Risk Management Category: Risk Management

The Risk Matrix as a Communication Tool

Not all risks the same. Some are minor with little consequence, while others are not. Every organization or reliability program facings a plethora of risks and being able to communicate the range of identified risks is helped by using a risk matrix.

The risk matrix is a simple two-dimensional grid that lays out on one access the expected consequence of risk, from minor to catastrophic. The other axis has the likelihood or occurrence of the risk becoming realized, ranging from rare too certain.

The boxes within the grid then contain classifications ranging from low to extreme, which provide a prioritization to address the risk in some fashion. Low-risk items are those with rare occurrences and insignificant consequences. The other end of the spectrum are extreme risks that are almost certain to occur and have catastrophic results. [Read more…]

by Fred Schenkelberg 1 Comment

Continuous Improvement of the Risk Management Framework

Systems and processes exist in our dynamic world. Each organization and situation is different. Just as there is not one risk management process that works for any organization, there also is the need for continuous improvement of an existing system.

When first designing a risk management process for your organization, you consider your objectives and adjust a framework to fit your needs. Over time your objectives and the surrounding environment changes, thus requiring a critical look at your process. [Read more…]

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The Detail Necessary in a Risk Management Plan

A risk management plan has to meet your organizations needs as the organization identifies, manages, and mitigates potential and actual risks. The ISO 31000 framework does not detail how an organization should plan or what elements are required for an effective plan.

This short article outlines a few details that may comprise a starting point as you build a risk management plan within your organization. Or, the suggestions here may help you review and improve your existing plan. [Read more…]

by Fred Schenkelberg 13 Comments

4 Effective Risk Mitigation Strategies

Identifying risk is an important first step. It is not sufficient though.

Taking steps to deal with risk is an essential step. Knowing about and thinking about risk is not the same as doing something about risk.

Risk will occur. Some good, some bad. Some minor, some catastrophic. Your ability to mitigate risk allows you to proactively acknowledge and accommodate risks. Let’s talk about four different strategies to mitigate risk: avoid, accept, reduce/control, or transfer. [Read more…]

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The Check Step of a Risk Management Framework

Planning and Implementing a risk management framework is an admirable accomplishment. Now make sure it is running well and will do so into the future.

As with any process, there will be opportunities to make improvements. By monitoring and reviewing your program you will find what is working well and what is not. [Read more…]

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Reliability and Implementing a Risk Management Plan

With the advent of ISO 31000 and other ISO standards suggesting organizational risk management practices, your organization may have or soon will implement a risk management plan. Reliability of your products, systems, or assets is an element of the organization’s risk profile.

As reliability professionals, your knowledge and skills are a natural fit within any risk management plan. You may focus exclusively on the reliability performance-related risks You may find the skills and tools to identify and mitigate risks play an important role beyond just reliability performance.

Large and small organizations face risks. The lines of communication differ as do the context, culture, and management practices between any two organization. The implementation of a risk management plan has to fit your organization.

Here are few general guidelines and practical considerations when implementing your organization’s risk management plan. [Read more…]

by Fred Schenkelberg 2 Comments

The Difference Between Risk Management and Enterprise Risk Management

The uncertainty concerning the future performance of a product or system is a risk to the customer and supplying organization. A product that fails too often or in an unsafe manner may require repair, replacement, or a recall.

A product’s performance including its reliability performance reflects on the organization that designs, builds, and sells the product. A poor reliability performance is no longer a risk to that individual product, rather it is a risk to the product line and organization as well.

Reliability professionals have long been involved with identifying and mitigating risks. The increased emphasis on enterprise risk management through standards such as ISO 31000 require reliability professionals to consider the larger risk management framework and how reliability related risks fit within the larger context. [Read more…]

by Fred Schenkelberg 2 Comments

4 Considerations When Designing A Risk Management Program

The risk management framework in ISO 31000 provides a flexible approach to create the right program for your organization. The document doesn’t provide advice or wisdom, so you have to supply that yourself.

The details of the risk management program or specific framework in your organization includes policies, procedures, analysis, and reporting, yet it also has to work within the context of your organization.

Based on the work of Greg Hutchins in ISO 31000: Enterprise Risk Management here are four considerations to supplement your wisdom as you design and implement your program. [Read more…]

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Mandate and Commitment to Manage Risk

Risk Exists; Therefore, Manage Risk

Every organization, business, and individual faces a relentless barrage of risk. Some risks are minor, while others may overwhelm.

We all deal with risk, manage risk, in our own way. For more than just yourself the management of risk is taking on a new level of organization and importance.

Risk exists whether or not we choose to plan, prepare, and mitigate.

The decisions concerning product reliability, and associated risks, require senior management (including the board of directors) engagement and commitment. While there is a wide array of business and societal risks the management team must address, the reliability performance of products and systems presents potentially catastrophic risks to any organization. [Read more…]

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Reliability and Risk Mitigation Actions

Once reliability risks have been identified and analyzed, we have to do something.

Well, not really.

If the risk is acceptable to the stakeholders, then we can simply continue with the current plan and monitor or any new risks or changes in our understanding of the existing risks.

Risk mitigation is a ‘system, process, or investment to control the likelihood or consequence of a risk.’ This is according to the glossary of risk terms in ISO 31000: Enterprise Risk Management. In many cases, the risk is unacceptable and will require mitigation. [Read more…]

by Fred Schenkelberg 1 Comment

A Framework for Risk Management

Making or supporting decisions involving product or system reliability is fraught with uncertainty. Is it reliable enough? Will failures occur prematurely? Are failures dangerous?

Uncertainty is risk.

In recent years more organizations and international standard bodies have focused on risk management. Identifying, analyzing, and mitigating uncertainty in a systematic manner.

There is not a set way for every organization to organize a risk management process. The ISO 31000 standard does describe a framework for the implementation of risk management within your organization. [Read more…]

by Fred Schenkelberg 2 Comments

CRE BoK and Risk Management

The New ASQ CRE BoK Group: Risk Management

The 2018 ASQ CRE Body of Knowledge has a new top-level section titled II. Risk Management.

A few of the topics, 6 of the 9, are the same or similar to topics in the previous CRE BoK. There are three new topics that extend the reliability engineers need to know, understand, and use risk management tools.

Overall the new section of Risk Management has three groups of topics:

A. Identification

B. Analysis

C. Mitigation

Let’s take a quick look at the details in this new section and highlight the changes and new elements. [Read more…]

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The Liability Part of Reliability Engineering

In many parts of the world ‘caveat emptor’ [let the buyer beware] no longer applies.

The producer and distributors of products are liable for their products.

This extends beyond product failures and a warranty claim. Today the company is liable for to make right any loss or damage incurred by the use of the product.

Courts and laws around the world reflect the protection of users of products from adverse consequences due to a negligent design and assembly practices.

The producer of a product must consider the user’s safety and provide reasonable safeguards.

This applies even when the user misuses or abuses a product. [Read more…]