Operational Risk Management – Some Closing Thoughts

Operational Risk Management provides a logical and systematic means of identifying and controlling risk on an ongoing and continuous basis. It should be applied to all aspects of an organization where an organization is exposed to risk or can be impacted (people, assets, processes, and the environment). Operational risk management is not a complex process and is for everyone. It requires management plus each individual worker to support and implement the principles, with the expected behaviors consistently performed to reduce the overall risk. Risk reduction is a never ending journey including continual processes for improvement including incident management, risk analysis, auditing, monitoring, and the identification, development and implementation of mitigating strategies and controls. Any solution or process that is put in place for operational risk management must be able to support these goals and objectives, including supporting the underlying processes of operations.

However, remember:

Some degree of risk is a fundamental reality

Risk management is a process of trade offs
Quantifying risk does not in itself ensure safety
Risk is often a matter of perspective

from the FAA System Safety Handbook, Chapter 15: Operational Risk Management – December 20 2000

The more complicated the operational environment, the more possible risks there are. With every aspect of an organization exposed to some risk, implification of those systems that support the company (including those that support Operational Risk Management) is fundamental in reducing risk. Reducing complexity by standardizing on one solution or set of solutions, with standard processes, and procedures, fully understood, and implemented, throughout the organization eliminates the unnecessary risk of complexity in the underlying supporting systems. After all there is enough risk inherent in the manufacturing environment without adding the additional risk of multiple systems.

But incidents still occur. http://www.csb.gov/ (see chemical accidents in the news).
Are we getting better?

This posting is the final blog of a series of blogs discussing various factors of operational risk management as it pertains to manufacturing organizations. I hope that you found the series enlightening and enjoyable. Please feel free to comment and discuss this series.

For those of you who would like to read earlier postings below are the links:

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

Part 17 Some factors generating operational risk External Factors – less controllable Government Regulatory Bodies, Non-Governmental Organizations, and Voluntary Organizations

1 Comment

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Monica Gassmann

March 25, 2013 at 10:46 pm

Thanks John for your incredible blog series. I will greatly miss your weekly posts. Please tell me that you are planning to start another, even more epic series of blogs!

Come on Chemicals Community! - Let's let John know how much his expertise is appreciated and leave him a comment.

Operational Risk Management – Some Closing Thoughts

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