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Mar 19, 2015

Did the Titanic Follow ISO 31000 Risk Management Guidelines?

President, E3

ISO 31000 (Risk Management) and its supporting publications encompass an impressive and useful "to-do" list of risk management guidelines to create and protect the value of an organization. However, if an organization selectively pursues some of the ISO guidelines and ignore others, highly undesirable events and tragedies can occur.  This is what happened with the Titanic.

ISO 31000, section 4.2, suggests we align risk management efforts to our objectives. White Star Lines, the Titanic builders, fulfilled this requirement. Their objectives were to create a luxury liner at the lowest costs, in the least amount of time, and maybe even break the speed record for an Atlantic crossing. These were admirable goals but they ultimately led to tragedy. The Titanic also followed ISO 31000, Section 5.5.1.b., by "taking or increasing the risk in order to pursue an opportunity." They did so because they believed their risks were not extraordinary and could be controlled.   This is a common judgment error.

The Pursuit of Opportunities Sank the Titanic, Not an Iceberg
The individual risk opportunities that Titanic pursued were not terribly unusual, but collectively, they created an unforgiving perfect storm fueled by three main linked cascading risks:
  • Ship design shortcomings influenced by cost cutting efforts
  • Rivet material  quality flaws
  • Vessel operation and evacuation mistakes.

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ISO 31000 Warns of Cascading and Cumulative Effects
ISO 31000, Section 5.4.2, warns us that "Risk identification should include examination of the knock-on effects of particular consequences, including cascade and cumulative effects." Although ISO lists thirty-one potential risk assessment tools to support risk assessment efforts, their warning about cascading cumulative risks is stronger than their suggestions of how to address these specific challenges.  

The World Economic Forum Warns of Cascading Risks
The World Economic Forum, in its 2014 Annual Global Risk Report, highlights cascading and interconnected risks many times as a serious threat. They also stated the need for better efforts to deal with such threats by supplementing traditional risk management tools with new concepts, methods and tools.

What Are Cascading Risks?
Cascades can be either beneficial, neutral or destructive. We define Cascading Risks as a series of interacting risks that emanate from Leadership (Aces) through the work culture (Kings) and work processes (Queens) that create bad performances (Jacks) and negative feedback loops (Jokers) back to leadership. Leaders then either apply learning's in creative ways or ignore the cascade signals, which can lead to failure and disasters. Detailed Cascading Risk Analysis can aid in minimizing such risks.



Cascade #1 That Threatened the Titanic: Inadequate Design
Titanic’s design was not unsinkable as was widely publicized at the time. It had many so-called “watertight compartments” but they were open at the top, like an ice cube tray. It had far too few lifeboats, a result of cost cutting efforts during the design phase. It had a double bottom but it did not extend up to the waterline, which would have provided protection against a side-swiping iceberg. This was a design flaw that was quickly corrected on Titanic's sister-ship, Britannic, which was still under construction at the time of Titanic's sinking.

Titanic's builders claimed that it was constructed considerably in excess of the Lloyds registry safety requirements. Therefore they never saw the need to seek Lloyd’s registry approval. However, Lloyds disputed that claim publically after Titanic sank and made a statement that the Titanic did not meet their safety requirements.

Cascade #2 That Threatened the Titanic: Bad Quality Rivets
Titanic required 3 million rivets to hold her together. Archives tell us at that time there was a shortage of riveters and the necessary materials to create high quality wrought iron rivets. White Star’s competitors converted to 100% steel rivets, which were much stronger than wrought iron rivets.

Titanic used steel rivets in the straight hull section but not in the front hull sections, the area impacted by the iceberg. Wrought iron rivets were easier to rivet by hand than steel rivets in those sections.  Recovery of Titanic's wreck from the sea floor confirmed the low quality and brittleness of the rivets in the impact areas. Higher quality rivets would have kept Titanic afloat longer which would have saved more passengers.

The Final Cascade #3 That Sank the Titanic: Vessel Operation and Evacuation Errors
Titanic was cruising near top speed, which was very risky on a moonless night with no waves through an area with active iceberg warnings.  Just hours before the disaster, a Lifeboat drill was cancelled by the Captain for no apparent reason. It was suspected that they were attempting to break a cross-Atlantic speed record. That recklessness and the collision with an iceberg sealed Titanic’s fate.   Her brittle rivets in the impact area popped off and allowed water to rush in the hull at a very high rate.  The Titanic sank in less than 3 hours. 1,502 people perished after a disorganized evacuation event filled the far too few lifeboats to just 61% of their total capacity.

Conclusion
Although ISO 31000 attempts to protect us from ourselves and the outside world, we cannot be selective in what we implement. We need to follow all of the guidelines and even test areas that we believe are safe. We must also heed ISO's challenge to examine cascading and cumulative effects. Effective Risk Based Thinking must include Cascade Effect Thinking.  Over the last 11 years I have developed patent pending Cascading Risk Management (CRM) techniques and tools that can further contribute to this effort of identifying and mitigating cascading and cumulative effect risks.


David Patrishkoff is President of E3 - Extreme Enterprise Efficiency® and the Founder of The Institute for Cascade Effect Research®. He is a Lean Six Sigma Master Black Belt and the inventor of a Cascading Risk Management Methodology (CRM), which has Patent Pending status. CRM can enable an organization to successfully achieve ISO 31000 Risk Management compliance. CRM has many practical, analytical and gamified techniques that solicit rigorous stakeholder inputs to help an organization build a common vision, strategy and action plan for successful Enterprise Risk Management implementations. David has helped clients from 60+ different industries, worldwide, to solve their most serious strategic, profitability and risk issues that their own experts could not solve. Prior to starting his consultancy in 2001, David held various worldwide senior executive positions in the automotive and trucking industry.

Author email: davepatrishkoff@eeefficiency.com





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