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MONTE CARLO, Monaco — Catastrophic fatal incidents in Formula One racing highlight the importance of corporate memory in driving continued engagement and focus on risk management.
“There can be no bigger objective when it comes to risk management than saving lives,” racing sector risk management adviser Mark Gallagher, Aynho, England-based CEO of Performance Insights Ltd., said during the opening keynote of the Federation of European Risk Management Association Forum 2017 conference Monday in Monte Carlo, Monaco.
Formula One experienced more than 40 driver fatalities between 1950 and 1994, and Mr. Gallagher recounted the deaths of four: Peter Collins in 1958, Jochen Rindt in 1968, Francois Cevert in 1973 and Tom Pryce in 1975.
“I’ve experienced personally the catastrophic outcomes we’ve had to withstand within our business,” Mr. Gallagher said. “I think it’s very important that we recognize developing a corporate memory around risk — and in our case, safety management — is so critical because as generations of employees turn over … the one thing that remains is the industry itself. That means we always need to be able to answer the question why do we do the things we do, why do we have the approach to the management of risk, why has it become so important.”
But Formula One’s approach to risk management didn’t really change until the death of three-time F1 champion Ayrton Senna at the San Marino Grand Prix in Imola, Italy, in May 1994, in which his car hit a concrete retaining wall a day after Mr. Gallagher’s friend, Austrian driver Roland Ratzenberger, died in a qualifying event after hitting a concrete wall.
“Why did that change things so much?” Mr. Gallagher said. “When Peter Collins and Jochen Rindt lost their lives, they did not lose their lives on live television being broadcast to hundreds of millions of people all over the world. This was very public. We really had to accept that we had gone from a situation where catastrophic incidents could be buried or at least weren’t in the public domain to something that was now as public as possible.”
The other contributing factor was that Mr. Senna drove for Williams Grand Prix Engineering Ltd., with several employees who were facing manslaughter charges acquitted, but one employee being determined responsible by an Italian court for design defects.
“It took 13 years to come to a conclusion,” Mr. Gallagher said. “Then you think about the human costs — losing someone you had worked with for so long. Then the financial implications of having major corporate customers question, ‘Do we need to do business in a sport that has people losing their lives on television?’ The effects of the Senna accident went on and on. The reputational damage to the Williams team, which prided itself on high-quality engineering and yet found itself in a court in Italy being blamed for failure of engineering, engineering process, quality of systems and process safety. If there was a silver lining to the cloud around the Senna accident, it was the fact that we had also entered a new era in terms of our understanding of these incidents because we had data.”
“The other thing that really changed is that we had the leadership who took the objective of better risk management, who took the objective of driving fatal incidents to zero, that became the new objective and they put their support behind it,” he added. “Now, I’m not going to say that the leadership of Formula One did not take safety seriously before that, but it’s one thing to take it seriously. It’s quite another thing to put it at the center of your strategy for your whole industry.”
This entailed empowering employees to focus on safety, including redesigning the Formula One race tracks, setting standards for crash testing and halting a race when necessary to avoid or mitigate safety risks.
These measures contributed to a 20-year streak of no fatal incidents until October 2014, when Jules Bianchi suffered a catastrophic collision with a crane at the Japanese Grand Prix and remained in a coma until he died nine months later. The race was allowed to happen despite extremely bad weather conditions and poor visibility amid commercial pressures related to television networks waiting to broadcast the race.
“Complacency is the thing we all have to be most afraid of,” he said.
PHILADELPHIA — Lesson No. 1: There is no typical day in the life of a risk manager.