Introduction: The 6 Essential Proofs of Due Diligence and Travel Risk Management
When it comes to the due diligence and travel risk management, these are the 6 essential proofs that every travel, human resources, risk, health and safety and general manager should know. In this article we will cover the essential proofs of due diligence being, knowledge, business relevance, resources, processes, compliance and verification for travel risk management and comply with the company’s social and legal obligations. By reading this article you will be able to confirm the true meaning of due diligence as it applies to travel risk management and determine if you or your company truly have a demonstrable travel risk management system that complies with your social and legal duty of care objectives.
Due Diligence in Perspective
Officers of a person conducting a business or undertaking (PCBU) must exercise “due diligence” to ensure the organization complies with the health and safety duties.
This casts a positive duty on officers to be proactive and continuously ensure that the organization complies with the relevant duties and obligations under the model workplace health and safety act.
The scope of the officers duties is directly related to the influential nature of their position. A high standard requires persistent examination and care to ensure that the resources and systems of the organization are adequate to comply with the duty of care required. Where the officer relies on the expertise of a manager or other person, that expertise must be verified and the reliance must be reasonable.
Completing the following 6 items and you can ensure they you are meeting your requirements under due diligence.
- Business Relevance
- Compliance, and
1. Knowledge- Business Travel Health and Safety
Due diligence requires Officers to acquire and keep up-to-date knowledge of work health and safety matters, both in the specific context of their organization and generally. Both historical and knowledge elements must be maintained and updated as appropriate.
Ignorance of changes in the law or industry standards is not a defence, in fact it would be an offence within most acts or legislations for failing to exercise due diligence.
Practically it requires officers to engage in a program of business travel training and information monitoring.
Officers need to make themselves aware of changes to legislation as well as the specific standards. This can be done by:
- briefing the boards, executive and management team.
- Providing information that provide regular updates on developments in health, safety and the supporting laws (intra net, newsletters etc)
- Identifying and providing bridging education between the current and required level of understanding for business travellers.
Safety Performance Reporting
Organizations must develop reports for monitoring safety performance.
Board reports must contain sufficient information on safety performance including trends and emerging issues that require intervention.
Historical data reporting must be complimented with forecasting and future projections of related travel hazards, threats and risk.
Executive reports must be more detailed in relation to safety performance and proactive compliance with safety obligations.
2. Business Relevance- Business Travel and Operations/Undertakings
To prove due diligence officers must gain an understanding of the nature of the operations of the business or undertaking of the organization and develop and understanding of the hazards and risks associated with those operations.
Focusing on Major Hazards
Requires the develop of a major hazard plan
Review the nature of the operations of the business or undertaking and the identification of major hazards associated with the operations.
Differs from a risk assessment as the aim is to identify the major hazards which give rise to the risks with high consequences and not necessarily all hazards. The idea is that is that it takes the focus from low consequence high frequency risk profile (i.e. slips, trips and falls), which are not the focus of corporate governance regimes contemplated by the due diligence duty and refocuses on the high consequence and low-frequency risk profile, which must be identified by officers in order to satisfy due diligence.
Due diligence does not require officers to engage in the routine supervision of work or to interfere with day-to-day management. Rather it requires officers to introduce safety checks and balances which are the hallmarks of corporate governance
Focusing on Business Operations
Must focus on hazards associated with core business activities.
It is reasonable to exclude “remote / Unlikely” hazards or events. Hazards and events can only be assessed as remote or unlikely by supported evidence-based information, analysis and assessment.
Officers must understand the legal obligations imposed by regulation of specific process (Codes of Practice) that their business engages in and these must be able to be verified (i.e. make sure that you can prove that you work to the code)
3. Resources-Business Travel Risk Management
Provide appropriate resources that are commensurate with the size and nature of the operations of the business or undertaking is essential to ensure compliance with the safety duties of officers and is core to the proving of due diligence.
Due diligence requires officers to ensure that their organization has available for use, and uses, appropriate resources and processes to enable hazards that are associated with the operation to be identified and managed.
As a minimum this requires this requires recruiting appropriate personnel with relevant safety expertise.
Dependent on the organization it could also mean having such people involved in the decision making process.
The duty require adequate and transparent investment in safety infrastructure, processes and systems.
4. Processes-Business Travel Risk Management
Due diligence requires officers to ensure that the organization has appropriate processes for receiving and considering information regarding not only incidents, but also hazards and risks associated with the operations of the business of the organization.
There are two aspects to this.
- the information of the hazards and risks is required in order to monitor the hazards and risks as they arise
- The information on incidents is required to identify deficiencies in the existing risk management that need to be addressed
It also requires officers to ensure that there are processes for responding in a timely way to that information. Hence it is necessary to report, analyze and respond to safety performance
Measurement of occupational health and safety performance – describing and reporting occupational injuries and disease, but this is lag indicators only the organization will need to support this with some leading indicators as this is a better measure (although it could be argued either way dependent on the system used) of safety performance.
The absence of an incident does not necessarily indicate a high level of safety, as shown in the Longford disaster. Positive performance indicators provides ongoing assurance that the risks are being adequately controlled and give early warning of a weakness within the system.
Officers focusing on lag indicators cannot have the requisite level of assurance that the company was compliant, where officers that focus on lead indicators can have a high level of assurance of ongoing compliance. The problem with lead indicators is that they are not standardized within or across industries.
Officers must monitor lead and lag indicators to prove due diligence. Incident response must match the severity of the incident. Hazards are dependent on the danger or threat rating. Risks are dependent on the risk rating. All information and findings must be documented and accessible.
5. Legal Compliance of Workplace Health and Safety for Business Travel
The duty of officers requires them to ensure that the organization develops, and implements, processes for complying with any legal duty that the organization has under the workplace health and safety Act. This can only be achieved by undertaking a legal compliance audit of the organization. A systematic review of the organizations, policies, procedures and practices using the relevant legal requirement as the standard)
Verification of compliance will be necessary to prove due diligence.
Working to standard does not necessarily mean that an organization is legally compliant.
6. Verification- Implementation of Business Travel Risk Management
The duty of officers is to both provide the systems and verify the implementation of the provided systems.
This can be done via commissioning and safety audits, but the duty also requires personal involvement of the officers.
Due diligence is about safety leadership and is not a duty that can be delegated. Officers must take personal responsibility for their organizations safety performance.
Conclusion: The 6 Essential Proofs of Due Diligence and Travel Risk Management
Now that you understand the 6 essential proofs of due diligence and travel risk management, you will probably see your approach and compliance in a whole new light. Duty of care and due diligence do apply to business travel. If you can prove all the above elements, you can prove due diligence. We have covered essential proofs of due diligence being, knowledge, business relevance, resources, processes, compliance and verification for travel risk management and comply with the company’s social and legal obligations. Focus on establishing a system, implementing the system, reviewing the system to see that it is working and acting on information gathered by the system which identifies weakness if you are to mitigate or eliminate the risks associated with business travel, convey confidence to business travellers that you are proactively fulfilling your duty of care and defend or confirm your compliance with the various acts and legislation. Objectively review your current preparedness and process specific to travel risk management and use this advice to make your comparison and rectify any omissions to your processes immediately.
The 6 Essential Proofs of Due Diligence and Travel Risk Management by
Jason Parsons and Tony Ridley