Risk
Management in the Context of Globalization
Managing supplier quality is always a
challenge. When you're dealing with possibly hundreds of suppliers around the
globe who are engaged in a broad array of complex manufacturing processes, the
challenge often appears to be insurmountable. Recent events have made supplier
quality issues a top priority, for both the consumer goods industry and its regulators
in the US and Europe; i.e. melamine contaminated baby formula and pet food as well
as allergic reactions and deaths from contaminated heparin. Bottom line, what happens at any outsourced
manufacturing operation can cause your company legal liability, damage your
reputation, and subject you to the considerable expense of a recall. Yet
outsourcing some or all of the manufacturing process has become an inevitable
part of doing business for the vast majority of multinational companies.
In 10 years all quality management systems
are likely to be designed as risk based. At the moment, however, some quality
management systems do not use risk assessment systematically to inform decision
making across a product life-cycle or within a manufacturing environment. Effective and consistent risk-based decision
making relies on the implementation of systematic product development, risk
management implementation over a product lifecycle, and a quality management
system. None of these initiatives is effective without the other two
components. They provide a common approach to product development, market
authorization, and risk management in the global marketplace. Only a risk-based
quality management system will prepare an organization for potential product
opportunities. And only a risk-based quality management system will protect an
organization from the risk that comes with the increasing complexity of
innovative technologies, new emerging diseases, and a global definition of risk
acceptability.
What is Risk Management?
Risk management is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives) followed by coordinated and economical application of resources to minimize, monitor and control the probability and/or impact of unfortunate event or to maximize the realization of opportunities. Risk management’s objective is to assure uncertainty do not deviate the endeavor from the business goals. Risks can come from different ways e.g. uncertainty in financial markets, threats from project failures (at any phase in design, development, production or sustainment life-cycles), legal liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attack from an adversary or events of uncertain or unpredictable root-cause. There are two types of events i.e. negative events can be classified as risks while positive events are classified as opportunities. Several risk management standards have been developed including the Project Management Institute, the National Institute of Standards and Technology, actuarial societies and ISO standards. Methods, definitions and goals vary widely according to whether the risk management method is in the context of project management, security, engineering, industrial processes, financial portfolios, actuarial assessments or public health and safety.
Risk sources are more often identified and located not only in infrastructural or technological assets and tangible variables, but in Human Factor variables, Mental States and Decision Making. The interaction between Human Factors and tangible aspects of risk highlights the need to focus closely into Human Factor as one of the main drivers for Risk Management. It is an extremely hard task to be able to apply an objective and systematic self-observation and to make a clear and decisive step from the level of the mere "sensation" that something is going wrong, to the clear understanding of how, when and where to act. The truth of a problem or risk is often obfuscated by wrong or incomplete analyses, fake targets, perceptual illusions, unclear focusing, altered mental states, and lack of good communication and confrontation of risk management solutions with reliable partners. This makes the Human Factor aspect of Risk Management sometimes heavier than its tangible and technological counterpart.
Risk Based Thinking in ISO 9001: 2015
One of the key changes in the ISO 9001 DIS
of 2015 is to establish a systematic approach to risk, rather than treating it
as a single component of a quality management system. In previous editions of
ISO 9001, a clause on preventive action was separated from the whole. Now risk
is considered and included throughout the standard. By taking a risk-based
approach, an organization becomes proactive rather than purely reactive,
preventing or reducing undesired effects and promoting continual improvement. Preventive
action is automatic when a management system is risk-based. On the other hand, risk-based
thinking is something everyone does automatically and often sub-consciously to
get the best result in different sort of situations. The concept of risk has
always been implicit in ISO 9001; however, in this revision with the maturity
of standard’s core, ISO 9001 makes it more explicit and builds it into the
whole management system. Risk-based thinking ensures risk is considered from
the beginning and throughout the process approach where risk-based thinking
makes preventive action part of strategic planning. Risk is often thought of only in the negative
sense, but risk-based thinking can also help to identify opportunities which
can be considered as the positive side of risk.
The ISO 9001 standard is based on customer
focus and their satisfaction which are some of the most important components in
the present business organizations where the objectives of risk based thinking
of ISO 9001 are;
To provide confidence in the organization’s
ability to consistently provide customers with conforming goods and services;
To enhance customer satisfaction;
The concept of “risk” in the context of ISO
9001 relates to the uncertainty of achieving such objectives and the concept of
“opportunity” in the context of ISO 9001 relates to exceeding expectations and
going beyond stated objectives. Thus successful companies intuitively take a
risk-based approach because it brings benefits to improve customer confidence
and satisfaction as well as to assure consistency of quality of goods and
services. It also helps to establish a proactive culture of prevention and
improvement.
The Risk Based Quality Management in Manufacturing Industry
Adequate use of limited resources in the
development, manufacturing, and distribution of products and services requires
a triage of tasks. There is not enough time or money or personnel available to
validate every process, investigate every procedural deviation, qualify every
supplier, and perform diagnostic studies or stability studies on every design
change with the same rigor of analysis. Risk-based decisions are necessary to
assure that limited resources are focused first of all on marketing practices,
manufacturing operations, and product development studies that can have the
greatest impact on product safety and performance. A systematic, risk-based
approach is necessary to assure that decision making is consistent throughout a
product lifecycle, throughout a product family, throughout the company, and
throughout the industry. Based on agreed-on definitions of hazards and
acceptable risk, this approach also minimizes the bias of case-by-case
decision-making.
The baseline risk managed by any risk-based
quality management system (QMS), despite the many types of hazards and
associated risks in the development, manufacturing, and marketing of foods, pharmaceutical
and biotech products, the baseline hazards of concern are common across all
product types and all regions of distribution which are potential hazards. A critical
hazard is a critical effect that is severe or life-threatening, where “severe”
would result in serious injury, permanent impairment, irreversible effects; it requires
unplanned medical intervention with hospitalization to prevent or mitigate
serious permanent injury or death; presents a high patient safety concern. Life Threatening is death or serious permanent
injury is likely to occur, which presents a catastrophic patient safety
concern.
In QMS development, companies can choose to
identify, assess, and control additional risks (e.g., product performance,
business, and regulatory risks), but every company should be expected to
develop a quality management system that effectively manages risks to customer
safety. Systematic product development supports risk-based decision making by
assuring that information about critical hazards and associated safety-critical
product features, and manufacturing processes which identified during product
development that are used consistently during product development to eliminate
or minimize risk and communicated consistently to commercial manufacturing and
marketing for use in risk control programs.
Systematic integration of information from
the market into the product development process increases the likelihood that a
developed product will meet user needs. Product risk profiles can change over
time with information gained through increased use of a product, increased
distribution, improvements in intended use, changes in a disease state, and
changes in manufacturing technologies or source materials. Monitoring for new
risks and the effectiveness of risk control programs should be established in
operations, in the distribution and in the market. Periodic and event-based
review of this information (risk review) helps assure that product risks remain
acceptable, providing better protection of the public and the company from new
and/or unexpected risk.
To be
continued.
References
http://en.wikipedia.org/wiki/Risk_management
http://www.iso.org/iso/iso9001_revision
http://isc-worldwide.com/iso-9001-2015-update-risk-based-thinking/
http://www.bioprocessintl.com/wp-content/uploads/bpi-content/070305ar02_77249a.pdf
http://www.biopharminternational.com/supplier-quality-management-risk-based-approach?rel=canonical
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