EH&S assurance: How assured are you?; Avoid a Wile E. Coyote splat with a sound environmental assurance program.

• Author: Pilko, George
• Position: The Environment - Environmental, health and safety performance programs

DID CHAIRMAN Ken Lay know that Enron was zooming off the cliff like the famous coyote while Wall Street was marveling at his company's amazing success? In light of Enron's stone-like drop into the abyss, its "amazing success seems more like a levitation act. Today, the stock trades for pennies, while the media digs into gnarly behind-the-scenes machinations that Newsweek characterized as "a seriously dumb move for a company that talks about hedging risks." As the Houston Chronicle wrote, "The stunning collapse of Houston's Enron Corp. has laid bare a massive failure of the basic checks and balances that are supposed to safeguard a corporation."

What about your company? What are your chances of some kind of Wile E. Coyote "splat"? Are you really getting good information in those annual assurance documents that filter up from staff?

The strength of any company ultimately depends on assurance, which applies to every area of the business -- financial transactions, manufacturing, human resources, product development and marketing, social responsibility and environmental, health and safety (EH&S) performance, our topic here. Missteps in EH&S can be surprisingly costly. Who can forget the Bhopal disaster or the Exxon Valdez? Functional assurance systems likely could have prevented both.

Or consider the major energy company that was unaware that one of its contractors had mishandled a bit of marginally hazardous waste. A minor infraction, you may think, but the EPA and Department of Justice had a field day. Fines to the contractor totaled several million dollars, and the energy company will ultimately pay 10-20 times that much for mandated changes not even related to the original misstep. Trust us, an EH&S assurance system would have cost much less.

What is EH&S assurance? First, it is not a form of auditing. An audit is a snapshot in time, a sampling of issues. Assurance is a meaningful form of continual self-confirmation that the EH&S processes desired by senior management are embedded into the daily activities of the organization. Maintaining regulatory compliance is only a starting point.

Second, it is not the typical assurance letter that filters up from your business-unit leaders. Without a standardized system for reporting real and potential problem areas, business unit managers can write anything they want. Would you highlight your problems to your boss?

A good assurance program accomplishes many goals. It catches problems in the incipient...