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The Aerospace and Defense sectors of the U.S. economy manufactures a wide range of products. Some of these companies have created a niche by supplying a specific set of technologies or products that have safety implications. To remain competitive, these companies must gauge the combination of the probability of harm and the severity of that harm for each product they manufacture. This estimation is known as risk and the process is known as risk management.
The primary goal of any company is to come up with cost-effective products while remaining profitable. Procedural and accounting transparency are necessary to drive cost effectiveness. Because the staff is manufacturing advanced and sensitive equipment, collaboration between concerned departments must be very cohesive. Any miscommunication can produce disastrous results for a company. An integrated risk management software solution can help a company identify and mitigate long-germ systemic risks by tracking and analyzing the recurrence of issues.
Why Risk Management?
Here’s a very simplified example of the importance of risk management. Say a natural disaster has interfered with a supplier’s ability to deliver an order of bolts for the manufacturer of an airplane wing. The bolts are used to attach the wing to the plane. The airplane manufacturer has a contract specifying a delivery date for ten airplanes, with a penalty cause for late delivery.
The purchasing agent knows the importance of the bolts, so he searches for another supplier. He can’t find another one that can meet the company specifications. Reasoning that the specifications are probably tougher than actually necessary, he finds a supplier who can get a lesser quality bolt delivered in time for the company to meet the delivery date. He does not communicate his decision to anyone.
Because the bolts are not “up to spec,” they can’t support the weight of the wings. When the planes take off for a test flight, the wings fall off. Now the company is incurring late fee penalties, pilot injury payments and insurance investigation because one purchasing agent made a decision without considering the risk involved in using a lesser-quality bolt and because he failed to follow purchasing procedures in place for communicating supplier substitutions.
Risk Management Software should provide a complete and accurate picture of the risk landscape across product lines, business processes, and business units, precluding reputation damage from recalls or regulatory action. It combines all risk-related documentation into a single location. The system should guarantee that corporate risk tolerance thresholds are employed and followed for risk-related activities across the enterprise.
Communicating Risks within an Enterprise through Risk Management Software
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How FDA and Risk Management Software are Helping Pharmaceutical Companies Avoid Risks
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How Food and Beverage Companies are Taking Advantage of Risk Management Software
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