What me worry?
Have you ever been in the midst of a project, strategic implementation, event or general activity and something terrible went wrong that derailed everything leaving you scrambling, picking up the mess? This is not a fun place to be in, but lots of people find themselves in this position. Risk management is critical to all businesses and organizations but, unfortunately, can be an afterthought. When the thought of risk management is brought up, some people will actually say, ‘why are we focusing on the negative’. Risk management is about outlining all the potential problems that could arise. Knowledge is power and the simple task of outlining all types of risk for your specific activity allows for mitigation plans to be created allowing you to avoid the problem in the first place.
Planning and being prepared is a good thing. It’s impossible to predict every potential risk but when you identify the ones that could potential come to fruition you are creating awareness which is the key to minimizing the impact. As I say to my clients, there are gaps in every plan or activity, the question is when things fall through the gaps, are they falling through a gaping hole that stops everything in its tracks or a small crack that one can recover from quickly?
When I implement risk management with clients, the tool I choose to use is a Failure Mode and Affect Analysis (FMEA). This is a tool I take from my engineering/manufacturing days but have also successfully used in Sales and Marketing too. This tool is great because it’s a systematic step by step approach for identifying all possible failures in a product, service, assembly process and/or design. This step by step approach identifies all possible failures that can potentially occur. FMEA is broken up in two components: failure modes and effect analysis. The failure mode is a way something might fail. Failures are errors or defects that can affect the customer. Effect analysis refers to analyzing the consequences of those failures. Failure will then get prioritized to the seriousness of the consequence, how frequently they occur and how easily they can be detected. Once a priority number has been assigned, the FMEA allows action to be taken to eliminate or reduce the failures against those identified as the highest risk. This is known as the mitigation plan.
When should you use an FMEA?
Below are some suggestions on when to use an FMEA:
- When a product, process or service is being designed
- At the beginning of a project when creating the project plan
- At the beginning stages of a strategic implementation
- When an existing process, product or service is being applied in a new way
- When analyzing failures of an existing process, product or service.
How to do an FMEA?
NEVER DO IT ALONE! There is power in numbers with an FMEA. Gather your subject matter experts and brainstorm the potential risks. Do it in a workshop setting. The more ideas that can be bounced back between different departments and/or people, the better. This is key to minimizing the gaps.
Being prepared and understanding all elements of your risk is a key factor of success. If you live in an earthquake zone, would you not make sure your home was built to code to sustain earthquakes? The answer of “I didn’t know” doesn’t work in our business environment when competition is stiff and our competitor’s are right around the corner ready to jump at the first chance at our failure. Looking at risk is a positive thing. It will ensure you are prepared, always looking at all the elements needed to meet your customer needs.
Do you think risk management is a smart planning tool or too negative? Feel free to leave a comment below or shout out to us on Facebook or Twitter. Of course, you could always
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