Comprehensive Risk Abatement: A Paradigm Shift

Introduction

In manufacturing, health care and service industries, failure of the enterprise is routinely caused by preventable malfunctions at some level of system operation. Historically, the cost per unit time of such a malfunction is called risk. Abatement strategies for risk should comprise at least the three elements common to all strategies:

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  Objectives

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  A Process to achieve the objectives

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  Communication mechanism between Process and Objectives to verify effectiveness

Risk abatement strategies generally rely on a variety of Analytical and Maintenance Procedures such as Lean Operation, Total Productive Maintenance, P-M Analysis, Theory of Constraints, Total Quality Management and many others. But given this plethora of procedures, four questions can be asked:

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  What are the enterprise wide common objectives that should be achievable by any completely effective set of Analytical and Maintenance Procedures?

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  How can a complementary set of Analytical and Maintenance Procedures be selected so that each provides critical information lacking in the others?

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  How can a complementary set of Analytical and Maintenance Procedures be systematically integrated to achieve balanced progress toward common objectives?

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  How can the links between process and objectives be evaluated to ensure that the chosen set of Analytical and Maintenance Procedures is capable of satisfying the objectives?

The 1^st bullet item pertains to enterprise wide common risk abatement objectives. The 2^nd and 3^rd bullet items focus on the risk abatement process. The 4^th bullet item connects the process to the objectives.

This paper is focused on: (1) developing a new, comprehensive, quantitative definition of risk, (2) creating a Comprehensive Risk Abatement Strategy which addresses these four questions and (3) devising an organizational structure to execute that strategy. Most of the paper is directed toward item (2) because the creation of a Comprehensive Risk Abatement Strategy requires substantial innovation and change.

• 1.

  The classical, quantitative definition of risk is somewhat narrow in scope and the various qualitative definitions have limited predictive value. The author proposes a return to the classical, quantitative definition of risk but with more comprehensive concepts of failure and cost.

• 2.

  Most risk abatement strategies in the USA are based on Six Sigma which is known to have a number of shortcomings; a few are summarized in this book chapter. A new, comprehensive, quantitative risk abatement strategy could fill a practical void. The one proposed in this book chapter represents a distinct paradigm shift and may trigger practitioners to think outside the box and develop others. The matrix format might lend itself to Big Data Analytics.

• 3.

  The preferred internal structure for implementing this new strategy may vary with the purpose of the organization. In a manufacturing enterprise, for example, planning could be carried out by a maintenance organization structured for a Lean Environment and operating according to a Lean Process Flow.

Literature Review

The concepts behind FORTUNE and IONICS were extracted from the work of M. Sondalini (Sondalini, 2009). The remainder of this book chapter is an original work by the author. Consequently, the References are primarily intended to provide background material for the current status of risk abatement theory and practice. Computations were carried out using Mathematica.