state – “What will the headline be if something goes wrong in your business?”. Each headline should form the basis of a Modified Bow Tie for your business. As an example – rather than having bow ties for all the various types and locations of fire – the business has one Modified Bow Tie for Fire – that covers causal pathways for all the various locations and flammable materials. Tactical decisions on what fire controls to apply in a certain location / circumstance are drawn from the modified bow tie by Supervisors and Personnel who are trained and monitored.
A typical set of Modified Bow Ties for a manufacturing facility will then be:
- Environmental Harm;
- Exposure to Machine Energy;
- Mobile Equipment Interactions;
- Fire and Explosion;
- Hazardous / Dangerous Goods Exposure;
- Working at Height;
- Load Movement (Lifting and Cranage);
- Electric Shock;
- Confined Space Entry;
- Structural Collapse;
- Business Loss – Productivity;
- Business Loss – Increased Cost;
- Overloading of Human Systems (chronic injuries, noise or health effects), and;
- Off site impacts (non environmental)
Benefits of Taking a Modified Bow Tie (MBT) Approach.
There is a key requirement for taking the MBT approach – and that is to achieve strict use of language (terms and descriptions) related to Operational Risk Management. This is important – as it improves understanding and avoids confusion. This is key for personnel who visit the MBTs infrequently and need to clearly understand what is being expressed and required to achieve control.
To expand on the brief summary earlier:
- Cause – the basis point at which a causal pathway is initiated and it relates to Human Error, Equipment Fault, Organisational Arrangements or Physical aspects of the Controlled Work Environment;
- Preventative Control – a planned intervention (such as selection of plant (equipment) conforming to nominated standards) by the business to interrupt causal pathways and avoid incidents;
- Incident – the point at which control is lost in a causal pathway and something unwanted will occur;
- Mitigating Control – a planned or natural intervention (such as low population densities) in a causal pathway that guides towards a less serious loss. Mitigating controls are grouped according to the manner in which they act – Reactive (providing the first layer of protection and leading to the least serious outcome) or Recovering – taking a an impending worst case scenario and making it less serious, leading to an;
- Outcome – the end point of a causal pathway. Each outcome can be stated as a risk – as it will have a frequency (likelihood) and consequence value connected with it. There will be a number of identically “dimensioned” outcomes for each Incident – with varying levels of consequence connected with them.
An example of a Modified Bow Tie is shown below (in a simplified form) where basic causes (with a prefix code to describe the system element to which they apply) are contained by Preventative Controls. Any loss of control causes an incident, whose Outcome is limited by the Mitigating Controls.
Figure – Sample Modified Bow Tie
Subsequent posts will explore Modified Bow Ties in more detail – and give more examples of root Cause analysis and the application of business models to control selection as part of describing how Causal Pathways are developed.