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How to Implement Risk Management for Your Assets

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Risk management is integral to asset ownership and management in organisations because we rely on assets to conduct daily operations. So how do you implement risk management into your asset management effectively. We look at how to think about risk management when it comes to assets in businesses and how to implement a risk management plan for your assets.

What is risk management?

A risk is widely understood as the effect of uncertainty on objectives . You can also think of risk as a result of threats, vulnerabilities, and impact . In turn, risk management is about minimising, monitoring, and controlling risks achieve your organisation's objectives. You can start by identifying risks and assessing the impact on your operations before working out how to deal with the risk. Risk management could involve continuous review of processes, systems, and other elements in the business. An ideal risk management strategy could be integrated into the enterprise's governance framework as well planning processes for best outcomes - so managing risk becomes a part of the culture.

How does risk management apply to your assets?

A good way to understand how risk management applies to assets is to view risk management as an inherent part of your asset management strategy, so you're addressing risks associated with the entire asset life cycle from acquisition to disposal. Asset management strategies need to consider risks and manage them while balancing this with things like cost and performance. Taking a risk-focused approach to asset management lets you address the root causes of issues rather than the symptoms. If you don't incorporate risk management into how you manage your assets, your business could breach compliance and regulatory requirements . Additionally, you could be exposing your business and staff members to hazards ranging from physical-safety ones to financial ones.

How to implement a risk management plan for your assets

To implement an effective risk management plan for your assets, start by understanding what assets you have and establishing a system to measure outcomes.

Understand your assets

Each asset owner (the teams or staff member in the organisation responsible for the asset) needs to know exactly what they're responsible for. They should know the basics like asset location, asset condition, and maintenance requirements to preserve asset value and life cycle. Develop a full list of your assets and verify the list with field staff. Set up a process, with a system (such as an asset management information system [AMIS]) to track and systematically understand what's going on with your assets. Without a good understanding of your assets, you could, for example, run the risk of assets degrading or otherwise functioning at less than optimal levels. This compromised status could expose your business to financial risks due to loss of revenue, safety risks such as injury, and even things like reputational risks with customers.

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Define risks and measure them

Define your asset risks and lay out a plan to tackle them. Take a systematic approach to managing asset-related risks with a specific plan. Involve asset owners and make sure they understand their role in mitigating and managing these risks. Define goals, milestones, metrics, and success criteria so you understand how your risk management strategy is working and can make adjustments along the way. Although you can never 100% eliminate all risks, defining them and having a plan to reduce their likelihood allows you to manage them more effectively.

Avoid over and under maintenance

Maintenance is an essential part of asset risk management. If you over-maintain an asset, you're exposing your organisation to higher financial risk by incurring unnecessary costs. Also, intrusive maintenance can lead to high risk of mechanical failures and extra costs for replacement and repair. At the same time, under maintenance could lead to higher risks relating to reliability, uptime and downtime, and business interruption.

Address technology risks

Technology is already changing asset management, and it’s allowing enterprises to do more within budgetary constraints. At the same time, new risks are emerging. Consider the impact of rising technologies like Internet of Things, connected devices, sensor-enabled asset tracking, and AI. The key risks associated with connected grids and smart devices could be data and system breach, so take measures to address these in your asset risk strategies.

Find an asset risk management system right for your business

Asset risk management can vary considerably depending on the type of organisation you're running. For example, in a large industrial plant, the operation of machinery can have a significant impact on staff safety and compliance issues. In an office environment, you might be more concerned about asset theft, business interruption due to poor maintenance, and internet attacks on your software and hardware assets. As such, you'll likely find an asset risk management system that matches the unique needs of your business.

These can include tools for tracking metrics, creating triggers, and generating reports. What's right for the business next door will probably be different to what your business needs. Risk management is an essential component of any asset management strategy, and it can help you address the root causes of asset-related issues. Take a systematic approach to understanding your assets, defining risks, and measuring outcomes, and you could successfully manage risks to optimise your asset management strategy. Smart Asset offers a best in class asset management solution with powerful deployment, integration, functionality, and reporting features.

To discuss your business needs, contact us today . Alternatively, get in touch to schedule a free demo now.

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