Salz Review - Wall Street Journal

Salz Review
An Independent Review of Barclays’ Business Practices
198
Appendix D – Business Practices: Lessons from
other Industries
Culture and values are important drivers of appropriate business practices, as are
governance arrangements. However, other factors also play a role. These include legal and
regulatory obligations, the economic and competitive environment, and the expectations
expressed by key stakeholders such as shareholders and also by the media.
Appropriate business practices are always important, but disproportionately so in high-risk
industries – where key business concerns transcend profitability, growth and competitive
advantage. Personal safety or the prevention of catastrophic property or financial loss are
paramount. Clearly, these risks differ, so care is needed in seeking to make comparisons.
However, as a high-risk industry, the banking industry can draw some lessons from how
other high-risk industries explicitly shape their business practices.
In the chemical industry, employees’ personal safety is paramount. One company which
has effectively managed this risk is DuPont. 303 DuPont has refined its own safety
methodology over 200 years of experience and has advised over a thousand clients
worldwide on their own safety management. 304 DuPont found that the level of leadership
focus and operational discipline around safe practices are leading indicators for near misses
and accidents. They set ‘zero targets’ for accidents and fostered a culture of individual
responsibility and prevention rather than reaction. DuPont’s total recordable injury rate
averaged 0.67 recordable cases per 100 full-time workers in the US from 2008 and 2009.
The industry average for the chemical industry was 2.7 in 2008, while the average for the
manufacturing industry was 5.0 in the same year. 305 The rate means that a typical DuPont
employee was in 2008 working in an environment that was four times safer than the
chemical industry average in the US.
In the commercial aviation industry, 306 passenger safety is also paramount; there is zero
tolerance for safety risk. To manage this risk, risk assessment has become an essential
component of decision-making. This is helped, of course, by pilots having a personal stake
in managing safety risks. To inform decision-making, the industry fosters a strong culture
encouraging employees to speak up, without assigning blame, and ensures rigorous
training, licensing and adherence to procedures. Risk management is improved through
mechanisms for close co-operation, which allow competing airlines to share experience on
technical and safety issues.
303 http://www2.dupont.com/Media_Center/en_SG/speeches/Wui_Poh_Speech.pdf; Hilde Janssens
Business Development – DuPont Safety Resources deck: “Improving your business with safety
management – EAGOSH – Nov 2002”; and http://www.moveeurope.it/file%20pdf/Paul%20Weber%20-%20WHP%20e%20Mental%20health.PDF.
304 http://www2.dupont.com/Sustainable_Solutions/en_US/assets/downloads/DnA_USA_
Brochure_06192012.pdf.
305 http://c.ymcdn.com/sites/www.naem.org/resource/resmgr/docs/casestudy-2011-dupont.pdf.
306 Regarding the commercial aviation, wildfire fighting and pharmaceutical industries, see: World Economic
Forum paper prepared in collaboration with The Boston Consulting Group, Rethinking Risk Management in
Financial Services: Practices from other Domains, April 2010:
http://members.weforum.org/pdf/FinancialInstitutions/RethinkingRiskManagement.pdf; and Martin,
D., Managing Risk in Extreme Environments, London: Kogan Page, 2008.