Appunti completi di Operations Risk Management

OPERATIONS RISK MANAGEMENT

EVOLUTION OF OPERATIONS MANAGEMENT

• Traditionally full of uncertainty → affected the performance of company and competitiveness.
• Market growth
• Tech innovation
• Materials/energy prices
• Supplier behaviors

• To cope with risk in the past
• Risk has just a negative implication (deviation from the expected)
• Use other functions to decouple operations from uncertainty sources
• Physical buffers
• Information buffers (on the whole demand pull or the shipping functions)
• Lean emphasises the need of standardization and order control

Disadvantages from buffering operations

• Communication relays between operations and other functions normally create delays → difficult operations meet expected life and timing of the environment → no exploit of opportunities
• Operations is never neglected to take responsibilities for long range impacts of its actions
• Physical buffering often involves maintaining large stocks of input or output resources

Operational risks in buffered operations (old view)

• Operations dynamics is too uncertain to achieve production objectives in a well-known stable context, facilitated by other functions
• Operations is wrongly charged with long term objectives, given the expected context
• Effective risk management is tied to the identity of what is the best way to achieve objectives, given the expected context
• There are no uncertainties to be managed but only deviations from that deviate the operations from normal situations
• Operational risks for operations managers are only those existing within the plan, process / model as monitored by control/monitoring
• Risk is defined from a negative perspective (threat/hazard)

Bowens & Watson Model

• Personal failure (errors, memory short)
• Organizational failure
• Human factors
• External factors
• Design-related failures

• Deviation from the normal functioning (abnormal has occurred)
• Disruption to production systems, human intervention is required
• Consequences in terms of existing process requirements
• Consequences in terms of production requirements

REACTIVE APPROACH

• You upgrade your protection just after a bad event
• A combination of a reactive approach to uncertainty and trade-off risk and protection → proof that relationships led to catastrophic event (disruption)

• PROTECTION BANK - APPLE
• PROTECTION AGAINST DISRUPTION

NEW APPROACH TO RISK MANAGEMENT

• Resilience of increasing complexity, dynamism and uncertainty of competitive context
• Competitiveness depends also on the new approach to risk management chosen by the company
• Main drivers of change
• Climate clause
• Globalization of products/disruptive tech.
• Increased regulation
• Increased level of protection
• Increased occurrence of "uninsurable" risk exposure

ERA: Principal Areas of Risk

• Intellectual Risks → Education, Industry, Heritage, Knowledge, Social...
• Transactional Risks → Environmental, Economic, Business, Finance, Information, Communication
• Reputational → Image Management, Reputation
• Safety → Technology, Culture, Health, Safeguarding

Risk Owner → Is the single owner

Risk Receiver → Every Risk Connected with the Company, he who is responsible, fundamentally.

Risk Appetite & Tolerance

• Risk Appetite → Assumes some Risk, not Risk Averse
• Absolute Risk Avoidance → Highly Defensive
• Risk Tolerance → Organizational/Societal (Readiness to bear Risk)

→ Positive if Risk undertaken fits the objectives

→ Committed to the ability to mitigate, depend on the objective

→ Point where the objectives are achieved

• Risk Tolerance → The degree or Risk-Handlings undertaken
• Management can determine their level
• To be above risk:

• Amount of risk we are willing to take in order to maximize the objective
• +ve Risk Appetite

Risk Severity

• Probability
• Uncertainty

Example Diagram Analysis

N is unlikely, not unlikely, with high uncertainty.

- Expected loss

- Exp. value under mitigation

- ≤cum

Risk Response Table

• Risk Identification / Assessment
• Qualitative Ratings
• Risk Response

• Impact
• Risk Owner
• Triggers

Risk-Based Thinking

Risk is important in all aspects, for quality management systems.

• Aids in risk analysis, perceived approach.
• Risk-based thinking ensures that risks are identified.
• Considered and continually throughout the design and use of the quality management system.
• Improves performance.
• Employs proactive steps in improvement.
• Assists with achieving, restoring compliance.
• Assists awareness of quality of products and services.
• Improves customer confidence and satisfaction.

Risk Assessment Techniques

Objectives, Critical Functions

• Process mapping
• Risk Assessment
• Risk Treatment
• Monitoring and Review

• Factor: Brainstormings, social factors, external factors
• Strategies & Criteria Selection

• Complexity of the problem and methods needed to analyze
• Nature of system, amount of risk and assessment, time.
• Resources, data needs and costs.
• Quantitative or not

Operational vs Disruption Risks

• Operational risks ⇨ uncertainty on bus. performance & execution abilities ↔ - information accuracy & soundness - focus on the internal control system performance - insurance cost - reduction on prices of own products

• Disruption risks ⇨ impact on bus. objectives & cash flows - natural disasters - man made disasters - economic crisis

SCRM (supply chain risk management) Globalisation ↑ risk ↑ complexity ↑ ↓ SCR is a corporate management issueThe identification of a potential source of risk and the implementation of the appropriate strategies for addressing their consequences on reaching men, causes to increase the members, to reduce the vulnerabilities of an operating advantage The constitution of a collaboration causes the risk performing entire probability and continuity

SC Risk Classification

• Plan
  • Forecast
  • Aggregate
  • Interpretation
  • Scenario
• Source
  • Suppliers
  • Inventory
  • Relationship
• Make
  • Operational
  • Disruption
• Delivery
  • Customer
• Return
  • Logistics
• Other
  • Environmental
  • Cultural

Decreasing risks extend a broader pattern of risk actions, going beyond operational and disruptive risks.

Reducing risk → it's the cause (impact causes risk)

Supplier risk → it's the cause (could be a source of different accusers)

Process View of SCRM

• SC Risk
• Risk Identification
• Risk Assessment
• Risk Treatment
• SC Performance

Risk Identification

• Braindumping
• Surveys
• Interviews
• Lesson - Learnt

QualitativeMore quantitative method

• SC Mapping → Visual Map of SC
• Alignment Analysis → Use Combined Business Failure
• Gamma Maps → Determine areas where strategy may focus:
• Breakeven Analysis → Business impact
• Results → Amount of failure

Leave list of factors connected and specific risk evaluated allto your supplier