Risk Management Process Example Business

A risk management process example for business is described in ASQ Quality Progress December 2015. The article is titled ″High Vantage Point: Report-outs to reduce the Risk of Organizational Problems.″

A PDF of this article below describes how an organization typically views its safety and other infrequent occurring events as lagging indicators. With this traditional risk management approach, each event is often discussed in isolation with the intent that changes be made to avoid re-occurrence.  However, an effective time-series data analysis of the time-between safety violations (for example) often indicates that nothing has changed. Another alternative reporting methodology is needed that tracks these infrequent failure-events from a process output point of view. A 30,000-foot-level report out addresses this need and provides a convenient means for tracking infrequent non-conformances (e.g., safety non-conformance events) and a more frequent failure rate from a process output point of view.

Example 1: Risk Management Process Example Business: Infrequent Events

In this first example, a 30,000-foot-level report-out methodology, the time between safety events is reported and tracked.

This report-out has much value over the common-place reporting of the number of safety incidents monthly.  With this form of reporting, one can conclude an effective process improvement effort was made if the individuals time-series chart transitions to an enhanced level of performance.  If this occurs, the chart would be staged and the probability plot would report-out an estimation of this new level of non-conformance median time between incidents and 80% frequency of occurrence. If a process change were undertaken from an incident and the individuals chart did not demonstrate a shift, one would conclude that the change did not positively impact the mean-time-between occurrences of future events.

The statement at the bottom of the chart provide the expected frequency of occurrences in the future.  If this frequency is not satisfactory, initial/additional process improvement efforts are needed to address the common cause variability of the processes.

With this form of non-frequent occurrence reporting, a new value is posted on the x-axis whenever a failure occurs.  The y-value for this new point is the time since the last failure.  For this 30,000-foot-level report-out, a median and 80% frequency of occurrence is then reported at the bottom of the chart.

Risk Management Process Example Business: Continuous Data

Example 2: Risk Management Process Example Business: Failure Rate Tracking

When there are more frequent failures in a subgrouping, a 30,000 foot-level report-out of a process non-conformance rate can be appropriate. With this approach high-level view of the output of a process, the x-axis is calendar time; e.g., daily, weekly, or monthly. The y-axis value for each subgroup is the number of non-conformances divided by the number of opportunities for failure.

With 30,000-foot-level reporting, a predictive statement is provided at the bottom of the chart.

Risk Management Process Example Business: Non-conformance Rate

Risk Management Process Example Business: Enterprise Level

Organizations benefit when they don′t just report risk and other key performance indicators (KPIs) in isolation but instead structurally link these metrics with the processes that created them in an Integrated Enterprise Excellence (IEE) organizational value chain.  With this approach, risk management metrics and their associated processes can be integrated with other KPIs and processes.  A benefit of this approach is the determination of which metrics need to be improved from a high-level perspective.  With this methodology, silos can be avoided for the identification of strategic improvement efforts.

More Information about Risk Management, Process Metric Reporting and Improvement Project Selection

For more information about risk management process example for business download the published PDF article.


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