As with the world itself, there are inherent risks in organizations large and small. Some risks are potentially dangerous to people while others can be threats to operations, processes, systems, production and more.
Operational Risk Management (ORM) is a way to get a holistic view of a company’s risk footprint throughout the supply chain—and everyone across the organization has a role to play in making an organization’s safety culture the best it can be.
To achieve these goals, companies must work together to mitigate risk, and that includes a need for:
- Corporate leaders to make safety part of their value structure by initiating and driving a culture of safety throughout the organization.
- Engineers to apply inherently safe design principles.
- Maintenance engineers to verify isolations while reliability engineers maintain asset uptime.
- Operators to start up, shut down and respond to abnormal conditions.
- Procurers, suppliers and transporters to understand their contribution to delivering and managing quality spare parts, materials and services that prevent the loss of containment
For many years, companies relied on what are known as “lagging” indicators to catalog and document incidents and near-misses. The days of filling out paper-based forms and focusing on just compliance are a thing of the past. In today’s enhanced regulatory climate and with the world watching, organizations must ensure they are keeping their people safe because not only is it the right thing to do but it’s also the smart thing to do.
Through digital solutions, companies can get a bird’s-eye view of their complete operations to map out their full risk profile. How is that accomplished? Through data, sensors and connectivity.
Today, Operational Risk Management has evolved to become much more technologically advanced, which has led to the concept of Integrated Risk Management (IRM). IRM is where software and technology work together to help organizations predict where their greatest risks might be while connecting different risk-mitigation areas through cloud technology. Software can also offer companies prescriptive advice to determine the “leading indicators” to help them mitigate incidents before they even occur.
Corporate leaders must create a culture that makes Operational Risk Management mitigation strategy a key part of their corporate value proposition. Doing so will help them keep their people safe, their product sustainable and their operations productive. Companies that have focused on an IRM approach to Operational Risk Management have seen:
- A 10% to 15% increase in frontline efficiency.
- A 50% decrease in incidents and injuries.
- A 46% decrease in asset downtime.
- A 25% decrease in compliance-related costs.
- A 15% to 20% decrease in inventory.
Additionally, one organization with a staff of about 2,500 people that chose a digital Operational Risk Management strategy saw an 8-to-1 return on its investment. Another organization with more than 25,000 workers across 30 assets saw a $20 million annual cost savings.
Further Resources on Operational Risk Management
Learn more about digital Operational Risk Management software solutions, including Advanced Risk Assessment software, Control of Work software and Master Data Management software.