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Author's profile photo John Harrison

Some factors generating operational risk: Internal Factors – those within your control:Pocesses, Products, Manufacturing, Mandates

Processes and Systems

A manufacturing organization’s operations are supported by many different systems and processes (e.g. Human Resource Management Systems, Laboratory Information Systems, Manufacturing Execution Systems, Process Control Systems). These systems have many different components each of which require the operation of various processes and other systems.


Complex, poorly designed, disparate systems and processes can give rise to operational losses, either because they are unfit for the purpose they are being used, or that they may malfunction.  In addition the increasing automation and integration of these disparate systems has the potential to transform the risk
of a minor processing error to a systematic failure.

Mitigation of risks in this area can be realized by considering the integration aspects of all systems that make up your information technology landscape (both business systems, and manufacturing systems) and choose solutions that are fully integrated with each other if possible.

Again, there is a need to integrate these processes and systems into the traditional Operational Risk Management approach.

Product and Process Design


The introduction of new products and new processes is always a cause for concern. Many products are assumed to be similar to existing ones and the underlying assumption is that they will act the same during processing. While this is true in many cases, it is not always a valid assumption.  Any change to the product(s) or processes that manufacture the product should be analyzed to see if an impact (positive or negative) is made on the corporate risk profile.


As you would expect in a manufacturing company, it is on the manufacturing floor where most workers are exposed to the most risk..  An operating manufacturing floor can be a dangerous place.  As the demands on the organization increase (e.g. produce more with less, run the plant at capacity),
care must be taken to ensure that safety is not forgotten.  At the most basic level the equipment must be kept in a safe operating condition.  The
policies and procedures that control the maintenance organization, ensuring worker safety, are part of all safety minded organizations.  Identifying and controlling the changes to manufacturing process or manufacturing environment, including those of a temporary nature (e.g. temporary process changes, new equipment on site, temporary circumstances that could affect safety), minimizes the chance of a failure.

In addition production planners can have a significant impact on the risk profile of the facility. By overriding scheduled maintenance for the sake of production, to running the facility at maximum production without taking into account staffing levels, all can have an impact on safety.

New Mandates

With an ever changing environment, business must adapt.  Business goals change, and along with these changes come new mandates for operations.  Just like any other changes to operations that could affect the corporation’s risk profile, these new mandates need to be documented, analyzed, and controls assigned.  The new mandate just becomes another type of process change that Operational Risk Management is designed to manage.


This posting is the sixteenth of a series of blogs discussing various factors of operational risk management as it pertains to manufacturing organizations. Please feel free to comment and discuss this series

Part 1:Are you heading for disaster by not managing your risk?

Part 2:Operational Risk Management (ORM), do I need it?

Part 3:Fines, Penalties, Safety Improvements, part of doing business or something to  be avoided?

Part 4:Managing Risk – There is help out there.

Part 5:Operational Risk Management: A needed framework

Part 6:ORM- Framework – Governance

Part 7 ORM- Framework – Planning

Part 8ORM Framework – Planning – Process Risk and Assessment Analysis

Part 9 ORM Framework – Planning – Process Risk Control Measure Analysis

Part 10ORM Framework – Planning – Managing Changes and Updates

Part 11ORM Framework – Execution

Part 12ORM Framework – Visibility

Part 13 ORM Framework – Optimization

Part 14 ORM Framework – Integration

Part 15 Some factors generating operational risk: Internal Factors – those within your control

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