CAE Flightscape User’s Conference The Business Value of Safety October 2, 2012

THE VALUE OF SAFETY Macro Tactical Sales Stock Price Right-to-Operate Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings

THE VALUE OF SAFETY Macro Tactical Sales Stock Price Right-to-Operate Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings

THE VALUE OF SAFETY Macro Tactical Sales Stock Price Right-to-Operate Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings

THE VALUE OF SAFETY Macro Tactical Sales Stock Price Right-to-Operate Market Cap Right-to-Operate Tactical Cost-Benefit Analysis ROI, NPV or DPP… Cumulative Savings

LEARNING OBJECTIVES Can Safety yield cultural gains and financial value? Is SMS the correct roadmap? Sikorsky’s legacy: Does it actually lower risk and earn money? Should this all be considered by our customers and their insurers?

SAFETY CULTURE INDICATORS Chronic unease Safety seen as a profit centre New ideas are welcomed GENERATIVE PROACTIVE Resources are available to fix things before an accident Management is open but still obsessed with statistics Procedures are “owned” by the workforce CALCULATIVE We cracked it! Lots and lots of audits HSE advisers chasing statistics We are serious, but why don’t they do what they’re told? Endless discussions to re-classify accidents Safety is high on the agenda after an accident REACTIVE PATHOLOGICAL The lawyers said it was OK Of course we have accidents, it’s a dangerous business Sack the idiot who had the accident Presentation by Patrick Hudson of Leiden University to Bristow Safety Conference, Lagos Nigeria, Feb 2011

LEADERSHIP Treat every accident as our accident

SMS Basic Principles Leadership Risk Mgmt Assurance People CULTURE COMES FROM REPETITION SMS Basic Principles Leadership Risk Mgmt Assurance People Culture & Value

CULTURE Starts at the top Safety

HIGH RELIABILITY ORGANIZATION

COMPETITIVE EDGE By protecting its employees and remaining dedicated to “doing the right thing”, Sikorsky has reduced its accident rates, workers’ comp costs and carbon footprint to become a company synonymous with strong environmental leadership, safety and environmental responsibility.

We pioneer flight solutions that bring people home everywhere…every time™

And we know it makes business sense…

Sikorsky Aircraft Corporation October 23-24, 2007 BRIDGING FINANCE & SAFETY BUSINESS TALK Finance/Operations Safety Earnings/EPS Accident rates ROI Property loss Payback Insurance premiums PVRR Fines and citations Internal Rate of Return No. of people trained Production rates Exposure Assessments Earnings/employee Near misses ROHSEI Net Present Value Bridges Behavioral Observations Cost Benefit the Gap Audit findings ROHSEI, Washington, DC 15

The ROHSEI Task Force Objectives: October 23-24, 2007 The ROHSEI Task Force Objectives: In 1995, a taskforce of fifteen Fortune 500 companies sponsored the development of a process and supporting tool set to determine the financial value of Safety investments: Build an accepted business tool. Apply an easy to use process. Communicate value of Safety investments. Improve performance by encouraging better decisions. ROHSEI, Washington, DC

Examples of ROHSEI Projects October 23-24, 2007 1. Sprinkler Protection 2. Onsite Primary Healthare 3. Disability (STD/LTD) c Mgmt 4. Disposable Coverall Recycling 5. Soil Remediation 6. HSE Websites 7. Behavior Based Safety Programs 8. Primary Healthcare in Europe 9. Epidemiology Studies and Software 10. PPE vs Engineering Controls 11. Ergonomics Programs (Lower back) 12. Ergonomics Programs (Work Station) 13. Fleet Safety Programs 14. Electronic MSDS Systems 15. PSM 16. Integrated Health and Wellness 17. IH for the FDA 18. FDM 19. EGPWS 20. SMS 21. Sim Training 22. FOQA ROHSEI, Washington, DC

The ROHSEI Navigation Screen Process – Horizontal Tools – Vertical

What the hell do you know about finance?

Fleet Safety Pays Back

ROHSEI Analysis of SMS Develop and document the focus of the opportunity:

Determine assumptions:

Estimate and enter the costs of implementation:

Research/document relative numbers of accidents:

Determine financial cost of an accident:

Hit the calculations button:

Present results to your management:

ROHSEI Analysis of Sim Training

Using Lloyd’s of London estimate of loss per accident…

Similar calculations to before on cost per year.

Same transparency of calculations for the finance geeks.

And an even better payback then just an SMS And an even better payback then just an SMS. Included in this calculation was the cost of a sortie and the profit of each flight which allows a calculation of the savings in terms of additional sorties, the decrease in the cost of each flight ($1028) and the percent saved per flight (20%). Not bad huh?

MY CONCLUSIONS 1. Safety yields value. 2. This value can be calculated. 3. It should be considered by our customers and the insurance industry. 4. We’d love to work with you on this. David Eherts PhD VP and Chief Safety Officer Sikorsky Aircraft Corporation Stratford, CT USA Office: +1 203 386 8666 Cell: +1 203 895 0410 ( GMT – 5 ) email: deherts@sikorsky.com Jill Browning Manager, A&PS - SMCC Sikorsky Aircraft Corporation Horseheads, NY USA Office: +1 607 378 4635 Cell: +1 607 377 9962 ( GMT – 5 ) email: jill.browning@sikorsky.com