Operational risk tries to identify and manage risks for people, processes, and systems; it is a discipline and behavior that needs to be put in place. As such, a framework to control the process is recommended. The framework is a set of integrated tools, processes, and mitigation strategies that assists a company in managing, measuring, and monitoring operational risk
- Governance,
- Planning,
- Execution,
- Visibility, Optimization, and
- Integration.
In this blog we will discuss the optimization portion or the Visibility and Optimization process.
Part of operational risk management is to ensure that the policies, principles, and processes of the organization are followed and to support continuous improvement processes. Periodic, recurring audits of compliance to the policies, processes, and procedures, are part of Operational Risk Management. Audits allow for a more detailed review of compliance policy and work procedures; while at the same time identifying “work arounds” to the process, thus, enabling corrective actions to be taken (e.g. policy, or procedural change, additional training, process changes, etc.).
Being able to audit policies and procedures has the additional benefit of ensuring compliance across the organization, especially with cross-departmental processes. It also enables the sharing of common practices throughout the organization.
Through the continuous monitoring of these operations, and controls, weak or poorly designed controls are identified and corrected or replaced, thus improving the organization’s risk profile. As the weak controls are identified and improved, the risk management process continues and renews with documentation, investigation, monitoring and analysis.
By focusing on risk analysis and performance measurement, an organization now has another aspect that can be add to the continuous improvement programs which exist in most manufacturing organizations. Thus, allowing them to go from a safety program to one of continuous safety improvement.
This posting is the thirteenth 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 those of you who are new to this series here are the links to earlier blogs in the 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
