Why Risk Management is a company-wide responsibility
And why it is so important in product lifecycle management (PLM)
Risk management has perhaps never been more important than it is now. The risks modern organizations face has grown more complex, fuelled by the rapid pace of globalization.
A recent external risk that manifested itself as a supply chain issue at many companies quickly affected the means of doing business and the ability to interact with customers.
Going forward, companies and especially their board of directors are taking a fresh look at what should be done to make their supply chains less vulnerable to crises. That is why they are consulting their risk management programs.
What is risk management in PLM?
When we talk about risk management in combination with managing the project or product lifecycle, managers need to have the capability to measure, calculate and eventually mitigate the changes and risks that could make them stray from the initial plan.
Previously, managers used techniques that could measure the performance of a scheduled activity using float analysis techniques to gather the data and analyze for the changes that they needed to work with.
With PLM, the entire management of the product lifecycle is assembled altogether under one roof, right from conception, design, manufacturing to end-of-life. It can seamlessly integrate with cloud and on-site business systems in the organization. It can identify risks early on and help create a process that can be easily deployed to mitigate the risk at every stage.
Why risk management is so important in PLM
In the world of business, risk management can be defined as the forecasting and evaluation of risk factors throughout the lifecycle of a product or project, together with the identification of procedures to avoid or minimize their impact as well as always adhere to all compliance requirements.
It is a continuous process of risk identification and mitigation and is closely linked to all the processes in the organization.
Risk, if properly managed can be proactive rather than reactive and can help the organization stay in control of all implied future turn of events as well.
If properly managed, risk can not only predict all possible future events but also help in their soft landing, by reducing the magnitude of their impact. For an organization to plan the lifecycle of their product, there needs to be a clear plan right from conceptualization, to design, to manufacturing, to after-sales, to end-of-life.
Several factors could hamper the realization of the objectives at every stage and ultimately translate into a loss of
- Compromise on quality parameters
For a product or project to have a well-oiled management, it is essential that every organization creates a plan for capturing, measuring, evaluating, and mitigating the risk.
Managing risk in silos
Organizations already have a lot on their plate with governance and compliance regulations becoming increasingly stringent.
Not only do these factors add on to the pressures on their operations and financial management, but they also have the added burden of managing several risk factors that could drive them off track from their objectives.
All organizations proclaim to have a risk management plan, but they often manage risks in silos, which often leads to ineffective, untimely, and poorly managed risk responsiveness. The best approach to manage risk is to perceive it as a lifecycle, where one step is a logical by-product of the other.
PLM can be viewed as a single source of truth, or in other words, a single source of information that can be easily accessed across the organization irrespective of disparate geographies, systems, or teams.
A Risk Management solution integrated in a PLM system can help the organization stay on schedule of its deliverables and track the progress through milestones and help in easy achievement of the expected outcomes and ROI.
It can be seamlessly integrated into all the on-site and off-site systems of the organization and maintain an issue tracker that keeps track of the actual progress of the project in accordance with the proposed plan. It proactively identifies, measures, evaluates, and formulates a plan to mitigate the risks before they occur, which helps the project to stay on track with their plan.