Many employers, particularly government departments are utilising a Root Cause Analysis (RCA) process in investigating and categorising the root causes of events with safety, health, environmental, quality, reliability and production impacts. The term “event” is used to generically identify occurrences that produce or have the potential to produce these types of consequences.

RCA is a tool designed to help identify not only what and how an event occurred, but also why it happened. Only when investigators are able to determine why an event or failure occurred will they be able to specify workable corrective measures that prevent future events of the type observed.

Understanding why an event occurred is the key to developing effective recommendations. Imagine an occurrence during which a worker is instructed to press button A; instead, the Worker presses button B. The typical investigation would probably conclude worker error was the cause.

This is an accurate description of what happened and how it happened. However, if the investigators stop here, they have not probed deeply enough to understand the reasons for the mistake. Therefore, they do not know what to do to prevent it from occurring again.

Root cause analysis helps identify what, how and why something happened, thus preventing recurrence

Generally, mistakes do not just happen but can be traced to some well-defined causes. In the case of the button error, we might ask, “Was the procedure confusing? Were the buttons clearly labelled? Was the worker familiar with this particular task?”

The answers to these and other questions will help determine why the error took place and what the employer can do to prevent recurrence.

Identifying root causes is the key to preventing similar recurrences. An added benefit of an effective RCA is that, over time, the root causes identified across the population of occurrences can be used to target major opportunities for improvement.

If, for example, a significant number of analyses point to procurement or training inadequacies, then resources can be focused on improvement in these areas.
Trending of root causes allows development of systematic improvements and assessment of the impact of corrective programs.


Definition

The definition of root cause does vary depending on the context in which it is being used, the following is used by many authorities in the investigation field¹:

1. Root causes are specific underlying causes.

2. Root causes are those that can reasonably be identified.

3. Root causes are those management has control to fix.

4. Root causes are those for which effective recommendations for preventing recurrences can be generated.¹
 
Root causes are underlying causes

The investigator’s goal should be to identify specific underlying causes. The more specific the investigator can be about why an event occurred, the easier it will be to arrive at recommendations that will prevent recurrence.

Root causes are those that can reasonably be identified

Occurrence investigations must be cost beneficial. It is not practical to keep valuable manpower occupied indefinitely searching for the root causes of occurrences. Structured RCA helps investigators get the most out of the time they have invested in the investigation.

Root causes are those over which management has control
 
Investigators should avoid using general cause classifications such as operator error, equipment failure or external factor. Such causes are not specific enough to allow management to make effective changes. Management needs to know exactly why a failure occurred before action can be taken to prevent recurrence.

We must also identify a root cause that management can influence. Identifying “severe weather” as the root cause of parts not being delivered on time to customers is not appropriate. Severe weather is not controlled by management.
 
Root causes are those for which effective recommendations can be generated

Recommendations should directly address the root causes identified during the investigation. If the analysts arrive at vague recommendations such as, “Improve adherence to written policies and procedures,” then they probably have not found a basic and specific enough cause and need to expend more effort in the analysis process.


The “Regulator”

Again, nothing happens and our mark should be getting suspicious. It is at this point when the mark will receive a call from a supposed “stock fraud” investigation or regulatory body. There are a number who contacted our suspect including the “Global Fraud Detection and Prevention Centre”, “International Shareholder Protection Department” and “Securities Regulation Office”.

The scam here is quite simple. The bogus regulator represents a number of stockholders similar to the mark who have been scammed. The “regulator” is trying to prosecute the fraudulent brokers and will be liquidating the stock. The good news is that the mark will be still making a fortune when the stock is liquidated. All the regulator needs is money to pay the IRS to release the stock. The mark is expected to pay these “fees” upfront (as our suspect did).
 
The “regulator” will also have an official looking web site which lists “accredited brokers” some of whom are scammers. The regulator will give the mark some names of some brokers and advise the mark to check them out on their own web site. Of course they come up as being accredited and genuine and the mark is scammed by them also.
 
The scammers themselves are quite ingenious in setting up their businesses. They operate from countries with a low level of regulation such as Philippines, Greece, Spain, Thailand and Eastern Europe and target investors in Australia, New Zealand, Europe but are mostly careful not to target US investors because of the powerful law enforcement resources available and the fact that Regulation S stocks cannot be traded in the USA without strict guidelines.

They set up “virtual offices” in the USA and the United Kingdom which consist of a diverted fax and phone line. They also set up impressive web sites with reader content lifted almost word for word from genuine brokers. Photographs and details of the principals of these bogus brokerage houses are of course bogus themselves. The bank accounts are set up in countries and states that have lax regulations to attract investors, such as the Bahamas, Philippines, Switzerland, etc.
 
The bottom line to these scams is that there is almost little prospect of getting your money back. This is due to jurisdictional problems, lack of paperwork issues and of course the difficulties in finding the crooks.

- Vince Scopelliti, Managing Director

© Copyright LKA Group Pty Ltd

_________________________________
¹Root Cause Analysis For Beginners by James J. Rooney and Lee N. Vanden Heuvel