Process Risk Analysis


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Our newsletters provide information on business management systems and process improvement methods. These systems include our services ISO 9001 QMS, AS9100 Aviation, Space and Defense, ISO/TS 16949 Automotive, ISO 27001 Information Security, ISO 13485 Medical Devices, and ISO 14001 Environmental Management Standards. 
Further subjects include methods of performance improvement such as Six Sigma, Lean Enterprise, and other topics of interest to our readers.


Do you have a topic of interest for a subject article? Please let us know.

Process Risk Analysis
  risk management flow chart drawn by hand isolated on blackboard

Process risk can come from many sources. Organizational process risk can result in unintended consequences, including what is affected. Understanding risk with a focus on process analysis can help you understand what could go wrong with a process, and what to do about it.

Risk analysis is usually driven by two variables: likelihood and impact. A risk that is highly likely to happen and would be highly disruptive to the business may require process improvement or contingency planning.  A risk management process generally consist of three main steps:         
  1. Identify risks- A risk is an effect of uncertainty on objectives, a deviation from the expected. The deviation could jeopardize success, cost or time, or a strategic goal. A process risk must be identified, and controlled by management within a formal system.
  2. Analyze risks – Risk analysis starts with proven methods.  For example a risk analysis table, risk cube, or an FMEA driving an assessment of potential outcomes. Risk analysis takes place when managers review the identified risk, assess its likelihood and impact, and determine severity based on a known scale of thresholds.
  3. Risk response – Follow the likelihood and potential impact of the risk. Managers can brainstorm possible mitigation and contingency actions. This can include a review of performance data history to identify risk response.  Maintaining a list of common risk sources by specific categories we have found can create an effective risk identification. Process risks affected could be product quality, schedule, equipment, customer satisfaction, and others.    
ISO:9001:2015 states that an organization will plan actions to address risks and opportunities – determine internal and external issues, including needs and expectations of interested parties. The following is an example of an approach we used with a start-up company in determining these requirements and risk factors.  
  1. What are your markets or market sectors?
  2. Are there any regulations or standards you have to plan for/work with? 
  3. Do you have any indispensable partners? 
  4. What does your perfect customer look like? What kind of customers are you after?    
  5. Who makes up your core team?  External/Internal-employees?  
  6. What’s the worse that can happen with your work environment? Defining the company scope of the management system first helps with this question.      


Does it all add up when you write the answers to these questions down? Is there a clear linkage between the company scope statement, context and interested parties? This would include risk identification and risk analysis using a proven method such as a risk table or a SWOT model.  This method is an interesting twist we picked up at a conference recently from other conventional methods we and you most likely have used to determine these requirements. 
Any thoughts on the value here, tell us what you think?     


ISO 14001 Guidance Document

Implementing an Environmental Management System (EMS) based on the ISO 14001 standard may seem like a large task, but that doesn’t mean it is just for major industries in any market. Breaking it down into phases is the key. A newly revised guidance document just published helps businesses of all shapes and sizes put an EMS in place in the way that suits them – and reap the benefits every step of the way. 

ISO 14005:2019, Environmental Management Systems – Guidelines for a flexible approach to phased implementation, provides small to medium size companies with a means to overcome this by enabling them to meet the requirements of an EMS in a phased, flexible way that is adapted to their specific needs. It allows them to start benefiting from the very beginning while ultimately meeting the requirements of the ISO 14001 EMS Standard.


The standard has just been revised to ensure it is up to date and continues to meet market needs.  Improving environmental performance is made easier with formal systems in place. However, small and medium-sized enterprises often find EMS implementation difficult due to fewer staff and resources.

ISO 14005:2019 allows companies to easily measure the business value and benefits of implementing an EMS and ensuring they get a return on their investment.  You can purchase the ISO 14005 EMS Guidelines document at the ANSI Webstore.  Contact us with your ISO 14001

questions, or seeking assistance with implementing an effective ISO 14001 Environmental Management Systems for your organization.


Metrics That Matter

If you’re a first-line supervisor responsible for managing operations, you know how important operational metrics are to the life and longevity of your organization.     

If you’re a corporate executive, you are often inundated with data, which makes it difficult to pull out relevant insights. Although most metrics on the executive dashboard are finance-related, executives in manufacturing organizations need visibility into operational metrics to gain more control over their businesses. They are looking to understand the effect operational performance has on their organizations’ goals.


The impact quality has on a company’s success is often well understood. However, companies have traditionally struggled to establish metrics that can easily represent the effectiveness of quality in the organization.


Whatever method you use, it should be fine with the auditor.  There are no rules on how you should present this information, and you chose whatever suits your business.

Cost of QualityThe definition of this metric is similar to the way it sounds. It measures the cost incurred by an organization to manufacture a quality product. Further narrowing things down, these costs come from two main categories: cost of good quality and cost of poor quality.  There are many different definitions of the Cost of Quality available, and many are lacking in scope or precision. To remedy this, we thought building on one of our favorite basic definitions (provided by ASQ, an organization we are actively involved with as senior members) would be a good starting point.

At the highest level, there are two different terms in the Cost of Quality equation: the Cost of Good Quality (CoGQ) and the Cost of Poor Quality (CoPQ). This can be understood in the below formula:

CoQ = CoGQ + CoPQ
Let’s start with the Cost of Poor Quality. These are the traditional quality costs companies measure. Examples would include scrap, rework, and returned materials. To give this part of the equation more structure, we think of Poor Quality costs as having two different terms: Internal Failure Costs (IFC) and External Failure Costs (EFC). This can be understood by the following equation:


CoPQ = IFC + EXC, where:
IFC = Scrap Costs + Rework Costs.
When it comes to the Cost of Good Quality, these are the costs that are much less likely to be measured by a company. Generally, these are the costs companies incur to ensure they are producing quality products. Again we break the Cost of Good Quality calculation into two different terms: Appraisal Costs (AC) and Prevention Costs (PC).
Keep that Appraisal Costs and Prevention Costs in mind.  We will continue this article in our next issue.  Don’t want to wait? Give us an email / phone call metrics that matter shout!   


Customer Complaints – Justified?

Has your organization decided that it’s a good idea to classify customer complaints according to whether they are “justified?” We have seen this occurrence take place this year during audits where a complaint due to using a product beyond its capability took place. The company felt it wasn’t necessary to utilize their corrective actions system for identification and resolution.

If I’m a customer, all my complaints are justified. If you try to tell me that my complaint is “unjustified,” it’s only going to make me angrier than I already am! Once the customer experiences a problem, it becomes the company’s problem. Regardless of the fault of the problem, customer satisfaction has been affected, and action must be taken.


Reporting Back to Your Customer. Customers want to know what action has been taken. After all, the customer had a negative experience related to something they spent their hard-earned money on. They even took the time to tell the organization about it. Now they’re curious. What are you going to do about it? If your organization is interested in turning the negative experience into a positive one, someone must take the time to report back to the customer. The communication should include these three key elements:


  1. The results of the investigation into the problem;
  2. The action taken; and
  3. A statement of thanks for reporting the problem.
Reporting action back to the customer closes the loop on the issue. It also lets the customer know that you take his or her feedback seriously and are committed to making improvements. In some cases, it will determine whether your organization remains a supplier to this customer.



In the News
2019 Aerospace, Aviation, Defense and Manufacturing Conference.  Thursday, June 20th in Scottsdale at ASU SkySong.

The Arizona Technology Council, Arizona Commerce Authority and the Arizona MEP are hosting the eighth annual Conference for Arizona’s Aerospace, Aviation, Defense + Manufacturing community.  Attendees will gain a full understanding of the latest trends, challenges, and forecasts in the aerospace manufacturing industry, and hear insider knowledge from industry professionals. From amazing exhibitors to keynote speakers, expert panels, and great networking, this is an event you do not want to miss!
Review Agenda and Registration.  We are Attending- See you There!

 Exemplar Global Online Auditor Expo

The Online Auditor Expo is the new name for the International Auditor Symposium. Now in it’s third year, The Online Auditor Expo is a comprehensive online conference for auditing and standards professionals.
The event is 100 percent online and will run 24 hours a day, seven days a week for the entire month of June, 2019. The Online Auditor Expo will consist of numerous pre-recorded sessions covering a variety of auditing topics such as quality, auditing skills, environment, occupational health and safety, and future technologies. Register and pay $99 USD today to enjoy a month of auditing and standards content at your fingertips. Current Exemplar Global certified professionals are elligible for free registration.


Training Courses
All courses can be delivered at your company or at our training centers. We do provide training beyond our home state of Arizona. Click on the course title for description, schedule, registration and payment. Group discounts are available. We also provide custom designed training to fit your specific needs. All training is fully documented for your training records and certificates of training are awarded.
Don’t see a course or schedule that fits your needs?  Contact us.

Why are some people more productive than others?

MIT Sloan Executive Education conducted a survey of 20,000 people from six different continents on why some people are more productive than others.
Interesting result- On geography, the average productivity score for respondents from North America was in the middle of the pack, even though Americans tend to work longer hours. In fact, the North American score was significantly lower than the average productivity scores for respondents from Europe, Asia, and Australia. For more information visit the MIT Sloan Executive Education Blog.

Best regards,

Walter Tighe and SES Team
Sustaining Edge Solutions, Inc.
Toll Free 888-572-9642


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