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Some factors generating operational risk External Factors – less controllable Government Regulatory Bodies, Non-Governmental Organizations, and Voluntary Organizations

A number of regulatory bodies, non-governmental organizations, and voluntary organizations need to be considered in dealing with operational risk. All of these organizations a corporation has very little direct influence on and are outside your direct control. A number of governance guidelines, regulatory and rating agency requirements need to be considered when looking at Operational Risk. After all, each regulation carries with it the potential for the organization to become non-compliant, and risk being fined.  In addition the non-governmental organizations can force you via bad publicity to change your way of  perating. On top of these, there are the organizations, whose standards and methods your organization subscribes to as a good and standard way of operating. 

Below is an example list of influencing regulations (not exhaustive), both voluntary and mandatory.

  • Cadbury Report (U.K.) – LSE – makes directors responsible for establishing a sound system of internal controls and reporting their effectiveness to the shareholders
  • Dey Report Canada TSE – requires companies to report on the adequacy of internal control
  • Australia / New Zealand Risk Management Standard – a common set of risk management standards
  • KonTrag (Germany) a requirement that includes the establishment of supervisory systems for risk management
  • Toxic Substances Control Act (TSCA-US)
  • Registration, Evaluation & Authorization of Chemicals (REACH – EU)
  • Clean Air Act (US)
  • Right to Operate (US)
  • OSHA (US)
  • Safe Drinking Water Act (US)
  • Federal Insecticide, Fungicide, and Rodenticide Act (US)
  • Resource Conservation and Recovery Act (US)
  • Emergency Planning and Community Right-to-Know Act (US)
  • Clean Water Act (US)
  • Control of major accident hazards (COMAH) (UK)
  • Control of Substances Hazardous to Health (UK)
  • Chemical Agents Directive and Carcinogenic & Mutagens Directive (EU)
  • Chemicals (Hazard Information and Packaging for Supply) (UK)
  • Regulation (EC) No. 1272/2008 Classification, Labeling and Packaging of Substances and Mixtures  (UK)
  • Security and Prosperity Partnership (US)
  • Measures on the Environmental Management of New Chemical Substances (Order 7 of the MEP )(China)
  • High Production Volume (HPV) Challenge Program (V-US)
  • Voluntary Children’s Chemical Evaluation Program (V-US)


It is up to each organization to be aware of all relevant regulations that apply to their operations, where ever they are located geographically. 

This posting is the seventeenth   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

For the other parts of this series see:

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

Part 16 Some factors generating operational risk: Internal Factors – those within your control:Pocesses, Products, Manufacturing, Mandates

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