Understanding the Finer Nuances of Risk Assessment Vs. Risk Management

Risk is an inevitable component of any business. Irrespective of the industry, an enterprise is susceptible to the supplier, quality, safety, and environmental risks. To that end, standards like ISO and ICH emphasize a renewed focus on proactive risk management using a risk-based approach to quality, health, and safety management.

Here is a quick peek into the risk management framework as per ISO 31000 requirements: These Risk management – Guidelines will help businesses from any industry and any size manage risks better.

When it comes to risk management, business leaders and decision-makers must have answers to the following questions:

• What is our risk appetite? What if things go wrong?
• Are we proactively trying to assess risks on an ongoing basis and planning mitigative actions?
• Are we ensuring continuous improvement (CI) of quality and safety management processes?
• Do we have the right process in place for risk assessment and risk management?
• How well-trained is our team from a risk awareness standpoint?
• Is our audit process streamlined and data-driven, so we can drive CI?
• Is the risk management workflow integrated with our QMS and SMS workflows?
• How quickly are we able to trigger a CAPA and RCA process when a potential risk is spotted?
• Are we able to automatically categorize risks by level of risk, potential impact, and urgency?
• Is risk data and information available in one place? Is it easily accessible?
• How are risk-related topics covered during management reviews?
• Who is the single point of contact for risk management?

In this blog, we will focus on the difference between risk assessment and risk management while highlighting the importance of automating the end-to-end risk management and risk mitigation lifecycle.

Difference Between Risk Assessment and Risk Management

Risk assessment is a subset of risk management. While risk management is a continuous process that involves identifying, analyzing, and responding to risk factors, risk assessment focuses on detecting hazards and analyzing all potential risks in the workplace.

Risk assessment consists of three essential components: identification, analysis, and evaluation. In risk identification, leaders and employees must be aware of the different risk possibilities present in the workplace. This can be health, safety, or quality risks. Risk analysis takes the assessment a step further. It is about understanding the consequences of risk present and its impact on the continuity of the work itself. Finally, risk evaluation is about categorizing the risks based on the severity, i.e., the possibility of the risk becoming a reality.

There are various types of risk assessment – fire safety, health and safety, equipment usage, and risk due to the presence of hazardous substances. Alternatively, one can use a risk assessment matrix to visualize the company’s potential risks.

On the other hand, risk management focuses on everything that needs to be done after risks are identified. It is about building risk management strategies based on the risk assessment performed. Having performed risk assessment, the final step in the risk management process is risk control or treatment. It should be an integral part of any company’s process and systems.

It needs a concerted approach to integrating risk management processes with other business processes.

• For instance, if a risk has been identified related to supplier quality, the immediate next step is to trigger a Supplier Corrective Action Process (SCAR).
• In another instance, if there is a safety risk that has been identified in a particular process where hot work is being performed and necessary precautions are not being taken, we need to trigger a CAPA, initiate a Change, and tweak the Permit-to-Work process – so the proper precautions are taken.

It is important to note that to make risk management effective it must be done collectively without siloes.

Automation in Risk Management Workflows

To build a culture of safety and quality, a business must conduct periodic risk assessments and proactively implement controls. However, the biggest challenge in risk management is the lack of effective risk assessment tools. If a company wants to adopt a proactive approach to risk management, having a manual process of identifying, sorting, assessing, and prioritizing risks can be challenging and tedious, even for a small business. The chances for uncertainty are high and can deeply impact the business, both in terms of compliance and business performance.

As automation is now touted as the next big thing in risk assessment and management, investing in a risk management system that supports automation has become an important requirement. If risk management is done in a silo, it becomes ineffective. Maintaining a centralized repository of identified risks at the project, department, or company level can help drive strategic decisions on potential threats.

With automation becoming a driving force for risk management, solutions such as CQ Risk Management Software leverages artificial intelligence to spot potential risks based on history and trending data. Organizations can now take a proactive approach to risk by using the solution’s Einstein Analytics to identify various quality and operational risks in a unified manner.

In 2019, American Operations Corporation (AOC) approached ComplianceQuest to automate risk and safety management workflows after facing several challenges with their legacy systems. Their biggest challenge with their legacy system was that the risk management process operated in a silo and was not integrated with other systems.

The company chose ComplianceQuest for its robust features, including real-time data visibility, flexible workflows, remote accessibility, and top-notch security capabilities. The implementation required minimal configuration as the out-of-box functionality fit well with AOC’s automation goals. To know more, read this case study here.

Cloud-based Risk Management Solution from ComplianceQuest

ComplianceQuest Risk Management Solution offers various benefits. Some of them are –

• All the identified risks are stored in a centralized repository at the project, department, or company level to help the management to make strategic decisions on potential threats.
• Aligned with the latest standards (ISO 31000, ISO 14971, ICH Q9 and risk principles in ISO 9001:2015, ISO 13485:2016, ISO 45001, and ISO 14001)
• The AI and analytics-based solution helps spot potential risks based on history, trending data, and key metrics. Quality and risk management leaders leverage embedded intelligence to proactively focus on risk mitigation.
• Stakeholders can get an accurate picture of the risk landscape to prioritize risks based on severity.
• Leaders can establish metrics to track progress and monitor and measure the success of risk mitigation measures.
• Create a risk-aware culture that helps organizations remain compliant and minimize business risks for faster growth and innovation

Watch the demo video to know more about our Risk Management Solution for Better Safety, Quality and Compliance: https://www.compliancequest.com/demo-video/risk-management-process/