Risk management - the order of the day for SMEs too
Risk assessment and estimation of potential costs is not only a topic of large companies. Those responsible for small and medium-sized enterprises should systematically think about risks. Unexpected costs, for example in the case of production breakdowns, can bring many companies to the brink of ruin.
Ws Nassim N. Taleb points out in his book "The Black Swan", the impossible must be thought of and evaluated. Events as momentous as the horsemeat scandal or the unexpected loss of a major customer do not have to happen. Companies that do not pay sufficient attention to existing risks often suffer unexpected events with expensive consequences for investors, owners and employees.
Risk management even without ISO 31000
As a manufacturer of a product or provider of a service, you are responsible for the promised product and service quality and bear full responsibility in the event of deviations. Management systems based on ISO 9000:2008 must include risk and failure analyses even without ISO 31000:2009 certification. Internal and external risks must be named and assessed by the management. For each risk factor, measures must be defined that actively avoid errors and really minimize risks. It is almost more important to know how to react to the effects of a failure on the customer relationship, the reputation or the environment.
Examples of risk aspects
With the following three examples, I would like to highlight important risk aspects in the practical business environment.
Supplier Relations: Processing faulty products not only causes high costs for rectification or warranty work, but also annoys your customers. Even the long-term cooperation with the purchasing department or an ISO certificate carries risks. You can read about the consequences of underestimating this issue in the press at regular intervals. Only personally conducted audits at the supplier can reduce the company risk and guarantee the product and service quality. On such occasions, in addition to optimising the customer relationship and product safety, you could also discuss future joint developments, which would deepen your position as a customer.
Own production: Even if your company has never had to carry out a recall or rectification due to a product defect, a permanent analysis of possible risks by the management is indicated. Thanks to certified processes, high product safety can be expected, but not guaranteed. Regardless of the brilliance of internal process planning, human inadequacies or lack of component testing can cause unexpected defects in your products. Only a quality management system that actively manages all aspects of risk can be considered an effective management tool. After all, it must ensure the protection of know-how, customer-oriented product development and the position of your company in the market.
Customer Relations: To reduce the risk of losing customers, depending on the company, the business, sales or development management must periodically invite customers to an intensive discussion about experiences and future needs. The management system may prescribe customer surveys. Unfortunately, in practice, management often proudly shows administratively determined increases in satisfaction in % during the audit. Despite improvements in standard scores, the risk of losing customers remains, perhaps because they have had to realign their business and you may no longer be able to supply them with the right products. Your sales didn't notice the changes because of the focus on order taking. IT and CRM systems unfortunately only provide statistical values from the past. In order to get a sufficient reference to social and market trends, the systems often tie up resources for support that are not justifiable from a business point of view. Without personal contacts, the right information is unfortunately rarely available.
Conclusion
Responsible persons in the companies actively personally detect and seriously evaluate risks that can cause painful costs. It is part of the management's task to prepare a plan for avoiding and optimally handling a claim caused by risks in the company. By specifically informing/training employees on the measures envisaged, they will increasingly feel personally responsible for quality assurance and innovation. Professional advice on the introduction and training of active risk management is an investment in the security and marketability of your company.
