Risks are a core part of every activity. Even when you do nothing, you take risks. To deal with risks in day to day life, you rely on your own experience or on the family feedback. To deal with risks in business life, numerous tools and books have already been published. The aim of this newsletter is to underline that skills and experience are an indispensable key success factor to monitor risks effectively.
Objectives
ISO 31000 defines risk as the effect of uncertainty on objectives. Therefore it assumes that the objectives are correctly identified and qualified.
Defining top level objectives is performed in the scope of the company strategy, as designed by the Board, the CEO, or other structure, depending on the company status. Objectives that are allocated to the company usually require adjustments, even extreme changes.
A short term high profitability objective will lead to focus on an aggressive sales development, not on investments in the production assets. An objective of sustainability for the company will on the other hand attempt to increase customer loyalty and make sure contract requirements are met. Deploying the objectives inside the organisation, where means are bound to be limited, render compromises mandatory and, therefore reaching the objectives in one or several domains may be jeopardised.
In order to coordinate the definition and deployment of the objectives in the organisation, some have built a scorecard. This work enables to formalise the organisation objectives, to deploy them within every department, using performance indicators, that are tracked at the company level and therefore benefit from an increased visibility to the whole lot of employees. However, it does not mean that the other indicators, that are tracked at the level of each company process should receive less attention. Every indicator is needed to check that activities are running as planned.
Competence of the stakeholders in the definition of the objectives and indicators is decisive in order to limit risks. Agreeing with objectives that require the implementation of actions with unrealistic deadlines or unavailable budgets, jeopardise the system and is a guarantee the objectives will not be met. Indicators must enable to measure the level of achievement of the objectives, but also measure the impact of the drawbacks if there are any.
Identification
Once the objectives have been agreed as reachable and the indicators as reliable, reaching the results is less unpredictable, but still not yet certain. Risks sources in the organisation are as numerous as the input providers (customers, but also administration, …) and the used resources (the 5M). Every of these sources can prompt events that introduce risks. The lessons learned from the human factors taught that a qualified and healthy person performs an average of 7 mistakes per hour. This is without taking into account the machine breakdowns, the lack of needed resources and so on. Nevertheless, it is not possible to secure economically all the risks that would be identified in no particular order. There again, competences and experience of the stakeholders, each one in his scope of responsibility, enable to sort the risks sources and rate the likelihood of events.
In addition, each of the sources and likely events will have a variable impact, depending on the company and its organisation, and so on. The absence on one single level NDT inspector in the company will have a different impact to the one involved by the absence of one level 2 NDT inspector in a team of 6. The impact of the risk is then to be qualified to complement the occurrence likelihood. The competence and the experience of the one in charge of assessing the risk impact is, there too, determining because he will know, as an example, if the actions plan to limit the impact can be easily implemented or not.
Method
The last part of the risks management which relies, once again, on the competences and experience is about the methodology. As risks are around all the activities in the company, they being undertaken within processes or within projects, risks must be dealt according to a common and agreed method. The assessment according to common criteria enables to set the priorities, when choices must be taken between different sectors to get the fixed objectives. Designing the methodology, dispatch it in the company, train / inform the involved staff, make sure it is « living », get the results and analysis them require specific competences, an appropriate experience in the company and be allowed to raise the alert to the right authority to warn about the failures.
The ePITsolutions online training on risks management
ePITsolutions has developed an online training on risks management. As you read all along this Newsletter, risks management must be customised to the company and for the company. Therefore our online training aims at introducing the main concepts on risks and to bring in familiarisation to risks identification in the company. We help the company become familiar with the concepts so that it is able to customise them to their own need. This is applicable for all manufacturing companies, them being aerospace industry or not.
The examples included in this ePITsolutions eLearning include, among others, the sales, manufacturing, human resources processes and the share of responsibilities between head office and business units.
This training has been designed for any engineer and manager (sales, manufacturing, quality, project, …) who wants to understand how to include risks management in his activity and benefit from the introduced tools to improve the monitoring of its results.
Customer specific
With our expertise in digital tools and aerospace engineering, we help you improve the effectiveness of the information you usually transfer through Powerpoint or pdf files. We develop online trainings and stand alone presentations in accordance to your specification. Voice over, animations and exercises make it easier for the attendee to understand and remember what is essential. You can find some simple examples on our corporate website, in the demo and quiz section.