Possibilities for Improvement of Risk Management Practices in the Coal Mining Industry of the Federation of Bosnia and Herzegovina

Kozarevic, Safet; Kurtic, Adil; Kozarevic, Emira Article Possibilities for Improvement of Risk Management Practices in the Coal Mining Industry of the Federation of Bosnia and Herzegovina Economic Review: Journal of Economics and Business Provided in Cooperation with: Faculty of Economics, University of Tuzla Suggested Citation: Kozarevic, Safet; Kurtic, Adil; Kozarevic, Emira (2014) : Possibilities for Improvement of Risk Management Practices in the Coal Mining Industry of the Federation of Bosnia and Herzegovina, Economic Review: Journal of Economics and Business, ISSN 2303-680X, University of Tuzla, Faculty of Economics, Tuzla, Vol. 12, Iss. 2, pp. 3-19 This Version is available at: https://hdl.handle.net/10419/193836 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 /// * Faculty of Economics, Tuzla University, safet.kozarevi[email protected] ** Faculty of Economics, Tuzla University, [email protected] *** Faculty of Economics, Tuzla University, emira.kozarev[email protected] 3 /// POSSIBILITIES FOR IMPROVEMENT OF RISK MANAGEMENT PRACTICES IN THE COAL MINING INDUSTRY OF THE FEDERATION OF BOSNIA AND HERZEGOVINA Safet Kozarević *, Adil Kurtić **, Emira Kozarević *** ABSTRACT Current business environment and growing exposure to a wide range of risks require companies (especially the large ones) to raise a question of risk management, start treating it as a particular business function that needs special attention and for which they have to seek proper solutions within their organizational structure. This particularly affects the coal industry, where risk exposure is rather evident and makes risk management one of the key management issues in general. A central point of the analysis includes companies in the coal industry of the Federation of Bosnia and Herzegovina (F BiH), where the management needs to be greatly concerned about protection against risks that affect this industry much more than other industries, in particular pure risks (those that involve only the possibility of loss and no possibility of gain). And if we add the so-called emerging or “newly developing” risks, which are still unknown even to risk management experts, it is clear that management of large companies have to take care of risk management culture development and seek adequate organizational solutions. On the basis of the conducted empirical research, the paper will show and appropriately explain the descriptive analysis results, accordingly used for establishment of the level of risk management efficiency in the coal mines of the F BiH and identification of certain weaknesses, whose elimination could significantly improve the process and increase the level of economic protection for these companies. Keywords: risks, risk management, coal mines, economic aspect, Federation of Bosnia and Herzegovina (F BiH) JEL: G-32, G-34, C-81, L-72 1. INTRODUCTION The risk management culture in the companies in Bosnia and Herzegovina (BiH) is generally at a low level. The key reasons are mostly due to low level of economic development and the heritage from the previous system based on centrally planned economy, where the issue of accountability for losses was treated differently than in market economies. It will take a lot of time before BiH companies become aware of a systematic (holistic) risk management they face in business activities as a precondition for business success. 2. THEORETICAL FRAMEWORK AND HYPOTHESIS There are different views by certain authors in respect of definition of risk management. Differences are mainly related to specification of risks which are the subject of management. Vaughan E. and T. (2000) define risk management as a scientific approach to problem of pure risks faced by individuals and companies. The definition emphasizes a “scientific approach” on the one side, and on /// . Kozarević S., Kurtić A., Kozarević E. . /// 4 Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 the other side “pure risks faced by (large) companies”. A scientifically based approach sees risk management as a process with several stages. As far as the number and content of the stages are concerned, there are different views. For instance, Tweedale and Joy (1997) suggest six stages of a risk management process, as follows: (a) establish the context (including defining the objectives and scope of the risk management process); (b) identify the risks; (c) analyze risks, so as to understand their causes, likelihood, and possible consequences; (d) assess risks, to determine the need and priority for attention given to the event in question; (e) treat risks by planning and undertaking the initiatives in operation, engineering or management, and (f) monitor and review progress and performance. Evans, Brereton, and Joy recommend the same number of stages but with their slightly different contents, as follows: (1) scoping, (2) information gathering, (3) identify risks, (4) analyze and evaluate, (5) treat risks, and (6) reporting and review. However, generally we can single out the following key stages in risk management (Kozarević 2010, p. 2.8):  risk identification,  risk evaluation,  selection of risk management method, and  implementation of program and evaluation of results. The risk management process starts with identification of risks, i.e. potential losses. For that purpose it is necessary to research the exposure of companies to property risks, liability risks, loss of income risks, loss of work capability risks, theft risks, etc. In order to identify risks, risk officers have several sources at their disposal such as previous experiences, various types of questionnaires and checklists, financial reports, conducted physical inspections, etc. Identification of risks is followed by their evaluation, i.e. assessment of potential losses. This stage implies the establishing of loss occurrence frequency, i.e. probability of its occurrence in a specific time period. Besides this, it is necessary to determine the severity (gravity, impact) for each potential loss, i.e. to estimate a possible size of loss. On the basis of established frequency and “severity” of potential losses, they are ranked according to the importance for the risk management program. Moreover, a comprehensive risk management approach requires not only quantitative risk measures but qualitative evaluation of risk as well. Successful qualitative risk management, apart from consultations with experts, requires precise and clear risk management objectives, strategies and practices pervaded by established risk management culture. Accountability at each organizational level must be clearly defined and assigned. Furthermore, based on probability and level of identified potential loss, selection of the method for risk management is done. Methods for risk management are basically divided into methods for risk control and methods for risk financing. In the process, it is necessary to select one or combination of several methods, depending on the funds available for coverage of potential losses. After that, the implementation of the program of measures which need to be undertaken starts as well as the evaluation of results. For that purpose, we first need to give authority to the risk officers so they can implement the program without being disturbed. Also, it is important to inform all the company’s employees who will participate in the program on their obligations. For the purpose of better implementation of the program, it is necessary to conduct periodical controls and evaluations of program results, mainly due to potential changes of circumstances taken into consideration in the preparation of the program, and possible mistakes in the implementation of the program. . Possibilities for improvement of risk management practice in the coal mining … /// Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 5 /// Large companies usually have specialized departments within their organizational structure whose main task is to collect information and make decisions in domain of risk management. Managers of these departments, chief risk officers (CROs), are responsible for defining risk management policy by means of preparation of rulebooks for this business field as well as for making risk management information system. However, in order to successfully perform their duty, CROs should not act alone, i.e. they need to have full coordination with other business functions. In other words, in order to reach the company goals risk management departments must have full cooperation with finance, production and other business functions of the company. In doing so, the employees of risk management departments have to gather necessary information from other company departments, not only about pure, but also about other risks the company is exposed to. Considering risk and uncertainty in the mining industry, Rendu (2000) emphasizes several key resources or fields that generate risks, as follows:  management;  geology and resource estimation;  engineering design;  cost estimation;  environmental impact;  revenue estimation and coal price;  exploration, and  political factors. In the mining industry there are many factors affecting the likelihood and the consequences which cannot be expressed by numbers, and which need to be expressed by words (Tweedale & Joy 1997). For instance, the consequences of risks can be estimated in the following terms: (a) risks to people, i.e. the numbers of injuries of different severities; (b) risks to property and production, i.e. the monetary value of the damage or production lost; and (c) risks to the environment, the extent of public reaction. Likelihood can be expressed in terms of the frequency per year, or the expected time between occurrences, e.g. 10 years. Regarding the main types of risks to which the coal mining industry is exposed, we suggest the following taxonomy (Kozarević et al., 2013, pp. 806-807):  strategic risks;  managerial risks;  operational risks;  financial risks;  market risks, and  political, legal and social risks. The basic research hypothesis is: “Based on the analysis of the current state of risk management in the coal industry of the F BiH, it is possible to identify the weaknesses whose elimination could significantly improve the risk management process and increase the level of economic protection for the companies within this industry”. 3. A REVIEW OF PREVIOUS SURVEYS Taking into consideration a number of relevant references, it appears that risk management in the coal industry has been the topic of research of many authors worldwide only in the last two decades or even less, regardless of the fact that risks are as old as coal operations in general. Chronologically, Tweedale and Joy’s Risk Management Handbook for the Mining Industry (1997) gives information which may help coal mining companies’ management, departmental personnel, and associated industries in the process of risk management. Because of the inherent hazards of mining as an activity and the complexity of mining machinery, equipment and the associated systems, procedures, and methods, the authors emphasized that it is not possible to be inherently safe. The principal responsibility for the safety of any particular mine and the /// . Kozarević S., Kurtić A., Kozarević E. . /// 6 Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 manner in which it is operated rest with the management of that mine. Lind (2005) considered Analysis of Pillar Extraction Potential (A-PEP) as a convenient, intelligent tool, based on certain physical, risk, and economic factors, which could be used as a preliminary output indicator in consideration of the secondary extraction support pillars in the Witbank and Highveld coalfields of South Africa. Pillar extraction practices in South Africa have consumed a significant proportion of safety and fatality statistics in relation to its relative output and as a consequence the research was undertaken in local pillar extraction operations and extended to similar operation in New South Wales. Grayson et al. (2006) found that during the period 1993-1999 no underground coal miners died from fires and explosions in the USA. A record low number of fatalities occurred in the coal industry in 2005 and the industry was poised to continue to make significant improvements. But in January 2006 and since then, three mine tragedies rocked the industry and coal industry fatalities rose to 37 through July of 2006 as compared to 22 in all 2005. As did many constituencies and Congress, the National Mining Association called for closer, independent scrutiny of the causes behind the fatalities and how the causes could be addressed and the fatalities prevented. The Association established the Mine Safety Technology and Training Commission to independently study the causes of events and fundamental issues that must be addressed in order to move the USA coal industry back into a global mine safety leadership role. Since its creation in March 2006, the Commission has studied the important events and issues. The study rang a clarion call for a new paradigm for ensuring safety in underground coal mining industry, one that focused on systematic and comprehensive risk management as the foundation from which all life-safety efforts emanate. Furthermore, Dunbar (2007) conducted a survey whose main purpose was to review the concepts of the descriptive viewpoint that would appear important to decision-making under uncertainty as well as risk assessment, management, and communication in the mining industry. Risk management is risk seeking or, more precisely, risk taking. The mining industry was generally tolerant of financial risks but essentially intolerant of risks involving safety. In the same year, 2007, Komljenovic and Kecojevic illustrated historical data on the number of fatalities and injuries in surface coal, metal, and non-metal mining operations in the USA and described a systematic risk analysis process for occupational safety and health in the field. Hence, a review of published risk management and assessment applications for various industries was presented and a generalized approach to risk management for occupational safety and health in surface mining was proposed. The approach consisted of several phases, as follows: (1) development of a systematic risk analysis process; (2) establishment of guidelines for selection and implementation of risk assessment methods, and provision of models (templates) for selected methods; (3) characterization of hazards (frequency) and creation of an occupational safety and health hazard database for surface mining; (4) creation of a generic risk matrix for occupational safety and health; (5) development of a structured database for calculation of risk profiles and for facilitation of access and distribution of information, and (6) establishment of criteria for determining the acceptability of residual risks and for identifying unacceptable risks. Underground coal mining has continually posed significant risks to worker safety and health throughout history. Looking back at the . Possibilities for improvement of risk management practice in the coal mining … /// Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 7 /// coal mining disasters across the world (e.g. collapses, explosions, fires), Mischner and Rothfeld (2009) claimed it was clear that uniform global safety and health standards for coal mining are imperative. The coal mining was regulated regionally such as within the United States (The Federal Mine Safety and Health Act of 1977), the European Union (The European Coal and Steel Community of 1951/52), Australia (The Coal Mining Safety and Health Act of 1999), and China (Labour Law of 1994/95). However, these regional regulatory schemes are not equally effective or enforced and they have limited scope and numerous gaps. The authors asserted that the right of coal miners to safety and health protection is universal. They concluded that unless a coal mine safety and health international agency is established, coal miners around the world would continue to have their universal right to safety and health violated. Cazzaniga et al. (2009) described various types and activities of the mining industry and also the main specialized machinery and equipment. They suggested that the industry is exposed to specific high hazards and risks and these were highlighted in detail for insurance underwriters’ appreciation when dealing with the typical engineering insurance coverages for the mining industry. 4. METHODOLOGY AND RESULTS 4.1. Sample selection In order to perceive the accurate situation related to the risk management processes in ten coal mines in F BiH, a primary research was conducted. A combination of research methods such as interview and survey was used, with a set of previously prepared and structured questions. The questionnaire was divided into nine sections (A-I, Table 4.1), and the survey participants provided answers to a series of questions related to various aspects of risk management. Most of the survey questions were structured in such a way that the answers are scaled from 1 (the worst) to 5 (the best world practice). Also, some questions included more than one possible answer. Each question allowed for additional comments, observations or suggestions. Based on the same survey, factor analysis was done and key factors for efficiency of risk management in the coal mining industry were recognized (Kozarević et al., 2013, pp. 802813), but this paper provides the results of descriptive analysis. The analysis and gathering of the strategic risk management documentation was conducted for each research unit. Within each mining organization, according to its size and organizational structure, all relevant employees able to provide information on the current state, whose observations are important for evaluation of the entire risk management process (including management, control bodies, auditors, etc.), were invited to participate in the survey, ensuring the overall quality of the research sample. 4.2. Results of descriptive analysis and discussion There were 121 valid survey responses in total. The survey questions were sent to all mining companies but the smallest organization in F BiH decided not to participate, which did not affect the quality of the data sample. The survey was analyzed using descriptive statistics and relied on relevant respondents’ subjective perception of the risk management processes. Table 4.1 shows the summary of major indicators based on survey responses. /// . Kozarević S., Kurtić A., Kozarević E. . /// 8 Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 Table 4.1. Basic statistics for the risk management questionnaire A – Risk management process Mean Standard deviation To which extent the company, based on analysis, avoids risks? 3.60 0.98 To which extent the company takes precautionary measures for the purpose of risk prevention? 3.93 1.04 To which extent other methods of physical risk control are used? 3.76 1.05 To which extent the company consciously exposes itself to risks for which it has no protection system at all? 3.42 1.07 For the employees’ personal risk management purposes the company uses insurance, e.g. accident insurance. 3.97 0.99 Risks related responsibilities of supervisory and executive staff in the production process are clearly defined. 3.82 0.87 B – Strategic risks Mean Standard deviation The Risk Strategy is based on reliable information. 3.54 0.96 In strategic decision making the company considers risks indicated in the Risk Strategy. 3.42 1.29 The company’s Risk Strategy is based on adequate analyses. 3.37 1.20 C – Managerial risks Mean Standard deviation Organizational structure of the company is adapted to the risks the company is exposed to, i.e. it is organized in a way that allows efficient risk management? 3.51 0.83 There is an adequate communication between management and directly involved employees regarding risk-related information. 3.50 0.86 Risk management control system is clearly defined, supported by proper procedures and implemented according to the risks. 3.20 1.00 D – Operational risks Mean Standard deviation To which extent safety and protection at work are defined by procedures/protocols resulting from risk assessment? 3.89 0.77 Identification and evaluation of risks related to safety at work is conducted regularly. 4.03 0.82 Reports on completed identification and evaluation of risks related to safety at work are regularly delivered to competent managers. 3.94 1.04 Company’s environmental impact risks in a sense of ecological and other damages are evaluated and there is an adequate policy related to reduction of environmental impacts. 3.46 0.84 The rescue team (or the so-called “squad”) continuously train and improve its capabilities. 4.08 0.98 The company has installed an information system that allows uninterrupted flow of information necessary for risk management. 3.17 1.16 The company has adequate and protected data bases created for risks information archive. 2.89 1.17 The company has defined procedures for reduction of strike and working operation interruption effects in order to maintain business continuity in crisis situations 3.01 1.21 The company is capable of business operating in conditions of weather disasters, for instance under heavy snowfall and low temperatures. 3.97 0.77 E – Financial risks Mean Standard deviation The company has adequate procedures (an established control system) that can guarantee quick response to business irregularities generating financial losses (such as fraud, embezzlement, nontransparency, etc.). 3.53 0.85 The company is capable of identifying a wide spectrum of financial risks? 3.34 0.95 Risk management is an integral part of investment projects planning in terms of analysis of major risks to which the projects are exposed. 3.35 1.04 F – Market risks Mean Standard deviation The company has an adequate response to competitor’s new technologies. 3.04 1.07 The company is capable of identifying the risks related to sales function (for example, coal demand reduction). 3.45 1.09 The company is able to promptly identify the risks in the supply market. 3.27 0.93 The company is prepared to expand to the new markets based on production improvements. 3.14 1.00 The company has resources for mitigation of the effects of disruption in the economy (recession, stagnation, inflation trends, etc.). 2.50 1.00 G – Political, legal and social risks Mean Standard deviation The company is capable of identifying the political environment changes which directly influence the business. 3.05 1.18 The company is prepared for an adequate response to social environment changes, such as protests in the region that can disrupt transportation of goods, vandalism, main business partners on strike, traffic blockade, etc. 2.86 1.08 The company is prepared to accept legal environment changes and has an opportunity to adapt to such changes (for instance, amended legislation). 3.52 0.96 . Possibilities for improvement of risk management practice in the coal mining … /// Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 9 /// 4.2.1. Risk management process Methods used by the mining companies in F BiH for risk identification are shown in Figure 4.1. Obviously, risks are primarily considered as business risks and their identification is mostly based on various business reports, while more demanding risk identification techniques (questionnaires, interviews, flow charts, etc.) are rarely used. The risk measurement methods used in the mining companies are shown in Figure 4.2. H – Risk management resources Mean Standard deviation The company has prepared an adequate budget for risk management projects. 1.95 1.08 All requirements for risk management integration into business process are met without introducing a new system of business process monitoring and reporting. 2.66 1.00 The company has the permanent research staff in charge of risk management, competent for adequate application of risk identification techniques, measurements, control and risk financing for the purpose of achieving the set goals. 2.34 1.08 The risk management process is implemented with great concern and pilot projects aiming to help in experience-based knowledge acquisition are introduced. 2.39 1.00 Awareness of employees about risk management and their attitudes towards the implementation of new techniques are changed, which improves the business process. 2.82 1.05 The company invests in technology that supports risk management, like reporting software, risks data base, etc. 2.74 1.10 I – Risk management implementation Mean Standard deviation There is an understanding within the company that the costs related to risk management system development are justified in relation to the benefits brought by the system. 3.03 1.04 The company takes all necessary steps to inform its employees on risk management significance and the Risk Strategy. 3.00 1.11 The company conducts continuous staff training via its participation in seminars and workshops in the field of risk management (e.g. training for the ISO 31000:2009 standard). 2.83 1.15 The company uses the services of external (independent) experts in order to improve risk management and educate its staff for the work in this field. 2.74 1.12 How satisfied are you with risk management process effectiveness in your company? 3.02 0.84 Source: The authors’ survey results Figure 4.1. Risk identification methods in the mining companies of the F BiH /// . Kozarević S., Kurtić A., Kozarević E. . /// 10 Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 Risk measurement is mostly based on the analysis of previous experiences, so there is a lack of more serious approaches that include application of statistical methods, probability theories, etc. Based on the completed evaluation of risks in the mining companies, the following risk management measures can be taken:  Prevention measures against the occurrence of accidents (installation of fire fighting systems, methane detection systems, video surveillance, security service, stock separation, etc.) – 80.17% positive answers.  Education of employees that allows reduction of likelihood of accident occurrence (e.g. education in the fields of protection at work, rescue and firefighting) – 69.42% positive answers.  Suppliers are required to provide performance guarantees – 61.98% positive answers.  Bank guarantees are used for contracts for the supply of goods and services – 56.20% positive answers.  Purchasing insurance (i.e. concluding appropriate insurance policies) – 29.75% positive answers.  Contracts for the execution of works define supplier’s accountability for damages caused by such works (both material and injuries at work) – 24.79% positive answers.  Establishing capital reserves for accidents – 13.22% positive answers, etc. Basically, the above mentioned answers indicate that the most commonly used measures are preventive and educational, while certain types of guarantees are requested from business partners (supplier and bank guarantees). On the other hand, insurance as a risk financing method is marginalized, and capital reserves are rarely formed for accident cases, which is diametrically opposite to the financial firms’ method of operating. The mining companies of the F BiH use the following instruments of transfer of risk to business partners: Figure 4.2. Risk measurement methods in the F BiH mining companies . Possibilities for improvement of risk management practice in the coal mining … /// Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 17 /// level of economic protection in these companies. To be precise, as large companies or companies highly exposed to risks (particularly pure risks), the mining companies should be a model for other BiH commercial entities in the sense of risk management approach. Of course, we cannot say that mining companies neglect the issue; however it is still far from a systematic (holistic) approach necessary for achieving the best possible results. It is most visible in the stages of identification and evaluation of risks, which are still based on some basic techniques, without getting into a more serious analysis. Prevention is the most important among risk management techniques due to the specific risks in coal mining industry. Regarding risk financing methods, the main weakness lies in excessive risk retention without previously prepared reserve funds for these purposes. The implementation of the risk management program is another specific problem because neither organization nor accountability related to risk management in mining companies has been resolved adequately. The fact that most of the mining companies do not have a legally stipulated act - the “Risk Strategy” – that should serve as a legal framework for risk management regulation clearly illustrates the approach of mining companies’ managements to systematic risk management. And for the mining companies that have developed such a document, it is questionable whether it was based on a serious analysis and to which extent it has been used as a risk management framework. The existing organizational structure of the mining companies is not entirely adapted to the risks they are exposed to, which makes risk management even more difficult. This is particularly evident in vertical communication which does not allow an adequate exchange of information, which is crucial for the effective risk management process. The control system in risk management has been neither fully defined nor supported by proper procedures. A great deal of consideration is dedicated to operational risks, which makes a positive side of the current risk management in mining companies. Therefore, the procedures related to safety and protection at work, identification and measuring of occupational risks, exchange of information in this field, education and training of rescue teams, as well as readiness to work under bad weather conditions are highly rated. The situation regarding the environmental risks is not so good, as well as the risks related to adequacy and safety of the existing information systems. The financial risk management in the mining companies is based on classic financial control techniques and procedures that are not completely reliable in terms of a rapid reaction to irregularities in business operations, which can cause financial losses. In the sense of market risks, the mining companies show less “fear” from the risks related to product sales, which is logical bearing in mind the high level of coal demand. On the other hand, the risks related to competitors’ introduction of new technologies, risks in the supply market, risks related to the expansion into new markets, and particularly the risks related to economic disturbances require significant improvements in the field of risk management. A similar situation is with political, legal and social risks. The risk management resources and implementation are the main obstacles and require important improvements. Apparently, the budget for risk management projects is inadequate, requirements for risk management integration into a business process are not met. There are no researches in the field of risk management, risk management awareness among the employees changes slowly, and there are no investments in new technologies which would /// . Kozarević S., Kurtić A., Kozarević E. . /// 18 Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 upgrade the process. The external (independent) experts’ services for education of employees and improvement of the risk management process are insufficiently used. Therefore, the general level of satisfaction in terms of risk management efficiency is not so high. Finally, the following steps and/or activities for improvement of the risk management process in mining companies may be recommended:  Reorganize the mining companies in a way that allows urgent formation of a separate organizational unit (division) with the focus on risk management and link it with internal audit and quality management system, which is still developing and should be completed in compliance with ISO 9001:2008 requirements. As an alternative, a special team, composed of the existing employees with relevant skills, could be formed and deal with risk detection, improvement and management system.  One of the key activities of the mining companies in the improvement of the risk management process is creation of the strategy (including a vision, mission, strategic goal and strategy itself) and its effective implementation.  Establish a comprehensive risk management process comprised of risk identification, evaluation, adequate treatment (“mitigation”), monitoring and control.  Focus on mining company’s internal controls, which must be regular and comprehensive, and precisely define the rules for such controls. The supervision over the internal control system should also be established and maintained.  Risk management itself should be based on the following principles: contribution in creating surplus value, participation/contribution in decision making, explicit addressing insecurity; systematic, structured and timely manner; organization based on information availability, adaptability, etc.  Establish a single information system for all business locations of a mining company, GPS tracking for coal transportation, and more efficient system of distribution and transfer of documents within a company, as well as increase the level of risk information.  Adopt a set of actions for technical and economic improvement of risk management in the coal mining industry.  Apply certain improvements in the processes of machinery and/or device manipulation, upgrade preventive maintenance of the machines, conduct regular equipment maintenance, increase the investment maintenance, etc.  Risk management process improvements also include primary as well as permanent additional education of employees in the sense of increased individual risk awareness.  In order to intensify business efficiency, a quality aspect must be incorporated in the risk management process as well, meaning it should become an integral part of the organizational culture. 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