Accendo Reliability

Your Reliability Engineering Professional Development Site

  • Home
  • About
    • Contributors
  • Reliability.fm
    • Speaking Of Reliability
    • Rooted in Reliability: The Plant Performance Podcast
    • Quality during Design
    • Critical Talks
    • Dare to Know
    • Maintenance Disrupted
    • Metal Conversations
    • The Leadership Connection
    • Practical Reliability Podcast
    • Reliability Matters
    • Reliability it Matters
    • Maintenance Mavericks Podcast
    • Women in Maintenance
    • Accendo Reliability Webinar Series
    • Asset Reliability @ Work
  • Articles
    • CRE Preparation Notes
    • on Leadership & Career
      • Advanced Engineering Culture
      • Engineering Leadership
      • Managing in the 2000s
      • Product Development and Process Improvement
    • on Maintenance Reliability
      • Aasan Asset Management
      • CMMS and Reliability
      • Conscious Asset
      • EAM & CMMS
      • Everyday RCM
      • History of Maintenance Management
      • Life Cycle Asset Management
      • Maintenance and Reliability
      • Maintenance Management
      • Plant Maintenance
      • Process Plant Reliability Engineering
      • ReliabilityXperience
      • RCM BlitzĀ®
      • Rob’s Reliability Project
      • The Intelligent Transformer Blog
    • on Product Reliability
      • Accelerated Reliability
      • Achieving the Benefits of Reliability
      • Apex Ridge
      • Metals Engineering and Product Reliability
      • Musings on Reliability and Maintenance Topics
      • Product Validation
      • Reliability Engineering Insights
      • Reliability in Emerging Technology
    • on Risk & Safety
      • CERMĀ® Risk Insights
      • Equipment Risk and Reliability in Downhole Applications
      • Operational Risk Process Safety
    • on Systems Thinking
      • Communicating with FINESSE
      • The RCA
    • on Tools & Techniques
      • Big Data & Analytics
      • Experimental Design for NPD
      • Innovative Thinking in Reliability and Durability
      • Inside and Beyond HALT
      • Inside FMEA
      • Integral Concepts
      • Learning from Failures
      • Progress in Field Reliability?
      • Reliability Engineering Using Python
      • Reliability Reflections
      • Testing 1 2 3
      • The Manufacturing Academy
  • eBooks
    • Reliability Engineering Management DRAFT
  • Resources
    • Accendo Authors
    • FMEA Resources
    • Feed Forward Publications
    • Openings
    • Books
    • Webinars
    • Journals
    • Higher Education
    • Podcasts
  • Courses
    • 14 Ways to Acquire Reliability Engineering Knowledge
    • Reliability Analysis Methods online course
    • Measurement System Assessment
    • SPC-Process Capability Course
    • Design of Experiments
    • Foundations of RCM online course
    • Quality during Design Journey
    • Reliability Engineering Statistics
    • An Introduction to Reliability Engineering
    • An Introduction to Quality Engineering
    • Process Capability Analysis course
    • Root Cause Analysis and the 8D Corrective Action Process course
    • Return on Investment online course
    • CRE Preparation Online Course
    • Quondam Courses
  • Webinars
    • Upcoming Live Events
  • Calendar
    • Call for Papers Listing
    • Upcoming Webinars
    • Webinar Calendar
  • Login
    • Member Home

by Greg Hutchins Leave a Comment

Baldrige Adds Enterprise Risk Management

Baldrige Adds Enterprise Risk Management

Guest Post byĀ James KlineĀ (first posted on CERMĀ Ā® RISK INSIGHTS – reposted here with permission)

The National Institute of Standards and Technology (NIST) just issued the 2017-2018 Baldrige Excellence Frame Work.Ā  There were modifications to a number of categories such as Category 1 Leadership, Category 2, Strategy and Category 6 Operations.Ā  Included in the modifications were substantive additions for Cyber Attacks and Enterprise Risk Management (ERM).

In the discussion of the changes from the 2015- 2016 framework it is noted: ā€œThe future competitive advantage that will flow from good ERM is based on the holistic addressing of risk and the actions taken – including the pursuit of intelligent risks – as part of an overall strategic approach to managing organization performance.ā€ (Baldrige.2017.45)

This statement makes two things clear.Ā  First, ERM is seen as contributing to the competitive advantage for any organization.Ā  Second, ERM is a holistic approach.Ā  The inclusion of ERM in the Baldrige Excellence Frame Work does two other things.Ā  It reinforces the momentum created by the inclusion of Risk Based Thinking in ISO 9001:2015 and the issuance by OMB of Circular A-123.Ā Ā  Both actions expanded the reach and ultimately the interest in ERM.Ā  In addition, it signals that ERM is considered part of best practice. This means its use increasingly will become a standard by which all organizations can be evaluated by regulators and stakeholders.

Baldrige Framework

To understand this process it is worth examining how the framework creates a holistic approach to ERM.Ā  Under the Strategic Development criteria 2.1, it is noted that management has a responsibility for assessing the ā€œlevel of acceptable enterprise risk.ā€ Ā In the Work Processes foot note 6.1a (3) it is indicated that supply chain process need to be examined to avoid disruptions ā€œtrigged by climate change and other unpredictable factors.ā€Ā  Note 6.2c (2) under Operation Effectiveness stresses the extent to which the organization is prepared for disasters and emergencies. ā€œAcceptable levels of risk will vary depending on the nature of your products, services, supply chain, and stakeholder needs and expectations.ā€

By including risk consideration in major elements of the operation; strategic, work processes and operational effectiveness, risk considerations are made holistic – enterprise encompassing.

While the Frame Work does not explicitly specify an ERM methodology, it stays close to its quality roots by emphasizing ISO 31000 and Plan Do Act Check (PDAC).

Is Baldrige An ERM?

Hertz (2016) in a discussion of the inclusion of ERM in the Baldrige Criteria, it is noted that ERM encompasses the following:

  • Aligning risk appetite and strategy to evaluate strategic alternatives
  • Making key decisions on risk avoidance, risk reduction and risk acceptance.
  • Enhancing the organization’s capabilities to identify potential events and establish responses.
  • Identifying and managing cross-enterprise inter-related risks and impacts.
  • Seizing opportunities in a proactive manner.
  • Improving the deployment of people and capital resources.

Assessing the Baldrige Criteria

Hertz believes that Baldrige Framework is ERM. Ā (Hertz.2016)

I would respectively disagree.Ā  While the 2017-2018 framework does now include risk based criteria and is holistic, it is not an ERM system.Ā  It is an enterprise wide management framework, which incorporates ERM, just as it incorporates quality.Ā  These are subsets.Ā  Moreover, ERM has a specific set of methodologies which are increasingly being standardized.Ā  The standardization can be seen in the similarities between ISO 31000, which is referenced in Baldrige, OMB Circular A-125, COSO (Treadway Commission), and the GAO Green Book, to name but a few of the comprehensive standards.

Conclusion

With the addition of ERM to the Baldrige Excellence Framework, the momentum of risk and ERM is increased.Ā  It also signals that ERM is considered part of Best Practice.Ā  As such, it becomes another vehicle by which regulators and stakeholders can evaluate the performance of an organization.Ā  Accordingly, organizations which do not have ERM, might not be viewed as competitive and this could damage the organization’s reputation.

Bio

James Kline is a Senior Member of ASQ, a Six Sigma Green Belt, a Manager of Quality/Organizational Excellence and a Certified Enterprise Risk Manager. He has over ten year’s supervisory and managerial experience. He has consulted on economic, quality and workforce development issues. He has also published numerous articles related to quality in government and risk analysis.

Baldrige, 2017, Baldrige Excellence Frame Work, 2017-2018, www.nist.gov/baldrige

Hertz, Harry, 2016 ā€œEnterprise Risk Management Requires A Systems Perspectiveā€, Insights, www.nist.gov/baldrige

Filed Under: Articles, CERMĀ® Risk Insights, on Risk & Safety

« Water Hammer and How it is Controlled
Driving Performance Outcomes Through Effective Meetings »

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

CERMĀ® Risk Insights series Article by Greg Hutchins, Editor and noted guest authors

Join Accendo

Receive information and updates about articles and many other resources offered by Accendo Reliability by becoming a member.

It’s free and only takes a minute.

Join Today

Recent Articles

  • Terrorism Risk Insurance Act Exclusions: Gray Coverage Areas
  • Why Total Productive Maintenance Is The Answer To Reliability-Centered Culture
  • 17 Powerful Insights on Effective Communication Using FINESSE
  • Surprising Insights from Simple Run Charts
  • Risk is Round

© 2023 FMS Reliability Ā· Privacy Policy Ā· Terms of Service Ā· Cookies Policy

This site uses cookies to give you a better experience, analyze site traffic, and gain insight to products or offers that may interest you. By continuing, you consent to the use of cookies. Learn how we use cookies, how they work, and how to set your browser preferences by reading ourĀ Cookies Policy.