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purchased or leased. Companies operating a one-of-a-kind aircraft may find that their spares
inventory and the people specially trained for such an aircraft become surplus.
c) Loss of staff productivity. If people are injured in an accident and are unable to work, many States
require that they continue to be paid. Also, these people will need to be replaced at least for the
short term, incurring the costs of wages, overtime (and possibly training), as well as imposing an
increased workload on the experienced workers.
d) Investigation and clean-up. These are often uninsured costs. Operators may incur costs from the
investigation including the costs of their staff involvement in the investigation, as well as the costs of
tests and analyses, wreckage recovery, and restoring the accident site.
e) Insurance deductibles. The policyholder’s obligation to cover the first portion of the cost of any
accident must be paid. A claim will also put a company into a higher risk category for insurance
purposes and therefore may result in increased premiums. (Conversely, the implementation of a
comprehensive SMS could help a company to negotiate a lower premium.)
f) Legal action and damage claims. Legal costs can accrue rapidly. While it is possible to insure for
public liability and damages, it is virtually impossible to cover the cost of time lost handling legal
action and damage claims.
g) Fines and citations. Government authorities may impose fines and citations, including possibly
shutting down unsafe operations.
4-24 Safety Management Manual (SMM)
Costs of incidents
4.8.8 Serious aviation incidents, which result in minor damage or injuries, can also incur many of these
indirect or uninsured costs. Typical cost factors arising from such incidents can include:
a) flight delays and cancellations;
b) alternate passenger transportation, accommodation, complaints, etc.;
c) crew change and positioning;
d) loss of revenue and reputation;
e) aircraft recovery, repair and test flight; and
f) incident investigation.
Costs of safety
4.8.9 The costs of safety are even more difficult to quantify than the full costs of accidents — partly
because of the difficulty in assessing the value of accidents that have been prevented. Nevertheless, some
operators have attempted to quantify the costs and benefits of introducing an SMS. They have found the
cost savings to be substantial. Performing a cost-benefit analysis is complicated; however, it is an exercise
that should be undertaken, as senior management is not inclined to spend money if there is no quantifiable
benefit. One way of addressing this issue is to separate the costs of the SMS from the costs of correcting
safety deficiencies, by charging the safety management costs to the safety department, and the safety
deficiency costs to the line management most responsible. This exercise requires senior management’s
involvement in considering the costs and benefits of an SMS.
____________________
5-1
Chapter 5
BASICS OF SAFETY MANAGEMENT
5.1 THE PHILOSOPHY OF SAFETY MANAGEMENT
Core business function
5.1.1 In successful aviation organizations, safety management is a core business function — as is
financial management. Effective safety management requires a realistic balance between safety and
production goals. Thus, a coordinated approach in which the organization’s goals and resources are
analysed helps to ensure that decisions concerning safety are realistic and complementary to the
operational needs of the organization. The finite limits of financing and operational performance must be
accepted in any industry. Defining acceptable and unacceptable risks is therefore important for cost-effective
safety management. If properly implemented, safety management measures not only increase safety but
also improve the operational effectiveness of an organization.
5.1.2 Experience in other industries and lessons learned from the investigation of aircraft accidents
have emphasized the importance of managing safety in a systematic, proactive and explicit manner. These
terms are explained below:
• Systematic means that safety management activities will be conducted in accordance with a
predetermined plan and applied in a consistent manner throughout the organization.
• Proactive means the adoption of an approach which emphasizes prevention through the
identification of hazards and the introduction of risk mitigation measures before the risk-bearing
event occurs and adversely affects safety performance.
• Explicit means that all safety management activities should be documented, visible and performed
independently from other management activities.
5.1.3 Addressing safety in a systematic, proactive and explicit manner ensures that on a long-term
　
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