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It never ceases to amaze me, no matter how often I fly, the very healthy respect I feel for what quietly goes on behind the scenes during those very moments. On one of my last flights, passengers could listen to air traffic control activity and flight deck interaction via the entertainment system. With child-like enthusiasm, I listened to the cryptic code and almost military-like series of instruction. It made me ponder a few things.

First, I was incredibly glad to hear the diligence and precision in their process.Second, I smugly expected no less. After all, they are air traffic controllers, they should be this concerned, they should be this diligent and they should get it right. Was it fair to expect this from them or was I arrogant to expect near-perfection?

This type of organization is known as an HRO--a high-reliability organization. HROs instill what is known as a "mindful" philosophy that is built into process and culture. Simply put, an HRO promotes swift rebound rates that contain unexpected adverse events in a time-critical manner, all to avoid catastrophes.

Characteristic HROs have been nuclear plants and aircraft carriers, organizations tasked with ensuring seamless operations and protecting human life. More recently, organizations such as jails, nursing homes and hospitals are adopting the HRO philosophy.

Key HRO hallmarks include "preoccupation with failure": testing, learning, and rebounding from it; "sensitivity to operations": maintaining alertness and containing surprises; and "deference to expertise": allowing persons with expertise and experience to trump those with rank during a crisis.

Radical thought: If we self-righteously ask for "near-perfection" from air traffic controllers, couldn't we set the bar at a similar height for other operations such as our banks, our drug manufacturers, our food suppliers and even our government?

Reflecting on recent events involving organizations such as Citigroup, SociétéGénérale and Merrill Lynch, each company admits to having learned painful lessons and that they are "upgrading" their supervisory controls. The setting seems ripe for an HRO-like approach--complex systems, hierarchical structures, dealings conducted at record speeds high stakes and high risk. We know that it can be done and best of all we know it works.

I guess, until then, our destiny is mostly set. We will fasten our seatbelts, wait for markets to become beneficent again, put our faith in the operating crews and hopefully make a solid landing next time.

JOANNA MAKOMASKI is the risk management columnist for Risk & Insurance®. She manages risk for an energy transportation and distribution company.

August 1, 2008

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