The evolution of risk management

A broader perspective

Successful companies in the manufacturing sector are those which recognise that a risk management programme, properly integrated across the entire enterprise and embedded in its culture is not just a protective tool; it can offer a significant competitive edge in an increasingly uncertain world.

Failure to adopt risk management solutions that integrate an advanced understanding of human factors with technical management expertise will force manufacturing companies to compete on price alone, bringing constant pressure on profit margins.

No matter what business you are in, risk is a vital component.  Operators of major facilities, which provide an essential service, must evaluate whether their risk strategies minimise uncertainties and maximise opportunities.  The key is to realise there is an upside to risk as well as a downside.  Successful companies in the manufacturing sector are those which recognise that a risk management programme, properly integrated across the entire enterprise and embedded in its culture is not just a protective tool; it can offer a significant competitive edge in an increasingly uncertain world. 

An effective risk management strategy addresses all risk exposures, provides assurance for all stakeholders, from the multinational asset owner to the end use of their manufactured products, the individual consumer.  We believe the perception of risk management has changed significantly; the discipline has evolved over time.  Yet a modern risk management programme still does what risk management has always done: it systematically identifies, measures, monitors, quantifies and reports risk.  Enterprise-wide risk management today does far more. 

If you look at the statistics on technical failures or operating failures, human error contributes about 80 % to the totality of the failure causes.  That’s why at Lloyd’s Register, we are integrating both the technical risk management side together with human factors and ergonomics.  There is no such thing as zero risk.  It depends on the level of risk acceptability to determine how it is managed within different companies.  Different companies will always have different levels of risk tolerance and risk appetite.  That is why the concept of risk will continue to evolve.  Talk to us.  The detail matters.