Risk management is misunderstood by companies
The Fraunhofer Institute for Production Technology IPT and P3 Ingenieurgesellschaft mbH found in a joint study that German industrial companies are not yet making effective use of the potential of preventive risk management methods. The authors see the main reasons for this in the fact that many companies misunderstand their risk management: Most of them do not use their risk management as a preventive measure, but only act when the errors have occurred. So you are practicing crisis management at best.
For the study entitled “Technical Risk Management”, Fraunhofer IPT and P3 surveyed German manufacturing companies in the areas of mechanical and plant engineering, automotive industry, aerospace industry, electrical engineering, medical technology and the food industry at the end of 2010, what importance risk management systems have for them and which methods and Concepts they apply to risk management. 180 companies took part in the study.
Risk management is not properly implemented
Above all, the study reveals uncertainties in dealing with risks. More than two thirds of the participants are convinced that risk management has a major impact on corporate success. However, a good two-thirds also believe that risk management is not implemented correctly in their company. "The result confirms our experience from consulting practice," comments Prof. Dr. Thomas Prefi, Managing Director of P3. »Companies are well aware that they need risk management, but in the end they often lack the consistency, the time or the staff to effectively integrate the methods into the production processes.«
The challenge for companies is to design their risk management in such a way that significant risks are identified early on, accepted if necessary or eliminated with little effort. According to the results of the study, many companies have also recognized this. 55 percent of the companies describe the early avoidance of production planning or product defects in development as a goal of their risk management,
57 percent measure the success of their risk management by the absence of errors. Still, most companies tend to be reactive when the errors have occurred. Approximately 62 percent stated that they only carry out a risk analysis when errors occur in the product or process.
gaps in the organization
A total of 70 percent of the companies have defined their own risk management process, which defines the processes, the organization and the responsibilities. However, the study also reveals that the defined processes are not consistently completed. Only about half of the companies have defined how the identified risks are communicated company-wide. 38,5 percent leave it up to the employees themselves whether they discuss the risks in the company. In many cases, the identified risk is not adequately controlled. The reasons given by the companies included risk control being too complex (around 55 percent) or the benefit being too small (around 39 percent). "The latter shows that the potential of risk management has not yet been understood and that the established organizational concepts and methods are not sufficient for the efficient use of risk management," concludes Prof. Dr. Robert Schmitt, member of the board of directors of the Fraunhofer IPT.
The organizational gaps continue in the documentation. Only 45 percent save the risk data in a central, company-wide database. »We very often observe that the sustainable benefit of risk analyzes is lost because the findings are not recorded clearly enough. Important know-how for safeguarding and efficiently designing future development projects is therefore lost«, says Prof. Dr. Smith.
weaknesses in analysis
The companies surveyed most commonly use Failure Modes and Effects Analysis (FMEA) to identify and analyze risks. However, around 46 percent criticize the high level of effort involved in the FMEA and the large scope for interpreting the results. The biggest challenge in analyzing the risks is calculating the cost of the risks. Only around 21 percent of those surveyed stated that they carried out a concrete cost calculation. 64 percent only estimate the costs and around 28 percent do not evaluate them at all.
More effective concepts required
According to the experts, the study results show that further methods are necessary, which in particular reduce the effort and thus also increase the benefit of risk management. Prof. Dr. Robert Schmitt sees a current need for research here: »Uncertainties and risks are part of entrepreneurial activity! Especially in the early phases of the product lifecycle, companies need a basis for decision-making and methods that can be used to reliably identify product and process risks and deal with them efficiently.«
At the same time, more individual concepts are required that contribute to the development of a comprehensive understanding of risk and a pronounced risk culture in the respective company. "This is where moderators should come into play, who accompany the risk management processes from integration into the existing structures through risk analysis to documentation, bring technical expertise and experience and also support the operation of holistic solutions," says Prof. Dr. Prefi.
The Fraunhofer IPT and P3 have been dealing with risk and opportunity management in business for a long time and combine research and practice in their cooperation. In its department for production quality and measurement technology, the Fraunhofer IPT, headed by Prof. Dr.-Ing. Robert Schmitt Research, development and production processes. The P3 Ingenieurgesellschaft mbH is a spin-off company of the Fraunhofer IPT and today supports industrial companies with almost 1100 consultants in the areas of quality, process, project and configuration management.
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Source: Aachen [ Fraunhofer IPT ]
