What is risk & opportunities? Its importance as per IATF

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In this article you will be able to know about :
  • Introduction about Risk and opportunities
  • What is risk and opportunities
  • Requirement of IATF 16949 standard
  • How to carry out risk & opportunities
  • Why it is Important (Risk & opportunity)
  • Process of Risk Management
 
Introduction about Risk and opportunities:
 
This is also another new requirement of International standard which is focuses on strengthening the overall Quality management system. This requirement is focus on the identified cation of risk and opportunities with respect to organization business process so that the assessment of risk can be carried out and opportunity can be identified .After carried out these main thing is identification of action in respect of identified risk so that it can be mitigate and opportunity it can be taken for getting benefits in long term. Its new requirement which his comes into existence causes issues facing by industry due to failure of any business process during supply chain without any alarm or information. This topic is related to the requirement of IATF 16949:2016. As we know IATF is an automotive standard which describe the requirement for automotive supplier to fulfil the customer requirements without any disruption. 
 
What is risk and opportunities?
 
As we discussed its and new requirement of international standard. It nothing just a process if identify the risk which hare present in the business process of and organization. Risk in the sense we can say the potential Un-certainty which can leads to failure of a part of business process or the complete business process. So we can say that it’s a prevention approach in which we are identifying the risk of our processes so that we can take action to mitigate these risk.
 
In similar way against identified risk we have to check either there is an opportunity is available or not, if it is available we can also make a road map to implement that opportunity so that it will strengthen our business process.
 
Before discussing the risk and opportunity first have to understand these two terms namely.
-Risk.
-Opportunity.
 
Risk- Effect of uncertainty
Opportunity: Any favorable situation to achieve intended result.
 
Requirement of IATF 16949 standard :
It is the prerequisite requirement to achieve an effective quality management system.
This requirement was present but hidden in previous editions of International Standard in form of preventive action to eliminate potential nonconformities and  analyzing any nonconformities to avoid reoccurrence.
 
For confirmation the requirement, an organization needs to 
-Plan and implement actions to address risks and opportunities.
 
Any favorable situation to achieve intended result can arise Opportunities , for example,  now  discuss  it with a simple example of crossing the road.
Case 1: when a person is tries to Crossing a highway directely which is full of traffic  .
Case 2-when same person use  foot over bridge  which is hardly around 500 mtr. away from the location of that person .
 
what’s your opinion about which case will be better….?
Answer .
In case 1 he is looking for saving the time which will be consume In walking to foot over bridge.
Its an opportunity.(time saving)
But in directly crossing the road having a high risk to meet an accident’s.
This an risk (met with accident).
In case 2. If he uses foot over bridge then he is not looking for an opportunity so that there will be no such risk.
Both cases having their loss and benefits. To understand the situation assessment is need to carried out to find out the risk and opportunity related to uncertainty in business process so that customer requirement can be full fill without and failure.
It means a risk is always carry with it self an opportunity which may be positive or negative. Its depends on us how we are looking the risks. 
Risk is the effect of uncertainty. 
Uncertainty can have positive or negative effects. A positive deviation arising from a risk can provide an opportunity, but not all positive effects of risk result in opportunities.
 
How to carry out risk & opportunities:
Here are the key step which an organization need to consider to identify the risk and opportunities in respected business process:
Interview with concern persons respected to business process: we have to interview with the person who are dealing with defined business process on daily basis, he can tell the actual hurdles which hare facing by him in his routine activity. So in such way we can collects information.
By considering the need and expectation of internal & external interested parties: we can collect the information related to the requirement of interested parties in respected business process.
 
Why it is Important (Risk & opportunity):
 
It is an prevention approach to avoid process failure
  • Systematic process to manage risk
  • Help to identify the action against risk
  • Strengthen the decision making against identified risk.
  • It tell the actual status of risk
  • It guide to mitigate risk.
  • It provide flexibility to respond the avoid sudden failure of an process
  • Strengthen the competitor market
  • Enhance confidence of management about the business process
 
Process of Risk Management :
 
Planning for risk & opportunity:
Organization need to identify and develop a process to identification and assessment of risk of business process.
 
Identification of risk and opportunity :
This is first step in which organization need to use a systematic approach to identify the business process risk due to business the intended objective of that business process can’t not meet. Organization need to consider issues related to local, regional, state and global economic, social, political, cultural, environmental, regulatory and competitive environments.
 
Assessment of risk identified :
After identification now it’s time to assess the identified risk which his identified by organization in respect of business processes so that an effective action can be decided to mitigate risk of process.
 
Response towards the risk:
Based on assessment which completed in last step its time to defined an action with the help of which the risk can be mitigate .and identification control to mitigation of risk whose. Implementation is responsibility of process owner .
 
Review of risk identified :
After completion of all above steps the organization shall review the status of risk based on the action implementation to further update ln the action ,in this review organization shall assure that the status of risk must up upgraded otherwise it strong action required. 
 
Reporting of review in respect of risk:
These review result must be reported to top management on regular basis to keep the system live an to avoid sudden failure of any processes.
 
Monitoring of action implementation :
After completion of all above steps it time to monitor the action identified against risk mitigation for effectiveness of defined system. Without this activity the whole process will be worthless so its very important to monitor these actions.
 
Thanks for your patience and concentration during reading the topic, Hope you like this topic and the explanation of topic ,wish it will add up values in your competency and enhance your confidence to impart this practice in your professional carrier. We will meet soon with another topic for enhance basic skill which is required to fulfil the professional requirement. In case of any query or suggestion you can write us in comment box .
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