RM Advancer. Liability Risk Management Award Winner Echo Entertainment Group Business overview

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1 Liability Risk Management Award Winner Echo Entertainment Group Business overview Please provide an overview of your business that includes: Number of years established and brief company history Private, public or not for profit company Occupation and main activities including details of your products and/or services Company annual turnover ($AUD) Company structure showing risk management responsibilities (attach if necessary) Number of permanent employees (i.e. full time, part time) Number and use of contractors, subcontractors and labour hire personnel Staff turnover rate for the past 12 months Making the most of stunning views of the harbour and city, The Star boasts two of the best Sydney hotels, penthouses, serviced apartments, over 20 Sydney restaurants, bars and cafés as well as a luxury 16-room day spa, upscale retail and casino areas, as well as an events and entertainment centre that can cater to international performers, intimate concerts, corporate conferences, exhibitions and 900-seat banquet functions. The hottest Sydney nightclub, Marquee, is fast becoming the city s favourite hot spot with national and world-famous DJs on the decks and celebs on the red carpet. The Star employs over 3,800 staff (2430 FT / 729 PT), with an annual staff turnover of 23% per annum. Serving up to 50,000 people per day with hotel accommodation for up to 2,500, The Star is Sydney s 5 Star Hotel & Premier Entertainment Destination. As a subsidiary of Echo Entertainment Group Limited (ASX listed) The Star s contributes annual turnover of more than $1.2 billion annually. Please tell us why your nomination is deserving of this award? Echo has made significant investments in the development and implementation of operational risk management at The Star. This development has included policies, life safety systems and staff training programs to manage day to day operational risks associated with operating a facility consisting of two hotels, 20 restaurants, bars and cafés as well as a retail and casino area that occupies more than 4 hectares of land which The Star occupies. An $870million capital investment program not only transformed the appearance of facilities, it also implemented risk management controls in design and construction of commissioned assets. This capital investment, together with investment in staff awareness training for management and reporting of operational risk incidents and near misses, has enabled management to identify areas of occurrence and take actions to mitigate exposures. All stakeholders are involved from the board and executive, through middle management to frontline employees and contractors. Echo and The Star have seen the return on this investment though reduced claims, reduced insurance premiums and cost of managing risk. V9178b 24/10/13 A 1

2 Key principles of Risk Management outlined in AS/NZS ISO Creates and protects value Risk Management contributes to the demonstrable achievement of objectives and improvement of performance in, for example, human health and safety, security, legal and regulatory compliance, public acceptance, environmental protection, product quality, project management, efficiency in operations, governance and reputation. 1.1 Do you measure the effect of liability risk management on the efficiency of the organisation? Yes No 1.2 How does your liability risk management program support the achievement of your organisation s objectives? Our ultimate objective is to provide a world class entertainment experience for our guests and a world class organisation for our team members. Education of operational management in good risk management practices has developed business processes to mitigate operational risks now, and into the future. Echo s senior management team actively considers and promotes a vision of health & safety that is positive to staff and guest s wellbeing. The strategy for delivering on this vision has five elements, one of which is risk management and consultation with reference to liability and property risk management. 1.3 How do you balance liability risk management with cost? Echo s risk framework: Identifies the financial, operational, strategic and legal/compliance risk exposures of the company; Analyses these risks to determine their inherent impact/exposure; Evaluates risk exposures to determine treatment plans; Monitors and reviews risk exposures so that residual risk is reduced to a level within the company s risk appetite statement. The company measures its total cost of insurable risk as a benchmark of its operational risk management performance. 2. Integral part of all organisational processes Risk management is not a stand-alone activity that is separate from the main activities and processes of the organisation. Risk management is part of the responsibility of management and an integral part of all organisational processes, including strategic planning and all project and change management processes. 2.1 Describe how liability risk management activities are incorporated into your business processes and management controls? Echo employs a cradle to grave approach to liability risk management from the concept and design of new assets through tendering, construction, commissioning and operations. Risk registers are built up over the course of the asset lifecycle and form an integral part of planning, execution, management checks and balances and decision making. Once an asset is commissioned, facilities maintenance and security are trained in its operation. In addition, roving security patrols and surveillance by over 2500 CCTV cameras, is used on a 24/7 basis to ensure that potential liability exposures are identified, reported, controlled and corrected immediately to ensure that potential exposure of staff and guests are nullified for example: staff identifying a liquid spill report it via radio to cleaning and stay in place to ensure no persons encounter it. 2.2 Provide one example of a change to your business where liability risk management was a key consideration. During the transformation of The Star, new flooring was considered at the concept and design stage from a slip, trip and fall perspective as well as an aesthetic and functionality perspective. The most suitable material was selected. Upon installation the flooring was slip tested. Spills management, defects rectification, maintenance and inspection are now employed in day to day operations to ensure ongoing management of risk. With daily visitation between 25,000 to 50,000 persons per day, managing assets so that operational risks are mitigated to better the welfare of our guests and staff is a key focus of management. Investment in staff awareness and floor surface maintenance has greatly reduced the liability associated with slips, trips and falls. 2

3 3. Part of decision making Risk management helps decision makers make informed choices, prioritise actions and distinguish among alternative courses of action. 3.1 What is the process for making liability risk management decisions within your organisation? The risk management policy and framework have been developed in accordance with AS/NZS ISO and risk tolerance levels defined in accordance with the business appetite. The process of identifying, assessing, controlling, reviewing and consulting on risk management decisions is contained within the risk management and work health and safety policy and procedures. Escalation and action levels are defined so as to be clear on the delegations and stratification of responsibilities. For example: staff identifying a liquid spill report it via radio to cleaning and stay in place to ensure no persons encounter it. 3.2 How is the management team involved in liability risk management decisions? Senior level decisions occur through the Board Risk and Compliance Committee and the Management Risk and Compliance Committee. Risk management decisions are devolved throughout the organisation through the roles and responsibilities via Risk Management Policies and Procedures and Workplace Health and Safety Management systems. All staff and guests are encouraged to report any concerns as to a potential or actual hazard. Weekly reviews of incidents by The Star s senior management team aims to identify common areas of exposure and/or hazards. A General Manager is then allocated responsibility for rectification of the risk by amendment of the asset to mitigate the risk. Where this is not possible, revision of operating processes and staff training via management briefings are then used to address the risk. 4. Explicitly addresses uncertainty Risk management explicitly takes account of uncertainty, the nature of uncertainty and how it can be addressed. 4.1 Do you have a formal business continuity plan? Yes No 4.2 Does it specifically include liability risks? Yes No 4.3 Is the plan up to date, regularly reviewed and tested? Yes No 4.4 How do you address uncertainty for liability risks within your organisation? The Star s risk management policy was developed in accordance with AS/NZS ISO to identify, assess, control, review and consult on operational risk management practices. Training of operational staff and management in managing exposures and responding to incidents provides guidelines that enable operational management to exercise its discretion. This is on the founding principle of conservation, such that isolation/quarantine of a risk/hazard is the first preference. Operational management are then trained in reporting the matter (including witness statements, cctv and any other relevant information) to senior management for review and treatment as per 3.2 above. 4.5 What is your policy in respect to contractual liability risks? The Star has standard legal terms used to contract with vendors and suppliers of services. Where standard terms cannot be applied, a dedicated in house legal team which reviews all contracts with suppliers so that any deviation from standard terms is required as part of service delivery. In these circumstances, the matter is referred to risk management for review of liability exposures so that the company s insurers have recourse to the insurance of the vendor. As a matter of policy, The Star does not cap liability exposures of its suppliers and requires that certificates of currency of insurance be provided pre-contract. 3

4 5. Systematic, structured and timely A systematic, timely and structured approach to risk management contributes to efficiency and to consistent, comparable and reliable results. 5.1 Do you have a formalised and documented liability risk management program? Yes No 5.2 If so, how is it organised and structured? see 6.1 below 5.3 How do you ensure that your liability risk management program is working effectively? The Star has dedicated Internal Control staff responsible for reviewing operational incidents and auditing operational practices to provide management assurance that operations are compliant with procedures and that policy settings operate within the company s stated risk appetite. 6. Based on the best available information The inputs to the process of managing risk are based on information sources such as historical data, experience, stakeholder feedback, observation, forecasts and expert judgement. However, decision makers should inform themselves of, and should take into account, any limitations of the data or modelling used or the possibility of divergence amongst experts. 6.1 What sources of liability risk management information do you use? All incidents and near misses are reported and recorded. Hazards, risks and controls are also recorded on a risk registers. Information is shared compared and benchmarked across the industry. Professionals employed in the risk and work health and safety departments regularly subscribe to and seek information sources from the regulator, data providers and professional bodies. In addition, The Star s dedicated Internal Control staff have access to controls databases so that auditing of operational practices to provide management assurance that operational risks is against best practice. Star senior management review customer complaints & incidents/accident registers monthly as per 3.2 above. 6.2 Provide an example of how you use information to reduce liability risk within your organisation. Occurrences with an actual or potential liability aspect to them are collated, analysed and reported upon in order to inform decision making in the risk management arena. Many departments are involved including risk, work health and safety, property and facilities, security and operations/gaming. Reviews of incidents by The Star s senior management team aims to identify common areas of exposure and/or hazards. The General Manager allocated responsibility for rectification of the risk will consult a subject matter expert to determine if modification of the asset is possible to extinguish the risk. Where this is not possible, revision of operating processes and staff training via management briefings are then used to address the risk. 4

5 7. Tailored Risk management is aligned with the organisational external and internal context and risk profile. 7.1 How has your liability risk management program been tailored to address risks specific to your organisation? The liability risk management program has been designed based on a risk profiling of the assets, properties, operations and stakeholder interfaces. The specific risks facing the organisation include: - Public liability - Reputational risk - Health and safety - Property failure or damage - Compliance risk Based on these risks, detailed assessments are undertaken; risks are either insured or managed to the level of tolerance and programs resourced to implement controls. Controls are assessed for implementation and effectiveness. The results of these efforts are reported to and monitored by The Star s Senior Management with the philosophy that any incident or near miss is a potential negative impact on guest experience. A guest experience metric is independently reported each month and reported as a KPI for all of the Star s Senior Management. 8. Takes human and cultural factors into account Risk management recognises the capabilities, perceptions and intentions of external and internal people that can facilitate or hinder the achievement of the organisation s objectives. 8.1 Describe the culture of the organisation relating to liability risk management. All team members undertake a health and safety induction that covers the liability risk issues that are able to be affected and controlled by them. All contractors undertake an induction that covers the liability and risk issues that are able to be controlled by them. Risk management is built into individual roles and responsibilities and into contracts for contractors and suppliers. 8.2 What programs do you have in place for liability risk management training and awareness? Internal stakeholders include the following departments - property, facilities, finance, gaming/operations, risk, work health and safety, human resources, stewarding, cleaning. External stakeholders include insurers, risk management advisors, regulators, contractors, project managers, architects, engineers, government and customers. 5

6 9. Transparent and inclusive Appropriate and timely involvement of stakeholders and, in particular, decision makers at all levels of the organisation ensures that risk management remains relevant and up to date. Involvement also allows stakeholders to be properly represented and to have their views taken into account in determining risk criteria. 9.1 Is there a procedure for stakeholders to suggest liability improvements? Yes No 9.2 How do you engage your stakeholders on matters of liability risk management? Internal stakeholders are engaged through regular consultation forums on broader risk issues and in more focussed forums for specific issues such as injury and illness/health and safety. The Management Risk and Compliance Committee and Board Risk and Compliance Committee are the forums for enterprise consultation and decision making. External stakeholders such as ILGA are located on site and are an integrated but independent part of the governance process of compliance. WorkCover NSW and Work Health and Safety Queensland are engaged through the Workers Compensation Self Insurance Scheme, Self Insurance Audits and Industry Forums. Local relationships exist with the inspectorate. 10. Dynamic, iterative and responsive to change Risk management continually senses and responds to change. As external and internal events occur, context and knowledge change, monitoring and review of risks take place, new risks emerge, some change and others disappear Does your company have a formalised and documented system for the management of change? Yes No 10.2 Does your change management policy specifically address liability risks? Yes No 10.3 How do you use technology in liability risk management? Echo is in the process of implementing an enterprise risk management system. The system will be used for capturing identified hazards and risks, assessing the risk levels, recording controls and tracking action taken against each control. The system will monitor inherent and residual risks. The system will be able to record incidents, investigations and the corrective actions allocated to the issue. Reporting will be conducted on a regular basis to feedback information to each stratum of the organisation responsible for risk management Provide an example of where a lesson learned has become a catalyst for improvement and or change. Marble flooring is very aesthetically pleasing, a great decision feature for any high end development. Marble as a floor surface presents at its best when highly shined, (a challenge for slip resistance). Noting the headcount through the property per day of approx 25,000 the use of Marble was limited to the Main Gaming Floor as walkways located within carpeted flooring. The remainder of the property had a high slip resistant Terrazzo flooring installed, particularly through entry points. To manage the Marble flooring and achieve the right combination of controls, The Star trialled a number of treatments, frequency of maintenance of the Marble flooring and established ongoing operational inspections and rapid reponse to any spill during peak and off peak times.the number of incidents is remarkably low and reinforces good design control and operational effectiveness. 6

7 11. Facilitates continual improvement of the organisation Organisations should develop and implement strategies to improve their risk management maturity alongside all other aspects of their organisation How are liability risk improvements identified, implemented and measured? Word limit: 100 A range of physical characteristics of the property design were identified during the operation of Star City Casino that were able to be effectively considered and designed out during the transformation to The Star. The risk management systems gave rise to the identification and inclusion of these opportunities in the new design. These included new flooring, new electronic gaming chairs, new dealer scallops on table games and improved air handling and ventilation What planned changes to liability risk management do you intend to make? Word limit: 100 Full implementation of the enterprise risk management system will take effect in the first half of FY 13/14, will enable Echo to engage in cross property analysis of incidents and near misses. this will enable the company to lower its total cost of insurable risk by applying consistent controls at each of its properties to so that operational risks are effectively mitigated no matter where they may occur within the Group s four properties. 7