Organizations should adopt risk-based thinking to make better decisions, particularly when they must contend with challenging, fast-paced or otherwise uncertain environments. This way of thinking protects manufacturers from inevitable, unexpected failures and inefficiencies, because it prompts organizations to invest time and resources toward planning for the unknown.

Addressing risk also helps companies long term. The time colleagues spend contemplating, finding, and dealing with risks also helps them understand organizational processes — a shared learning progression that strengthens culture and business results.

Risk assessment and risk management do consume resources, and so not all organizations fully commit to it. However, organizations that adopt risk-based thinking can reducing the frequency, likelihood and impact of losses, while also response time to unexpected events. The process fosters better communication across the organization, which makes for new opportunities for growth and improvement

How can organization integrate risk-based thinking into their operations?

They can start by thoroughly understanding their processes. To investigate how uncertainty will impact, outcomes, operators must clearly define processes, and know how to add value to those processes. Additionally, they should be able to back this up with documents that accurately reflect those process. When staff can develop shared, documented understanding of their work, they can slim down risk.

They should also build quality into their products and processes instead of planning to catch problems upon inspection. This proactive approach to quality planning may involve Design for Manufacturing and Assembly, Design for Six Sigma, Quality by Design in the life sciences or Advanced Product Quality Planning in automotive or aerospace. Manufacturers must monitor how these initiatives reduce doubt bolster desired outcomes.

They should implement corrective action. Corrective actions can repair processes to achieve desired performance. Preventative actions and continuous improvement tasks will help leaders to foresee problems and therefore boost performance. A quality management system can help manufacturers start to reduce risk and improving performance.

They must stay nimble. Implementing responsive processes helps manufacturers reduce uncertainty. For example, good relationships across departments means better communication, which results in better quality. Additionally, leaders who make educated swift decisions at precisely the right moment, as opposed to following pre-determined schedules, often make more informed choices with better results.

Lastly, they must keep everyone informed. When staff are all privy to the same shared information systems, where they can access to the most up-to-date data, they will be more engaged. By providing your workforce with ample resources to contribute their knowledge, your team will work together to better identify risks and opportunities.