Operational Risk Management: Getting Ahead of the Risk Curve
The current economic environment, the inherent complexity in managing manufacturing operations, and the global supply chain have all put more pressure on companies to focus on risk management. Organizations must be flexible, well organized, and agile enough to quickly react to adverse events, as well as shifts in market and regulatory requirements. The recently released study, “Operational Risk Management: Getting Ahead of the Risk Curve,” by Aberdeen Group, provides a roadmap for companies planning to adopt a risk-based approach to managing and reducing adverse events in manufacturing operations on a predictive basis.
The concept of Operational Risk Management (ORM) is about creating a framework that will help executives, employees on the plant floor, and maintenance personnel understand and manage the risks impacting their organization, establish processes to effectively address these risks, and implement procedures for corrective and preventative actions.
Operational risks can be broadly categorized as people, process, and asset risks. These are highly interrelated, which makes it paramount for executives to establish a strategy that transcends functional boundaries and effectively addresses these three key areas of operational risks. Failure to effectively respond results in production loss, deteriorating equipment condition, and the intangibles associated with brand value that could impact longer term business goals.
From non-compliance and environmental accidents to safety, supplier quality and logistics, the report describes what executives see as their greatest risks, and how successful companies are systematically quantifying and mitigating them. For example, “Process capabilities are one of the most difficult to implement as they require employees to change the way that they do their jobs,” says report author Nuris Ismail. “We cannot overemphasize the need to create a risk culture and open communication.”
To access the full Aberdeen Analyst Insight, “Operational Risk Management: Getting Ahead of the Risk Curve.”