Implementing a Quality Management System requires planning. That planning must include actions to minimize threats and to reduce the likelihood of products and services falling out of conformity.
Requirement 6.1 of ISO 9001 points to the need for risk management if the company wants to ensure continuous improvement in its processes. So in this post we will explain why actions to address risks and opportunities are so important and what needs to be done for a manager to ensure maximum safety and quality.
Risk management and risk-based thinking
Managing risks and opportunities is one of the ways a company can prevent failures from harming the business. Requirement 6.1 raises the need for the organization to adopt risk-based thinking, so that it is not caught off guard by negative results — and so that it can act calmly in the face of errors.
According to ISO 9001, threats can be positive or negative. And it is risk-based thinking that determines how managers view these effects.
There are many types of risks, and they can vary from one business to another. Some examples are:
- Delivering products late;
- Failures in meeting requirements;
- Production stoppages caused by some failure in the power supply;
- Consumer dissatisfaction with the company's customer service;
- Shipping defective goods.
However, there are also opportunities which, if properly analyzed, can bring significant gains, such as:
- Increasing consumer satisfaction;
- Acquiring new technologies to optimize processes;
- Entering new markets;
- Securing better prices and terms with suppliers;
- Improving services and products.
In other words, risk management and risk-based thinking make a difference. They can help the organization better analyze its errors and amplify its opportunities. They also help professionals draw up more assertive plans to reach positive results faster.
Actions to address risks and opportunities
Once the company defines its risks and opportunities, it gains a more strategic view. This analysis is important for helping map out improvements that achieve goals such as assuring results, enhancing desired effects, and preventing and reducing negative effects.
After the threats have been identified, it is time to act. The company needs to integrate and implement actions across all of its processes. And, regardless of the strategy, it must evaluate the effectiveness of each action. This is necessary to ensure the effects really will be positive.
Some strategies for addressing threats are:
- Accepting the risk and taking no action until the threat occurs — that is, letting the problem happen (if it happens) and only then looking for solutions.
In this case, we can say that this acceptance of the risk can be passive, as when the company establishes no plan until the threat materializes. Or active, when it has a strategy in place in case the risk occurs.
- Placing the risk under the responsibility of a third party — an insurance company, for example;
- Eliminating, avoiding, or preventing all causes of a risk;
- Mitigating or reducing threats. Here the risk is not actually eliminated, but the organization draws up a plan to make the problems as harmless as possible.
As for strategies for addressing opportunities:
- Just as in the risk strategy, here too no action is taken to make an opportunity happen. The company simply waits for it to appear;
- Transferring an opportunity, in whole or in part, to a third party — a partner, for example;
- Embracing the opportunity to the point of making it happen no matter what — that is, sparing no effort for a goal to be achieved;
- Implementing actions that bring the company closer to the opportunity, making it more attainable over time.
Why is having a risk and opportunity management process important?
With risk and opportunity management, the company becomes better prepared to identify, analyze, evaluate, and develop strategies to solve problems. The organization can benefit in different ways, but the main advantages lie in:
- Increased efficiency and productivity: adopting actions for risks and opportunities can mean the team spends less time working around a problem. By anticipating threats in advance and formulating strategies to minimize their impact, professionals end up gaining efficiency and productivity;
- Avoiding financial losses: risks can cause significant losses. The absence of a system that performs backups, for example, can compromise important data — which, in turn, can undermine planning and strategy formulation;
- Better profit margins: if the company does not identify risks and opportunities in advance, it may end up having to deal with problems down the road. That not only increases its financial cost but also shrinks its profit margin. With risk management, on the other hand, it can minimize that threat.
Do you see how important risk and opportunity management is? And how evaluating the effectiveness of each action is also fundamental to improving how the company operates? Management and planning are necessary points that help ensure greater growth and security in your processes!
Should I manage my company's risks and opportunities?
Yes, you should!
A risk is a problem that has not happened yet, and the best way to stop it is through management. By identifying threats in advance, analyzing every error, and formulating an effective plan, managers can correct failures and prevent adversity from affecting results.
If you don't want problems to repeat themselves — but do want to amplify opportunities — see risk management as a safeguard. Many professionals cannot measure the value of opportunities because of past errors, but that doesn't mean they can't start improving that mindset right now.
Is your company's goal to ensure the quality of operations and guarantee consumer satisfaction? Then risk and opportunity management remains the best alternative.
And if you still don't know how to take that first step, click here and download this risk and opportunity classification template right now.
Originally published in Portuguese at useall.com.br.