Optimize operations with a new approach to risk management
Every day we take risks when driving to work, flying to a conference or playing a game of soccer in the backyard. Maybe we don’t think about it too much, but we are often weighing risks as we perceive them. For example, flying across the country is much safer—statically, at least—than driving across town, but many people feel safer driving than they do flying because they feel they are in control when behind the wheel of a car.
For businesses, operational risk is serious business—one that cannot be left to chance or employee whims; however, the risk is much more than a mathematical model. Human judgment is needed. Many corporate executives and strategic consulting firms list managing risk and uncertainty and improving business performance as leading business objectives and challenges. The evaluation and assessment of risk is critical across a range of industries, particularly those subject to major accidents or hazards such as chemical, oil and gas, mining and utilities.
Safety-related risk needs to be assessed for a variety of different work activities and operations including for both personnel and processes. The assessment approach can lead to considerable variation in the methods used to evaluate the nature of the risk. In classical risk assessment, identified hazards or risk events are reviewed by consequence, severity and likelihood against predefined risk matrices. These risks are either eliminated or mitigated, where appropriate, by controls that seek to reduce risk to an acceptable level. Almost always, the final assessment of risk relies on some level of human judgment.
These ideas are explored in the recent IBM thought-leadership white paper A unified approach to process safety: Managing safety-related risks and uncertainties, which highlights the connection between operational risks and overall business risks. Using IBM Maximo oil and gas and health and safety as a case study, this paper focuses on the operational aspects of managing safety-related risks while considering the often-disparate nature of risk assessment techniques. It also outlines an approach that can support enhanced consistency in the process of managing risk.
The white paper suggests that using advances in software technology along with well-suited decision making by humans provides the potential to make highly informed decisions about risk, thus improving operational and business performance. And the paper incorporates advanced thinking strategies and business and strategic frameworks from several notable business schools.
To learn more about risk assessment, listen to Terry Ray from IBM discuss how IBM Enterprise Asset Management solutions help organizations enable a safe infrastructure.