Using Strategic Safety parameters to determine Investment targets

Introduction

In a recession managers and investors generally take fresh views of their investment portfolios. They then focus not only on probable growth of a company, but also on its ability to energize the market as a whole i.e. a market player/leader. The reason for this is that some surety is required to prevent future recessionary losses (again). Following this intuitive methodology, investors use strategic safety analysis to determine their new targeted investments. Strategic Safety methods can therefore identify future safe market leaders.

• Safety outcomes

Safety at strategic level is a central and critical human endeavor. It encompasses health, security and systems while requiring optimization in the face of opportunity loss.

In the final analysis, safety is a human risk. Risk has been managed for thousand’s of years resulting in the basic knowledge outcome of failures or opportunities.

Such outcome can be categorized as follows:

• Negative Spirals

Since every risk is followed by a failure or an opportunity, both these effects are open for miss-interpretation as “panic” or “greed” respectively. An argumentative example is the oil shale and tar sands development because the net energy is low. Investments made might fail because it is based on the likely scenario of greedy leadership in a panic stricken community faced with uncontrolled energy solutions. The double whammy comes when such investors realise they lost opportunities in a more sustainable future.

• Positive Spirals

Interpreted correctly, risk failures can be mitigated while related opportunities are exploited in sustainable fashion. An example is Abu Dhabi where the risk (of using own oil thereby losing income) is mitigated by building the energy efficient city of Masdar. The opportunity however, is not Masdar, it’s the semi-conductor industry supported by Masdar. From a safety perspective, industrial automation is slowly but surely establishing itself and will eventually spill-over into the health, security and systems related industries. One of the reasons for this happening is because decentralized systems and instrument technologies have access to cheaper and safer semiconductors, enabling advanced control techniques. (A good investment choice)

Having accessible control technologies will allow the localized control needed previously only possible at global scale. Humans had the same health, security and systems risks 100 years ago and while those risks were solved by thinking globally, we now have to solve the same risks by re-thinking locally. The difference is the complex theory approach

Safety requirements

Globalization is in principle supported by the system and process theories, but as soon as complex methods are used, these get relegated to lower-level structures. Most of these structures are intentionally separated to allow optimization techniques. An illustrative scenario is to separate water/energy industries into two “requirement areas” namely coastal and mountain slopes. That means putting these industries close to the sea and/or close to mountains. From ecology principles it would be better due to flatlands and rivers being optimized for agriculture. The result is moving away from globalization towards localization.

An example of the advantage of such a “requirement” based scenario is that with agriculture now in the spotlight, methods can be enhanced to improve the agriculture specific waste and pollution management industry. (A good investment choice)

Another example that may seem expensive is desalination, but at 1 penny a gallon it is less expensive than the current estimated 2.3 pennies per gallon. This is also due to reduced logistics of not requiring a built-up dam of water. Natural fresh water is much more expensive than people assume because of the long term cost to maintain the natural environment for human benefit.

The standard of living will improve once more localization is possible. (Globalization actually removes control of the standard of living)

Safety risk

Managing risk is not easy and especially business is failing dismally in their attempts to manage it sustainably. However, there is an excellent example – the military.

Military managers of safety are by far and away better than their business counterparts. This is because of the following;

1. Commercial investment risks are always low i.s.o. high.
2. Financial management is always linear i.s.o. non-linear.
3. Business use efficiency as the major metric i.s.o. effectiveness.

The military always needs to be super effective (not efficient). This has led to the establishment of fantastic abilities such as;

• Technology base management
• Non-linear fatality-cost management
• Operations research techniques

Business leaders (and it should be the leaders), managing their companies using above techniques will be beneficial to investors as well as their society. Their customers and employees won’t succumb to safety incidences and their companies will make money sustainably as described (amongst others) in the book “Good to Great” by Jim Collins.

Summary

Utilizing strategic safety analysis it is possible to identify industries or technologies causing positive safety spirals that result in safe outcomes. As long as these outcomes fall within safe requirement areas, the risk can be reduced by proper management techniques, making those industries and technologies desirable investment targets.

One such target today is decentralized control capabilities championed by the Automation Industry.

Johann Theron
Multiply Safety
South Africa

Credits to Chris Nelder (www.getreallist.com), Deloitte – Risk Intelligence Series Issue No 7, Automation World and Siemens.