Honestly Lay Bare

Sick: Queensland Health's Payroll System Implementation

2010-07-07T04:06:00.000+10:00

System usability testing and the validation of the new processes in the business environment was not performed

In late June, the Auditor General of the Australian state of Queensland released a detailed report on the implementation by the Queensland Department of Health (Queensland Health) of its new payroll and rostering system.

The Auditor General report is an excellent summation of what all project implementations should consider in terms of systems governance and control.

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Queensland Health pays its workforce, of approximately 78,000 people, every seond Wednesday, for all work completed and allowances owing in the fortnight ending at the midnight on the previous Sunday.

A new payroll and rostering system was implemented on 14 March 2010 and was immediately followed by claims of no payment, inaccurate payment and overpayment (or as was once described to Honestly Lay Bare ... the holy trinity of payroll management).

The report by the Auditor General (Report to Parliament No.7 for 2010 Information systems governance and control, including the Queensland Health Implementation of Continuity Project) was tabled in the Queensland Parliament.

Key findings from the audit of the system implementation included:

The Queensland Health payroll system has complex award structures. There are 13 awards and multiple industrial agreements which provide for over 200 different allowances, and in excess of 24,000 different combinations of calculation groups and rules for Queensland Health employee.
The governance structure for the system implementation, as it related to CorpTech, the prime contractor and Queensland Health, was not clear, causing confusion over the roles andresponsibilities of the various parties.
There was inadequate documentation of business requirements at the commencement of the project.
The time taken to reach Go-Live status increased from eight months to 26 months.
The absence of a periodic review of the business needs contributed to subsequent difficultieswith system testing and the implementation of a system which did not meet the needs ofQueensland Health’s operating environment.
System and process testing prior to Go-Live had not identified a number of significant implementation risks and therefore the extent of the potential impact on the effective operationof the payroll system had not been fully understood and quantified.
System useability testing and the validation of the new processes in the business environmentwas not performed. As a result, Queensland Health had not determined whether systems,processes and infrastructure were in place for the effective operation of the new system.
A number of critical business readiness activities and practices were not fully developed prior tothe implementation of the new system. This was in part a reflection of the view of QueenslandHealth staff that the project involved a ‘like for like’ replacement of the legacy system and the lack of an awareness of the full impact of the business rules configured into the new system.
Business continuity plans were not available and able to be quickly implemented to address payroll issues as they emerged.
Key system performance reports for use by CorpTech were not available during the completion of the initial payroll processing.
Several changes to the payroll administration practices, such as a new fax server and are-allocation of processing duties within the Queensland Health Shared Services Provider, were introduced at the same time as the release of the SAP HR and WorkBrain systems.

Not surprisingly there are many lessons to be learnt for future systems implementations:

Where possible, simplify award structures prior to implementing a new payroll system to remove complexities which will impact on the effectiveness and efficiency of the payroll process.
Establish clear lines of accountability and roles and responsibilities at the initiation of the projectto ensure an end to end governance structure.
Ensure the full impact of system change is assessed on the end to end business process.
Ensure the ultimate decision to Go-Live is based on the readiness of the business and that thesystem’s application within the business is fully tested.
Identify all project and systems risks and have in place robust contingency plans and risk management strategies to address risks in the event of unexpected system issues.

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Honestly Lay Bare bets an empty hosptial bed that before the end of 2010 we will see another report raising the same issues about another information system implementation somewhere else.

Why is it that we are destined to always repeat the mistakes of others.

The Mole

2010-06-30T04:09:00.000+10:00

The absence of adequate security controls at the FBI made espionage too easy for Hanssen to commit

Robert Philip Hanssen (born April 18, 1944) is a former American FBI agent who spied for Soviet and Russian intelligence services against the United States for 22 years from 1979 to 2001. He is currently serving a life sentence at the Federal Bureau of Prisons maximum facility in Florence, Colorado in which he spends twenty-three hours a day in solitary confinement.

Hanssen was arrested on 18 February 2001 at near his home in Vienna, Virginia and was charged with selling American secrets to Russia for more than US$1.4 million in cash and diamonds over a 22-year period.

On 6 July 2001, he pleaded guilty to fifteen counts of espionage.

He was then sentenced to life in prison without the possibility of parole.

His activities have been described as "possibly the worst intelligence disaster in US history.”

**

As much as we would love to turn Honestly Lay Bare into a spy catching espionage tale – we have resisted the temptation.

Instead we went looking for what we knew would be the official report written – somewhere – that discussed the internal control failings that inevitably allow such intelligence failures to materialize.

We found it in the Department of Justice Office of the Inspector General August 2003 report (yep we read widely) titled “A Review of the FBI’s Performance in Deterring, Detecting and Investigating the Espionage Activities of Robert Philip Hanssen”.

It noted that the Hanssen case highlighted significant, longstanding deficiencies in the FBI's internal security program, many of which were brought to the attention of FBI management over the years but were not corrected.

Historically, the FBI has not been in compliance with Executive Orders, Justice Department regulations, and Intelligence Community standards regarding security.

Before Hanssen's arrest, the FBI's security program was based on trust. Rather than taking the sort of proactive steps adopted by other Intelligence Community components - such as requiring regular counterintelligence polygraph examinations, financial disclosures, and meaningful background reinvestigations, and utilizing audit functions regarding computer usage - the FBI trusted that its employees would remain loyal throughout their careers. The Hanssen case showed the danger of that approach.

There were observed serious deficiencies in nearly every aspect of the FBI's internal security program, from personnel security, to computer security, document security, and security training and compliance. These deficiencies led to the absence of effective deterrence to espionage at the FBI and undermined the FBI's ability to detect an FBI mole. Moreover, the absence of deterrence played a significant role in Hanssen's decision to commit espionage. As he explained during debriefings: "[I]f I had thought that the risk of detection was very great, I would never have done it." Hanssen also exploited many of these weaknesses - particularly in document and computer security - to pass sensitive information to the KGB.

With respect to personnel security, Hanssen was never subject to a wide variety of basic security techniques and procedures that could have deterred or perhaps uncovered his espionage. For example, Hanssen was never asked to submit to a polygraph examination during his 25-year FBI career, despite his extraordinarily broad access to extremely sensitive human and technical intelligence information from across the Intelligence Community.

Hanssen likewise was never asked to complete a detailed financial disclosure form during his FBI career. During interviews with the Inspector General’s office, Hanssen identified meaningful financial disclosure as the security technique that would have provided the greatest deterrence to his espionage. As it was, Hanssen felt comfortable depositing thousands of dollars of the KGB's cash in a passbook savings account - listed in his own name - at a bank located a block away from FBI Headquarters. He also safely invented stories about family wealth and successful investments to explain his spending.

Hanssen received his first - and only - background reinvestigation in 1996, 20 years after he had joined the FBI. The FBI conceded that a number of "red flags" emerged during Hanssen's reinvestigation that were not resolved. The FBI's perfunctory background reinvestigation of Hanssen was not atypical, however. The system in place for background reinvestigations discouraged thoroughness. The principal investigators were not given access to the necessary source materials, such as the employee's personnel file, security file, and credit reports, and they primarily interviewed references supplied by the employee. They did not interview the employee. Moreover, the principal investigators merely collected information; they were not required to provide analysis or to make investigative recommendations. As a result, information developed through background reinvestigations received little analysis.

In committing espionage, Hanssen exploited serious weaknesses in the FBI's document and information security. His access to classified national security information - for both hard copies and computer files - was subject to little control or monitoring throughout his FBI career. As a result, he walked out of the FBI with copies and originals of some of the U.S. Government's most sensitive classified material - including numbered Top Secret documents - with little fear of being stopped or detected.

This deficiency is significant with respect to both deterrence and detection, because the FBI's inability to account for its most sensitive documents makes an access-based investigation for an FBI mole extremely difficult to pursue. The starting point for any such investigation is a list of those employees who had access to a compromised operation; at the FBI, that determination is often impossible to make.

During his last period of espionage, Hanssen used the FBI's ACS computer system to track the FBI's most sensitive espionage investigations - including the investigation that was looking for him. Hanssen also routinely searched the system for references to his own name and home address, and to the signal and drop sites that he used, to assure himself that he was not under investigation. Hanssen conducted thousands of searches for highly sensitive information that he had no conceivable "need to know," without fear that a computer audit would reveal his misconduct. As with his record of cash deposits, it would have been difficult for Hanssen to invent an innocent explanation for his repeated searches regarding his name, address, and signal and drop sites. Even more significantly, an audit of Hanssen's ACS activity would have identified him as someone worthy of investigation.

The serious security flaws in the FBI's ACS system - which have been discussed in prior OIG reviews and internal FBI inspection reports - had been apparent since the system's inception in 1995, but have not been remedied. Access restrictions were subject to ready override by Headquarters personnel who, like Hanssen, have no "need to know" about the sensitive operations the access restrictions are designed to protect. The system was likewise prone to human error, with documents concerning highly sensitive operations - such as the Hanssen investigation - being made available to any curious user because of improper uploading or inadequate restriction codes. The ACS system's audit function, mandated by Justice Department regulations and a principal tool against unauthorized usage as well as espionage, was rarely utilized before Hanssen's arrest.

The FBI's lax approach to personnel and information security also was apparent in its handling of security violations. Hanssen's career was replete with security breaches, none of which were documented in his personnel or security file or (with one exception) reported to the FBI's Office of Professional Responsibility, the Security Programs Manager, the NSD's Security Countermeasures Section, the Justice Department Security Officer, or any other central location for review and consideration of appropriate disciplinary action. While these security breaches did not necessarily show that Hanssen was engaged in, or was predisposed to engage in, espionage, they demonstrated that he was unfit to have access to sensitive information. The review revealed unwillingness within the FBI to report security violations and take them seriously, even when highly sensitive information was involved. The Hanssen case also highlighted the absence of a centralized reporting program for security violations at the FBI, as well as the absence of a unit at FBI Headquarters responsible for collecting derogatory information concerning FBI employees, particularly in the counterintelligence context.

Many of the security issues that emerged from the review of the Hanssen case stem from deficiencies in training.

For example, FBI personnel specialists responsible for employee background reinvestigations did not have the necessary analytical training to assess issues that commonly arise during background investigations. FBI employees using the ACS system did not have sufficient knowledge and training to use the security controls that were built into the system to regulate access to sensitive cases. FBI employees were not knowledgeable regarding the requirements for handling classified materials, particularly at the Sensitive Compartmented Information (SCI) level. And employees and supervisors were not properly trained in how to report and document security violations.

In sum, the absence of adequate security controls at the FBI made espionage too easy for Hanssen to commit.

Because of inadequate document security, he felt comfortable removing thousands of pages of classified documents from FBI offices.

Because of lax controls over even the most sensitive information and violations of the "need to know" principle, he knew that he could compromise the FBI's most important Soviet/Russian assets and operations with little risk that the loss of these cases would be traced to him.

Because of inadequate computer security, he felt free to conduct thousands of searches on the ACS system for references to himself and for information concerning the FBI's most sensitive counterintelligence cases. Because of the absence of financial disclosure, he felt comfortable depositing thousands of dollars in espionage proceeds into his bank accounts.

Because of the absence of polygraph examinations for onboard employees, he never had to confront the issue of what would happen when he failed polygraph questions aimed at determining whether he was or had ever been an agent of a foreign power.

And because of a flawed and inadequate background reinvestigation program, he never had to fear that the FBI would uncover spending and other behavior inconsistent with his position at the FBI.

The defects in the FBI's security program were the product of decades of neglect.

Protecting Walruses

2010-06-23T04:37:00.002+10:00

One of the true tests of leadership is the ability to recognise a problem before it becomes an emergency.

Honestly Lay Bare was going to move on from the Gulf of Mexico environmental disaster this week until we saw footage of the Congressional Inquiry.

The Inquiry was a United States House of Representatives hearing where the big oil companies were all required to attend.

In the Committee hearing there was discussion about the oil companies emergency response plans.

The following is a direct transcript:

The committee asked each of the five major oil companies for their oil spill response plans.

On paper they are very impressive, each document is more than 500 pages long.

But what they show is that ExxonMobil, Chevron, ConocoPhillips and Shell are no better prepared to deal with a major oil spill than BP.

The same company, The Response Group, wrote the five plans and describes them as cookie cutter plans.

What we found was that these five companies have response plans that are virtually identical.

The plans cite identical response capabilities and tout identical ineffective equipment. In some cases they use the exact same words.

We found all of these companies, not just BP, made the exact same assurances.

The covers of the five response plans are 4 different colors, but the content is 90 percent identical.

Like BP, three other companies include references to protecting walruses, which have not called the Gulf of Mexico home for 3 million years.

Two other plans are such dead ringers for BP's that they list a phone number for the same long dead expert.

Source: http://energycommerce.house.gov/documents/20100615/transcript.06.15.2010.ee.pdf

Such a commentary was of sufficient interest to Honestly Lay Bare that we shared it with a number of colleagues and friends (of which we have both!) and the responses were a fascinating cross section of what the rest of the world is thinking in response to what is easily the risk management case study of our times.

We have removed any identifying references from the responses but contained within is a great catalogue of what issues ALL companies should consider in the event of a doomsday scenario visiting their organisation.

Hard to believe such large organisations would take such a large risk on such an important issue!

Pretty tricky to have a proven emergency response when you're drilling in depths/conditions where no-one has ever had to manage this sort of incident before. You can't do practices for this sort of thing.

Unbelievable. Wonder what the consultants charged for producing the same plan for each client?

MBAs are going to be built on the back of this one ! It is interesting how these issues can be interpreted and it will be interesting to see where it all ends up. One might also argue that having consistent approaches across the industry might have some advantages - although the walruses are a bit of a worry and each has probably paid some consultant a ridiculously high fee to have them take the same product off the shelf and change the cover.

It does demonstrate key risks around using contractors who develop template solutions to meet timeframes and keep costs low. Also highlights the need to have executable plans able to be used by operators rather than a top shelf plan to meet compliance requirements.

There must be a concept that something trivial undermines the whole.... This is it

Given the size & nature of the risks involved this is pretty surprising. I have been heavily involved in liquidity crisis plans, so I forwarded your commentary to some of the guys here who are responsible for liquidity crisis planning.

Very interesting indeed, especially given the other super majors seem to be hanging BP out to dry.

They need to consider the "unthinkable" as a real possibility!

I believe BP Tony's plan should have been to move himself and assets to Brazil

That's what happens when a company hands over its basic responsibility to an external service provider .....

Hopefully, a diligent risk process applied to Business Resilience at BUs and Functions would uncover such a risk.

As a 'practicing' consultant there are deeper messages about tailored solutions!

Quite right - auditors will be looking at these response plans more closely considering the impact such disasters can have on financial position of companies - contingent asset???

But perhaps the final word is that from a New Orleans resident that has lived through Katrina:

Soooo sad, isn't it. Lives, economy, and ecology and environment forever changed.

Prudhoe Bay Oil Spill

2010-06-16T04:11:00.000+10:00

We have taken significant steps to ensure our operations are safe and reliable

As the world waits in hope and fear as to the long term environmental impacts of the Gulf of Mexico oil spill, today Honestly Lay Bare takes you back to 2006 and the Prudhoe Bay oil spill.

The Prudhoe Bay field is located 650 miles north of Anchorage and 400 miles north of Fairbanks. It is 1200 miles from the North Pole and 250 miles north of the Arctic Circle.

The Prudhoe Bay field is the largest field in North America and the 18th largest field ever discovered worldwide. Of the 25 billion barrels of original oil in place, more than 13 billion barrels can be recovered with current technology. Prudhoe Bay field was discovered on March 12, 1968.

The next 8 years saw frenetic activity as companies with lease holdings in the vicinity worked to delineate the reservoir, resolve equity participation, and put together an initial infrastructure.

Prudhoe Bay came on stream in June 20, 1977, rapidly increasing production until the field’s maximum rate was reached in 1979 at 1.5 million barrels per day. This rate was maintained until early 1989, and is currently declining by 10% per year. Production totaled approximately 475,000 barrels per day on January 1, 2004. More than 10 billion barrels have already been produced.

On March 2, 2006 a well pad operator discovered a leak in the transit line that delivers oil to the trans - Alaska pipeline from Gathering Center 2 in the western operating area of the oil field.

The leak occurred in the transit line segment between GC-2 and the point where the production from Gathering Center 1 enters the line.

An immediate response was launched to what, with an estimated volume of around 200,000 gallons, proved to be the largest spill in the history of Prudhoe Bay.

The cause of the leak became obvious within a few days of its discovery: internal corrosion had caused a one-quarter-inch hole in the bottom of the transit pipeline.

The hole had formed in a section of line buried under what is termed a caribou crossing, a culvert designed to allow animals to cross over a pipeline as opposed to going under an elevated pipeline.

The winter snow covered the leaking oil, so the spill remained undetected, probably for several days. It was odor — the smell of oil — that ultimately exposed the leak to a worker.

In the wake of the transit line leak there was much discussion about the line’s leak detection system.

The leak detection system measures the volumes of fluid entering each pipeline segment and the volumes of fluid leaving each segment. The system triggers an alarm if the volume measurements don’t match up.

So why did the system not detect a leak of the magnitude of the transit line oil spill?

In fact the leak detection alarm did sound four times during the week before the spill was discovered, although the alarm did not go off during the two days prior to the discovery.

Both before and after the discovery of the leak the company interpreted the leak detection alarms as false alarms.

It now seems clear that the leak occurred slowly over an extended period of time. As a result, the leak rate was below the regulated and practical threshold of the leak detection system.

In a report in 2005, the company said it based its corrosion-fighting on a limited budget instead of needs.

Employees had raised their concerns before the actual incident, which were ignored by management.

In an e-mail to a company lawyer in June 2004, Mr. Kovac, an official of the United Steelworkers union representing workers at the facility, forwarded a collection of his earlier complaints to management.

One of these, dated 28 February 2003, concerned "corrosion monitoring staffing levels".

It began, "The corrosion monitoring crew will soon be reduced to six staff down from eight."

Carolyn Merritt, chief executive officer of the United States Chemical Safety and Hazard Investigation Board told the Congressional Committee set up to review the incident that "virtually all" of the root causes of the problems at Prudhoe Bay had "strong echoes" of those that led to the Texas City 2005 explosion in Houston. These had included cost cutting and a failure to invest in the plant.

The company involved in the Texas City explosion, the Prudhoe Bay Oil Spill and the Gulf of Mexico oill spill was BP.

Who Was in Charge?

2010-06-09T01:57:00.000+10:00

It’s a very complex operation in which the human element has not been aligned with the complexity of the system

Over the next two weeks, Honestly Lay Bare examines the control failings behind the Gulf of Mexico environmental disaster and its (now nearly forgotten) predecessor, the Prudoe Bay Oil Spill.

On Sunday past, the New York Times ran an extensive front page article on the failings that led to the Gulf of Mexico incident.

It was titled At Issue in Gulf: Who Was in Charge? Hodgepodge of Oversight for Rig Helped Set Stage for Disaster

The article is probably the best constructed case study on the management of risk and the failings of controls that Honestly Lay Bare has seen in a long time.

This Dear Reader is the risk management case study of our time.

Over six days in May, far from the familiar choreography of Washington hearings, federal investigators grilled workers involved in the Deepwater Horizon disaster in a chilly, sterile conference room at a hotel near the airport here.

The six-member panel of Coast Guard and Minerals Management Service officials pressed for answers about what occurred on the rig on April 20 before it exploded. They wanted to know who was in charge, and heard conflicting answers.

They pushed for more insight into an argument on the rig that day between a manager for BP, the well’s owner, and one for Transocean, the rig’s owner, and asked Curt R. Kuchta, the rig’s captain, how the crew knew who was in charge.

“It’s pretty well understood amongst the crew who’s in charge,” he said.

“How do they know that?” a Coast Guard investigator asked.

“I guess, I don’t know,” Captain Kuchta said. “But it’s pretty well — everyone knows.”

Looking annoyed, Capt. Hung Nguyen of the Coast Guard, one of the chief federal investigators, shook his head. The exchange confirmed an observation he had made earlier in the day at the hearing.

“A lot of activities seem not very tightly coordinated in the way that would make me comfortable,” he said. “Maybe that’s just the way of business out there.”

Investigators have focused on the minute-to-minute decisions and breakdowns to understand what led to the explosion of the Deepwater Horizon, killing 11 people and setting off the largest oil spill in United States history and an environmental disaster. But the lack of coordination was not limited to the day of the explosion.

New government and BP documents, interviews with experts and testimony by witnesses provide the clearest indication to date that a hodgepodge of oversight agencies granted exceptions to rules, allowed risks to accumulate and made a disaster more likely on the rig, particularly with a mix of different companies operating on the Deepwater whose interests were not always in sync.

And in the aftermath, arguments about who is in charge of the cleanup — often a signal that no one is in charge — have led to delays, distractions and disagreements over how to cap the well and defend the coastline. As a result, with oil continuing to gush a mile below the surface in the Gulf of Mexico, the laws of physics are largely in control, creating the daunting challenge of trying to plug a hole at depths where equipment is straining under more than a ton of pressure per square inch.

Tad W. Patzek, chairman of the Petroleum and Geosystems Engineering Department at the University of Texas, Austin, has analyzed reports of what led to the explosion. “It’s a very complex operation in which the human element has not been aligned with the complexity of the system,” he said in an interview last week.

His conclusion could also apply to what occurred long before the disaster.

Deepwater oil production in the gulf, which started in 1979 but expanded much faster in the mid-1990s with new technology and federal incentives, is governed as much by exceptions to rules as by the rules themselves.

Under a process called “alternative compliance,” much of the technology used on deepwater rigs has been approved piecemeal, with regulators cooperating with industry groups to make small adjustments to guidelines that were drawn up decades ago for shallow-water drilling.

Of roughly 3,500 drilling rigs and production platforms in the gulf, fewer than 50 are in waters deeper than 1,000 feet. But the risks and challenges associated with this deeper water are much greater.

“The pace of technology has definitely outrun the regulations,” Lt. Cmdr. Michael Odom of the Coast Guard, who inspects the rigs, said last month at a hearing.

As a result, deepwater rigs operate under an ad hoc system of exceptions. The deeper the water, the further the exceptions stretch, not just from federal guidelines but also often from company policy.

So, for example, when BP officials first set their sights on extracting the oily riches under what is known as Mississippi Canyon Block 252 in the Gulf of Mexico, they asked for and received permission from federal regulators to exempt the drilling project from federal law that requires a rigorous type of environmental review, internal documents and federal records indicate.

As BP engineers planned to set certain pipes and casings for lining the well in place in the ocean floor, they had to get permission from company managers to use riskier equipment because that equipment deviated from the company’s own design and safety policies, according to internal BP documents obtained by The New York Times.

And when company officials wanted to test the blowout preventer, a crucial fail-safe mechanism on the pipe near the ocean floor, at a lower pressure than was federally required, regulators granted an exception, documents released last week show.

Regulators granted yet another exception when BP sought to delay mandatory testing of that blowout preventer because they had lost “well control,” weeks before the rig exploded, BP e-mail messages show.

The Minerals Management Service, which regulates offshore drilling, went along with these requests partly because the agency has for years had a dual role of both fostering and policing the industry — collecting royalty payments from the drilling companies while also levying fines on them for violations of law.

Its safety inspections usually consist of helicopter visits to offshore rigs to sift through company reports of self-administered tests.

Even Ken Salazar, the interior secretary, who oversees the minerals agency, has said that oil companies have a history of “running the show” at the agency, a problem he has vowed to correct.

The minerals agency shares responsibility for oversight of drilling in the gulf with many others. The Environmental Protection Agency and others review offshore drilling for potential damage to wildlife and the environment. The Coast Guard inspects vessels for seaworthiness and licenses crew members to work on the rigs. The National Oceanic and Atmospheric Administration monitors dangerous weather conditions over deep seas.

And regulatory duties extend even past the federal government. Foreign countries, or “flag states,” where many oil rigs are registered, have their own sets of safety requirements and inspections.

On the Deepwater Horizon, for example, the minerals agency approved a drilling plan for BP that cited the “worst case” for a blowout as one that might produce 250,000 barrels of oil per day, federal records show. But the agency did not require the rig to create a response plan for such a situation.

If a blowout were to occur, BP said in its plan, the first choice would be to use a containment dome to capture the leaking oil. But regulators did not require that a containment dome be kept on the rig to speed the response to a spill. After the rig explosion, BP took two weeks to build one on shore and three days to ship it out to sea before it was lowered over the gushing pipe on May 7. It did not work.

(The rig’s “spill response plan,” provided to The Times, includes a Web link for a contractor that goes to an Asian shopping Web site and also mentions the importance of protecting walruses, seals and sea lions, none of which inhabit the area of drilling. The agency approved the plan.)

More broadly, regulators have not required technology and strategies for dealing with deepwater spills to be improved.

Engineers trying to control the blowout are using the same tactics they used in 1979 when the Ixtoc I well blew up in the Bay of Campeche off the coast of Mexico. In the earlier blowout, they first tried lowering a containment dome over the leak. When that failed, they unsuccessfully tried to inject golf balls and other material in a move called a junk shot, which was also tried and abandoned for the Deepwater Horizon.

Questions of oversight also came up in the New Orleans hearings last month. For example, Michael J. Saucier, an official with the Minerals Management Service, said that his agency “highly encouraged” — but did not require — companies to have backup systems to trigger blowout preventers in case of an emergency.

“Highly encourage?” Captain Nguyen of the Coast Guard asked. “How does that translate to enforcement?”

“There is no enforcement,” Mr. Saucier answered.

In some ways it was jinxed from the start.

As early as June 2009, BP engineers had expressed concerns in internal documents about using certain casings for the well because they violated the company’s safety and design guidelines. But they proceeded with those casings.

Mechanical problems started in March with the Deepwater, setting the stage for the April 20 explosion.

More than five weeks before disaster, the rig was hit by several sudden pulsations of gas called “kicks” and a pipe had become stuck in the well. The blowout preventer, designed to seal the well in an emergency, had been discovered to be leaking fluids at least three times.

Dealing with these problems required teamwork, a challenge to the throng of different companies with responsibilities on the rig. Of the 126 people present on the day of the explosion, only eight were employees of BP. The interests of the workers did not always align.

In testimony to government investigators, rig workers repeatedly described a “natural conflict” between BP, which can make more money by completing drilling jobs quickly, and Transocean, which receives a leasing fee from BP every day that it continues drilling.

Halliburton was also on hand to provide cementing services, while a subsidiary monitored various drilling fluids. A different company provided drilling fluid systems, another provided technicians to operate the remote-control vehicles that are they eyes of the rig crew deep underwater, and yet another provided the well casing.

Amid this tangle of overlapping authority and competing interests, no one was solely responsible for ensuring the rig’s safety, and communication was a constant challenge.

“I don’t have a feeling that there is somebody who has a handle on the coordination of all the activities on this vessel, going from routine to crisis,” Captain Nguyen said during one hearing. “BP is in charge of certain things, Transocean is in charge of certain things.”

BP had fallen behind schedule and over budget, paying roughly $500,000 a day to lease the rig from Transocean. The rig was 43 days late for starting a new drilling job for BP by the day of the explosion, a delay that had already cost the company more than $21 million.

With the clock ticking, bad decisions went unchecked, warning signs went unheeded and small lapses compounded.

On April 1, a job log written by a Halliburton employee, Marvin Volek, warns that BP’s use of cement “was against our best practices.”

An April 18 internal Halliburton memorandum indicates that Halliburton again warned BP about its practices, this time saying that a “severe” gas flow problem would occur if the casings were not centered more carefully.

Around that same time, a BP document shows, company officials chose a type of casing with a greater risk of collapsing.

Despite noticing cementing problems, BP skipped a quality test of the cement around the pipe. Federal regulators also gave the rig a pass at several critical moments. After the rig encountered several problems, including the gas kicks and the pipe stuck in the well, the regulators did not demand a halt to the operation. Instead, they gave permission for a delay in a safety test of the blowout preventer.

Tests shortly before the well blew out found a buildup of pressure that was an “indicator of a very large abnormality,” BP concluded and disclosed to Congress in a preliminary report last month. Yet, the rig team was satisfied after another test was deemed successful, and it proceeded.

About 10 hours before the explosion, the challenges of trying to keep the pressure in the well under control led to an argument among the workers about how best to finish the well and move the rig to the next site.

Douglas Brown, a Transocean mechanic on the rig, told investigators that an unnamed BP official whom he called “the company man” had instructed rig workers to execute a new plan for removing the riser and sealing the well. Mr. Brown testified that workers thought the plan was too risky. But he could not hear details of the argument that ensued.

“The company man was basically saying, ‘Well, this is how it’s going to be,’ ” Mr. Brown told investigators at a hearing on May 26 near New Orleans, adding that the Transocean rig workers “reluctantly agreed.”

When the explosion occurred around 9:50 p.m. on April 20, there was pandemonium on the rig. Most workers headed for lifeboats. Others rescued shipmates trapped under equipment. On the bridge, Captain Kuchta gathered with at least eight other managers and crew members to decide on an emergency plan.

Steve Bertone, the chief engineer for Transocean, wrote in his witness statement that he ran up to the bridge where he heard Captain Kuchta screaming at a worker, Andrea Fleytas, because she had pressed the distress button without authorization.

Mr. Bertone turned to another worker and asked him if he had called to shore for help but was told he did not have permission to do so. Another manager tried to give the go-ahead, the testimony said, but someone else said the order needed to come from the rig’s offshore installation manager.

After the spill, the government and BP were supposed to cooperate, partly a consequence of laws written after the 1989 Exxon Valdez spill that were intended to make polluters more accountable for cleaning up their own messes.

One example of what was supposed to be a unified front was the Joint Information Center. Housed in a Shell-owned training and conference center in Robert, La., the center includes roughly 65 employees, 10 of whom work for BP. Together, they write and issue news releases and coordinate posts on a Web site, Facebook and Twitter.

But the partnership between BP and the government has strained along with the failure of efforts to plug the well. Mr. Salazar, for example, assured the public on May 2 that the administration was keeping its “boot on the neck” of BP. Next he was being publicly chastised by President Obama for using antagonistic language.

BP’s chief executive, Tony Hayward, told reporters at one point that the spill was “relatively tiny.” Federal officials soon released estimates indicating that the spill had far outpaced the Exxon Valdez disaster.

Under intense media scrutiny, at least a dozen federal agencies have taken part in the spill response, making decision-making slow, conflicted and confused, as they sought to apply numerous federal statutes.

In one stark example of government disputes, internal e-mail messages from the minerals agency obtained by The Times reveal a heated debate over whether to ignore some federal environmental laws about gas emissions in an effort to speed the drilling of relief wells.

One agency official, Michael Tolbert, warned colleagues on April 24 that emissions of nitrous oxide from the well were “pretty far over the exemption level,” an issue that his colleague Tommy Broussard said could result in “BP wasting time” on environmental safeguards in a way that would be “completely stupid.”

But a third colleague, Elizabeth Peuler, intervened to demand that the agency take “no shortcuts.”

“Not even for this one,” she said. “Perhaps even especially for this one.”

Debates over the speed — or lack thereof — of the government response have also played out in Louisiana, where state officials spent much of May repeatedly seeking permission from the federal government to construct up to 90 miles of sand barriers to prevent oil from reaching the wetlands.

For three weeks, as the giant slick crept closer to shore, officials from the White House, Coast Guard, Army Corps of Engineers, Fish and Widlife Service, National Oceanic and Atmospheric Administration and Environmental Protection Agency debated the best approach.

They ultimately approved the use of only one barrier, called a berm, to be paid for by BP.

Comparing the federal government’s response to “telling a drowning man to wait,” Gov. Bobby Jindal of Louisiana asked: If one berm is safe, then why not the 23 others that he had requested? Slowly, the federal government approved more berms.

From the start, BP had played down the extent of the problem in miscalculating the rate of the leak and in denying the existence of underwater oil plumes. By deferring to the company, federal officials underestimated the problem they were facing and thus what was needed to respond to it.

It took more than a week after the explosion for the homeland security secretary, Janet Napolitano, to declare, on April 29, “a spill of national significance” a legal categorization that was needed before certain federal assistance could be authorized.

Because of such delays, critics have charged, more coastline will be hit, more animals will die, more habitats will be ruined and more money will be lost in tourism, fishing and real estate.

And yet, the administration is limited in its ability to divorce itself from BP, because federal officials rely on the company for technology, personnel and financing for the cleanup. The relationship reached a turning point last week when the administration said the national incident commander, Adm. Thad W. Allen of the Coast Guard, would start giving solo briefings. He will no longer share a podium with BP, which will offer its own briefings.

That move, however, does not resolve the matter of who is actually in charge in the gulf — of ensuring safety and regulating the dangerous extraction of vast riches under the deepest waters there, as well as of handling the continuing emergency.

The question is proving equally vexing as investigators try to place blame for events on the rig the day of the explosion— as was clear on Tuesday when Attorney General Eric H Holder Jr. announced that he had begun a criminal investigation.

Citing “a wide range of possible violations,” Mr. Holder declined to specify the target of the investigation, because, he said, the authorities were still not clear on “who should ultimately be held liable.”

Post based on At Issue in Gulf by Ian Urbina New York Times Sunday June 6 2010

Don't Mess with the Michelin Man ...

2010-06-02T04:56:00.000+10:00

No man in the world has more courage than the man who can stop after eating one peanut.

A number of years ago, Honestly Lay Bare and (the then soon to be Mrs) Honestly Lay Bare dined two nights in a row at a one star Michelin restaurant just outside Geneva.

Why two nights in a row you ask ... well it was a somewhat isolated - but incredibly grand - hotel and secondly because it was a one star Michelin restaurant.

They were two of the great meals of our life.

It is beyond the comprehension of Honestly Lay Bare's limited culinary imagination to even contemplate what a meal (no ... English wouldn't have the appropriate word for it) would be like at a three star Michelin restaurant.

Many meals later, Honestly Lay Bare came across a November 2009 New Yorker article on the life of a Michelin reviewer.

Welcome Dear Reader to what it is like to be a top end food auditor!

And just before you accuse Honestly Lay Bare being flippant ... read the article and occassionally substitute the word inspector for auditor and the same issues of professionalism, training, accuracy of report and impacts of bad reviews on the recipients comes up again and again.

If you will now excuse Honestly Lay Bare we need to order!

One afternoon last month, a woman in her early thirties, with shoulder-length blond hair and large brown eyes, arrived at Jean Georges, on the ground floor of the Trump International Hotel, in midtown Manhattan. The restaurant, which is owned by the chef Jean-Georges Vongerichten, and is one of the highest rated in the world, has an understated décor, with bare white walls and floor-to-ceiling windows. The woman took a seat at one of the tables in the center of the room. She wore a light-blue dress with a high neckline, little makeup, and no jewelry. There was nothing remarkable about her appearance, and her demeanor was quiet and unassuming, as if designed to deflect attention—a trait indispensable for her profession as an inspector for the Michelin hotel-and-restaurant guide.

Conceived in France at the beginning of the last century, the Michelin guide today has editions in twenty-three countries and is one of the best-selling restaurant guides in the world. It operates on the principle that only reviews by anonymous, professionally trained experts can be trusted for accurate assessments of a restaurant’s food and service. Major newspapers like the Times aspire to anonymity for their restaurant reviewers but rarely achieve it. In his recent memoir, “Born Round,” Frank Bruni, who served as the Times’ restaurant reviewer from 2004 until earlier this year, describes his efforts at camouflage—using aliases, wearing a wig and fake mustache—which were mostly futile once the dust-jacket photograph from one of his early books was posted on the Internet. Photographs of Bruni’s successor, Sam Sifton, doctored in several ways to suggest what he might look like in disguise, began to circulate on foodie Web sites like Eater months before he took up his duties.

Michelin has gone to extraordinary lengths to maintain the anonymity of its inspectors. Many of the company’s top executives have never met an inspector; inspectors themselves are advised not to disclose their line of work, even to their parents (who might be tempted to boast about it); and, in all the years that it has been putting out the guide, Michelin has refused to allow its inspectors to speak to journalists. The inspectors write reports that are distilled, in annual “stars meetings” at the guide’s various national offices, into the ranking of three stars, two stars, or one star—or no stars. (Establishments that Michelin deems unworthy of a visit are not included in the guide.) A three-star Michelin ranking—like that enjoyed by Jean Georges—is exceedingly rare. Only twenty-six three-star restaurants exist in France, and only eighty-one in the world.

In 2005, Michelin launched its first foray into North America, with the publication of the 2006 New York City guide. (It has also published guides to Los Angeles, Las Vegas, and San Francisco.) Since coming to America, Michelin has learned that its brand of Gallic opacity and unapologetic gastronomic élitism has been a tougher sell here than it was in Europe or Asia. (The Tokyo edition of the guide, which débuted in 2007, sold more than a hundred thousand copies on its first day.) Five years after its arrival in New York City, Michelin has failed to knock the Times from its perch as the premier arbiter of restaurants in the city, or to outsell the Zagat guide, which relies on customer surveys for its restaurant rankings.

This fall, in an effort to promote what the managing director of the guides, a forty-eight-year-old Frenchman named Jean-Luc Naret, calls a “better understanding” of the guides’ means and methods, Michelin launched a Web site, Famously Anonymous, to explain to Americans the concept of the Michelin inspector; it has also recently opened Twitter accounts for its reviewers. But by far the most salient sign of Michelin’s new openness was its decision, this fall, to allow me to meet—and to eat with—one of its New York-based inspectors.

Naret joined me and the inspector for lunch. He has a handsome, darkly tanned face, and favors designer suits with flared-collar shirts and no tie. Although the inspector was never identified to the staff, Naret, who eats often at Jean Georges and is well-known to the restaurant’s staff, considered her anonymity compromised; she would never pay an inspection visit to the restaurant again. As a precondition of our interview, I was told that certain details of the inspector’s personal life would be obscured—or not divulged to me at all. When I asked her name, the inspector laughed nervously. “No,” she said. “Let’s not even say it. Make something up.”

I suggested the first thing that came to mind. “Maxime?”

Naret smiled, and then, with a soupçon of extra secrecy, began referring to her as M.

Maxime is a New Yorker. She said that speaking to me about her work felt “surreal.” “We spend all our time not letting people know who we are,” she said, but admitted that she had told her husband what she does for a living. “He’s an attorney; he knows all about confidentiality.” For most others, she keeps her occupation vague. “We try not to lie,” she said. “You say you’re ‘in publishing,’ something like that.”

The waiter, a young man in a dark suit, handed us menus. I asked Maxime how she chooses what to order.

“You’re looking for something that really tests a number of quality ingredients and then something that’s a little complex, because you want to see what the kitchen can do,” she said.

“We would never order something like a salad. We rarely order soup.” She decided to try the foie-gras brûlée, “although I usually avoid it, because of the calories.”

Maxime eats out more than two hundred days of the year, lunch and dinner. She eats the maximum number of courses offered—at Jean Georges, we were having three courses, plus dessert; that way, she said, “you really get to see the most food”—and she is required to eat everything on her plate. It is a regimen that calls to mind the force-feeding of the ducks that supply Vongerichten with his velvety foie gras, but Maxime, blessed with a quick metabolism, had managed to avoid obesity, an occupational hazard.

She was tending toward the Arctic char for her main course but couldn’t decide about her second course. The waiter reappeared and asked if he could answer any questions.

“Can you tell me about the crab toast?” she asked.

“It’s Peekytoe crab, a chiffonade of tarragon as well as chives topped with white sesame seeds, toasted in the oven, finished with a miso mustard, and a pear salad on the side,” he said.

“It’s new?” she said.

“About a week on the menu.”

She asked the waiter to give her a minute and then leaned in to me. Inspectors love it when they ask a question and can tell that a waiter has made up an answer, she explained, adding, “That never happens here.”

The original Guide Michelin was developed by André Michelin, an engineer, and his younger brother, Édouard. Born into a wealthy manufacturing family in Clermont-Ferrand, the brothers, in 1895, presented a new design for a pneumatic tire for cars. Automobiles were still a rarity on roads in France. The brothers had the idea that a guidebook to hotels in the French countryside would encourage people to climb into a car (equipped with Michelin tires) and hit the open road. The first edition, published in 1900, was a five-hundred-and-seventy-five-page alphabetical listing of towns throughout France and the distances between them, with recommendations for hotels and places to refuel, and instructions on how to change a flat. In a preface to the first edition, André wrote, “This work comes out with the century; it will last as long.” In 1933, the Michelin brothers introduced the first countrywide restaurant listings and unveiled the star system for ranking food, with one star denoting “a very good restaurant in its class”; two stars “excellent cooking, worth a detour”; and three stars “exceptional cuisine, worth a special journey.”

Over the years, other publications attempted to challenge Michelin but without success. To offset the expense of sending inspectors to restaurants across the country, rival guides were obliged to accept free meals, or to offer favors, like free advertising in the guides’ pages. Michelin’s inspectors faced no such quid pro quo. A century after André and Édouard created their first tire patent, Michelin has grown into one of the most successful multinational corporations in the world, a company more than three times the size of Goodyear. Michelin’s profits help to defray the costs of food inspectors’ salaries, travel budgets, and restaurant bills (which can run into real money at the upper end of the gastronomic scale: six years ago, at Bernard Loiseau’s La Côte d’Or, a three-star restaurant in Burgundy, the chicken stuffed with carrots, leeks, and truffles was two hundred and sixty-seven dollars). This independence, coupled with the jealously guarded anonymity of its inspectors, is what gives Michelin its aura of incorruptibility. The French chef Paul Bocuse, who helped create nouvelle cuisine in the nineteen-sixties, and whose restaurant near Lyons has held a three-star Michelin ranking for a record forty-five years, has said, “Michelin is the only guide that counts.” Indeed, in France publication of the guide each year sparks the kind of media excitement attendant on the Academy Awards. The days and weeks leading up to publication day are given over to endless debate, speculation, and rumor on TV and in newspapers over who might lose, and who might gain, a star. The results, revealed in early March, provide either a very public triumph or a very public humiliation for the chefs concerned, and a corresponding rise or drop in revenues for their restaurants.

Not everyone, however, is convinced that anonymous experts with bottomless expense accounts are the key to a dependable restaurant guide. “We’re coming at it from a completely different perspective,” says Nina Zagat, who dreamed up the idea of a customer-driven food survey with her husband, Tim, in their Upper West Side apartment thirty-one years ago. Today, Zagat covers more than ninety cities worldwide, is available as an iPhone app, and remains the top-selling restaurant guide in New York. “We’ve never believed that there were experts that should tell you what to do.”

“I’d love to know what their training is,” Tim Zagat added, speaking about Michelin’s inspectors. “Usually, the experts—for example, the major critics for the major papers—you know what their background is. But this business of making a virtue out of not knowing? I question it. How are you supposed to judge their expertise if you don’t have any idea who they are?”

Bernard Loiseau, the chef and owner of La Côte d’Or, once told a fellow-chef that if he ever lost one of his Michelin stars he would kill himself. Loiseau had made a life’s ambition of becoming a three-star chef, a goal he achieved in 1991, seventeen years after arriving at La Côte d’Or. His ranking led to a line of frozen food bearing his name and likeness, and the Legion of Honor, awarded by President François Mitterrand. But by 2002 Loiseau’s classic cooking was losing ground to trendier fusion styles, business was slowing, and he was swimming in debt. As Rudolph Chelminski relates in his 2005 book “The Perfectionist,” the food writer François Simon published a story in Le Figaro hinting that Loiseau was on thin ice with Michelin. Loiseau, who had suffered periodic depression for years, sank into despair. In early February, 2003, he was notified by Michelin that he would keep his third star. Still, Simon wrote another piece, in which he suggested that Loiseau and his third star were “living on borrowed time.” Two and a half weeks later, after a day at work in the kitchen, Loiseau killed himself with a shotgun blast to the head. He was fifty-two.

Loiseau’s death ushered in a dark period for the guide. In early 2004, an inspector named Pascal Rémy broke the company’s code of silence when he published a book based on a diary that he had kept of fifteen years on the road as a Michelin inspector in France. (Rémy, having notified Michelin of his plans to publish, was fired; he later sued.) Rémy’s book, “L’Inspecteur Se Met à Table” (“The Inspector Sits Down at the Table”), described the inspector’s life as one of loneliness and underpaid drudgery, driving around the French countryside for weeks on end, dining alone and under intense pressure to file reports. Michelin had always hinted that it employed roughly a hundred inspectors to cover Europe, but Rémy claimed that it employed only eleven within France when he was first hired, in 1988—a number that had shrunk to five by the time he left, in 2003. Contrary to Michelin’s assertion that every starred restaurant was revisited several times a year, Rémy said only one visit every few years was possible.

Furthermore, he wrote, the guide played favorites—most notably with Bocuse, whose restaurant in Lyons was known, according to Rémy, to have declined drastically in quality yet continued to hold three stars. Rémy’s revelations made the front page of Le Monde. Derek Brown, the director of the guides at the time, denied Rémy’s assertions in an interview in the Times, but he remained vague about how many full-time inspectors the guide employs in France and offered an anemic rebuttal to Rémy’s claim that certain three-star chefs were untouchable: “There would be little sense in saying a restaurant was worth three stars if it weren’t true, if for no other reason than that the customer would write and tell us.”

The Rémy affair occurred during Brown’s final year at the guide. As his successor, Michelin hired the charismatic and outgoing Naret, who worked for many years as a hotelier, but whose professional focus has not been food. He boasts of giving more than two thousand interviews a year, in which he tells journalists how many inspectors Michelin employs in France (about fifteen), throughout the world (ninety), and in the United States (ten).

Naret introduced the idea of expanding into North America and chose New York City as the best place to start. The first New York City guide, which appeared in November, 2005, was created by a team of five European inspectors, who examined fifteen hundred restaurants in all five boroughs, and selected five hundred for inclusion. Their selection was criticized, by some, as Francocentric. The Times noted that more than half the restaurants that received at least two stars “could be considered French.” Among the one-star restaurants was the now defunct La Goulue, which one highly regarded New York food critic describes as “this dinosaur of an outdated, mediocre kind of French bistro on the Upper East Side.” And the 2006 guide failed to award stars to Eleven Madison Park (Danny Meyer’s haute-cuisine restaurant), Craft (the “Top Chef” head judge Tom Colicchio’s take on contemporary American food), “or any number of celebrated restaurants,” the critic adds. “It was one of those things, like, only a bunch of French people could respond that way.”

Naret, who says that he never intended to continue to use European teams, established an office in New York for the next year’s guide and began recruiting New Yorkers. He received thirty-five hundred applications.

Though born in New York City, Maxime moved with her family to a nearby “rural countryside” town, which, she says, has “an extraordinarily active foodie community.” Maxime’s family was discerning about food, and came into the city frequently to sample the restaurants. “I ate falafel at Mamoun’s and bagels and lox from Russ & Daughters before I’d even heard of a peanut-butter sandwich,” she said. The family also travelled abroad, and she learned early about the Michelin guide. “Other kids wanted a Barbie or something. I wanted to go to a three-star restaurant in Paris.” Maxime’s fascination with food was not confined to haute cuisine. “It’s a global food passion,” as she put it. Big Macs, tacos from “these divey little delis in Sunset Park,” Chinese food from “a Szechuan restaurant that’s a total dump,” even hot dogs from Papaya King’s grimy corner kiosks in Manhattan elicit groans of pleasure: “Oh, fantastic hot dogs!”

Linda Bartoshuk, a professor of community dentistry and behavioral science at the University of Florida, has for more than three decades done research into genetic variations in the perception of taste. Through studies of the disposition and the density of taste buds on the tongues of test subjects, Bartoshuk has divided people into three categories: supertasters, tasters, and non-tasters. Most food and wine experts would fall into the “taster” category. (Supertasters, despite their name, have too many taste buds and are thus oversensitive to flavor, and tend to prefer bland foods; non-tasters can eat an exquisite risotto and say, “Eh.”) I asked Maxime if she believed that she had some biological advantage when it came to tasting and discerning flavors.
“You could argue that the inspectors have some biological makeup, or you could argue that they eat so much that they have the grounds for comparison,” she said. “And they have their training, the professional training.”

A degree in hospitality, hotel management, or cooking is mandatory for Michelin inspectors.

Every job that Maxime held, from high school on, had been in the domestic food, wine, or restaurant industry. She got a master’s from N.Y.U. in food studies, and obtained a sommelier’s certification. Six years ago, she was working in a food-and-hospitality job in a city far from New York when she learned that Michelin was recruiting inspectors to produce a New York City guide. “I immediately started stalking Jean-Luc,” she said. She had several preliminary interviews in New York, during which she was warned about the rigors of life as an inspector—the travel, the regimen of constant eating, the pressure to fill out meticulously detailed reports on time, the enforced anonymity, the low pay. (“Let’s just say it’s not about the money,” she said.)

“The interview process is a bit like trying to scare you off,” she went on. “You really have to be committed. It’s your life. It’s not like a nine-to-five job.” Nor is it all about three-star dining.
“The stars are only ten per cent of the selection,” she said. “The vast majority of the time, we’re hiking around the Upper East Side, we’re eating at neighborhood restaurants, we’re hiking around Brooklyn.” Assigned specific areas of the city to cover, Maxime, who lives in Manhattan, spends weeks riding the subway out to the farthest reaches of Queens to make her way through a selection of Thai restaurants, eating two meals a day, every day, and she typically eats alone, since talking with a spouse or friend is frowned upon.

After making the first cut, she was obliged to order and eat a series of dinners in New York restaurants under the scrutiny of seasoned European inspectors. “You don’t know what you’re doing, so you’re, like, What do I pick? What do I eat? And then they show you the wine list to see what wine you choose.” After the meal, she was required to write a paper analyzing the experience, while an inspector looked on. “And then there’s also the kind of covert-ops part,” she said. “You never know the name of the person you’re meeting, you never know where they’re meeting you until right before, so they call you up and say ‘Meet me at the corner of XYZ and XYZ.’ ”

All candidates are flown to France to take part in the Michelin training program. “You’ve got to go to the mother ship to understand the origins of the system,” she said. The fundamentals include not only the star rankings but also the couverts: the crossed-knife-and-spoon icons used to rank the ambience, comfort, and service of a given restaurant. The couverts range from one to four, in ascending order of quality, and they can be in black or red ink. (Red ink denotes exceptional service and décor.) After their time in France, trainees receive additional instruction in another European country. Maxime was sent to England, where, she says, she contracted her only bout of food poisoning, from a pork-belly dish.

When she returned to New York, she was required to apprentice under one of the European inspectors. “There’s no point in sending you off on your own if you’re going to come back and say, ‘I don’t know if it’s a two-couvert or a three-couvert’ or ‘Oh, I thought it was a star’ ”—only to have the senior inspector go back to the restaurant and discover that the food is, as she put it, “junk.” This period of apprenticeship generally lasts three to six months, but at any point an applicant can be told that he or she is not working out.

The waiter arrived and placed before Maxime a large white plate. At the center was her foie gras, a short pillar of puréed duck liver on a piece of crisp toast with a lacy web of caramelized sugar on top; the sides were studded with cherries and sprinkled with pistachios, and a transparent sauce, made of white port gelée, surrounded the entire creation like a moat. She considered the dish for a few moments, as if trying to determine the best angle of attack. With the side of her fork, she broke off a piece of the complicated construction, and tasted it. The dish, which I later tried, activated every sense with which humans are equipped: the foie gras was smooth and as rich as butter, its silky texture contrasting with the caramelized sugar, which shattered like a pane of microscopically thin glass against the teeth and tongue, its sweetness offset by the sour cherries, the rounded aromatic flavor of the toasted nuts, and the texture and taste of the port gelée.

“Excellent,” Maxime said.

I asked her what she liked about it.

“It’s not really a ‘like’ and a ‘not like,’ ” she said. “It’s an analysis. You’re eating it and you’re looking for the quality of the products. At this level, they have to be top quality. You’re looking at ‘Was every single element prepared exactly perfectly, technically correct?’ And then you’re looking at the creativity. Did it work? Did the balance of ingredients work? Was there good texture? Did everything come together? Did something overpower something else? Did something not work with something else? The pistachios—everything was perfect.”

When her second appetizer arrived—the crab toast topped with toasted sesame seeds—she dipped the tines of her fork into a thick line of dark-green sauce that bisected the narrow rectangle of crab toast, and touched it to her tongue. Her eyes grew wide.

“This sauce is really good,” she said. “It’s so Jean-Georges. He does this French-and-Asian thing.” She warned me that she would need a few seconds to figure out its precise ingredients. (She refused to divulge them, on the ground that Vongerichten would consider the recipe “a trade secret.” I later learned from one of the waiters that the ingredients include powdered English mustard and soy sauce.) “It’s so complex,” she said. “It makes me smile.”

Her Arctic char arrived, on a bed of watercress rémoulade, and accompanied by a julienne of apple. She took a bite. “It’s perfectly cooked,” she said, excitedly. “I mean, it’s textbook.”
For New York City’s chefs—particularly those raised and trained in France—the arrival of the Michelin guide was both a blessing and a curse. Eric Ripert, the chef and co-owner of Le Bernardin, a three-star Michelin restaurant in midtown Manhattan, attended culinary school in France and trained in several three-star restaurants there. “Most of us very young cooks were aspiring to be one day a three-star chef,” Ripert told me. “Very few of us were aspiring to have a bistro.” But when Ripert joined Le Bernardin, in 1991, Michelin did not yet have an outpost in New York, and there were no plans to open one. “I remember sometimes chefs here, especially the French ones—and even some American ones—we were a bit frustrated that we will never be judged by Michelin,” Ripert said. “But at the same time we were a little bit, like, more relaxed because obviously the Michelin puts pressure on chefs and restaurateurs to be excellent.”

Le Bernardin was one of only four restaurants in New York (along with Jean Georges, Thomas Keller’s Per Se, and the now defunct Alain Ducasse at the Essex House) that earned three stars in the début issue of the Michelin guide, and it has held on to its three stars ever since. Ripert estimates that revenues increased by eighteen per cent when the first guide came out, but the pressure to hold on to his stars has also escalated. “Today when I wake up and I go to work I don’t think guide, I don’t think stars,” he insisted. “You can’t. When I go to work, I think about my day and about what I have to achieve during my day as a chef.” Still, Ripert admitted that, just before the publication of a new guide, he gets nervous. “It’s not in my mind until a week before, and then every day I think about it,” he said.

Like Ripert, Jean-Georges Vongerichten trained in three-star restaurants in France, and he was eager to know how its inspectors would rate him internationally, yet he also dreaded that knowledge. At a party thrown by Michelin at Rockefeller Center on the evening that this year’s star rankings were announced, I spoke to Vongerichten, a dapper man with slicked-back dark hair and intense dark eyes. He was “happy and relieved,” he said, to have retained his three-star ranking for Jean Georges, but he added, “Ah, but we lost a star, too—for my restaurant JoJo.” He was referring to the moderately priced restaurant he runs out of a town house on East Sixty-fourth Street. In the previous four guides, JoJo had earned one star. Now it had none.
Vongerichten was determined to get the rating back. “I will ask for the report on JoJo,”
Vongerichten told me. (Michelin will, on request, supply to chefs the inspectors’ written report on their restaurant.) “I will study it. The good thing is, you have a year to make it better!”

Also at the party was the chef Daniel Boulud, a short, dark-haired man in a double-breasted suit, who bustled through the crowd, happily accepting congratulations from all who recognized him. That morning, Boulud had received a call from Naret informing him that, for the first time, his restaurant Daniel had been promoted from two stars to three. To many in the food-and-restaurant industry, it was overdue. Daniel consistently drew top rankings in the Zagat guide and for years had earned the Times’ highest rank of four stars. During my lunch with Maxime, I had asked about Michelin’s ranking of Daniel.

“We got beat up a lot the last five years for not giving him three,” she said. “But it wasn’t there.”

“In terms of consistency?” I asked.

“Consistency—and accuracy,” she said. “It’s just technical. I mean, cooking is a science, and either it’s right or it’s wrong. And that’s something that’s very objective. Either a sauce is prepared accurately—or it’s not. A fish is cooked accurately—or it’s not. There’s the talent, the creativity that has to be applied to get a three-star—he has to be a very talented chef—but there was just a lot of inconsistency.” This year, she added, “it was so obvious. It was so solid.” Michelin sent inspectors back to eat at Daniel eight times over the year, Naret told me. At the stars meeting, which he oversees, every inspector’s report described the restaurant as faultless.
I talked to Boulud a couple of days later. Like Ripert and Vongerichten, he trained in multiple three-star restaurants in France. He pronounced himself “proud and happy” to get his third star, but I sensed a less immediate embrace of the Michelin system. When I told him that Naret and the inspector had said that the restaurant, in previous years, lacked consistency and accuracy, he didn’t exactly disagree. But he bridled a little, saying, “My restaurant is extremely chef-driven and extremely market-driven, and so the menu changes a lot—to the pleasure of my customers. Maybe the success I have today is because we keep giving pleasure in very simple ways or sometimes in a very spontaneous way and without thinking, Oh my God, am I perfectly consistent with that dish? I mean, Did I create the masterpiece where I don’t need to change anything? I just need to program it now?”

Boulud’s comments called to mind criticisms often levelled against Michelin: that its approach to restaurants and food is too wedded to an ideal of formal, technical accuracy that is not applicable to restaurants outside France. “When I lived abroad, in Rome, the Michelin guide was not, to be utterly candid, very helpful,” Frank Bruni, the former Times restaurant reviewer, told me recently. “The kinds of restaurant in Italy that Michelin smiles on are restaurants that feel sort of fussily French.” He added that the New York guide seemed to be trying to address this. “In New York—maybe because Michelin is trying to Americanize—you see the inspectors trying to move beyond that. Right from the get-go they gave a star to the Spotted Pig”—the chef April Bloomfield’s upscale pub-food restaurant. “In years since, they’ve given stars to places like Dressler, in Brooklyn”—a restaurant that serves contemporary American food with a French twist. “So you can see them trying. . . . But I wonder if a certain sort of chromosomal stodginess can ever really be completely leached out of the Michelin guide and the system.” He added, “The other thing that has always made me wonder about Michelin rankings is that they claim a lot of science to them, but is there a lot of soul to them? When Michelin describes its own system, I think, Where is the allowance for just a visceral, emotional response to a restaurant?” Bruni is also no fan of the couverts and other icons that Michelin uses: “Those crosses and spoons and all those symbols—it’s like hieroglyphics, it’s like cave etchings.”

The waiter arrived with dessert. He placed a rectangular plate before Maxime. He pointed to one end, where a small piece of strawberry gâteau rested. “It begins on the right, with cumel-macerated strawberries, cream-cheese sponge cake, and pear-de-vanilla-center crème fraîche; to the left is strawberry sorbet swirled with lemongrass glacée and lavender crisp; and, lastly, a blueberry soda with fresh blueberries, which you can drink directly from the glass.”

She thanked him, and the waiter moved off.

If she were on an inspection visit, she said, she would go home directly after finishing dessert and paying her bill, and begin filling out her report, which is made in the form of entries in a classification form supplied to all Michelin inspectors. She would list every ingredient in everything she ate, and the specifics of every preparation. She would rate these according to several criteria, including quality of the products, mastery in the cooking, technical accuracy, balance of flavors, and creativity of the chef. Then she would fill out the section that deals with setting, comfort, and service—and that determines the number of couverts the restaurant will earn. “I’ll talk about the service, the crowd, the décor, the ambience, the wine list, the sake list—whatever is applicable,” Maxime said. “The salt, the glasses, everything about the experience you had from the second you made the phone call to book the reservation, to when you walked in the door, when the hostess greeted you—or didn’t greet you—to whatever little goodies you have at the end of the meal.” For a restaurant like Jean Georges, filling out the reports would take two to three hours. A Chinese restaurant might take an hour.

It was three o’clock by the time we emerged onto the street in front of the restaurant. I couldn’t recall ever feeling so full. I asked Maxime what she would do with the rest of her day.

She said that she had to work that night, reviewing a restaurant in another borough.

Which one? I asked.

“I’m sorry,” she said. “I can’t tell you that.”

Post based on Lunch with M. - The New Yorker - November 23, 2009 by John Colapinto

The Coase Theorem

2010-05-26T04:43:00.001+10:00

It is the theory that decides what can be observed

For those long term readers of Honestly Lay Bare you will know that we have a certain liking for theorems and how they explain the world.

As many will attest that still cannot get the vision of hotel room dancing out of their head Honestly Lay Bare has even named a theorem of its own - the Violin Theorem.

Today we look at a theory of economics that won its conceiver the 1991 Nobel Prize in Economics (surely it must be Honestly Lay Bare's turn soon!).

May we introduce the Coase theorem - which essentially states that an inefficient regulation will be undone by the market.

In law and economics, the Coase theorem, attributed to Ronald Coase, describes the efficiency of an economic allocation or outcome in the presence of externalities (a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit).

The theorem states that when trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights.

In practice, obstacles to bargaining or poorly defined property rights can prevent Coasian bargaining.

Coase developed his theory when considering the regulation of radio frequencies.

Competing radio stations could use the same frequencies and would therefore interfere with each others' broadcasts. The problem faced by regulators was how to eliminate interference and allocate frequencies to radio stations efficiently.

What Coase proposed in 1959 was that as long as property rights in these frequencies were well defined, it ultimately did not matter if adjacent radio stations interfered with each other by broadcasting in the same frequency band.

His reasoning was that the station able to reap the higher economic gain from broadcasting would have an incentive to pay the other station not to interfere.

In the absence of transaction costs, both stations would strike a mutually advantageous deal. It would not matter whether one or the other station had the initial right to broadcast; eventually, the right to broadcast would end up with the party that was able to put it to the most highly valued use.

Of course, the parties themselves would care who was granted the rights initially because this allocation would impact their wealth, but the end result of who broadcasts would not change because the parties would trade to the outcome that was overall most efficient.

**

Whilst this is all great economic theory what does it have to do with the world(s) of internal audit, risk management and corporate governance.

Thanks for asking!

It is the role of the assurance provider to identify weaknesses in systems and processes and then recommend solutions.

The problem is that there are multiple solutions out there to consider and rarely are more than one provided to a control deficiency solution.

What assurance providers have yet to master is what is the most efficient solution.

To use the radio example, the right to broadcast ends up with the broadcaster than can use it to the greatest advantage.

The right to impose a control (or remove it as the case may be) should equally rest with that Management that benefits (legitimately) from the impost or the removal of the control.

Perhaps it is time Dear Reader to consider Coase Theorem the next time you write an internal control recommendation improvement!

Post based in part on Wikipedia entry on Coase theorem.

What is Independence?

2010-05-19T04:43:00.003+10:00

Today Honestly Lay Bare considers a concept so central to the proper exercise of internal audit that it is rarely considered, rarely debated and rarely challenged.

That concept - independence.

What is independence?

Why does it matter?

Are internal auditors independent?

And would it matter if they weren't?

Firstly what is independence.

In its purest form independence is freedom from control or influence of another or others.

The state or quality of being independent; freedom from dependence; exemption from reliance on, or control by others; self-subsistence or maintenance; direction of one's own affairs without interference.

In internal audit - why does it matter?

To borrow the phrase upon which a highly respected and well read internal audit blog is based - internal audit is there to honestly lay bare to the proprietors the true condition of the undertaking.

Internal Audit is not there to provide a biaised view but a true view.

One that is independent of the control of any other person's judgement than their own.

For Internal Audit to exist it has to be independent.

Or does it.

Honestly Lay Bare raised this issue with a former Global President of the Institute of Internal Auditors and the reply was right on the money:

"I suspect too many people think of independence as being independent of the organisation, whereas I believe the intent of the term is to be independent of being part of decision making, line management etc. The essential element is the ability to be "objective" in assessing the organisation and providing opinions."

To show the importance of independence of thought Honestly Lay Bare today calls upon the Institute of Internal Auditors to forgo the big cities for their next International Conference and visit what is the 201st largest city in the United States.

We would be there not to honour its most famous resident - the 33rd President of the United States - but to show to the world that irrespective whether Internal Audit is paid for by the organisation it only ever truely exists when it lives out the true meaning of what it is to be independent.

Honestly Lay Bare still believes in a place called Independence.

The Data Driven Life

2010-05-05T04:02:00.000+10:00

If you want to replace the vagaries of intuition with something more reliable, you first need to gather data.

Honestly Lay Bare is fascinated by all things data and has often said - clearly without too many people listening! - that data is the new frontier of internal controls.

We are not talking CAATs or even superficial data examination. We are talking full throttle, high intensity, real time data analysis.

The New York Times magazine in an article by Gary Wolf recently explored what it called the data driven life.

It could be easily an examination of the data driven organisation.

Dear Reader - this is what the future looks like.

**

Humans make errors. We make errors of fact and errors of judgment. We have blind spots in our field of vision and gaps in our stream of attention. Sometimes we can’t even answer the simplest questions. Where was I last week at this time? How long have I had this pain in my knee? How much money do I typically spend in a day? These weaknesses put us at a disadvantage. We make decisions with partial information. We are forced to steer by guesswork. We go with our gut.

That is, some of us do. Others use data. A timer running on Robin Barooah’s computer tells him that he has been living in the United States for 8 years, 2 months and 10 days. At various times in his life, Barooah — a 38-year-old self-employed software designer from England who now lives in Oakland, Calif. — has also made careful records of his work, his sleep and his diet.

A few months ago, Barooah began to wean himself from coffee. His method was precise. He made a large cup of coffee and removed 20 milliliters weekly. This went on for more than four months, until barely a sip remained in the cup. He drank it and called himself cured. Unlike his previous attempts to quit, this time there were no headaches, no extreme cravings. Still, he was tempted, and on Oct. 12 last year, while distracted at his desk, he told himself that he could probably concentrate better if he had a cup. Coffee may have been bad for his health, he thought, but perhaps it was good for his concentration.

Barooah wasn’t about to try to answer a question like this with guesswork. He had a good data set that showed how many minutes he spent each day in focused work. With this, he could do an objective analysis. Barooah made a chart with dates on the bottom and his work time along the side. Running down the middle was a big black line labeled “Stopped drinking coffee.” On the left side of the line, low spikes and narrow columns. On the right side, high spikes and thick columns. The data had delivered their verdict, and coffee lost.

He was sad but also thrilled. Instead of a stimulating cup of coffee, he got a bracing dose of truth. “People have such very poor sense of time,” Barooah says, and without good time calibration, it is much harder to see the consequences of your actions. If you want to replace the vagaries of intuition with something more reliable, you first need to gather data. Once you know the facts, you can live by them.

Five years ago, Ben Lipkowitz, who is now 28, was living with some friends in Bloomington, Ind., and he found himself wondering how much time he spent doing one of his roommates’ dishes. Lipkowitz had a handheld electronic datebook that he purchased on a trip to Tokyo, and on May 11, 2005, at 2:20 p.m., he started using it to keep a record of his actions. Instead of entering his future appointments, he entered his past activities, creating a remarkably complete account of his life. In one sense this was just a normal personal journal, albeit in a digital format and unusually detailed. But the format and detail made all the difference. Lipkowitz eventually transferred the data to his computer, and now, using a few keyboard commands, he can call up his history. He knows how much he has eaten and how much he has spent. He knows what books he has read and what objects he has purchased. And of course, he knows the answer to his original question. “I was thinking I was spending an hour a day cleaning up after this person,” Lipkowitz says. He shrugs. “It turned out it was more like 20 minutes.”

Another person I’m friendly with, Mark Carranza — he also makes his living with computers — has been keeping a detailed, searchable archive of all the ideas he has had since he was 21. That was in 1984. I realize that this seems impossible. But I have seen his archive, with its million plus entries, and observed him using it. He navigates smoothly between an interaction with somebody in the present moment and his digital record, bringing in associations to conversations that took place years earlier. Most thoughts are tagged with date, time and location. What for other people is an inchoate flow of mental life is broken up into elements and cross-referenced.

These men all know that their behavior is abnormal. They are outliers. Geeks. But why does what they are doing seem so strange? In other contexts, it is normal to seek data. A fetish for numbers is the defining trait of the modern manager. Corporate executives facing down hostile shareholders load their pockets full of numbers. So do politicians on the hustings, doctors counseling patients and fans abusing their local sports franchise on talk radio. Charles Dickens was already making fun of this obsession in 1854, with his sketch of the fact-mad schoolmaster Gradgrind, who blasted his students with memorized trivia. But Dickens’s great caricature only proved the durability of the type. For another century and a half, it got worse.

Or, by another standard, you could say it got better. We tolerate the pathologies of quantification — a dry, abstract, mechanical type of knowledge — because the results are so powerful. Numbering things allows tests, comparisons, experiments. Numbers make problems less resonant emotionally but more tractable intellectually. In science, in business and in the more reasonable sectors of government, numbers have won fair and square.

For a long time, only one area of human activity appeared to be immune. In the cozy confines of personal life, we rarely used the power of numbers. The techniques of analysis that had proved so effective were left behind at the office at the end of the day and picked up again the next morning. The imposition, on oneself or one’s family, of a regime of objective record keeping seemed ridiculous. A journal was respectable. A spreadsheet was creepy.

And yet, almost imperceptibly, numbers are infiltrating the last redoubts of the personal. Sleep, exercise, sex, food, mood, location, alertness, productivity, even spiritual well-being are being tracked and measured, shared and displayed. On MedHelp, one of the largest Internet forums for health information, more than 30,000 new personal tracking projects are started by users every month. Foursquare, a geo-tracking application with about one million users, keeps a running tally of how many times players “check in” at every locale, automatically building a detailed diary of movements and habits; many users publish these data widely. Nintendo’s Wii Fit, a device that allows players to stand on a platform, play physical games, measure their body weight and compare their stats, has sold more than 28 million units.

Two years ago, as I noticed that the daily habits of millions of people were starting to edge uncannily close to the experiments of the most extreme experimenters, I started a Web site called the Quantified Self with my colleague Kevin Kelly. We began holding regular meetings for people running interesting personal data projects. I had recently written a long article about a trend among Silicon Valley types who time their days in increments as small as two minutes, and I suspected that the self-tracking explosion was simply the logical outcome of this obsession with efficiency. We use numbers when we want to tune up a car, analyze a chemical reaction, predict the outcome of an election. We use numbers to optimize an assembly line. Why not use numbers on ourselves?

But I soon realized that an emphasis on efficiency missed something important. Efficiency implies rapid progress toward a known goal. For many self-trackers, the goal is unknown. Although they may take up tracking with a specific question in mind, they continue because they believe their numbers hold secrets that they can’t afford to ignore, including answers to questions they have not yet thought to ask.

Ubiquitous self-tracking is a dream of engineers. For all their expertise at figuring out how things work, technical people are often painfully aware how much of human behavior is a mystery. People do things for unfathomable reasons. They are opaque even to themselves. A hundred years ago, a bold researcher fascinated by the riddle of human personality might have grabbed onto new psychoanalytic concepts like repression and the unconscious. These ideas were invented by people who loved language. Even as therapeutic concepts of the self spread widely in simplified, easily accessible form, they retained something of the prolix, literary humanism of their inventors. From the languor of the analyst’s couch to the chatty inquisitiveness of a self-help questionnaire, the dominant forms of self-exploration assume that the road to knowledge lies through words. Trackers are exploring an alternate route. Instead of interrogating their inner worlds through talking and writing, they are using numbers. They are constructing a quantified self.

Until a few years ago it would have been pointless to seek self-knowledge through numbers. Although sociologists could survey us in aggregate, and laboratory psychologists could do clever experiments with volunteer subjects, the real way we ate, played, talked and loved left only the faintest measurable trace. Our only method of tracking ourselves was to notice what we were doing and write it down. But even this written record couldn’t be analyzed objectively without laborious processing and analysis.

Then four things changed. First, electronic sensors got smaller and better. Second, people started carrying powerful computing devices, typically disguised as mobile phones. Third, social media made it seem normal to share everything. And fourth, we began to get an inkling of the rise of a global superintelligence known as the cloud.

Millions of us track ourselves all the time. We step on a scale and record our weight. We balance a checkbook. We count calories. But when the familiar pen-and-paper methods of self-analysis are enhanced by sensors that monitor our behavior automatically, the process of self-tracking becomes both more alluring and more meaningful. Automated sensors do more than give us facts; they also remind us that our ordinary behavior contains obscure quantitative signals that can be used to inform our behavior, once we learn to read them.

“When you have small, distributed battery-powered sensors, you want to collect all biometric data,” says Ken Fyfe, one of the pioneers of wearable tracking devices. In the mid-’90s, Fyfe was teaching engineering at the University of Alberta in Edmonton, where his specialty was acoustics and vibration. He was also a runner, in a family of runners. His sons were national competitors at 400 and 800 meters. At the time, runners who wanted to know more about the mechanics of their performance — their stride, their cadence, the way their motion changed as they grew tired — had to go into a lab and be filmed. “You would run in a room on a treadmill with reflective stickers on your hips, knees, ankles and feet,” Fyfe recalls.

Taking video of people in motion, and then analyzing the video, seemed like a roundabout way to get data. Why not use an accelerometer, which can directly measure changes in speed and direction? Accelerometers had long been used in industry and cost several hundred dollars each. Then accelerometers were developed to trigger the air bags in cars. Massive purchases in the automotive industry drove the cost down. The size and power demands shrank, too. Suddenly, it seemed less crazy to put an accelerometer on your body.

Fyfe guessed that there would be plenty of interest in something like a personal speedometer, a wearable instrument that displayed how far you’d gone and your average speed. So he tried to invent one. “I worked on it every weekend for three years,” Fyfe says. He put accelerometers into a molded plastic insert. The insert fit into a shoe, and data were transmitted wirelessly to a sports watch. But there was a problem. The numbers produced by a motion sensor don’t necessarily say anything about a runner’s pace and distance. They give you the acceleration of a runner’s foot — that’s all. Some method — a formula or algorithm — is needed to translate the data into the information you want, and the method must work for almost everybody under a wide range of conditions: stopping and starting, jumping over a curb, limping because of an injury. Developing these algorithms took up most of Fyfe’s time during the years he perfected his system.

Thanks to faster computers and clever mathematical techniques, Fyfe and other inventors are turning messy data from cheap sensors into meaningful information. “The real expertise you need is signal processing and statistical analysis,” says James Park, the chief executive and co-founder of Fitbit, a company that makes a tracker released late last year. The Fitbit tracker is two inches long, half an inch wide and shaped like a thick paperclip. It tracks movement, and if you wear it in a little elastic wristband at night, it can also track your hours of sleep. (You are not completely still when sleeping. Your pattern of movement, however, can be correlated with sleeping and waking, just as the acceleration of a runner’s foot reveals speed.) Park and his partner, Eric Friedman, first showed their prototype at a San Francisco business conference in the summer of 2008. Five weeks later, Park and Friedman, who are both 33, had $2 million in venture capital, and they were flying back and forth to Singapore to arrange production. Last winter they shipped their first devices.

At nearly the same time, Philips, the consumer electronics company, began selling its own tiny accelerometer-based self-tracker, called DirectLife, which, like the Fitbit, is meant to be carried on the body at all times. Zeo, a company based in Newton, Mass., released a tracker contained in a small headband, which picks up electrical signals from the brain, and uses them to compile the kind of detailed record of light sleep, deep sleep and REM sleep that, until now, was available only if you spent the night in a sleep-research clinic. Lately I’ve been running into people who say they wear it every night. And Nike recently announced that its Nike+ system, one of the first personal speedometers, has been used by more than 2.5 million runners since its release in 2006.

Ken Fyfe’s accelerometer-based tracking system is used with sports watches by Adidas and Polar. In 2006 he sold his company, Dynastream, for $36 million to Garmin, which makes navigation equipment commonly used in cars and airplanes and which is now branching out into personal tracking. Fyfe’s former company stayed in Alberta, where it continues to sell tracking components. A low-power data-transmission protocol they invented is in new blood-pressure cuffs, glucose monitors, blood-oxygenation sensors, weight scales and sleep monitors, all of which are aimed at the consumer market.

Web entrepreneurs like to talk about democratizing communication. Fyfe’s dream is to democratize objective research on human subjects. “Until we came up with this technology, you couldn’t do this kind of analysis unless you could get into a lab,” he says. “Now you can.”

At the center of this personal laboratory is the mobile phone. During the years that personal-data systems were making their rapid technical progress, many people started entering small reports about their lives into a phone. Sharing became the term for the quick post to a social network: a status update to Facebook, a reading list on Goodreads, a location on Dopplr, Web tags to Delicious, songs to Last.fm, your breakfast menu on Twitter. “People got used to sharing,” says David Lammers-Meis, who leads the design work on the fitness-tracking products at Garmin. “The more they want to share, the more they want to have something to share.” Personal data are ideally suited to a social life of sharing. You might not always have something to say, but you always have a number to report.

This is how the odd habits of the ultrageek who tracks everything have come to seem almost normal. An elaborate setup is no longer necessary, because the phone already envelops us in a cloud of computing. This term, “the cloud,” has some specialized meanings among software architects, but fundamentally the cloud is just a poetic label for the global agglomeration of computer resources — the processors, hard drives, fiber-optic cables and so on — that allow us to access our private data from any Internet connection. We entrust all kinds of things to the cloud: our mail and our family photographs; the places we go and the list of people we call on the phone. When Jeff Clavier, the founder of SoftTech VC, a Silicon Valley venture capital firm, invested in a small financial company called Mint (now part of Intuit), he was warned that ordinary people were unlikely to trust their bank passwords and credit-card details to the cloud.
“About 1.5 million people did it,” Clavier says.

One of the reasons that self-tracking is spreading widely beyond the technical culture that gave birth to it is that we all have at least an inkling of what’s going on out there in the cloud. Our search history, friend networks and status updates allow us to be analyzed by machines in ways we can’t always anticipate or control. It’s natural that we would want to reclaim some of this power: to look outward to the cloud, as well as inward toward the psyche, in our quest to figure ourselves out.

Sophie Barbier, a 47-year-old teacher in Palo Alto, is a cyclist who regularly logs her time, distance and heart rate during a ride. “Training logs have been around forever,” she told me. “But the more variables I added, the more curious I got.” Along with her cycling stats, Barbier began scoring her mood, sleep and ability to focus, as well as her caffeine consumption, and noting the days her menstrual cycle began and ended.

After surgery for a back problem, Barbier had trouble sleeping. On CureTogether, a self-tracking health site, she learned about tryptophan, a common amino acid available as a dietary supplement. She took the tryptophan, and her insomnia went away. Her concentration scores also improved. She stopped taking tryptophan and continued to sleep well, but her ability to concentrate deteriorated. Barbier ran the test again, and again the graph was clear: tryptophan significantly increased her focus. She had started by looking for a cure for insomnia and discovered a way to fine-tune her brain.

It is tempting to dismiss reports of such experiments as trivial anecdotes, or the placebo effect. I took Barbier’s results to a friend of mine, Seth Roberts, an emeritus professor of psychology at the University of California, Berkeley, and an expert on self-experimentation. “There is a large difference between what Barbier did and the minimal story of somebody who takes a pill looking for a certain effect and then finds it,” he pointed out. “First, she wrote the numbers down, so the results are not subject to memory distortion. Second, she changed the conditions several times. Every switch is a test of her original theory.”

Roberts told me about his own method of measuring mental changes, a quick test he programmed on his computer that involves 32 easy arithmetic problems. The test takes about three minutes, and he has found that it can detect small changes in cognitive performance. He has used his self-tracking system to adjust his diet, learning that three tablespoons daily of flaxseed oil reliably decreases the amount of time it takes him to do math. Consuming a lot of butter also seems to have a good effect.

Self-experiments like Barbier’s and Roberts’s are not clinical trials. The goal isn’t to figure out something about human beings generally but to discover something about yourself. Their validity may be narrow, but it is beautifully relevant. Generally, when we try to change, we simply thrash about: we improvise, guess, forget our results or change the conditions without even noticing the results. Errors are possible in self-tracking and self-experiment, of course. It is easy to mistake a transient effect for a permanent one, or miss some hidden factor that is influencing your data and confounding your conclusions. But once you start gathering data, recording the dates, toggling the conditions back and forth while keeping careful records of the outcome, you gain a tremendous advantage over the normal human practice of making no valid effort whatsoever.

I recently received an e-mail message from a 26-year-old filmmaker named Toli Galanis, who keeps track of about 50 different streams of personal data, including activities, health, films watched and books read, the friends he talks with and the topics they discuss. While Galanis acknowledged that he gets pleasure from gathering data and organizing it intelligently, it was a different aspect of his report that caught my attention. “I know that immediately after watching a bad movie I am more apt to be negative about my career prospects as a filmmaker,” he wrote, explaining that tracking has made him better able to detect the influence of seemingly trivial circumstances on his mood and decisions.

The idea that our mental life is affected by hidden causes is a mainstay of psychology. Facility in managing the flow of thought and emotion is a sign of happiness and good adjustment. But how is it done? Nearly every therapeutic prescription involves an invitation to notice, to pay attention. Once we have a notion in our sights, we can attack it with an arsenal of tools: cognitive, psychoanalytic, even spiritual. But none of these will tell us if we’ve missed something. You may simply have failed to notice a debilitating habit, a negative correlation, a bad influence.

Galanis’s realization that bad movies subject him to professional discouragement is the type of insight that will seem accessible to anybody blessed with a modest amount of self-awareness; finding it is no more difficult than catching sight of a dollar in the street and picking it up. But for every one you grab, how many do you overlook?

It’s not only the context of our thoughts that escapes us. Our actions do, too. Since 2004, Terry Paul, an educational entrepreneur and philanthropist, has been working on a digital device that tucks into specially designed toddlers’ clothing and can be used to predict language development through tracking the number of conversational exchanges a child has with adults. It cost Paul $32 million to perfect the system that takes the noisy sounds of a baby’s environment and translates it into reliable data. As a commercial enterprise, it was unsuccessful. His device, called the LENA monitor, is used for academic research but never took off as a consumer product. When I tell parents about it, most of them are horrified. They imagine a nightmare of surveillance and an inducement to neurotic competition: who wants a digital recorder that grades you on how you talk to your kid?

Were we to submit to such a test, however, many of us would fare poorly. Parents, in fact, overestimate how much they talk to their preverbal children. Users of the LENA monitor can be awkwardly surprised. A mother I spoke with recently began monitoring after her daughter was prescribed a seizure medication that was associated with language delays. “It became very clear to us that my husband’s words were less than mine,” she said. He needed to try to talk to his daughter more. Until he saw the data, he had no idea that his attention was wandering.

Of course, sometimes we fail to notice what we do because we are motivated not to notice it. We are ashamed of ourselves, so we lie to ourselves. Shaun Rance started tracking his drinking two years ago, after his father was given a diagnosis of end-stage liver disease. He didn’t pledge to stop drinking; he didn’t do a searching moral inventory; he just started counting, using the anonymous Web site drinkingdiary.com. He found that his externalized memory was very powerful. Having a record of every drink he took sharpened his awareness and increased his feeling of self-mastery — and reduced his drinking. Because his tally is held by a machine, he doesn’t feel any of the social shame that might make him, consciously or not, underestimate his drinking. “I don’t lie to the diary,” he says. After all, it is silly to posture in front of a machine. The tracking system is an extension of a basic faculty of Rance’s consciousness, there to remind him where he stands, and it does its work without emotion. As far as he’s concerned, that’s a virtue.

There may be new domains of our biology that we can incorporate into our sense of self. “We know about asleep, awake, hungry, depressed, cold, drowsy, nauseous,” says Dave Marvit, a vice-president at Fujitsu Laboratories of America, where he is leading a research project on self-tracking. “But what about hypoxic, anemic, hyperglycemic?” If we had a gentle signal about how much sugar was in our blood, would we change how we ate? Would it change how we feel?

Drinking. Talking. Being discouraged by a movie. Giving a moment’s attention to a feeling of anger or elation, a small surge of energy or a metabolic dip. These are the materials of daily life. They barely stand out against the background of what we take for granted, and yet picking up these weak signals gives us leverage. Margaret Morris, a clinical psychologist and a researcher at Intel, recently ran a series of field trials using a mobile phone for tracking emotion. At random times, the phone rang and quizzed its owner about his or her mood. A man in one of Morris’s studies reviewed the trends in his data and noticed that his foul mood began at the same time every day. He had a rushed transition from work to home. While unfinished tasks were still on his mind, new demands crowded in. The stress followed him for the rest of the evening. The data showed him where the problem was. With help, he learned to take a short mental break right there. He was much relieved.

The contrast to the traditional therapeutic notion of personal development is striking. When we quantify ourselves, there isn’t the imperative to see through our daily existence into a truth buried at a deeper level. Instead, the self of our most trivial thoughts and actions, the self that, without technical help, we might barely notice or recall, is understood as the self we ought to get to know. Behind the allure of the quantified self is a guess that many of our problems come from simply lacking the instruments to understand who we are. Our memories are poor; we are subject to a range of biases; we can focus our attention on only one or two things at a time. We don’t have a pedometer in our feet, or a breathalyzer in our lungs, or a glucose monitor installed into our veins. We lack both the physical and the mental apparatus to take stock of ourselves. We need help from machines.

Watch out for those machines, though. Humans know a special trick of self-observation: when to avert our gaze. Machines don’t understand the value of forgiving a lapse, or of treating an unpleasant detail with tactful silence. A graph or a spreadsheet talks only in numbers, but there is a policeman inside all of our heads who is well equipped with punishing words. “Each day my self-worth was tied to the data,” Alexandra Carmichael, one of the founders of the self-tracking site CureTogether, wrote in a heartfelt blog post about why she recently stopped tracking. “One pound heavier this morning? You’re fat. Skipped a day of running? You’re lazy. It felt like being back in school. Less than 100 percent on an exam? You’re dumb.” Carmichael had been tracking 40 different things about herself. The data she was seeing every day didn’t respect her wishes or her self-esteem. It was awful, and she had to stop.

Electronic trackers have no feelings. They are emotionally neutral, but this very fact makes them powerful mirrors of our own values and judgments. The objectivity of a machine can seem generous or merciless, tolerant or cruel. Designers of tracking systems are trying to finesse this ambivalence. A smoking-cessation program invented by Pal Kraft, a Norwegian researcher at the University of Oslo, automatically calls people who are trying to quit, asking them every day whether they’ve smoked in the last 24 hours. When the answer is yes, a recorded voice delivers an encouraging message: All is well, take it easy, try again. This mechanical empathy, barely more human than a recorded voice on the customer-service line, can hardly be expected to fool anybody. But a long line of research in human-computer interaction demonstrates that when machines are given humanlike characteristics and offer emotional reassurance, we actually do feel reassured. This is humbling. Do we really feel better when a computer pats us on the back? Yes, we do.

Jon Cousins is a 54-year-old software entrepreneur and former advertising executive who was given a diagnosis in 2007 of bipolar affective disorder. Cousins built a self-tracking system to help manage his feelings, which he called Moodscope; now used by about 1,000 others, Moodscope automatically sends e-mail with mood-tracking scores to a few select friends. “My life was changed radically,” Cousins told me recently in an e-mail message. “If I got the odd dip, my friends wanted to know why.” Sometimes, after he records a low score, a friend might simply e-mail: “?” Cousins replies, and that act alone makes him feel better. Moodscope is a blended system in which measurement is supplemented by human sympathy. Self-tracking can sometimes appear narcissistic, but it also allows people to connect with one another in new ways. We leave traces of ourselves with our numbers, like insects putting down a trail of pheromones, and in times of crisis, these signals can lead us to others who share our concerns and care enough to help.

Often, pioneering trackers struggle with feelings of being both aided and tormented by the very systems they have built. I know what this is like. I used to track my work hours, and it was a miserable process. With my spreadsheet, I inadvertently transformed myself into the mean-spirited, small-minded boss I imagined I was escaping through self-employment. Taking advantage of the explosion of self-tracking services available on the Web, I started analyzing my workday at a finer level. Every time I moved to a new activity — picked up the phone, opened a Web browser, answered e-mail — I made a couple of clicks with my mouse, which recorded the change. After a few weeks I looked at the data and marveled. My day was a patchwork of distraction, interspersed with valuable, but too rare, periods of focus. In total, the amount of uninterrupted close attention I was able to muster in a given workday was less than three hours. After I got over the humiliation, I came to see how valuable this knowledge was. The efficiency lesson was that I could gain significant benefit by extending my day at my desk by only a few minutes, as long as these minutes were well spent. But a greater lesson was that by tracking hours at my desk I was making an unnecessary concession to a worthless stereotype. Does anybody really believe that long hours at a desk are a vocational ideal? I got nothing from my tracking system until I used it as a source of critical perspective, not on my performance but on my assumptions about what was important to track.

People are not assembly lines. We cannot be tuned to a known standard, because a universal standard for human experience does not exist. Bo Adler, a young computer scientist at Fujitsu Laboratories of America, is one of the most committed self-trackers I’ve ever met: during his most active phase he wore a blood-pressure cuff, pulse oximeter and accelerometer all day long, along with a computer on a harness to collect the data. Adler has sleep apnea, and he is trying to figure it out. When he became too self-conscious going to the gym in his gear, he wore a Google T-shirt to throw people off. Maybe he was a freak, but at least people could mistake him for a millionaire freak.

“Here’s what they told me was the normal surgical course of treatment,” Adler explained. “First they were going to cut out my tonsils, and if that didn’t work, they would break my jaw and reset it to reposition my tongue, and finally they would cut out the roof of my mouth. I had one question: What if my case is different? They said, ‘Let’s try the standard course of treatment first, and if that doesn’t work, then we’ll know your case is different.’ ” Adler recognized what this proposal meant: it meant that his doctors had no cure for different. They wanted to see him as a standard case, because they have treatments for the standard cases. Before Adler underwent surgery, he wanted some evidence that he was a standard case. Some of us aren’t standard, after all; perhaps many of us aren’t.

Adler’s idea that we can — and should — defend ourselves against the imposed generalities of official knowledge is typical of pioneering self-trackers, and it shows how closely the dream of a quantified self resembles therapeutic ideas of self-actualization, even as its methods are startlingly different. Trackers focused on their health want to ensure that their medical practitioners don’t miss the particulars of their condition; trackers who record their mental states are often trying to find their own way to personal fulfillment amid the seductions of marketing and the errors of common opinion; fitness trackers are trying to tune their training regimes to their own body types and competitive goals, but they are also looking to understand their strengths and weaknesses, to uncover potential they didn’t know they had. Self-tracking, in this way, is not really a tool of optimization but of discovery, and if tracking regimes that we would once have thought bizarre are becoming normal, one of the most interesting effects may be to make us re-evaluate what “normal” means.

“My girlfriend thinks I’m the weird person when I wear all these devices,” Bo Adler says. “She sees me as an oddity, but I say no, soon everybody is going to be doing this, and you won’t even notice.”

Say It Aint So ...

2010-04-28T04:42:00.000+10:00

The biggest scandal in Australian sports history.

The Melbourne Storm is an Australian professional rugby league football club based in the city of Melbourne. They have competed in every season of the National Rugby League (NRL) Premiership since its inception in 1998.

The first fully professional rugby league team based in the Australian rules football dominated state of Victoria the Storm have played in the last fourNRL grand finals making them one of the league's top teams.

The club won the minor premiership three times in a row from 2006–2008 and contested each grand final from 2006 to 2009, winning in 2007 and 2009, although these titles were later stripped for salary cap breaches. They were named the NRL Team of the Decade for the 2000s.

Last week it all came unstuck by the largest corruption scandal to have hit Australian sport.

Following claims by a whistleblower that the club was keeping a second set of books, the NRL conducted an investigation early in 2010.

Initially denying the claims, on 22 April 2010 the Melbourne Storm eventually admitted to the NRL that the club had systematically circumvented the salary cap conditions for the last five seasons.

This included a breach of $400,000 in the 2009 season and a projected breach of $700,000 in the 2010 season.

The Storm admitted that a dual-contract system was run within the club, in which the NRL were not able to know of payments made to the players outside of the $4.2 million yearly cap.

As a club's compliance with the NRL salary cap is supported by statutory declarations, the club's owners have requested that fraud charges be laid against those responsible and has stated that any person who knew of the breach would be expelled from the club.

Storm executives had arranged for inflated invoices to be submitted to hide the payments to players. This involved submitting invoices of up to $20,000 above the real value of the services rendered with this amount paid directly to players by the third party suppliers although there is no suggestion that the suppliers were involved in submitting the inflated invoices.

As a result, NRL Chief Executive David Gallop announced that the Melbourne Storm would be stripped of their 2007 and 2009 premierships (which are currently not expected to be awarded to Manly and Parramatta, their opponents from the two respective grand finals), minor premierships from 2006, 2007 and 2008.

A $500,000 fine and was ordered to repay $1.1 million in prize money, which will be redistributed equally among the other 15 NRL clubs.

The eight premiership points the Melbourne Storm had already received in the season were deducted, and the club was barred from receiving premiership points for the rest of the season.

Storm are expected to meet the task of reducing salaries by $700,000 to meet the cap by the end of the season; failure to do so will result in the club being excluded in the 2011 Season of NRL.

Former CEO Brian Waldron (pictured), current chief executive and former financial officer Matt Hanson, and current financial officer Paul Gregory, are alleged to have been the main culprits behind the incident.

On 23 April 2010, Brian Waldron was asked by the Melbourne Rebels rugby union club to stand down from his position of chief executive of the club after just six weeks of taking over the expansion team entering the new Super 15 competition.

On the same day the NRL seized a secret dossier hidden in the home of acting chief executive Matt Hanson. The dossier contains letters of offer to four of Storms star players guaranteeing illegal payments in the form of goods from third parties.

For one player with a $400,000 contract lodged with the NRL, the letter of offer valued at an additional $550,000, contained a $20,000 gift voucher for a national retailer and a $30,000 boat. Other offers included a new car for a player’s partner and $30,000 in home renovations. The offers together amounted to $700,000 of which the four players had already received $400,000.

The news was referred to by The Melbourne Age newspaper as "The biggest scandal in Australian sports history".

Club supporters had mixed reactions and feelings towards the situation as the club was left with "dishonour and shame".

In 102 years of professional rugby league in Australia, no club had ever been stripped of a competition title.

Many fans dumped their jerseys and other memorabilia at the team's headquarters on hearing about the incident, and many others simply broke into tears; there was a feeling that former CEO Brian Waldron was to blame and not the players.

But amongst all of this one thing worked as it should have - the information market.

Betting agencies received an "old fashioned betting sting" as some punters found out about the salary cap allegations before they became common knowledge. The Storm were at $4.20 favourites to win the title at the time and $251 to win the wooden spoon.

TAB Sportsbet has claimed it will be due to pay out at least $500,000 before betting was suspended.

The Fabulous Fab

2010-04-21T04:57:00.000+10:00

We know that Goldman Sachs has been playing both sides of the street but we've never been able to put together a situation where the same office in Goldman Sachs knowingly sold bad securities to one group of investors while letting another investor bid against them.

Here at Honestly Lay Bare we like to think that we can see into the future (remember our insightful 2007 post on SecondLife ... OK so not everything works out) and identify the issues that will be around for a long time.

We are making a wild guess to suggest that the fraud charge against Goldman Sachs may just fall into the category of being around for a long time.

And as such we feel obliged to the Dear Reader to bring you up to speed on what has been alleged.

According to a civil law suit filed in New York last week, Goldman Sachs manufactured an investment designed to fail.

It was approached by a wealthy hedge fund manager, John Paulson, who saw the global financial crisis coming.

He'd already made deals with Goldman betting that securities backed by sub-prime mortgages would collapse but he'd run out of securities to bet against so he asked Goldman Sachs to make him one.

And it did, in early 2007.

In the jargon of Wall Street, a synthetic collateralised debt obligation, or CDO, tied to the fate of sub-prime home loans.

The SEC says the hedge fund boss played a key role in choosing the portfolios of loans that went into the CDO. Then he placed trades with Goldman that would see him paid money if the security went bust.

But none of this was disclosed to other investors. They didn't know that the product they were being encouraged to invest in was designed for and by a man looking to profit from its failure.

But the rising Goldman star who did the deal did, 28-year-old Fabrice Tourre, who liked to be called the fabulous Fab.

On the 23rd of January 2007, he emailed this to a friend:

More and more leverage in the system, the whole building is about to
collapse any time now. Only one potential survivor, the fabulous Fab,
standing in the middle of all these complex, highly leveraged exotic trades
he created without necessarily understanding all the implications of those
monstrosities.

Goldman Sachs says the case against it is wrong in law and fact.

And for now, at least, the fabulous Fab is still working for the firm, in London as an executive director of Goldman Sachs International.

Tourre is a graduate of one of France’s oldest and best known engineering schools, the École Centrale Paris, where he studied from 1998 through 2000.

His degree at the school, which is among France’s grandes écoles, was a bachelor’s in mathematics, and his path to Goldman Sachs was not uncommon for elite French students with a background in formal math. Demand for quantitative skills has grown on Wall Street in recent decades, especially in areas like structured finance.

On Monday, Goldman said that Mr. Tourre was taking “a bit of time off,” but that he was still an employee of the firm.

Before going to École Centrale, Mr. Tourre attended two equally famous preparatory high schools — Louis LeGrand and Henri IV — both feeders to the universities that create France’s governing elite. After the École, he attended Stanford University and obtained a one-year master’s in operations research, which cited a LinkedIn profile that has since been closed down.

On another Web site, Viadeo, the French equivalent of LinkedIn created by a fellow École central alum, Mr. Tourre describes himself on his résumé — now erased — as being a “trader/structurer of exotic derivatives.”

Mr. Tourre joined Goldman Sachs in 2001, was based in New York when the 2007 deal happened between Paulson's hedge fund, Paulson & Company; ACA Management and the eventual clients like IKB Deutsche Industriebank that bought the synthetic collateralized debt obligations. Tourre earned $2 million that year — regardless of how much Goldman Sachs lost on the Paulson-ACA trade.

In November 2008, he was sent to Goldman’s London office as an executive director, where he was given the jobs of setting up a similar program.

Meanwhile, the Democrats are treating the charges as new fuel for their campaign to pass the financial regulatory bill and have bought a sponsored link from Google for the search words “Goldman Sachs SEC” that takes you to my.barackobama.com.

I Had To Eat

2010-04-14T04:18:00.000+10:00

Management is doing things right; leadership is doing the right things.

Honestly Lay Bare has previously examined a number of the lessons learnt from the terrible Black Saturday bushfires in Victoria, Australia in February 2009.

Today we take a slightly different tack and examine the actions of the Victorian Chief Commissioner of Police on that fateful day and what her actions say about accountability, leadership and the tone set at the top in a crisis.

The Black Saturday bushfires were a series of bushfires that ignited or were burning across the Australian state of Victoria on and around Saturday 7th February 2009 during extreme bushfire-weather conditions.

The fires resulted in Australia's highest ever loss of life from a bushfire. 173 souls perished as a result of the fires and 414 people were injured. As many as 400 individual fires were recorded on 7 February.

3,852 firefighting personnel were deployed across the state on the morning of 7 February in anticipation of the extreme conditions. By mid-morning, hot northwesterly winds in excess of 100 kph (62mph) hit the state.

As the day progressed, all time record temperatures were being reached, 46.4 C (115.5F) in Melbourne, the hottest temperature ever recorded in an Australian capital city and humidity levels dropped to as low as 6%.

By midday, windspeeds were reaching their peak. The overwhelming majority of fire activity occurred between midday and 7pm, when windspeed and temperature were at their highest and humidity was at its lowest.

The 19th Chief Commissioner of the Victoria Police, Christine Nixon, was sworn in on 23 April 2001 - thereby becoming the first woman to become a police commissioner in Australia.

She was appointed to that position by the Victorian government following an extensive career in the New South Wales Police Force and attaining the rank of Assistant Commissioner. Nixon was a police officer for over thirty years.

Her actions on Black Saturday last week became the source of great criticism after her appearance at the Royal Commission set up to investigate the tragedy.

What she did and what it meant is probably best summed up by a columnist from the Melbourne tabloid newspaper, the Herald Sun:

She admitted under cross-examination that she did not attend the State Emergency Response Co-ordination Centre until noon on Black Saturday, despite knowing the fires were already out of control on a day the Government warned would be "as bad a day as you can imagine".

Not once did she check if police had fulfilled their formal responsibility to issue warnings to towns in the path of the fires.

From 1.30pm to 3pm, she actually left the SERCC and retired to her office to clean up paperwork, neither seeking nor receiving in those 90 minutes a single briefing or call on the fires.

Nor did she call any police in the fire zones to check their wellbeing, ask for news or offer help.

She did not call the Premier once, even to discuss - as is her job - declaring a state of emergency.

She did not call in her Deputy Commissioner in charge of disasters, Kieran Walshe, and he himself - perhaps following his boss's example - did not turn up at work until nightfall, and only to give a press conference.

She failed to check that every regional commander in the fire-prone areas was at their post, and to this day does not know if they were.

It was as if she were a mere spectator. Not once did she seem to actually do anything to help. And it got worse.

On returning to the emergency headquarters at 3.30pm, Nixon did not ask for another briefing on the fires, even though she says she heard the staff say: "This is looking terrible; there are many more fires."

"I should have, but I didn't," she told the commission, explaining that everyone seemed "very busy" and "carrying out their responsibilities".

They acted. She watched. And was treated as a mere watcher, too.

Her senior officials didn't bother to tell her that nursing homes and hospitals were being evacuated in Neerim South and near Bunyip. She also didn't check how police planned to protect fans at a country music festival at threatened Whittlesea.

Nor did she ask for or read the police log in the room that noted what her officers were battling to do.

"It sounds rather passive, Ms Nixon," the startled counsel assisting the bushfire commission exclaimed.

At 5pm, the fire service chiefs did at last brief the paralysed Nixon, warning her the fires seemed about to burn Strathewen, and there was a "real potential for people to lose their lives". Worse, a change of wind later that evening threatened Kinglake and other towns and "we were facing a disaster".

The Police Minister had been called in to help co-ordinate the effort.

It was now about 5.30pm. And what did Nixon decide to do at this moment of crisis, with lives to save?

She asked an Assistant Commissioner, Steve Fontana, to brief the Police Minister in her place while she went out to dinner. (Last week on Melbourne radio, she defended this decision by saying that she "had to eat").

She deserted her post. And didn't return that night, not even after hearing whole towns had been destroyed.

Nixon has tried to mislead the royal commission, in my opinion, about how profoundly she betrayed her duty.

She did not tell it she'd actually gone to a restaurant, and implied instead she'd stayed at home, keeping in touch.

She denied she'd had another appointment that night, saying only she'd "had a meal" and "was obviously listening to the radio ... and watching television". Asked if she'd had email and web access, she said: "Yes."

But presumably not while you were at the restaurant, Christine. You weren't properly monitoring anything then but the menu.

I cannot think of a worse failure of duty by an Australian police commissioner than this.

The revelations present a fascinating case study as to what is expected of our leaders in a crisis.

Do we expect them to take charge or do we expect them to have confidence in the delegations that they have exercised in moments when crisis is not upon us?

Honestly Lay Bare will reserve judgement on the politics of the matter and simply conclude that of the many lessons that have been and are being learnt from that terrible Saturday the actions of Christine Nixon deserve to be studied by crisis management experts for as long as the discipline exists.

Post based on part on "Chief Nixon Copped Out" by Andrew Bolt, Herald Sun, 9th April 2010

The Fable of Captain Crunch

2010-04-07T04:06:00.000+10:00

Experience is the name we give our mistakes.

Honestly Lay Bare decided that for this week’s post we would explore the history of hacking.

Then as is usually the case we got distracted down one of the many lane ways that archival searches tend to take you.

And we met Captain Crunch – one John Draper.

**

In 1964, after taking some college courses, Mr. Draper joined the Air Force, which his parents thought would provide much-needed discipline. He was sent to Alaska and later Maine, where he served as a radar technician. Since the soldiers had only one phone line on which to call home, Mr. Draper began tinkering with the access codes and figured out how to make free calls through the local switchboard.

After an honorable discharge in 1968, he built gear for several companies in the San Francisco Bay area. But his work, much of which was military-related, was out of step with the counterculture blooming around him. Mr. Draper grew his hair and began spending more time on a pirate radio station, which he operated from the back of his green Volkswagen van to make it harder for authorities to track the signal. He also turned his attention to the phone system, an attraction for like-minded techies before the arrival of personal computers.

Mr. Draper learned how to make free calls by imitating the tones used by the phone company.

He learned from other "phone phreaks" -- as the hackers called themselves -- including blind teenagers with near-perfect pitch. Mr. Draper learned that a toy whistle found in a cereal box would also imitate the required tones, earning him the nickname Cap'n Crunch.

The point was not just to make free calls but to explore and learn from the phone company's rich and complicated system. On one occasion, Mr. Draper says he learned the code word needed to speak with the president -- "Olympus" -- and got through to someone on a secure line he thought was President Nixon. Mr. Draper says he told the man about a toilet-paper shortage in Los Angeles.

Authorities began to take notice, particularly after a lengthy article on phone phreaking appeared in the October 1971 edition of Esquire magazine. Mr. Draper, the group's ringleader, was arrested for the first time several months later on charges of wire fraud, and received a five-year probation.

The Esquire article also caught the attention of Steve Wozniak, an eventual Apple co-founder, who invited Mr. Draper to his dorm room at the University of California at Berkeley. When Mr. Draper appeared that evening, Mr. Wozniak, then 21, was taken aback by his guest's appearance and odor, Mr. Wozniak wrote in his recent autobiography.

"Are you Cap'n Crunch?" Mr. Wozniak asked in disbelief, according to the book.

"I am he," Mr. Draper responded as he strode into the room.

Mr. Draper showed Mr. Wozniak and a friend, Mr. Jobs, how to build a device that could produce telephone tones. The pair turned the knowledge into a small business on the Berkeley campus, their first collaboration before founding Apple a few years later.

Mr. Wozniak employed Mr. Draper at Apple, where as a contractor in 1977 he designed a device that could immediately identify phone signals and lines -- such as ones that made free calls -- something modems were not able to do for a decade. The technology would later be used for tone-activated calling menus, voice mail and other purposes.

**

On a recent morning at a Bob's Big Boy restaurant in Burbank, Calif., where he goes when he has enough money, Mr. Draper ordered his usual breakfast: eggs and bacon first, to be followed five to seven minutes later by grilled pancakes loaded with butter and syrup.

The first course arrived. "The bacon's too greasy, I can't accept these," he shouted at the waiter. Mr. Draper sends back his bacon about 70% of the time. He says that since he has no opposing teeth, the bacon needs to be crisp enough to break off in his mouth. He lost most of his teeth from infrequent dental care, which he blames on his lack of health insurance.

After breakfast, Mr. Draper returned to his one-room apartment beside a four-lane expressway. The apartment was in squalor, with open cereal boxes, clothes in trash bags, computers and old newspapers strewn about. Mr. Draper left an angry voice message for a client who hadn't paid for some programming work. He fretted that without the money he would have difficulty covering his electricity bill that month.

"I'm blacklisted, man, a permanent menace to society, I guess," he said. "It's too bad because there are some things I think I could contribute."

**

The fable of Captain Crunch!

Post based on “The Twilight Years of Cap'n Crunch” Wall Street Journal January 13, 2007.

Toot

2010-03-31T04:57:00.000+11:00

It may be that your whole purpose in life is simply to serve as a warning to others.

Recently Honestly Lay Bare, Mrs Honestly Lay Bare, Auditor 1 and Auditor 2 went on a holiday.

This holiday necessitated a flight and as such we rented a car at our destination.

The car had all the modern conveniences that one would expect with the exception of one thing - its horn didn't work.

And today dear reader the existence of car horns is the focus of our post.

**

Car horns have become part of everyday life. One can hardly find a car without a horn (we did!). Car horns date back to the earliest of horseless carriages. In the early 1800s, steam carriages were becoming popular in Britain.

For the safety of pedestrians and animals, a law was passed stating that "... self propelled vehicles on public roads must be preceded by a man on foot waving a red flag and blowing a horn."

It didn't take long to realise that a horn in the automobile itself, operated by the driver, was much more efficient.

Over the years, there have been many studies and designs in an attempt to produce horns that are pleasing to the ear but still able to penetrate the low frequency rumble of traffic noise. Up until the mid 1960s most American car horns were tuned to the musical notes of E flat or C. Since then, many manufacturers have moved up on the scale to notes F sharp and A sharp.

**

When you drive a car knowing that you don't have a car horn you drive very differently than if you do have a car horn (or as was the case with the Honestly Lay Bare family for the first three days we thought we had a car horn).

Why is that?

Honestly Lay Bare and Mrs Honestly Lay Bare summised that the knowledge of the existence of a car horn allows you to take more risks driving content in the knowledge that you have an early warning system that can alert other people to your taking of the risks.

Another interesting side effect of having no horn is that you cannot provide "feedback" to other drivers that have caused your concern or ill.

So the morale of the story is two fold.

Firstly, an early warning system is essential in the management of risk and allows for immediate feedback on your assessment of the risks taken.

And secondly, if you are ever on holidays with the Honestly Lay Bares, make sure that their car has a horn before you agree to a lift!

Post based in part on Car Horns - A History www.cogapa.com/history

The Demise of AF447

2010-03-24T04:25:00.001+11:00

All the world is a laboratory to the inquiring mind.

A fascinating article from Popular Mechanics about the lessons learnt and being learnt from the tragic demise of an Air France passenger jet in May 2009.

Seven miles above the empty expanse of the South Atlantic Ocean, on May 31, 2009, an Air France A330 passenger jet cut through the midnight darkness. The plane had taken off 3 hours earlier, climbing from Rio de Janeiro on a northeast heading, its navigation computers hewing to a great-circle route that would take the flight 5680 miles to Paris.

At 10:35 pm local time, one of the co-pilots on the flight deck radioed Atlantico Area Control Center in Recife, Brazil, and announced that the plane had just reached a navigation waypoint called INTOL, situated 350 miles off the Brazilian coast. The waypoint lay just shy of the Intertropical Convergence Zone, a meteorological region along the equator famous for intense thunderstorms. Staff at Atlantico acknowledged the transmission and received the airplane’s reply: “Air France Four Four Seven, thank you.”

It was the second time within the past 12 hours that the jet, F-GZCP, had crossed this stretch of ocean, having flown the Paris-to-Rio leg with only 2 hours to refuel and load passengers before departing again. Such was the lot of the four-year-old long-haul plane: a repeated cycle of flight and turnaround, as rhythmic and uneventful as the phases of the moon. But the routine was about to be broken.

After receiving AF 447’s transmission, Atlantico asked for the estimated time it would take the aircraft to reach the TASIL waypoint, which lies on the boundary of the Atlantico and the Dakar Oceanic control areas. At that point communication would pass from Brazil to Senegal. AF 447 did not reply. The controller asked again. Still, there was no reply. The controller asked a third and fourth time, then alerted other control centers about the lapse.

According to the flight plan filed by AF 447, the plane should have crossed into Dakar Oceanic at 11:20 pm, at which point the flight crew would have made radio contact with Dakar to confirm their position. They didn’t. They also failed to contact the Cape Verde controller, whose airspace they were supposed to enter at 12:43 am. As time went on, controllers along the aircraft’s route began to worry that the problem was more than just a communications breakdown.

By 3:47 am, the flight should have appeared on the radar screens of Portuguese air traffic controllers. It didn’t. An hour later, Air France contacted the Bureau d’Enquêtes et d’Analyses pour la Sécurité de l’Aviation Civile (BEA), the French equivalent of the United States’ National Transportation Safety Board. By 8 am, French authorities officially reached what had become a grim, unavoidable conclusion: Air France 447 had disappeared.

Vanishing without a trace is not supposed to happen in this day and age. The globe is crisscrossed by constant ship and air traffic. A constellation of satellites orbits overhead, and communication is nonstop. Yet, for a few days in early June, it seemed that the impossible had happened. Air France 447 and the 228 people onboard were simply gone. There was no distress call or wreckage; there were no bodies.

Within hours, the French government deployed a search-and-rescue airplane near the TASIL waypoint. Over the next few days a flotilla of ships and aircraft arrived to assist the search operation, including a French nuclear submarine and a research vessel withan unmanned deep-water submersible that were dispatched to find the flight data recorder, or black box.

Yet for days nothing was found. The only clues to the plane’s fate were automatic messages that the onboard maintenance computer transmitted by a datalink system called the Aircraft Communications Addressing and Reporting System (ACARS). The system transmits text messages via satellite to ground stations, which then forward them on landlines to the intended destination. In just a 4-minute span, the system had broadcast 24 reports to Air France’s dispatch center in Paris, each concerning problems with subsystems onboard the aircraft.

At 11:10 pm, about 35 minutes after AF 447’s last verbal communication, the system sent a message that the autopilot had disconnected. Seconds later, it reported that the flight control system was unable to determine the aircraft’s correct speed. Subsequent messages cited a cascade of other malfunctions. At 11:14 pm, the final message reported that the airliner’s cabin either had depressurized, was moving with high vertical velocity, or both.

ACARS messages are transmitted in a dense alphanumeric code and are used for airplane maintenance, not real-time monitoring of flights by dispatch centers. When investigators realized that the plane was lost, they scrutinized the messages. The story the transmissions told was tantalizing, but inconclusive. Did the error messages suggest a fault in the sensors, or was the flight management system somehow fatally corrupted—perhaps because of a midair lightning strike?

The absence of clues causes concerns that reach beyond the AF 447 investigation. Was the crash a result of pilot error, an unexpected breakdown of vital equipment or a combination of both? Without answers, there is no way to guarantee that another airliner won’t suffer the same fate.

All the attention given to a crash like Air France 447’s can obscure an important truth: Commercial air travel is incredibly safe—and getting safer. In 2008, the U.S. fatality rate was fewer than one death per nearly 11 million passenger trips. This impressive record is the result of more than a century of incremental improvements that have been amassed through painstaking forensic analysis.

After each plane crash, investigators study the wreckage, analyze flight data and examine clues regarding flight conditions. Once they have determined a cause, they often help create recommendations that prevent the problem from recurring.

The FAA is determined to cut the already minuscule airliner fatality rate in half by 2025. With this in mind, the agency recently developed a new approach to make safety improvements. In 2007, it began working with airlines to sift through the masses of data that planes record about their normal flight operations, looking for safety improvements that could preempt accidents before they happen, instead of learning these lessons after a plane crash occurs.

The sophistication of aircraft makes this strategy possible. Modern planes are studded with environmental sensors that record flight conditions, while other sensors constantly assess the health of the airplane’s subsystems. This information is fed to a central computer, forming a network that resembles the neural system of a primitive organism. At the end of each flight, maintenance crews can easily download the data for analysis. Airlines have been using this information to improve their safety performance since the early ’90s, but two years ago the FAA began collecting these records as part of its Aviation Safety Information Analysis and Sharing (ASIAS) system.

This year, the FAA opened the Accident Investigation and Prevention Service to scrutinize the ASIAS data. “We’re having many fewer accidents, but the ones we do have are being caused by threats that are much harder to detect,” says Jay Pardee, the director of the new office. As an example of the kind of problem that ASIAS data could prevent, consider Comair Flight 5191, which was scheduled to take off from Lexington, Ky., in August 2006.

Thinking they were on 7000-foot Runway 22, the pilots failed to get their aircraft airborne before they ran out of asphalt on the runway they were actually on—3500-foot Runway 26. The airplane’s wheels clipped an airport perimeter fence and the plane plowed into a grove of trees 1800 feet from the end of the runway. All 47 passengers and two of three crew members were killed.

After the accident, the FAA reviewed 25 years of data and discovered that 80 commercial aircraft around the country had either taken off or tried to take off from incorrect runways. “Nobody connected the dots,” Pardee says. Following the AF 447 disappearance, other Airbus 330 operators studied their internal flight records to seek patterns. Delta, analyzing the data of Northwest Airlines flights that occurred before the two companies merged, found a dozen incidents in which at least one of an A330’s airspeed indicators—4-inch-long, pressure-sensing pitot tubes located on the fuselage under the cockpit—had briefly stopped working.

Each time, the flights had been traveling through the Intertropical Convergence Zone, the same location where Air France 447 disappeared. In the case of the Northwest A330s, the pitot tube malfunctions had been brief and harmless. But what if a severe version of the problem had struck Air France 447 amid more unforgiving circumstances?

At last, on June 6, the multinational search effort began to find evidence of the crash. The Brazilian military recovered bodies and debris floating approximately 40 miles north of the last automatic Aircraft Communications transmission. Over the next two weeks, search vessels retrieved 51 corpses from a stretch of ocean 150 miles wide, along with bits of wreckage—a section of the radome, a toilet compartment, part of a galley—that collectively added up to less than 5 percent of the aircraft. The largest single piece was the tail fin, marked with the distinctive blue and red stripes of the French national carrier.

The most important piece of the wreckage, however, remained missing. More than a month after the plane went down, despite the joint efforts of the French and U.S. navies, the black box still hadn’t been found. Given the huge search area, the ruggedness of the undersea terrain and the depth of the water (up to 15,000 feet), locating the recorder, let alone retrieving it, was proving to be an enormous task. Once the unit’s acoustic pinger passed its 30-day certified life span, the chances of recovering the black box became virtually nil.

Without the box’s data, the only physical evidence of the airplane available to investigators was the mangled wreckage. From the way it had been deformed—in particular, the way the floor of the crew’s rest compartment had buckled upward—French investigators determined that the fuselage hit the water more or less intact, belly first, at a high rate of vertical speed. Added to the ACARS messages and the satellite weather data, the evidence began to conform to a possible scenario. By 10:45 pm, 10 minutes after the last radio transmission, the plane hit the first, small storm cell in the Intertropical Convergence Zone.

Fifteen minutes later, it hit a larger, fast-growing system. And then, just before its last ACARS transmissions, the plane hit a whopper, a multicell storm whose roiling thermal energy rose more than 3 miles higher than AF 447’s altitude. Buffeted by turbulence, near the heart of a strong thunderstorm, the pitot tubes froze over. Lacking reliable speed indicators, the airplane’s computerized Flight Management System automatically disengaged the autopilot, forcing the co-pilots to fly the airplane manually.

Without autopilot, the pilots had no envelope protection restrictions, which are designed to keep the pilot from making control inputs that could overstress the aircraft. This is particularly dangerous for airliners at high altitudes. The thin air demands that airplanes fly faster to achieve lift, but they still must remain below speed limits. Flying too fast can create a phenomenon known as mach tuck, when supersonic shock waves along the wings shift the aircraft’s center of pressure aft and can make it pitch into an uncontrollable nose-dive. Flying too slow can cause a plane to stall. AF 447’s flight crew, disoriented in the storm, uncertain about their speed and buffeted by turbulence, could easily have taken the A330 outside its flight envelope.

“The fact that they didn’t transmit a mayday would seem to indicate that whatever happened to them happened quickly,” says William Waldock, a professor of safety science at Embry-Riddle Aeronautical University in Arizona. Without more data, this kind of scenario can never be verified completely. But the global aviation community has already taken steps to prevent another accident like AF 447.

Within days, Air France replaced pitot tubes on its Airbus planes with ones made by another company, and in July Airbus advised other airlines to do the same. Three months later the FAA turned the recommendation into a regulation. To be sure, the pitot tubes are not the definitive cause of the crash. Even if they had failed, that alone should not have been enough to bring down an airliner. As in virtually every fatal air crash, what doomed AF 447 was not a single malfunction or error of judgment, but rather a sequence of missteps that crash investigators call the accident chain. “There’s always a series of events,” the FAA’s Pardee says. “That means there are multiple opportunities to intervene and break that accident chain.”

In the case of AF 447, the error chain included the co-pilots’ decision to fly too close to severe thunderstorms—bad weather that several other pilots, flying similar routes that night, had chosen to give a wide berth. There were certainly other links in the accident chain that pushed AF 447 beyond its limits. But unless the black box is found, we may never identify those links. And that means safety officials might never learn the full lessons of the disaster.

To prevent a similar loss of forensic evidence, executives at Airbus say they are now studying alternatives to physical black boxes. It is feasible to create a system that could broadcast not only text messages like ACARS but comprehensive data about the status of every aircraft, in real time. The aircraft would continuously transmit data to VHF stations within a radius of 125 miles, or by satellite if the plane is farther away. Airliners in flight could one day stream all sorts of high-speed data, sharing information directly with one another. “It would be a network in the sky,” says Bob Smith, chief technology officer at Honeywell, which manufactured AF 447’s ACARS. “Aircraft could pass not only information about their location and where they’re headed,” he says, “but whole data sets. An airliner over Seattle could send its weather radar picture to a plane inbound from Dallas. And the guy from Dallas could pass it along to five other aircraft.”

Military aircraft already use a similar system; it is not clear if civil aviation will adopt it.

The disquieting truth is that we don’t really know precisely what happened to Air France 447, and perhaps never will. The same links in the accident chain could someday take down another unlucky airliner. If they do, improved technology might provide investigators with the data they need to make sure that the next time is the last time.

Post based on "How Plane Crash Forensics Lead to Safer Aviation" by Jeff Wise in Popular Mechanics December 2009

The Dabhol Power Plant Debacle

2010-03-17T04:03:00.000+11:00

Corruption never has been compulsory

Continuing one week more on the Enron theme, Honestly Lay Bare has always considered Enron's investment in India in the 1990s as one of the classic case studies of poorly thought out - and even more poorly executed - management of foreign investment risk.

Welcome to the financial and political disaster that was Enron's investment in the Dabhol Power Plant - more than 300 kilometres south of Mumbai.

Once the seventh-largest company in the US, Enron in 1992 was contracted to build a US$2 billion power project on India's western coast, in what was then the largest foreign investment ever made in India.

Today, the Dabhol plant, 320 kilometers south of Mumbai, is nearly 700 hectares of rusting equipment, empty buildings and huge storage tanks bisected and surrounded by deserted roads. It had been projected as the world's largest natural gas-burning energy facility.

At Dabhol, almost everything went wrong. Dabhol Power Company (DPC), as it was named, was supposed to generate 2,100 megawatts of power, not only to meet the shortage around Mumbai and Maharashtra state, but to partially meet the demand for an increasingly power-starved country.

Even before it was built, opposition figures were charging that Enron had got the contract with the aid of bribes, which the company repeatedly denied.

The opposition campaigned in 1994 and 1995 against the then-ruling Congress Party on an anti-Enron platform, charging that the contract was unduly enriching the Texas company. The Maharashtra state government fell in 1995, with the new government appointing a team of ministers to review the project and ultimately recommending the contract be scrapped. Enron entered arbitration and demanded $300 million in compensation. The state government countered with a suit alleging fraud and misrepresentation.

In 1996, when the currently ruling Bharatiya Janata Party had only been in power for 13 days, Dabhol received the green light for construction from Finance Minister Jaswant Singh. He not only cleared the project, but also provided the government's first-ever counter-guarantee to a power project, assuring full payment to the creditors in case of project failure under the Indo-US Bilateral Investment Protection Treaty.

At its height, the power plant employed 15,000 people. Its most immediate problem was that the power Enron’s Dabhol plant was selling was twice as expensive as that of its next nearest competitor.

None of this should have however come as a surprise.

Back in 1993, when the project was just a twinkle in an executive's eye, the World Bank concluded that it was "not economically viable." The bank said that the type of plant proposed would produce too much power at too costly a price for the state.

"We knew what would happen, and they did it anyway for reasons they thought best," it was said. "You're bankrupting yourself knowingly, willingly, deliberately."

**

Enron's problems extended from fraudulent accounting to an inability to execute its largest project.

Clearly they were not always the smartest guys in the room.

Enron | A Theatrical Interpretation

2010-03-10T04:28:00.000+11:00

Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction.

Honestly Lay Bare has been writing these missives since 2004 but today - 6 years on - is the first time that we have written a theatre review.

But this - as you may have imagined - is no ordinary theatre review.

Friday last after a week working in the United Kingdom and Ireland, Honestly Lay Bare took themselves off to see the play "Enron" at the Noel Coward Theatre in the West End (yes Honestly Lay Bare does have a cultural side!).

Not surprisingly - although it was to the elderly couple sitted behind Honestly Lay Bare who at the end of the production accused it of being a documentary - "Enron" shows how the Texan energy giant moved from a model of the future to a bankrupt disaster with debts of $38bn.

Prime mover is Jeffrey Skilling: a classic over-reacher who boldly announces "we're not just an energy company, we're a powerhouse for ideas".

As any student of accounting will now know his basic idea was to trade in energy as well as supply it. But, as his dreams expand to include video, internet and even the weather, the gap between stockmarket perception and reality grows ever greater.

As profits failed to materialise, Skilling turned to his sidekick, Andy Fastow, to create shadow companies to conceal mounting debts. Once the market lost confidence, however, Skilling's schemes are revealed for what they are: a fraudulent fantasy.

It could all be dry as dust.

But it wasn't. It was a wonderful explanation of one of the more fascinating times in modern business history.

Not to give too much away ... but having said that we will ... there is a wonderful scence where scene where Fastow explains his system for funnelling Enron's debts into shadow companies (who will ever forget the LJMs!).

Even financially challenged auditors can follow this as Fastow shows boxes encasing ever smaller boxes lit by a flickering red light symbolising the basic investment.

This is Enron exposed as con-trick and illusion.

But the triumph of the play is that it renders Enron's rise and fall in exciting theatrical terms, and leaves you with the feeling that - even with the subsequent impact of the global financial crisis - the lessons of this vast collapse have still to be learned.

Tone Deaf

2010-03-03T04:03:00.000+11:00

The best weapon of a dictatorship is secrecy, but the best weapon of a democracy should be the weapon of openness.

Today Honestly Lay Bare looks to the world of celebrity (of which it has been cruelly and unjustifiably excluded) for a process – that applied appropriately to the world of business – could seek to quantify the previously unquantifiable: the tone at the top of an organisation.

The Davie Brown Index (DBI) http://www.daviebrowncelebrityindex.com/ is an independent index for brand marketers and agencies that determines a celebrity’s ability to influence brand affinity and consumer purchaser intent.

Developed by the talent division of Davie Brown Entertainment, the DBI provides marketers with a systematic approach for quantifying the use of celebrities in their advertising and marketing campaign.

The DBI, goes a step beyond the decades old Q rating approach which is based on two factors, how many people have heard of Celebrity X and how many people name him or her as one of their favourites

The DBI surveys 1.5 million Americans to score on eight key attributes: “appeal,” “notice” (their pop ubiquity), “trendsetter” (their position as such), “influence” (do they have any?), “trust,” “endorsement” (spokespersonability), “aspiration” (do we want his or her life?), and “awareness” (expressed as a percentage).

The scores are then cross-referenced in a database that supposedly will help advertisers decide who among a list of more than 1,500 celebrities will help them hawk their wares.

Access costs $20,000 a year.

Tiger Woods - whose dalliances are of such that they are not within the family classification of Honestly Lay Bare – has recently felt the sting of the DBI.
Prior to his car crash, Woods had ranked as the sixth most valuable endorser according to the DBI. After the car crash and subsequent revelations, he has now fallen to 24th on the list.

**

It is the quantification of a celebrity’s “it” factor that has really got Honestly Lay Bare thinking.

Investors, Boards, employees and a myriad of other stakeholders have often had to rely on gut instinct when it comes to determining whether to install, support or reject Chief Executive Officers and other C suite members.

We know that such key Management have an impact upon the tone of an organisation yet we have never really sought to quantify or understand how that is the case.

Imagine then if there was a corporate version of the DBI.

A C Suite member would be ranked by key stakeholders on attributes relevant to the assessment of the tone at the top – walks the talk; holds people accountable; is accountable for decisions; rewards good decisions; addresses poor decisions; is trusted by the employees; is likely to be one day involved in some form of scandal.

If this exercise was conducted within an organisation this would be invaluable information for a C suite member to review and ignore at their peril.

Perhaps, however, the greater use of a corporate DBI would be if there was a central repository of the rankings so that there was an unequivocal assessment of a C Suite member that current and future employers could reference in determining whether the person just about to be employed / considered for a new role would be good not only at the competency elements of their role (something that a corporate DBI could not measure) but the tone at the top issues.

Imagine how such transparency would impact upon the attention that the C Suite gave to the attributes upon which they were now being measured.

Food for thought.

iFailure 2.0

2010-02-24T04:03:00.001+11:00

I said, "Do you speak-a my language?" He just smiled and gave me a Vegemite sandwich.

In consideration of our 150th entry (thanks in advance for the well wishes that we know will be about to flood our inbox), we here at Honestly Lay Bare today consider a case study of either brilliant product awareness or one of the worst examples of new product governance / risk assessment that has been seen in recent times.

We are erring on the latter because if it was the intention to go for the former it was a seriously weird way about doing it.

What are we talking about?

We are talking about the launch of a variation on the Australian staple, Vegemite and its soon to be derided cousin.

**

Firstly for those that may not be aware, Vegemite is a dark brown, salty, slightly bitter and malty Australian food paste made from yeast extract. It is a spread for sandwiches, toast, crumpets and cracker biscuits and filling for pastries. It is similar but not as intensely flavoured as British Marmite and is less sweet than the New Zealand version of Marmite.

At this point it doesn’t really sound like the content for the usual Honestly Lay Bare update does it?

Well wait – there is more!

In September 2009, Kraft Foods – the makers of Vegemite – announced the results of a nationwide competition which attracted more than 40,000 entries to name the new, creamier recipe of the suburban staple.

iSnack 2.0 was the name Kraft Foods selected (we kid you not!).

The move was a bid by the food conglomerate to align the new product with a younger market -- and the "cool" credentials of Apple's iPod and iPhone. That a yeast based spread is not a technology based instrument seemed to allude the minds of the judging panel.

Simon Talbot from Kraft Foods said: "The name Vegemite iSnack2.0 was chosen based on its personal call to action, relevance to snacking and clear identification of a new and different Vegemite to the original. We believe these three components completely encapsulate the new brand."

The product's tag line read: "iSnack 2.0, because it's the next generation Vegemite."

The winner of the contest, West Australian web designer Dean Robbins, told the media ''It's been difficult to contain my excitement; I actually leapt out of my chair when I heard the news. To think that I could go down in Australia's history is overwhelming."

That he will go down in Australian history is not without dispute ... but probably not for the reasons that he wanted.

By the day after the release of the name, the product launch was met with almost universal condemnation by customers.

The internet bristled with indignation at the name chosen with the online world turning on Kraft with a savagery not seen since Coca-Cola changed its recipe in 1985 and rebranded it New Coke.

Soon thousands of negative comments were up on Twitter and a website, Names That Are Better Than iSnack 2.0, also sprung up.

Within three days, Kraft had dumped the brand name (but not the new product which was selling very well).

"The new name has simply not resonated with Australians … particularly the modern technical aspects associated with it," Kraft's Food’s Simon Talbot said.

"At no point in time has the new Vegemite name been about initiating a media publicity stunt.

"We are proud custodians of Vegemite, and have always been aware that it is the people's brand and a national icon."

**

And see this is where Honestly Lay Bare starts to have problems with the whole process.

If this was a genuine attempt at naming a new product that would also be in the shadow of a national icon one would have thought that some assessment of likely customer reaction may have been made by ... hmmmm going to a focus group or even asking around.

This is basic risk management - to test out reactions to a potential course of action.

But no, the “personal call to action” seemed to confirm this effort as one of the worst product launches of recent times.

And forever more, iSnack 2.0 will ring out as what you should not do when you are launching a new product.

A Wilpena

2010-02-17T04:28:00.000+11:00

False eloquence is exaggeration; true eloquence is emphasis

Today Honestly Lay Bare types into the lexicon of internal controls vocabulary a new phrase – a Wilpena Internal Control.

We predict that the usage of the term will soon go viral and when it does we want you to remember that you read it here first.

Now ... before we get to what is a Wilpena Internal Control (some may call it a WIC but we are sticking with the expanded, more pure, form!), firstly one has to take a seat in front of the Honestly Lay Bare film projector and come with Honestly Lay Bare and Mrs Honestly Lay Bare on a journey into one of the remotest corners of Australia.

**

To cut a long story short (film nights always drag on), Wilpena Pound is a natural amphitheatre of mountains located 429 kilometres (267 miles) north of Adelaide, South Australia in the heart of the Flinders Ranges National Park. The Pound is the most northern point with access via a sealed road in this part of the Flinders Ranges.

The Flinders Rangers are some of the most stunning natural landscapes that you will ever see (not to mention the many deserted ghost towns along the way) and in mid 2000s Mrs and Mr Honestly Lay Bare were travelling through the Flinders Rangers on holidays.

We soon discovered that one cannot travel through this part of the world without being asked – at every opportunity – whether you have visited The Pound yet.

Whilst we like to consider ourselves seasoned travellers, at the time we had no idea what The Pound was, did or where it was.

But as the days progressed our need to visit something – that days earlier we had never heard of – increased to the point of absurdity.

We just had to get to Wilpena Pound. Just had to.

JUST HAD TO!

When we discovered that there was no accommodation left at The Pound we were shattered.

The value of our collective lives seemed to drain in an instance.

Mrs Honestly Lay Bare had a wonderful idea – to fly over The Pound in a small plane (the story of the flatulent pilot can wait for another day).

We did and that is where the inspiration for a Wilpena Internal Control came from.

The Pound was nothing more than a collection of half sized hills.

We had spent days agonising over the need to visit something that turned out to be the least interesting part of a fascinating journey.

And into the language of the Honestly Lay Bare family came the phrase “that is a Wilpena”.

It means when one stresses over something that is not important or is disproportionately important only to the participant to the event and of no significance to anyone else.

**

So what does this have to do with internal controls?

Well – ask yourself; how many times have we identified an internal control deficiency that you are certain is of fundamental and vital importance to the survival of the human race only to discover that there is no one else that shares your concerns let alone your enthusiasm.

Of course there will be times when you have to swim against the tide and speak without fear or favour – but when you are dealing with a Wilpena Internal Control you are not in a life or death situation.

You are dealing with an internal control that – quite simply – no cares about and neither should you.

When you are at that moment – my friend, you have discovered a Wilpena Internal Control.

Hell on Earth

2010-02-10T04:37:00.000+11:00

The worst day ever in the history of the State.

In 2009, starting on January 28th, the State of Victoria – the second largest population centre in Australia, experienced its most severe heat wave in recorded history.

Many elderly people died; steel train tracks buckled; in one Melbourne park a thousand fruit bates fell dead from the trees.

By Monday February 2nd Claire Yeo, one of Victoria’s two fire meteorologists, noted that all the facts that create extreme fire weather were evident: high temperatures; strong, gusty winds; and very little moisture.

So terrible was the forecast that, when she had to brief assembled fire chiefs, meteorologists, and other specialists on the situation, she stood at her lectern for some time, hanging her head and unable to speak.

Yeo’s predictions were accurate.

Saturday 7th February 2009 was the hottest day in Melbourne since records began to be kept in 1855. The temperature reached 46.4 degrees Celsius (115.5 degrees Fahrenheit) in Melbourne and a hundred and twenty degrees Fahrenheit elsewhere in the state.

Humidity was just six per cent and a strong wind was blowing from the northwest.

The six hundred fires that started that day were not just the deadliest that Australia had ever known but among the worst the world had seen for decades.

**

These extreme conditions were recognised by the Victorian Government and fire agencies. Prior to 7 February, Victorians were warned from the Premier down that the Saturday was likely to be ‘the worst day ever in the history of the State’.

These dreadful expectations were matched by the calamity that resulted on 7 February.

Many long-serving Country Fire Authority officers had not experienced such fires. The rate of spread of the fires equalled the maximum previously recorded, and the prolific spotting made fire behaviour on the day unique.

Reports referred to flames leaping 100 metres into the air, generating heat so intense that aluminium road signs melted. The plume of the fires created a convection effect that generated winds so strong that trees appeared to have been screwed from the ground.

One hundred and seventy-three people died in the fires.

**

A Royal Commission was established to inquire into the catastrophe.

A Royal Commission is an administrative inquiry established by Executive Government which, by long tradition, operates independently.

A Royal Commission is a valuable mechanism by which the circumstances of the involvement of government or government agencies in an event like the 7 February bushfires can be thoroughly examined in a public setting. A Royal Commission has broad investigative powers. It is not under a duty to reach a definitive verdict. It has a duty to report on the nature of its inquiries, explaining what conclusions were drawn from its investigations and what advice it should give the Executive Government based on its deliberations.

A key element of the Royal Commission’s report was on the importance and failings of the communication systems on that dreadful day.

**

Timely warnings save lives. The community expects and depends on detailed and high quality information prior to, during, and after bushfires. The community is also entitled to receive timely and accurate bushfire warnings whenever possible, based on the intelligence available to the control agencies.

There were a number of weaknesses and failures with Victoria’s information and warning systems on 7 February.

Warnings were often delayed which meant that many people were not warned at all or the amount of time they had to respond to the warnings was much less than it should have been.

The warnings that were issued often did not give people a clear understanding of the location and severity of the fire and how they should respond.

The methods of delivery of the warnings were also inadequate.

Some techniques for raising awareness such as the use of an emergency warning signal to capture people’s attention when warnings are broadcast were not used. Similarly, other avenues for issuing and raising awareness of warnings were not encouraged, such as the use of local sirens or the use of commercial radio and television.

Finally, the sources of information and warnings that were available during the fire did not cope well with the level of demand. People had difficulty getting onto the relevant websites and about 80 per cent of the calls to the Victorian Bushfire Information Line were unanswered. Often the information available through these sources was incomplete or out of date.

During the afternoon of 7 February the emergency telephone call services (Telstra’s Triple Zero service and the Emergency Services Telecommunications Authority) experienced unprecedented demand which resulted in serious failures. Large numbers of calls were not answered and many callers could not be connected to the relevant authorities, leading to a significant number of abandoned calls. The collapse of the system caused extreme stress to both the callers and the operators.

**

The Royal Commission recommended the following improvements in Victoria’s information and warning system:

• improving the quality of bushfire information and warning messages by adopting standard language already developed for national usage
• simplifying the format of bushfire warnings
• reintroducing the Standard Emergency Warning Signal to draw attention to broadcast warnings about life threatening fires
• extending the broadcasting of official warnings to commercial radio and television
• allowing the reintroduction of sirens in local communities where there is demand for them
• supporting the acceleration of the full introduction of a nationally developed telephone based automatic warning system
• pursuing research into the development of improved fire danger index systems
• enhancing the role of the Bureau of Meteorology in issuing daily information on bushfire risk
• improving technology and processes to accelerate the updating of common bushfire information on agency websites
• increasing the capacity of the bushfire emergency networks, the Victorian Bushfire Information Line, Telstra’s Triple Zero service and the Emergency Services Telecommunications Authority to better handle peak demands, and to work more collaboratively during severe fire risk days.

The lessons of Black Saturday are relevant to any country, society, organisation or family that is seeking to protect its citizens or members in the time of urgent and critical need.

May they be lessons never forgotten.

Based in part on "The Inferno"; The New Yorker October 26, 2009 and the Executive Summary to the Interim Report of the Victorian Bushfires Royal Commission

Choke

2010-02-03T04:01:00.001+11:00

A compelling story, even if factually inaccurate, can be more emotionally compelling than a dry recitation of the truth.

If you have ever found yourself gasping for air and suddenly been bear-hugged from behind by a waiter, his fist, placed just below your sternum, dislodging the food blocking your trachea with one miraculous thrust, you owe the waiter a large tip, but you owe your life to Dr. Henry Heimlich.

He's the maneuver man, credited for three decades as the inventor of the simple, anyone-can-do-it technique for saving the lives of dinner companions who have just begun pointing furiously at their throats while turning blue.

Or at least that is the way that it works in the movies.

In real life there is little evidence to support the assertion that the Heimlich manovuer actually works.

**

Dr. Heimlich's first claim to medical fame was a surgical technique that involved replacing a patient's damaged esophagus with a gastric tube. In 1955 Heimlich had published a paper in the journal Surgery describing how he had performed the operation on dogs. A Romanian physician, Dr. Dan Gavriliu, wrote to Surgery to point out that he'd been performing the same operation successfully on humans for four years.

At the 1985 American Heart Association conference, at which a panel of experts in each safety field would decide whether new evidence warranted new recommendations for approved actions in emergencies, the Heilich Maneuver was to be considered. The chairman of that conference, Dr. Bill Montgomery, knew that Heimlich was prepared to do battle with the committee on the topic of choking.

"It was this huge publicity campaign. He was something to be reckoned with," Montgomery recalls. "He threatened to sue us all and write to the presidents of our universities. It was brazen, terrible, unusual."

Different studies reached different conclusions about the most effective method for choking intervention: the Heimlich maneuver, back blows, or chest thrusts, which consist of pushing down on the victim's sternum, as with CPR. There was a dearth of data. As one panel member, Dr. James Atkins, summarizes the situation, the committee could "adopt something that has no evidence, something that has very poor evidence, or something that has mediocre evidence."

Heimlich's evidence might have been even less persuasive, however, had he informed the panelists that his own foundation had financed the one study demonstrating the superiority of the Heimlich maneuver. In fact, they didn't learn this until 20 years later.

Heimlich's rivals folded.

Dr. Archer Gordon, the advocate of back blows, was too scared even to show up at the conference.

Dr. Charles Guildner, the champion of the chest thrust theory, didn't back down so easily, leading Heimlich to make good on his threats: Heimlich accused Guildner of unethical medical practices and petitioned to have his license stripped. Says Guildner, "He tried to bury me.

The panel ruled for the Heimlich maneuver.

**

There is, however, one significant problem.

There is actually very little or no evidence to support the Heimlich manoeuvre and the literature is awash with reports of harm and this includes things such as fractured sternums, ruptured livers and other serious consequences of this Heimlich manoeuvre.

Apart from a few case reports there is no other evidence to support what Henry Heimlich has advocated. There's no published data of any substantial nature except for a few case reports and lots of TV programs and there were substantial reports in the literature of harm.

By the late 1980s Henry Heimlich's anti-choking maneuver was world famous, and he was publicly musing over the question, what next? His first priority was establishing the Heimlich maneuver's use in drowning rescue, in lieu of CPR. Second, he vowed he could cure AIDS by treating HIV-positive patients with malaria. He even considered running for president in order to bring world peace.

The maneuver-for-drowning campaign was based on the premise that water must be forced out of the lungs. "You can't blow air into water-filled lungs," according to Heimlich's slogan.

There's just one problem with that thesis. "The idea that inhaled water fills up the lungs in drowning is totally incorrect," says Rear Admiral Alan Steinman, who crafted the U.S. Coast Guard's guidelines for cases of near-drowning. Steinman said that an involuntary response, laryngospasm, seals the lungs at the moment fluid threatens to flow in. Only a very small amount of water ultimately gets into the lungs after the spasm relaxes.

Employing the Heimlich maneuver may be not only ineffective but lethal, according to Dr. James Orlowski, another drowning expert. In 1987 Orlowski published a paper describing a 10-year-old drowning victim who had suffered complications from the rescuer's use of the Heimlich maneuver rather than CPR. A boy who might have been saved slipped into a coma and later died.

**

Despite his lack of independent evidence, Heimlich had credibility with the public and the media.

And perhaps – that is all that one needs these days to be heard and believed.

The Bleeding Obvious

2010-01-27T04:58:00.000+11:00

Mens sana in corpore sano

In the early years after the second world war, health researchers in Britain noticed a curious epidemic: people had begun dying of heart attacks in unprecedented numbers. Nobody knew why, and so a scientist in London named Jerry Morris set up a vast study to examine the heart-attack rates in people of different occupations – schoolteachers, postmen, transport workers and more.

“The very first results we got were from the London busmen,” says Morris.

“And there was a striking difference in the heart-attack rate. The drivers of these double-decker buses had substantially more, age for age, than the conductors.”

The data were so telling because drivers and conductors were men of much the same social class.

There was only one obvious difference between them. “The drivers were prototypically sedentary,” explains Morris, “and the conductors were unavoidably active. We spent many hours sitting on the buses watching the number of stairs they climbed.” The conductors ascended and descended 500 to 750 steps per working day. And they were half as likely as the drivers to drop dead of a sudden heart attack.

Today, almost everyone understands that physical exercise can help prevent heart disease, as well as cancer, diabetes, depression and much else besides. But on that day in 1949 when Morris looked at the bus data, he was the first person to see the link. He had inadvertently – “mainly luck!” – stumbled on a great truth about health: exercise helps you live longer.

Morris’s own mission of the late 1940s was heart disease. He spent “interminable hours” reading the postmortem folios of the London Hospital in the East End for 1907 to 1949. But he still couldn’t understand why heart attacks were increasing.

“We were in the fortunate situation,” he says, “that very little research had been done on it. It might be hard for you to imagine a time when heart attack wasn’t a major preoccupation of everybody.” Today, heart disease is the most common cause of death in western countries.

“The only hunch I had was that this might be related to occupation. It was commoner in men than women, it was commoner as middle age advanced, and there were some hints in the national statistics of mortality that it might be connected in some way to occupation.”

The busmen’s data were fascinating, and the sample size was thousands of men. But Morris didn’t treat it as proof of anything. In what he has called “one of the tensest moments of my professional life”, he had to wait for data to arrive for other occupations. Finally, he got the figures for postal workers. “It was strikingly similar!” he says. The postmen who delivered the mail by bike or on foot had fewer heart attacks than sedentary men who served behind counters or as telephonists and clerks. It was true: exercise prevented heart disease.

And yet Morris sat on his data for years. If there were flaws in his theory, he was determined to find them before anyone else could. “We set about destroying this observation,” he says. “We brought in outside people with no blood in their veins, no interest, to destroy it.” But they couldn’t. His paper (“Coronary heart-disease and physical activity of work”) finally appeared in The Lancet in 1953. His hypothesis, as he still called it, was greeted with general disbelief. What could exercise possibly have to do with heart attacks? True, there had always been a vague belief that exercise was good for the soul.

Even he had no idea how exactly the mechanism worked. Only after his paper appeared did the physiologist Henry Taylor sit him down for a solid day in a Washington hotel room and, in Morris’s words, “schoolboy-taught me the physiology of exercise”. Morris thinks the essential story is simple: “Exercise normalises the workings of the body.” Humans were meant to keep active.

With hindsight, his London bus drivers inhabited one of the first societies on earth where exercise was ceasing to be part of daily life. Technology was letting people grow slothful. Even in the 1950s, Morris foresaw that when poor countries developed, they would have the same problems. He remembers warning then: “Their time will come to develop these diseases, and not to make the mistakes that we made, eg a lack of exercise, eg smoking, eg our lousy diets. Of course, nobody paid any attention.”

**

Upon reading about the man that discovered exercise, it got Honestly Lay Bare thinking.

What is it that is plain for all to notice by no one can?

What is that the practitioners of internal audit, risk management and corporate governance are missing that will make eternal and fundamental sense of the world in which we ply our trade?

Honestly Lay Bare is going to start the ball rolling on this one.

Our nomination for the Bleeding Obvious That Has Yet to Be Found is something (well we would be more precise but by definition we cant because we actually wont know it until we see it) to do with the importance of communication within an organisation in improving its internal control culture.

We all seem to know that that is the case in the same way that we now accept that exercise is good for a healthy heart.

But we have no way of measuring it to prove it.

Indeed when it comes down to it – internal audit, risk management and corporate governance have little in the way of measurements to prove their hypotheses (and some would say, worth).

And therein perhaps lays our equivalent of riding a London bus observing the world.

What is the one measure that proves our worth?

And who amongst us will find it.

Post based in part on “The Man Who Invented Exercise”. The Financial Times by Simon Kuper. September 11, 2009

The Art of the Ditch

2010-01-20T04:48:00.000+11:00

Education is an ornament in prosperity and a refuge in adversity

Here at Honestly Lay Bare central it is fair to say that we are inundated with examples of the worst execution of internal controls, risk management and corporate governance.

That is, paradoxically, good for us as it gives us a never ending stream of case studies to dissect and analyse.

But we don’t want to be just seen as the carcass finders of our profession.

So today we examine an event that had its first anniversary just under a week ago.

It is a case study of people and machinery responding exactly as one would hope it to react upon the occasion of an unfortunate event.

It is a case study that is worthy of repeating throughout the ages.

It is the art of the ditch.

**

Not long after takeoff from LaGuardia last January 15, as the Charlotte-bound US Airways flight was climbing out smoothly over the Bronx on a northerly heading, something hit the airplane.

Something that seemed big.

There was a loud noise and a collective gasp from the passengers. Some of them had seen something like a flash of brown going into the engines. The airplane began to wiggle a little and decelerate. The flight attendants were still strapped in their seats not near any windows, but they guessed what had happened. There was a smell of something burning. It had become completely quiet. There was no word from the cockpit.

A woman would text her husband, "My flight is crashing."

The airplane was not crashing, but it was definitely headed down.

At about 2,500 feet it had collided with a flock of Canada geese flying southwest; geese are not uncommon in the New York area, their ancient migratory routes passing over it. At least five birds had hit the plane, three or more going into and virtually destroying both engines. The copilot, Jeffrey Skiles, had been at the controls, and he and the pilot, Chesley Sullenberger, had suddenly seen, at the same time, the flock of geese slightly above and ahead.

"Birds!" Sullenberger cried just before they hit.

"Whoa!" Skiles said.

They were fortunate that a bird—Canada geese are large—hadn't crashed directly into the windshield, but the engines were already banging and winding down. Fire was coming from both of them, flames from one and fireballs from the other.

Briefly, for some fifteen seconds, Sullenberger tried to restart the engines and also, more or less instinctively since it was not part of the procedure, he started an auxiliary power unit in the tail to maintain electrical power. His pulse rate must have been high, but he said calmly, "My aircraft," and took over the controls.

Sullenberger was almost fifty-eight years old, an experienced and steady captain who had been flying since he was sixteen. He had learned to fly in high school in Denison, Texas, from a grass field and had gone on to the Air Force Academy and the beginnings of a career as a fighter pilot, during which he had flown a Vietnam-era fighter, the F-4 Phantom.

He had never, in his long flying career, had an engine failure. It was hardly surprising since jet engines are simple in design and extremely reliable although subject to damage if anything reasonably substantial comes into the intake. He called New York Approach and said, "We lost thrust in both engines. We're turning back towards LaGuardia."

As Sullenberger began a turn to the left to return to the field, Skiles began working on the checklist of air restarting procedures. They had slowed to a recommended gliding speed. In the cabin no one knew what was happening, although knowledgeable passengers could see that they were turning back and had some idea of the situation.

Sullenberger had been quickly offered Runway 13 to land on at LaGuardia. He was just descending through 1,900 feet, and the field was still out of sight to the left. He was a precise, mature pilot. At this already crucial point he had two tasks and just one decision. The tasks were, first, to get one or both engines restarted. If he was successful, that would solve things. If not, or in any case, he had to land the airplane someplace. The question was: where? Runway 13 was seven thousand feet long. In a case like this, you might prefer ten thousand feet, but of equal importance was that the water of Flushing Bay came right to the threshold of the runway, there was no overrun or stretch of grass if you hit short. So it would have to work out almost perfectly.

It was too risky. He called and said, regarding the offer of the runway, "We're unable. We may end up in the Hudson."

Sullenberger, in his Airbus A320, continued with Skiles to try to restart the engines, and amid unnecessary and irrelevant voice alarms going off in the cockpit, continued talking to the controller. Teterboro, an airport off to the right in New Jersey and no closer than LaGuardia, was briefly considered, but, like Newark, rejected. The decision had really been made. The best choice was the Hudson.

Ditching is best done with power.

The general assumption is that the airplane will be going down in the ocean somewhere, perhaps in a bay. With its landing gear up and at close to normal touchdown speed, the airplane is flown parallel to any waves and between them, and the aft section is the first to come into contact with the water. There have been only a few airliner ditchings and apparently only one without power, in Java, just seven years before Sullenberger's. That plane also ditched into a river (and one person, a flight attendant, died).

The need for power is obvious: the pilot wants to be in complete control of the descent, holding it off just above a stall and allowing the tail to touch and then smoothly setting the rest of the fuselage down like a boat launched at more than a hundred miles an hour.

Sullenberger's first announcement to the cabin, when the die had been cast and they were going to end up in the river, was "This is the captain. Brace for impact."

Although three and a half minutes, the time that elapsed between hitting the geese and landing in the river, seems leisurely enough—a man can run close to a mile in that length of time—the pair in the cockpit were too occupied to explain, even in the briefest terms, what was going on.

The order came as a surprise to nearly everyone. One man said out loud, "What does that mean?" Soon enough he figured it out.... The most astute passengers had known for a while that they were descending over the Hudson, and would not be returning to LaGuardia, but some had held out hope that they were headed for Newark instead. Now they knew that the airplane was going to crash into the river.

The flight attendants did not know it, because...they had no eye-level windows while seated in their positions, and were expected to rely on instructions from the cockpit.... They therefore reacted purely by rote, chanting, "Brace! Brace! Heads down! Stay down!" with no idea of how high they were, where they were, or what was going on.

A man in the back had the poise and presence of mind to call out, "Exit row people, get ready!" A woman mid-plane with a baby boy on her lap did not know what to do. The man next to her asked if he could brace her son for her, and she passed the child to him, and he did.

In the cockpit the ground warning alarm had begun, an automatic voice repeating that the plane was too low. Sullenberger called for the flaps on the wings to be extended in order to slow the plane for impact. At two hundred feet he began breaking his glide and ballooned a little. They were at 150 knots—about 180 miles an hour.

He lowered the nose slightly and then, pulling back on the stick in the last few seconds before touching down, his airspeed spent, remarked coolly to Skiles, "Got any ideas?"

"Actually not," Skiles said.

They touched the water at an optimum angle, nose slightly high, 120 knots. The left engine tore away, the plane's belly ripped open toward the rear, and the aircraft skimmed to a stop. There was such heavy spray that the passengers near the windows thought they had gone entirely underwater.

The evacuation of the plane was all one could hope for.

Water entered quickly. There was an eighty-five-year-old woman who needed a walker, plus several children aboard. In the rear, the floor had buckled and a beam had broken through. There was more water there; it rose to almost chest-high before everyone was out. The flight had been sold out—only one empty seat.

The flight attendants, three women all in their fifties, were exemplary.

Doreen Welsh, the oldest, in the rear, had the greatest difficulties and was seriously injured. People tried to swim in the river, some slipped into the water and were pulled back, all ended up standing on the wings, some waist deep in water, or in the inflated slides and rafts.

Sullenberger and Skiles had all along been moving through the cabin assisting and handing out life vests. In the end Sullenberger went through the deep water in the cabin one last time to make certain no one was left. The water was bone-chillingly cold, but within five minutes the first of the rescue boats was at the plane.

There had been no casualties. All survived.

Chesley Sullenberger and his entire crew had performed admirably. The event was so spectacular, in full view of Manhattan and the New Jersey side of the Hudson, and it ended so happily that the public embraced it.

It seemed a miracle.

A "miracle."

On examination it seems more like a bit of luck and a job perfectly done.

Airline crashes normally produce so many fatalities that this was an unexpectedly nice outcome.

Whether the computerized characteristics of the A320 were an important element in that outcome seems uncertain.

Experts gives the airplane credit for smoothing out the slight ballooning in the last moments and easing it in the optimum position onto the water as Sullenberger held the stick full back, but given Sullenberger's abilities and good judgment, along with the weather and other circumstances, it seems likely that he would have accomplished the same thing in a Boeing, and that no autopilot or computer we can conceive of could have handled the emergency half as well.

**
Post based in part on The Art of the Ditch by James Salter. The New York Review of Books. January 14, 2010.

Risk Profiling's Moment of Truth

2010-01-13T04:18:00.000+11:00

Assumptions are the mother of all stuff ups.

In our first blog for the new decade we pause to consider the ramifications for risk management borne out of two events that occurred within hours of each other on Christmas Eve / Christmas Day 2009.

The circumstances surrounding the events call into question a key element of risk management - the practice of risk profiling.

It is difficult to establish the history of risk profiling other than to say that it is likely to have been around (if not in a formalised state) for as long as people have tried to manage risk.

The concept of risk profiling is based on the assumption that one can predict future risks or better understand existing risks by examining or analysing information, trends or data points.

Risk management as a discipline has long used risk profiling as a tool in the understanding of the - not suprisingly - profile of risk that is to be managed.

We don't need to rewrite the many thousands of newspaper articles that have been written about the two instances that we refer to.

Firstly, the failed Christmas Day attempted bombing of the Northwest Airlines flight and its 278 passengers by a Nigerian man, Umar Farouk Abdulmutallab.

Secondly, the assault on Pope Benedict on Christmas Eve by Susanna Maiolo.

In both instances there were glaring indicators that both persons were of high risk and would be possibly dangerous in the circumstances that they ultimately found themselves in.

With regards to the Northwest incident, the alleged attempted bomber's father had warned authorities of his son's likely intentions.

With regards to the Papal incident, in 2008 - at the same Mass - the lady had attempted to jump over the security barriers (wearing near identical clothes to the ones that she wore in 2009).

Risk profiling should have prevented both instances.

Is it not reasonable to expect that Maiolo may have been stopped somewhere before she was in the physical presence of one of the highest profile people in the world? This was a person that had previously attempted to breach the security of the Pope - yet she was allowed to be within striking distance again.

Is it not reasonable to expect that the attempted bomber may have been stopped before he got on a plane and put so many lifes in jeoporady.

Undoubtedly official investigations will be - and have been - launched to ensure that such instances do not happen again.

One does wonder, however, as to what the practitioners of risk profiling have to say about the instances.

Why is it that we only hear about risk profiling when it works.

When it fails there is but silence.

For Honestly Lay Bare - that equation of truimphant success against silent failures is not the foundation upon which risk management should be basing its long term future.

The moment is upon risk profiling to prove its worth.

Honestly Lay Bare doubts that it can.