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Rob Kella - Chief Risk Officer

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1 Rob Kella - Chief Risk Officer
Thank you to the sponsors including the Society and the Institute Advantageous to follow several learned speakers - opportunity to update presentation to reflect their “words of wisdom” Emphasise the “journey” concept and that risk solutions need to be tailored to the business, its strategies, culture and management decision-making processes Provide overview of presentation: The business, risk and governance frameworks and Risk and Assurance Supporting case studies - with both a safety management and risk management orientation The Simplicity of Aviation Safety Management Putting Practical Ideas Into Practice - Airline Risk Management Bringing Risk and Assurance Together Rob Kella - Chief Risk Officer

2 The Group - “Sum of the Parts”
Qantas Airlines Qantas Engineering People Jetstar Services (Airports and Catering) Finance & Strategy We’re still a public company - we haven’t been privatised Outline the segmented nature of the Group - a collection of aviation related businesses own their own pathways - some are being re-positioned for future growth, others are experiencing exceptional growth currently Additional businesses on the horizon including: Qantas Holidays Qantas Flight Training Fleetco, etc Development might take these businesses from segmentation, to corporatisation, through a de-merger process to an eventual IPO - no set formula - each business will be separately considered in determining their respective development paths Multiple AOCs in the Group - embedded in Qantas, Jetstar and Qantas Freight Enterprises Loyalty Qantas Freight Enterprises Risk and Assurance

3 Group Governance and Risk Management Model
Operations Strategic Financial Segment Risk and Assurance Personnel Risk and Assurance Risk Review Group Segment Board of Directors Board Safety, Environment and Security Committee Board Audit Committee Safety and Environment Mgmt Committee Executive General Manager “Scope to Reach Across the Group” Segment Risk/Safety Committees Ongoing Management of Safety and Risks Safety and Risk Leadership Committee (Exco) Outline both the Group (strategic direction, monitoring and oversight) and Segment (emphasis on pushing responsibility/accountability for operational risk to the Segments) views Safety and risk concepts aligned on “same page” Point out the linking/enabling position of Risk and Assurance as part of this framework (working with Executive Management, Segment Management and the Board Committees with a focus on risk and safety) Framework built on the Group’s existing risk model of: Strategic risk (owned by the Executive) Financial risk (primarily owned by the CFO) Operations risk (as the cornerstone/foundation of the model, principally owned by the Segments)

4 Aviation Medical Services
Established in March 2006 Logical synergies across Risk and Assurance Aviation and occupational medical services Medical advice (employees and passengers) Environmental compliance and risk management Environmental improvement programs (inclusive of fuel and non-fuel initiatives) Internal compliance and control Corporate governance Occupational safety compliance and risk mgmt People safety improvement program Risk management advice, consulting and reporting Risk and assurance improvement program Aviation safety compliance and risk management Oversight of Group aviation safety standards Security compliance and risk mgmt Group security services Business resilience Risk and Assurance Chief Risk Officer Aviation Medical Services Internal Audit Risk Safety Security Occupational Health and Environment and Fuel Conservation Outline what Risk and Assurance comprises: Technical skills built around the key operational risk areas of safety, security and the environment Capacity and capability to provide both advisory and assurance related services Provision of assurance relating to both specific technical areas as well as on Management’s application of the overall risk management model

5 Why? Increasing complexity of external risk environment
Continuous pressure to change - related impact on the risks of doing business Management demand for more timely risk information Increasing/changing demands from regulators; further compliance requirements Re-alignment of governance models within Group Leveraging safety and risk management expertise across Group

6 Objectives and Supporting Activities
Improve visibility and awareness of risk Sponsor/manage risk and assurance improvement initiatives across business through: Oversighting operations Supporting Segments in complying with regulations and managing regulatory relationships Providing timely risk analysis/reporting/advisory and assurance services

7 Supporting Safety Management - Flight Ops
Board Safety Committee Risk and Assurance Representation Qantas Airlines Safety Committee Management Safety Review Committee (Flight Operations) Escalate Risks & Trends Type Committees (Each Fleet) Common Information Source (AQD) Case Study 1

8 Measuring Safety Management Performance
Input Process Output Outcome Measure overall riskiness of operating environment Measure quality and effectiveness of safety management systems Measure safety activity Measure safety outcomes Case Study 1

9 Measuring Safety Management Performance
Case Study 1

10 Fieldwork and Reporting
Ongoing Transformation Challenge From Decision Support Percentage Effort To Protect/Create Value Value for Money 50 Fieldwork and Reporting 50 2005/06 2008/09 Case Study 2

11 Current Improvement Initiatives
Align/re-engineer R&A activities (risk assessments, investigations, audits, etc) Work with Segments to re-align/re-engineer their related activities Roll out information system strategy Further redesign advisory services by leveraging risk information Utilise integrated risk information to work with regulators (increase awareness of risk management system); minimise potential for unnecessary regulation Case Study 2

12 Integrated Management System - Overall Design
Where? Integrated Management System (Control Framework) Why? KRI Scorecard (Lead/Lag) Review Processes Business Behaviours, Business Processes and Infrastructure Monitoring and Analysis Management Review Level of Detail Escalation Business Performance Data Capture Incidents Risk Assessments Policy/ Regulations Investigations Audits Case Study 2

13 Leveraging SMS Successes
Established SMS Process Elements IMS Process Elements Management review embedded in AOCs Safety performance indicators developed Mature safety information systems (eg, AQD) Safety systems audit and safety investigation methodology and skills Embedded operational risk assessment process Expand scope to other operational areas across Group Migrate to a broader risk control framework Expand to provide interim/prototype solutions (eg, action tracking) Develop common audit and investigation models Integrate with a broader, common risk assessment model Case Study 2

14 Ongoing Success Factors
Continued support/advocacy from the top Organisational positioning Culture that empowers safety and risk ownership Organisation that embraces change Culture that empowers sharing Structured/disciplined processes

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