CERM® Risk Insights

Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

Many aspects of risk management are deeply rooted in mathematical formulae for determining probability. This heavy dependence on mathematics to determine probability of risk realization may create “false positives” regarding a risk that can be either positive or negative. There is also a limitation on how much data can be gathered and assessed in respect to the development of the probability equation regarding the risk being assessed. [Read more…]

Guest Post by Greg Hutchins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

We’ve been discussing how ISO 9001:2015 has adopted Risk Based Thinking that will impact 1.2 million companies.  ISO 14001:2015 will impact 400,000 companies.  Now, government agencies are adopting and putting into statute risk management.

We’ve been talking up the fact the US government is requiring Enterprise Risk Management (ERM), specifically Office of Management and Budget Circular OMB A 123, of all US departments.  This is a game changer for federal agencies.  In this article, we’ll look at some of the significant changes in ERM for Federal agencies. [Read more…]

Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

The Nine Circles of Planning Hell (Adapted from Dante’s Inferno)

Introduction

Inferno, the first part of Dante’s Divine Comedy that inspired the latest Dan Brown’s bestseller of the same title describes the poet’s vision of Hell. The story begins with the narrator (who is the poet himself) being lost in a dark wood where he is attacked by three beasts which he cannot escape. He is rescued by the Roman poet Virgil who is sent by Beatrice (Dante’s ideal woman). Together, they begin the journey into the underworld or the Nine Circles of Hell. [Read more…]

Guest Post by Greg Hutchins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

The idea of supply chain risk management has been around for about 10 years. It is only in the last 5 years, that it has become popular. We are still at the early stage of supply chain risk management adoption and deployment.

In terms of total dollar amount, external suppliers provide a significant portion of a manufacturer’s product. For U.S. firms, 50% to 80% or more of the final price of a product can be the cost of purchased goods.  In Japan, it can be even higher.

For these reasons, any supply disruption can kill a supply chain.  As a result, supply chain risk management is now critical to a company’s competitiveness. [Read more…]

Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

If you want senior management to pay attention give them something that challenges their focus – and understand that their focus is not on how many computers you have or RTO, RPO stats. It is on business survivability – will we be in business tomorrow given the issues that we face today. [Read more…]

Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

Heightened Awareness or Reactive, Backwards Looking?

From financial crises to energy catastrophes to earthquakes and threats of terrorism, we hear a lot about events that challenge our ability to identify and manage risk.

Unfortunately, some of the things that emerge from many of these events are reactive regulatory rules and requirements. [Read more…]

Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

We hear a lot about things that are being called “Black Swans” today thanks to Nassim Taleb and his extremely successful book, “The Black Swan: The Impact of the Highly Improbable,” now in its second edition. I have written several articles centering on the “Black Swan” phenomenon; defending, clarifying and analyzing the nature of “Black Swan” events. And, I am finding that wildly improbable events are becoming perfectly routine events. [Read more…]

Guest Post by Roxann Dawson (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

In order to improve business performance, manufacturing companies need to reduce the levels of non-conformance and attendant failure costs stemming from poor product design and development. Failure costs generally make up the largest cost category in a manufacturing business and include those attributable to rework, scrap, warranty claims, product recall and product liability claims. This represents lost profit to a business and as a result, it is the area in which the greatest improvement in competitiveness can be made. [Read more…]

Guest Post by Greg Hutchins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

More ISO management systems are incorporating RBT and risk, so the standard is becoming a ‘must know’ standard. ISO 31000 risk management principles, risk management framework, and risk management process are the preferred tools to use with ISO management systems because ISO 31000: [Read more…]

Guest Post by Keith Ridgeway (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

Every day we are exposed to all types of hazards, but what really makes these hazards become risks.

For the past 30 years, I’ve been involved in one way or another, investigating the root causes of failure modes be it a system, process, person, plant or product.   During this time I’ve applied different problem-solving tools like “FMEA, 8D, 5Whys, FEA’s, DMAIC etc” in order to find the true root cause of this failure mode.   Only to get frustrated, thinking I had found the root cause, only 3 months later a new failure mode would come to the surface. [Read more…]

In May of 2015, we finished ISO: Risk Based Thinking book.  We answer more than 300 questions about risk, quality, RBT, risk based auditing, and certification.  We will start answering questions that we get weekly.

SO WHY YOU?

So, what gives us credence since ISO 9001:2015 is coming out in 4 months.  Well ….   We coined and trademarked the expression: Future of Quality: Risk®.  We used the expression CERM: Risk Based Problem Solving | Risk Based Decision Making years before ISO developed Risk Based Thinking.   Twenty years ago, we wrote best selling ISO books.  We worked with the first ISO CB’s in 1987.  Anyway, you get the idea, we’ve been in this business a long time. [Read more…]

Guest Post by Stuart Rosenberg (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

The supply chains of most companies, large and small, exploit a world of opportunities.  But increasing global exposure comes with an increasing range of risks.  These companies’ complex networks of suppliers and customers are as diverse as the goods and resources they manage.  Within the same supply chain, giant multinational companies can sit side-by side with small to medium enterprises (SMEs). Yet among companies large and small there is growing awareness that extreme weather and a changing climate pose new risks and opportunities to old ways of doing business. [Read more…]

Guest Post by John Ayers (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

Most companies have policies and procedures for concurrent engineering but many are ineffective for various reasons resulting in poor implementation of improved producibilty in their products. I have made this observation based on working for a variety of companies in different industries. Three examples of different approaches I encountered are presented below for your consideration. Two of the examples were used by defense companies, one of which I consider excellent and the other poor. One method was used by a commercial company is one I consider to be very good. [Read more…]