What you need

to know...

SMS for There are a lot of

changes taking place in
the industry and it can be
somewhat of a daunting
task to sort through

Senior Leaders
all the information.
Many of these changes
involve responsibility
and accountability for
corporate leaders. You
need to know about the
changing world of Safety
Management.

Written By: Bill Yantiss

ARGUS PRISM
Executive Vice President
October 13, 2009
First, the source document for Safety Management System (SMS) standards is the International Civil Aviation Organization (ICAO) Annex
6, Appendix 7. These international standards are then reflected in the individual State (country) civil aviation regulations. Second, each
State’s Civil Aviation Authority, such as the US Federal Aviation Administration (FAA), has the option to augment the international standard
with additional requirements. These additional requirements are being developed
during the current SMS rule making process. The regulatory environment is a bit
complex—so let’s walk through some important fundamental topics.

What is Safety Management?

As defined on ICAO’s Safety Management Website: Safety management is a
managerial process for establishing lines of safety accountability throughout the
organization, including the senior managers. The concept of safety management
is realized through the development and implementation of a State Safety
Program (SSP) and a Safety Management System (SMS). The SSP is an
integrated set of regulations and activities aimed at improving safety. An SMS is
a systematic approach to managing safety, including the necessary organizational
structures, accountabilities and policies developed by and for operators.

Now that we have an understanding of safety management, let’s tackle the

changes that are taking place in the aviation regulatory environment.

The Regulatory Environment is Changing…

The second edition of the ICAO Safety Management Manual (SMM – Doc 9859) describes the
functional framework for global implementation of Safety Management Systems. ICAO guidance
is directed at two audience groups: State Civil Aviation Authorities (CAA) and individual “service
providers.” As a CAA, the FAA is required to establish a State Safety Program (SSP) that will
enable a transition from regulatory compliance and oversight to a performance-based approach of
risk management, utilizing safety indicators (categories) and safety targets (metrics).

Implementation of an SSP may require a significant change throughout the regulatory authority
organization to transition from a reactive environment to a proactive methodology of integrating

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 regulatory compliance with a performance-based approach. This transition may be “turbulent” for many CAAs. ICAO is currently delivering
a training program for State CAA representatives to provide additional knowledge of safety management concepts and to understand the
spirit and intent of the ICAO Standards and Recommended Practices (SARPs).

States are in various stages of SMS adoption and implementation, an obvious source of frustration for international operators—you have to
deal with these variations. For Commercial Airline (FAR Part 121) international operators, State
CAAs have accepted the IATA Operational Safety Audit (IOSA) standard for code share operations
because it reflects all applicable ICAO standards. Additionally, the IOSA Standards Manual (ISM)
is being revised to reflect the new ICAO SMS requirements, currently scheduled for a March,
2010 release. Although the global business aircraft community has begun to rally around the
International Standard for Business Aircraft Operations (IS-BAO), there are still a lot of moving
parts relative to this situation. The more ambiguous landscape for business aircraft charter and
private (FAR Part 135 and Part 91) operators has been described in detail in the “Confused about
SMS?” article available on the ARGUS website. This is a “must read.”

You’re not the only one confused by SMS.

If it’s any consolation, the regulatory authorities are also struggling to get their arms around their
roles and responsibilities to accept and oversee the development, implementation, and operational
performance of the operator’s SMS. This is a huge challenge in that safety inspectors must
expand their skill set to effectively transition from performing benign cockpit, cabin, or ramp
inspections to evaluating a management system for safety that can differ from operator to operator depending on their size and scope of
operation. The transition from “inspector” to “system auditor” represents a significant leap in complexity.

A view from the North.

As a regulator who has a great deal of SMS experience, Transport Canada has cleverly captured the transition from traditional
surveillance to monitoring the operator’s internal management systems and safety performance metrics as five separate categories. The
concept recognizes that SMS implementation occurs over time, particularly instituting the changes required in the organization’s safety
culture. Of particular interest is the gradual shift in regulatory philosophy from one of active compliance inspections to that of closely
monitoring the performance of the operator’s SMS 12 elements. For example, the regulator will take a renewed interest in incident
investigations, follow-up on hazard reports, internal evaluation audit reports, functional manager audit results, and the entire suite of
performance metrics. This change in philosophy will be evidenced by the CAA spending a lot more time assessing the operator’s
management systems, processes, and safety metrics.

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 Figure 1: Courtesy of Transport Canada " TP Aviation Safety Letter" Originally published by ICAO journal, Volume 60, Number 4 (July/August) 2005.
www.tc.gc.ca/civilaviation/publications/tp185/1-06/feature.htm

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 Figure 2: Courtesy of Delta Airlines published on the Mitre Corporation website www.mitrecaasd.org/SMS/doc/sample_SMS_Phases_of_Implementation_
poster.pdf

Phases of SMS Implementation.

The FAA has taken a “walk before you run” or phased implementation approach. A number of US service providers have volunteered for
the FAA SMS beta test in an effort to both contribute to the rule-making process and also to get a head start on SMS implementation.
This concept of phased SMS implementation will bring order and continuity to the change process. Aircraft operators who are either IOSA
(FAR Part 121) or IS-BAO (Part 91/135) registered should find that conformity with these standards provides a beneficial “intermediate
step” toward full SMS implementation. Both standards will be revised to reflect the new ICAO SMS standards. Further, these standards
will be mirrored in the next revision to Advisory Circular 120-92, Introduction to Safety Management Systems. One of the more significant
characteristics of the ICAO SMS standard is the emphasis on senior management commitment to operational safety and is clearly reinforced

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 by the introduction of the term Accountable Executive. Although this is a
familiar concept in the European Union, the introduction of documented
safety accountabilities may require some getting used to in the US
as the Federal Aviation Regulations (FARs) currently say little about
a documented management system. However, the SMS framework
creates a significant shift in policy and emphasis. So when we refer to
the Accountable Executive, how do we identify this person?

Who Is the Accountable Executive?

Simply stated, the Accountable Executive is the senior management
official who has overall responsibility for ensuring the safety and security
of operations. More specifically, this person has the authority to make
policy decisions, provide adequate resources, maintain financial control,
lead organizational performance, safety, and management reviews, and
to accept operational risk. In many large organizations, the Accountable
Executive may be a non-pilot CEO or COO. In contrast, small
organizations may identify a Director of Operations who is assigned
additional responsibilities associated with an Accountable Executive.

What the Accountable Executive Needs to Understand!

SMS implementation may involve significant change for many operators. The Accountable Executive sets the pace for the organization in
terms of setting policy, establishing priorities, allocating resources and endorsing initiatives. The commitment to SMS must be endorsed,
supported, and communicated by the Accountable Executive. These leaders do not have to be an expert in Fault Tree Analysis, Monte
Carlo simulations, or Failure Mode Effects Analysis or any other analytical tool. However they do need to understand:

•  That SMS is a business approach to managing safety.

•  The use of risk indices and risk mitigation.

•  That the SMS standard requires their leadership in the management review process, the identification of operational hazards, the
mitigation of recognized hazards, and acceptance of predicted residual risk associated with a significant change in operations.

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 •  The requirement to provide adequate resources for the safety and quality services departments that lead Safety Risk Management
(SRM) and Safety Assurance (SA) activities.

•  That SMS implementation is a major cultural change in terms “of the way we do business.”

•  That the direct responsibility for safety rests with line management and employees, but must be modeled and supported at the senior
management level.

•  That a healthy corporate culture requires constant nurturing, is composed of multiple components and that non-punitive methods are
necessary to manage human error.

•  That there will be individuals throughout the organization that will resist SMS implementation and that the Accountable Executive must
model desired attitudes and behaviors to all employees.

•  That there must be continued support for the SMS champion (safety manager) who will lead and communicate the development
progress throughout the organization.

As a Member of Senior Leadership, What Should I Be Doing Now?

SMS is going to be a requirement for all aircraft operations worldwide. It is
clear that the global regulatory community is attempting to get their arms
around the essence of SMS, both in terms of SSP oversight responsibilities
and SMS structure. They have the same question as all operators—“How
will I recognize an SMS when I see it?” Until some of the dust settles, there
are a number of things that all aircraft operators can do that will increase
your comfort level and enable development of an implementation strategy
and timeline:

•  Ensure that the organization’s “SMS champion” (safety manager) is

both qualified and trained to lead the SMS development effort. Since SMS
implementation may require from 1 to 4 years, this individual needs to
remain in this role for continuity.

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 •  If not already in progress, begin familiarization with SMS standards, vocabulary, tools, and
techniques. A useful website to obtain the latest FAA SMS materials is sponsored by MITRE
Corporation: http://www.mitrecaasd.org/SMS/documents.html

•  As an interim step, the operator may consider either IOSA or IS-BAO registration. This
commitment will provide operators with a good head start down the path of SMS implementation
now rather than waiting for the FAA rule to be published. For international operators, registration
signals positive intent to meet SMS requirements and evidence of actual progress.

Reference: "Safety Management Systems in Aviation". By Alan J. Stolzer, Carl D. Halford, and John J. Goglia. Ashgate Publishing, 2008

ARGUS International, Inc. (ARGUS) is the industry leader in providing specialized aviation services to companies that manufacture,
finance, operate, maintain, and market commercial and business aircraft, as well as providing products and services to end user
consumers worldwide. ARGUS is the worldwide leader in performing on-site safety audits for corporate flight departments, charter
operators, and commercial airlines. Key services include Charter Evaluation & Qualification (CHEQ) and CHEQPoint, Professional
Resources In Safety Management (PRISM), TRAQPak market intelligence data service, aircraft operating cost reports, market
research, and aviation and travel consulting. ARGUS is headquartered in Cincinnati, OH, with additional offices in Denver, CO,
Doylestown, PA, Houston, TX and Columbus, OH.

212 West 8th Street, Cincinnati, OH 45202 // 513.852.1010 // [email protected] // www.aviationresearch.com