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Operational risk tries to identify and manage risks for people, processes, and systems; it is a discipline and behavior that needs to be put in place. As such, a framework to control the process is recommended.  The framework is a set of integrated tools, processes, and mitigation strategies that assists a company
in managing, measuring, and monitoring operational risk.

  1. Governance,
  2. Planning,
  3. Execution,
  4. Visibility, Optimization, and
  5. Integration.


In this blog we will discuss the planning process, which can be broken down into the following:

  1. Processes, Operation, and Scenario Documentation
  2. Process Risk  and Assessment Analysis
  3. Process Risk Control Measure Analysis
  4. Managing Changes and Updates

In this blog we will discuss in more detail the Process Operation and Scenario Documentation portion of the planning process, the other parts of planning will be discussed in later blogs.

Fundamental to Operational Risk Management is an understanding of the detailed processes, operations, and scenarios that support the operations of the organization. The understanding and documentation of business processes, operations, and activities that have the potential to expose the company to operational risks under normal operating conditions is only the start of the required analysis.

A significant increase in risk usually occurs under abnormal conditions.  Creating scenarios that apply these abnormal conditions to operations enables an organization to gain a better understanding of the risk that it could face under extreme conditions (e.g. are the structures and processes to be designed to withstand a 100 or 500 year earth quake or flood, or what happens if a multistory retort (a pressure cooker) shifts while in operation).

This posting is the seventh of a series of blogs discussing various factors of operational risk management as it pertains to manufacturing organizations. Please feel free to comment and discuss this series.

For those of you just joining this blog here are links to the earlier postings:

Part 1:Are you heading for disaster by not managing your risk?

Part 2:Operational Risk Management (ORM), do I need it?

Part 3:Fines, Penalties, Safety Improvements, part of doing business or something to be avoided?

Part 4:Managing Risk – There is help out there.


Part 5:Operational Risk Management: A needed framework

Part 6:ORM- Framework – Governance

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