Third Party Audits for Industry

November 18, 2010 - "Roles for Third Parties in Improving Implementation of EPA's and OSHA's Regulations on the Management of Low-Probability, High-Consequence Process Safety Risks" - Penn Program on Regulation, in conjunction with the Wharton Risk Management Center, hosted a conference regarding the usage of third party auditors in the enforcement of regulatory safety measures in high risk industries. Industries which experts call "Low-Probability, High-Consequence," such as nuclear reactors, oil refineries, or chemical processing plants, are specifically hoped to be improved by third party inspections safety. The conference brought together numerous participants from a variety of fields, including from government, industry, insurance, academia, and non-profit sectors. The conference consisted of a day-long discussion spread over three separate panels. Over the course of the conference, participants stressed the importance of implementing a third party system to effectively and thoroughly audit industry despite lack of adequate funds and resources. Other potential scenarios offered for enacting effective third party auditing included making sure that these third party auditors were completely independent from the industries they would be inspecting so as to eliminate bias or a conflict of interest. Another issue to consider is the question of whose authority would the third party auditors be under and what kind of enforcement power would they have to enforce industry change. One of the panel discussions brought up the potential linkage of third party audits with insurance companies so as to provide an incentive for industry to decrease safety risks in order to pay lower insurance premiums. Workshop participants included Isadore "Irv" Rosenthal, a Senior Research Fellow at the Wharton Risk Management and Decision Processes Center; Howard Kunreuther, James G. Dinan Professor of Business and Public Policy at Wharton and Co-Director of the Wharton Risk Center; Laurie Miller, Senior Director of Environment and Process Safety at the American Chemistry Council; Erwann O. Michel-Kerjan, Managing Director of the Wharton Risk Management and Decision Processes Center; Scott Berger, Executive Director of the American Institute of Chemical Engineers; Don Nguyen, a Principal Process Safety Management Engineer at Siemens Energy, Inc.; Mike Marshall, Process Safety Management Coordinator at the Directorate of Enforcement Programs at the Occupational Safety and Health Administration (OSHA) within the United States Department of Labor; Cary Coglianese, Edward B. Shils Professor of Law and Professor of Political Science at the University of Pennsylvania Law School and Director of the Penn Program on Regulation; Bob Whitmore, Former Chief of OSHA Division of Recordkeeping at the United States Department of Labor; Jim Belke, Chemical Engineer at the Office of Emergency Prevention and Member of the Office of Chemical Preparedness within the U.S. Environmental Protection Agency (EPA); William Doerr, FM Global Research Area Director; Manuel Gomez, Director of Recommendations at the U.S. Chemical Safety Board; Tim Cillessen, Manager of Sales and Marketing at Siemens Energy, Inc.; Mike Wright, Director of Health, Safety, and Environment at United Steelworkers; Jennifer Nash, Affiliated Researcher of Nanotechnology and Society Research Group at Northeastern University and the Associate Director of the Mossavar-Rahmani Center for Business and Government, Executive Director of Regulatory Policy Program at Harvard Kennedy School of Government; Michael Perron, Senior Vice President of Willis Re New York.

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