Risk-Based Thinking Step 1

Identify

Potential Threats

When identifying threat potentials, it is helpful to use categories. Consider using these four categories for potential threats:

• Inherent process risks
• Risks caused by technological disruptions
• Risks linked to extreme events of nature
• Risks from willful or intentional misconduct

Examples of tools that are helpful in identifying threats after an event include:

• Monitoring escapes
• Warranty claims
• Process breakdowns
• Safety incidents
• Spills or emissions

However, being proactive and acting before a potential threat occurs can prevent if from occurring. Some tools and techniques for identifying threats before they occur are:

• Failure Mode and Effects Analysis
• Fault Tree Analysis
• Control Charts

Opportunities

Opportunities can be categorized as well:

• Optimize products/processes
• Revamp underperforming assets
• Enter new markets
• Introduce new products

Identifying opportunities usually involves listening to customers and better understanding the marketplace. Listening to customers helps to:

• Anticipate customer’s future needs.
• Question fundamental restrictions to our current product and processes.
• Anticipate proactive (or defensive) actions of our competitors.

When identified, opportunities help us look at the business in a different light often helping us recognize an opening for a unique product feature or market segment. Techniques that can help identify opportunities include:

• SWOT Analysis
• SOAR Analysis

Opportunities tend to proactively “stretch” the organization.

• Risk Elimination: Prevent the potential of risk.
• Risk Reduction: Minimize the impact or lower the likelihood of risk.
• Risk Avoidance: Stop or curtail the planned activity to avoid risk.
• Risk Assignment: Share (or transfer) the risk by outsourcing or insuring the activity.
• Risk Acceptance: Don’t mitigate the risk, accept it.

(While we list five options, only Elimination and Reduction can be considered true mitigation options. While avoidance may seem like a “safe” option, ending the related activity is often not a viable option.  And assignment or acceptance options impart a false sense of risk mitigation unless the potential risks are low. This course focuses on Risk Elimination and Risk Reduction, not the other three options.)

Approaches to Capitalize on Opportunities

Most opportunities will be customer-focused. “Categories” of opportunities include:

• Optimize products/processes: Can the product/process be made more robust?
• Revamp underperforming assets: Have customer needs changed?
• Enter new markets: Is there an opening for existing products/processes in new markets?
• Introduce new products: Is there a market opening for a new product/process or a product line extension?