DEPARTMENTS
RISK
A Holistic Approach to Risk
BY JULIE ROTH
The first installment contains content from three separate interviews with risk leaders from three industrial manufacturing companies. Because they wish to remain anonymous, the article refers to them by initials only. J.J. works in the food and beverage industry, G.H. in industrial tooling and household hardware, and L.B. in the appliance industry. Their responses have been edited.
QUESTIONS AND ANSWERS
What is your company's overall approach to risk management?
J.J.: Our company’s strategy is to increase environmental health and safety performance across every operation and facility. Our strategy is based on an ISO 45001/14001-compliant EHS management system, a digital system, cultural elements that increase leadership involvement and employee engagement, and a Tollgate process to split the strategy in manageable pieces over the next three to five years. [Editor’s note: “Tollgate” is a term from the Six Sigma management technique. The intent of Tollgates is to keep managers from moving to a new phase of Six Sigma until the project leader confirms that the previous phase has been completed.]
We have specific programs that focus on our high-risk areas (chemical management, combustible dust, and contractor safety).
We know that for a risk management program to be successful across the organization, leadership must be brought into and understand the management systems.
G.H.: Our company has a very low tolerance for risk. This low tolerance includes not just our management programs, but also a conservative approach to worker health and safety.
One hundred percent of the locations within our EHS model must participate in our programs and management systems. There is no exemption based on size or risk profile; it does not matter if you are a manufacturing site, distribution site, service operation, or warehouse/office.
The company does have a bi-sector model for managing risk. We have a specific model for manufacturing facilities and a model for service operations. We know that the risk profile is inherently different, which is why we have two different approaches to manage those risks.
L.B.: Our company is reevaluating how we manage and identify risk. In the past, regions and functions would review concerns, events, and changes. This data would then be ranked and statistically reviewed to help identify the top three to five risks across the company as well as highlight potential black swan events. This data would then drive the internal audits, program focus, and reviews. This risk function reports up through the CFO.
We are now in the process of transitioning to a partnership with a third-party firm. This firm has a streamlined process that helps businesses evaluate their risk profile and identify corrective actions and opportunities. This information is provided to senior and executive leaders. Leadership will then take this feedback and develop objectives for the business.
Under both models, the risk portfolio developed is presented to the board of directors.
What do you focus on today that was not on your risk radar five or ten years ago?
J.J.: We are starting to look at sleep patterns, heart rates, and overall worker health. This focuses not only on manufacturing employees, but also on leadership.
We find that there are inherent challenges and risks with data privacy when collecting personal medical data. Despite this, a large group of employees welcomes this initiative.
It is critical to have a discussion with the board of directors on overall worker health. With the board’s support, these initiatives gain better traction.
We are involved in conferences with peers and contractors where we discuss issues and problems we are facing in the industry. We need to collectively work together to drive broad change that impacts our workers and the community.
G.H.: There is a larger focus from investors around environmental and social transparency. This has fine-tuned how we as a corporation look at our risk.
Our goals have a longer time horizon (think 2030 climate goals). External publications and public sentiment are driving forces around these long-term goals.
These goals are driving product innovation, an increased focus on corporate social responsibility, and a more global view of risk.
Our company is focusing more on total worker risk. We are looking at employees as industrial athletes, where we focus on the overall health of the individual.
“We are looking at employees as industrial athletes,
where we focus on the overall health of the individual.”
JULIE ROTH, CIH, is a health, safety, and environmental manager with Baker Hughes, a GE Company based in Minden, Nev. She is currently the secretary of the AIHA Risk Committee.
Send feedback to The Synergist.
We are working to bring new technologies to our manufacturing environments and training our employees to meet the demands of these technologies. Some areas we have focused on include cobots, robots, and increased automation. These areas pose new challenges with guarding, programming, and understanding what standards must be met. There must be a holistic approach to managing the risks new technology introduces, and EHS is a key element to driving successful change.
L.B.: There is more focus on risk from a geopolitical standpoint than there was in the past. Looking at our global footprint and the risk associated with how we conduct business across the globe has been a significant shift over the past few years. There has been a change in how we evaluate our overall corporate risk profile: it is broader, with longer-term objectives. We continue to look at global changes and how they may impact our company, employees, and consumers.
The company is looking at the risks we will be facing in the short-term future. Robotics and the internet of things (IoT) pose both challenges and opportunities that we are aggressively working on. We are focused on how we get in front of the unique risks these new technologies bring to the table. There are many unknowns, and it is difficult to determine what our risk strategy should focus on.
We are trying investing in our team and building capabilities to manage these unseen risks. We have advanced manufacturing teams working on automated manufacturing and automated material handling. The challenge is how quickly the advancements in this space are occurring, thus making it difficult to stay on top of the potential risk.
We continue to focus on wearables and building out our internet-capable appliance offerings. The business is continuing to prove the safety of these technologies. When introducing appliances to the consumer, it is critical that the technology is safe, reliable, and easy to use, and the data is managed appropriately. The business is partnering with other technology companies who have been at the forefront of IoT to better understand and manage our risk profile.
LONG-TERM, GLOBAL RISK
I am grateful to J.J., G.H., and L.B. for offering their unique insights into their companies' overall risk strategies. All three made it clear that a holistic approach to risk is critical for continued success. Risk within companies goes beyond traditional EHS and financial opportunities. Companies are looking beyond their three-to-five-year plans and focusing on long-term, global risk. They are working to ensure they are prepared to handle the challenges of advancements in technology, the political climate, and global dynamics. For a corporate risk program to thrive, all levels within an organization—leadership, employees, consumers, and the board of directors—need to drive the overall vision.
