As you will no doubt remember from the news or from a previous blog, the new Boeing 787, Dreamliner, aircraft has been grounded globally following a series of incidents; two of which involved overheating of the lithium ion batteries resulting in smoke incidents. Fortunately neither of the incidents resulted in loss of life but they do serve to illustrate principles which all risk professionals, whether health & safety, quality or business risk should bear in mind.

One issue which can be overlooked is that of risk tolerance.

In a statement from the National Transportation Safety Board (NTSB), the failure rate of these batteries should be <1 failure per 10 million flight hours; in the case of the Dreamliner this has been 2 failures in approximately 100,000 flight hours, more than 200 times the design rate. This was identified, and based on this, the fleet was grounded but we still have to establish whether there has been a design problem or a manufacturing fault or even a problem which occurred at the aircraft assemble stage.

In the statement, the Head of the NTSB said “Our task is now to see if enough, and appropriate layers of defence and adequate checks were built into the design, certification and manufacturing of this (lithium ion) battery”.

Another important issue which we sometimes fail to appreciate is the way risks are interrelated; we often address individual risks in silos. In this example we can see a wide range of impacts on a range of stakeholders, including the battery manufacturers, Boeing, individual airlines and the travelling public.

If we consider the impact on Boeing, the Dreamliner has been a revolutionary new aircraft for which a total of 890 firm orders have been received. Were customers to lose confidence in the aircraft as a result of these incidents there would be a significant financial impact on Boeing’s business and a loss of its reputation. This is in a severely competitive market with only one major competitor, Airbus Industries.

Another issue for Boeing is that delivery has been seriously delayed and further delays may lead to compensation claims or even cancellation by the airlines.

The airlines themselves could also suffer financial loss through non-availability of the new fleet, particularly as they were viewing this as replacement for older aircraft. In cases such as ANA, JAL and LOT the new planes were already in service and there will be costs associated with providing alternatives. At the same time there could be a loss of confidence in the airlines by the travelling public.

A key lesson for risk professionals is that we always need to think through the possible consequences rather than stopping at the immediate outcome of the threat.

Barry Holt, IIRSM Director of Policy & Research