How Important Are Risk Assessments?

Risk assessment processes in the manufacturing industry help companies alleviate disruptions to business. Risk management provides analysis in order to make factories more efficient and more agile when supervisors, team leaders and line leaders take a comprehensive, clinical view of risk at the plant.

Identifying and addressing risks may reveal the complex nature of critical hazards and how quickly they may affect a company's bottom line. Risk assessment practices must adapt at the same pace as of technological changes within the manufacturing industry. Innovation often outpaces investment, which means technology may force companies to upgrade quickly when firms do not have the money to implement and support the improvements. What are initially small problems can cause larger ones once weaknesses are exposed.

For instance, many manufacturers rely heavily on wireless communications. Managers and supervisors may love the fact that a tablet computer can instantly tell them how many more units must be made, how much raw material is left, and what needs to be shipped in the next few hours. But what if the network breaks down? Can the company keep its production moving if a thunderstorm knocks out the Internet server or a cyber security threat infiltrates company computers? Managers find answers to these questions through risk assessment procedures.

When a company eyes a particular innovation to remain competitive, risk management teams must swing into action. They analyze the impact new software may have on the firm's 10-year-old desktop computers. Does this new software require a facility-wide computer upgrade with new operating systems? Can tablet computers communicate with the existing desktops? Do production systems analyze the ordering system to ensure the company has plenty of raw materials? Risk assessment teams must find out the answers to these questions and try to solve dilemmas before they start.

Effective supply chain management also requires risk mitigation. If one supplier goes down for some unforeseen reason, manufacturers need to have backups in place. When circumstances beyond a company's control affect the supply chain, production lines may have to reduce output or even shut down until the problem is fixed. Finding and predicting risks eases supply issues before they start.

Innovation and data analysis also affects a company's staffing priorities. Human resource managers must consider risk assessment models when hiring new employees. If a new machine is due to arrive on site in two months, the HR staff should determine if someone needs to be trained or hired to run the new equipment. Does this new person replace three others or does he complement the team already in place? Investment in an employee now can save the factory downtime later.

Each company has unique sets of risks based on its culture, leaders and quarterly performances. Assessing risks should be a part of every employee's responsibilities. When changes occur, potential hazards must be managed along with the innovations.

Risk assessment should not be a special one-time process requiring new hires or different skills. Companies can deploy teams of employees already within the organization to assess and prioritize risk mitigation on a regular basis. That way, things run more smoothly for everyone within the company.

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