• 6 Steps to Operational Risk Management

6 Steps to Enable an Operational Risk Management Program

November 27, 2017 By
Enablon Insights aims to bring you engaging, curated, and actionable guidance and resources. We’re glad to publish our eighth post of the Aberdeen Expert Series, featuring practical tips and result-oriented research from Aberdeen Group. Today’s post identifies six steps to enable an operational risk management program:

In the past decade, manufacturers have implemented various safety measures that have shown considerable success in reducing occupational injuries and illnesses. However, when considered in terms of manufacturing operations, the sole focus on personal safety is not enough to mitigate operational risks. Follow these six steps to enable a comprehensive, standardized operational risk management program:

Step 1: Establish contingency policies and escalation procedures

Risk management is an ongoing process throughout the life of a manufacturer. As a part of documenting and preventing risk, lessening the probability of adverse events requires setting a contingency plan that is established through company policy and includes a series of actions or escalation procedures should an adverse event occur.

Step 2: Standardize risk assessment across the enterprise

Manufacturers must define their propensity for risk in a manner that accounts for workforce protection, asset management, environmental impact, and business implications. To some extent, risk assessment is subjective based on the individual views of an event. Establishing a procedure that removes this bias will help the entire organization understand the severity of risk levels.

Step 3: Adapt technology that fits your people and processes

Add solutions that are easy to use and integrate with your current process. Keep in mind that any new solution will require training, which should be considered a critical part of integration. Use simulation to reduce errors and enable functionality that fits with the existing process.

Step 4: Align operational data with financial data

Understand the financial impacts of adverse events by aligning operational and financial data. The bottom line for every manufacturer is to remain profitable. That means understanding the financial impact of various scenarios. With this understanding of the operational link to financial impact, manufacturers can prepare and hopefully prevent the financial damage of an adverse event.

Step 5: Fully commit to the process

A successful implementation of an effective operational risk management program requires buy-in from top management right down to associates.

Step 6: Keep everyone on the same page

Communication across R&D groups, third-party vendors, and manufacturing will ensure success.

To learn more, download the complimentary full length report below:

Optimizing Organizational Performance with Operational Risk Management

Categories: Risk

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