Last year a number of Royal Commissions placed the actions of Directors, Executives and ‘Officers’ into the spotlight. Drawing upon the findings of these there are some interesting learnings; there is a need for Boards and Executive Management to effectively manage risks, receive the right information about (non-financial) risks, and seek out information to enable assurance and verification.
Considering all of this, and the emergence (and application) of ‘Industrial Manslaughter’ Legislation it is understandable that the upper echelon of Directors and Executive Management in many organisations are now becoming very interested in their Due Diligence requirements.
This is the first in our series of articles that explores the ‘Officers’ Due Diligence requirements as imposed by the WHS Act.
For ease and to avoid any confusion, we will consider an ‘Officer’ to be any director, company secretary or anyone who makes, or participates in making, decisions that affect the whole or substantial part of the business, or who has the capacity to affect significantly the corporation’s financial standing.
To paraphrase Sec 27 of the WHS Act , the ‘Officers’ are required to take ‘reasonable steps’ to:
- Firstly, acquire (and maintain) an understanding of WHS [Sec 27 (5)(a)] and an (effective) understanding of the organisation’s operations and the hazards and risks [Sec (5)(b)]
- Then, ensure appropriate resources and processes are used to eliminate or minimise the WHS risks [Sec 27 (5)(c)] and ensure processes are in place for the timely receipt, consideration and response to incidents, hazards and risks [Sec 27 (5)(c)]
- And finally, implement assurance and verification process to ensure that hazards and risks are being appropriately controlled and that legal requirements are being fulfilled (Sec 27 (5) (e) and (f)]
So, to explore the understanding component in more depth.
What does it mean?
The Board and Executive Management, as ‘Officers’ of the organisation, must obtain up to date WHS knowledge of WHS duties / requirements, as well as those relating to industry best practice.
Then this needs to be coupled with an understanding organisation’s operations and the hazards and WHS risks associated with the Operations (particularly those relating to higher-risk activities); and the controls for these risks.
What needs to be done?
Officers should take the following steps:
- Attend WHS training at board level exploring Officers’ duties under the WHS Act;
- Receive briefings on relevant WHS Matters from subject matter experts;
- Continually learn and monitor changes to WHS legislation, codes of practice, standards and management practices affecting the organisation;
- Be aware of benchmark industry standards and practices for WHS risk management;
- Meet regularly to discuss WHS issues;
- Review the strategic WHS risk registers (with a focus on the higher risks) and identify and understand the control measures that are used to manage the hazards and risks associated with the Operations;
- Review and assess information regarding WHS incidents (including trends) and any linkages to the identified risks; and
- Review and assess WHS performance reporting, including the lead and lag indicators.
Please contact QRMC for more information.