The Crucial Role of Safety Management Systems in Business Governance

In today’s ever-evolving business landscape, maintaining safety boundaries is essential, even amidst significant changes. During times of transition, a company's core values—including safety—are tested like never before. Safety Management Systems (SMS) should not just be an afterthought; they must be an integral part of corporate ethos. If safety is not recognized as a fundamental corporate value, it risks becoming undervalued, potentially jeopardizing the organization’s long-term sustainability.

Mohammed Al-Mady, CEO of Sabic, aptly stated that effective process safety governance and culture are not optional—they are imperative for survival in high-risk industries. This sentiment underscores the importance of aligning safety governance with corporate strategies. According to the OECD’s guidelines on corporate governance for process safety, leaders must consider the long-term implications of their business decisions on site safety. The importance of proactive leadership in recognizing and addressing safety risks cannot be overstated.

Historical analyses of industrial incidents reveal a troubling pattern: inadequate leadership and a poor organizational culture often contribute to safety failures. These failures frequently stem from a lack of situational awareness, insufficient information for making informed decisions, and a failure to anticipate the consequences of organizational changes. Such oversights highlight the need for a robust SMS that facilitates informed decision-making and proactive risk management.

Leaders in high-hazard industries must recognize the potential risks associated with their operations, treating major accidents as credible business threats. It’s crucial to view process safety management on the same level as financial governance and investment decisions. The interconnected nature of modern businesses means that a failure in one area, such as safety, can disrupt entire supply chains and lead to far-reaching consequences.

One initiative that illustrates effective safety governance is the Voluntary Protection Program (VPP). This U.S. government program encourages companies to adopt good safety practices and establish comprehensive safety management systems. By participating in programs like VPP, organizations can demonstrate their commitment to safety and governance, ultimately fostering a culture where safety is prioritized and integrated into daily operations.

In conclusion, as businesses navigate change, the emphasis on safety governance and SMS is more critical than ever. Leaders must prioritize safety not only as a legal requirement but as a core corporate value that safeguards both their workforce and the organization’s future.