Risk Management in Manufacturing...In a manufacturing process consideration needs to be given to the potential risks associated with ongoing day to day activities. Risks can arise due to the nature of the materials in use, the equipment, the people, etc.. It is important to have a program in place which can identify the various risks that can arise, to understand the probability of the risks arising and the potential impact on the business, the staff, the shareholders, customers, suppliers and the community, were a risk to be realized.
Depending on individual perspective the focus of a risk management program can be to minimize injury to staff, to customers, or the local community. Alternatively the focus may be financial, where the financial health of the business is a key concern or the potential impact on shareholder financial returns. Many organizations place a high focus on reputation, any potential damage to business reputation could have long term effects, therefore, the risks which could impact on the reputation of the organization need to be identified and controls implemented to minimize the potential of such risks being realized.
Whatever the reason for wanting to understand and control risks, in every manufacturing process there will be a need for a comprehensive risk identification, risk assessment, risk measurement, risk minimization and risk monitoring program. Such a program will need to encompass all aspects of the business to ensure all key areas of risk concern are captured.
Development of a Risk Management Plan.A first stage by many manufacturing organizations in implementing a risk program is often the drafting of the Risk Management Plan. A risk management plan is required to ensure that an organized roadmap that encourages objectivity in identifying risk is created and prevents essential risk elements being forgotten. The plan needs to identify those involved in and with responsibility for the effective implementation of the risk management process.
The plan will address the need for management reviews of the risk management process. The plan will identify how and when reviews will take place. If the plan relates to a specific product, then the plan needs to address the full life-cycle of the product from design through to production and onto post production use (i.e. use by the end customer).
Similarly for risk within a manufacturing process or throughput a manufacturing organization, the risk plan needs to encompass the full scope of responsibility and impact across the process or organization.
The criteria for risk acceptability should be defined in the plan. The plan should outline how the implementation of any required risk controls and the effectiveness of such controls is verified.
The plan should outline how information is gathered and fed back into the risk analysis process on an on-going basis.
Implementation of a Risk Management Process.In order to implement the risk process there will be a need to continually ask questions. What are the potential risks? Which are the most harmful? What are the root causes associated with the risks? Which are the risks most likely to occur?
Usual practice will be for a team of individuals (the risk team) with a range of skills and competences to input into the risk process.
Where the risk team identifies potential risks, then they will need to identify potential actions to address each risk. These actions will be agreed and implemented. When implemented then there will be a need to verify the effectiveness of actions implemented. The risk plan and risk measures will need to be updated to reflect any product or process changes and resultant risk levels.
Those in charge of risk will need to continually monitor the effectiveness of the actions taken and continually update the risk plan.
Tools and Techniques available to facilitate the Risk Management Process.In assessing risks you should consider the application of risk assessment tools such as HAZOP, Process FMEA, Ishikawa diagrams, Fault Tree Analysis, etc.. There are a wide range of such tools and techniques available. The key benefit in applying these methodologies is that they force fact based analysis and can help extract knowledge from competent individuals during the various stages on the risk management program.
Determining the Manufacturing Risk Level.For each aspect of risk, you need to establish a method of identifying and measuring the risk levels, be they financial, customer related, regulatory, etc….
As you proceed through the risk assessment process, you will have identified the list of potential risks, you will also have used some form of risk tool to identify the potential severity, probability and detect-ability of each potential risk.
You then need to combine each of these aspects of risk. There are a range of methods for combining these various measures, one approach being to create a single number as follows:
Severity * Probability * Detect-ability (S*P*D) = Risk Level Number (or a Risk Prioritization Number – RPN).
Once the Risk Prioritization Number is known, the acceptability of a risk can be defined, and a prioritization of potential risks to be reduced can be agreed.