Step-by-step risk analysis

‘Risk based thinking’ currently dominates the world’s most popular quality standard, the ISO 9001. Whoever wants to comply with ISO9001:2015 has to have a risk management process in place within their organisation.

How do I establish a process for risk management?

Step 1. Risk management – target
-    Which (quality) requirements, (quality) targets have been established?
-    What are the risks when these requirements and targets cannot be met?
-    What are the opportunities for improvement?
Example
Requirement: Supply to the customer within two days after the order has been placed.
Risk: Due to an outdated logistics system, the two day target is often exceeded.

Step 2. Method
-    The method to be used needs to be established, as well as acceptance criteria.
-    Frequently used method (deliberately simplified here): Risk = probability x impact.
-    Probability (scale 1-5), impact (scale 1-5) and risk (scale 1-25).
Example
Supply > 2 days: probability (high, 4) x impact (severe, 3) = risk (12)
If acceptance criterion is 10, measures need to be taken to reduce risk (migitation). For example, a better logistics system, to reduce the probability of issues. (when probability = 2, risk = 6 < acceptance criterion 10)

Step 3. Risk treatment plan
-    Perform risk analysis and implement measures if necessary.
-    Monitor progress of the measures to be carried out and establish effectiveness.
-    Accept the residual risk.
Example
In May next year, a new logistics system will be introduced. The person accountable is the logistics manager. Estimated delivery period in June next year. Management accepts a residual risk of 6.

Step 4. Update risks.
-    Re-evaluate the risks periodically, for example ahead of the annual management review.
Example
After the implementation of the logistics system, 96% of all deliveries is carried out within 2 days. By implementing a different supply system, delivery time can be reduced to 1 day.

Click on the video (in Dutch) below for an impression based on the Proware module RiskManagement or try it yourself.