Roads to Resilience

Strategy, tactics and operations

Strategic risks It might be thought that the Drax Group would only have a safety focus, but the organisation also views the achievement of strategy as something that needs to be risk-managed. For example, because the Group’s strategy is dependent on many outside factors: “ we have a relatively conservative approach to risk management … [as] we operate in fairly volatile commodity markets and therefore if you’ve got high business risk you have to have low financial risk. You have to find the right balance between … business risk and financial risk … [so] we run a very conservative balance sheet, which ensures that any downsides in our performance we can ride out ” (Head of Risk and Corporate Finance). Dealing with the uncertainties in the energy sector means that the Drax Group perceives the need to have a “ very tightly defined strategy and … [focused on where] we’ve built up expertise and capabilities ” (Head of Risk and Corporate Finance). In addition to the conservative approach to risk, “ You will find different approaches to different types of risks. For example … the production risk register [is there] … to drive risk down … it [Drax] is very intolerant to risk in that area and hence the controls are very specific but if you contrast that to some of the investment decisions, for example, that we’ll take [assessments of business risk] ” (Director of Corporate Affairs, Drax). All projects are also assessed: “ Every project has a risk ranking in terms of the benefit that that project would bring to the business and projects fall away as part of the assessment process, so quite often we won’t complete all of the projects that have initially been proposed in a specific year because we have to make resource allocation decisions based on risk ” (Engineering and Safety Manager). Across the Drax Group, risk is perceived to have a ‘downside’ and an ‘upside’. Consequently, “ risk isn’t just the risk of something bad happening, it is the risk of missing an opportunity for something good to happen. Taking the example of investment in biomass, had we taken a very risk-averse position and said we’re not prepared to invest at all until there’s regulatory certainty, then we’d still be sitting here today waiting. Being prepared to take some limited investment risk enabled us to move more quickly as the regulatory landscape developed. ” (Director of Corporate Affairs, Drax). Operational risks At the operational level, there are many ways in which risk is managed; from the rules in the power station, to the dealings with contractors. Many employees mention similar things about these rules and their application. For example: “ we have a set of golden rules at Drax for safety and one of them is that you must stop unsafe work … the other thing that we talk about in terms of our culture is, we talk about controlled anxiety [from the ideas of Professor James Reason] … we’ve used his teachings and learning quite a lot ” (Engineering and Safety Manager). In addition to clear safety rules and a level of organisational awareness to prevent complacency, Drax has recognised that “ … behavioural safety management is an area that we believe is important … we’ve done a lot of work in that area … so it is a full spectrum of health and safety advice … on how to control hazards effectively and comply with the law ” (Engineering and Safety Manager). Part of the value of understanding behavioural factors, is that Drax know that, “ when people are carrying out a ‘High Risk’ task or a ‘Medium Risk’ task they are a lot safer than when they carry out a ‘Low Risk’ task because …

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Roads to Resilience: Building dynamic approaches to risk to achieve future success