Lessons learned from the conviction against Whakaari Management Ltd
Board responsibility for managing risk has been widely discussed recently, particularly managing financial risk. Business owners, directors and CEOs also have an obligation to exercise due diligence to ensure their organisation meets its health and safety obligations.
In October 2023 the NZ Court found the regulator WorkSafe had proven a criminal charge brought against Whakaari Management Ltd (WML) arising from WML’s management of Whakaari-White Island, a volcanic island known as New Zealand’s most active volcano.
Background
As background, the tragic eruption of Whakaari-White Island volcano on 9 December 2019 resulted in the death of 22 people and lifelong injuries for a further 25. The judge appropriately paid tribute to the strength and courage of the survivors who gave evidence in the trial.
WorkSafe charged 13 parties for health and safety failings prior to the eruption. This included the tour operators, booking agents, geo-science agency, and the owners/managers of the island. The court case got global attention. A number of parties pleaded guilty or had charges dismissed including the tour operators, booking agencies and geo-science agency. Charges were also dismissed against the individual directors of WML, leaving the judge to concentrate the court hearing on the charge against the company. He found WML liable for breaches of its legal responsibilities, as managers of the island.
Whakaari Management Ltd's Failures
The judge found WML’s failures included:
- not engaging the necessary expertise and not taking expert advice necessary to assess risk arising from the conduct of commercial tours on its active volcano; and
- not continuing an active and ongoing risk assessment, given the variable and unpredictable conditions and characteristics of Whakaari which did erupt from time to time.
WML could not rely on the information provided by GNS Science or rely on tour operators conducting their own risk assessments. WML needed to conduct its own risk assessment, and to take steps to verify what tour operators were doing to assess risks. WML was the only business that gave people permission to visit the island. With this power, even privilege, came responsibility. The conditions there were “variable and unpredictable” – so careful analysis was always needed. This was even clearer after the 2016 eruption – but WML did not do more to assess the risk after that. It should have.
The Judge found WML’s failure to undertake necessary risk assessments was a significant and substantial cause of an individual being exposed to risk of death or injury.
Interestingly, WML also argued the case on several technical legal points. It won some and lost some, but none of the technical points worked as a complete defence.
Sentencing for all guilty parties is scheduled for late February 2024. We expect to see WML taking a very different approach at sentencing.
Lessons for organisations and their boards
- Do your own risk assessment and mitigation, and act on the advice. It is not enough to rely on others.
- Seek appropriate resources and expert advice on an ongoing basis, regularly updating the risk planning
- Keep up to date.
A good starting point is this guide from IoD and WorkSafe.
At Grounded Governance we provide the governance advice and governance support necessary to ensure you have met your responsibilities as a CEO or board member. Contact us now.