Introduction to Financial Analysis of Risk in Aviation SMS Programs

Risk Analysis Financial Charts module allows managers to easily review reported issues and identify challenges without going through exhaustive financial analyses. There are no risk calculations. These reports talk to managers in clear terms: where can we apply risk management processes to reduce economic risk?

SMS Pro's complex charting tools allow managers to quickly determine which types of issues are costing them the most time and money to manage, thus allowing them to make financial analysis recommendations. These drill-down charts get one to the heart of the matter and provide incredible amounts of visual information by having the data analyses performed for you automatically. Risk Analysis Charts and Risk Analysis Financial Charts™ share basically the same functionality.

Risk Analysis Charts are broken out by "Number of Occurrences, and "Financial Costs" remain at the heart of Financial Risk Analysis Charts.

Management easily applies date ranges and/or types of issues to quickly see real-time reports by:

• Types of Issues
• Type of Processes Involved
• Root Causes
• Associated Risks/Hazards
• Key Performance Indicators
• Status (open, closed, in progress...)
• Department
• Division

More sophisticated SMS Pro™ implementations can take data from multiple portals to analyze.

Understanding Financial Risk Analysis Chart Numbers

Reported issues can have multiple classifications attached to them. Often the issues have overlapping classification types.

For example:

A bird strike is reported through the issue reporter. A manager working through the issue management life-cycle for this issue may add several "Type of Issue" classifications,
such as:
1. Injury >> Employee
2. Injury >> Customer
3. Damage >> Aircraft (not NTSB Reportable)

In the charts it will show that there have been two "Injury" classifications, but when you hover over the drill-down links it will only show one issue. Please keep this in mind doing your analysis.

Risk Analysis Charts and Risk Analysis Financial Charts share similar functionality. What applies to Risk Analysis Charts also applies to Risk Analysis Financial Charts; however, the context changes from "number of occurrences," to "cost of occurrences."

Note: Advanced SMS Pro™ implementations can display aggregated data for multiple portals. For example, a multinational airline may a portal for North America, another for Latin America, and another for Asia. Data can be aggregated from these three portals and displayed immediately. This functionality saves time and money preparing accurate and timely reports.

Using Risk Analysis Financial Charts

By default, a divisional report is loaded when users come to the module. The current user's default division is active, hence, it is loaded. If users have permissions to view other divisional data, other divisions will appear in the dropdown list at the upper left.

Choose whether to narrow your investigation to one division or the entire company by selecting an item from the dropdown list for "Show Issues for:"

Next, decide whether to change the date parameters. By default, the start date is filled with the date of the first reported issue in the system. The end date contains today's date.

One is able to filter the types of reported issues (safety, security, quality or compliance) by selecting an option from the "Type of Concern" dropdown list. "Type of Concern" should not be confused with "Type of Issue." Types of Issue are customizable by the SMS Admin and may be unique to each division.

Drilldown and KPIs are similar report types. By selecting a classification type, such as Type of Issue, Process or Root Cause, one can drill down and investigate data associated to the classification scheme. It is possible to drill down into three charts, which is the number of classification dropdown lists in the Issue Manager. All classifications originate from the classification process in the Issue Manager.

Hovering over the links, one can learn more about the types of issues providing the data, such as the Issue Title and the Total Cost associated with the reported issue.

Types of Issues are the first classification system that all organization should use when classifying issues. This classification is performed in Issue Manager under the "Classify" tab.

Type of Business Process is an optional classification scheme companies can use to determine whether business processes are faulty and may need modifications. Type of Business process is classified in the Issue Manager under the "Classify" tab. Business processes are documented in the Process Description Library. The Process Description Library affords management an opportunity to document processes requiring change.

Root Cause originates from the Investigation in Issue Manager. Root cause analysis typically covers Management responsibility, Procedures, Controls, Process Management and Interfaces. After determining the contributing factors of an event, a root cause analysis is performed and corrective actions established.

Key Performance Indicators (KPIs) measure critical success factors of an organization. Based on carefully selected measures, aviation-related KPIs reveal a high-level snapshot of a dynamic, functioning organization. KPIs vary depending on the kind of organization they characterize. For example, an airport may have a KPI as the total runway overruns, while KPIs of a helicopter operator may have to do more with the number of emergency landings. Since there are so many ways to classify an issue, such as type of issue, root cause or type of business process, not every classification is highly important to the organization. KPIs allow companies to focus on what matters most to them.

Associated Hazards come from the Proactive Hazard Analysis Tool. This list is generated automatically and may be appended in the Investigation portion of the Issue Manager. After discovering the root cause of an issue, managers may have discovered a new hazard. The ability to easily add identified hazards to the Hazard Registry is important functionality of SMS Pro. Associated hazards should also have identified risks and control measures to mitigate the risk and recovery measures should the hazard occur.

Status/Type allows managers to see how many issues are open, closed, in progress, etc. Choosing the "By Type" option displays the reported issues according to safety, security, quality or compliance.

Department reports show the number of issues reported that have been classified as belonging to particular departments. Higher number of reported issues for a particular department may not necessarily indicate a lack of quality or substandard performance. The department may merely have an exceptional reporting culture, or the department may be highly represented within the company.

Division reports allow management to quickly see how many reports originate from each division. Similar to departments, higher number of reported issues for a particular division may not necessarily indicate a lack of quality or substandard performance. The division may merely have an exceptional reporting culture, or the division may be more highly represented within the company.