Process Risk Analysis - an introduction.
You might have seen your fair share of risk matrices, and you've probably met enough risk advisors, risk analysts, and you've been assigned a few risk mitigation tasks from that one workshop that lasted a week when it could have been wrapped up in two days. Or maybe you haven't done or seen any of these people and things (good for you!) but you imagine the kinds of people who are really into risk analysis must be the ones that go around muttering to themselves constantly calculating the probabilities that something bad will happen, while consequently avoiding anything that remotely resembles fun. "Risk Analysis" even sounds boring. A Risk Analyst is -not- the person you want to be stuck small-talking at your next soiree.
Well, we process managers do not want to miss out an all the fun, so we have created our own risk analysis framework.
Process Risk Analysis can be broken down into three focus areas: Short-term, mid-term, and, you guessed it, long-term. When process managers look at process risk, we are analyzing your process landscape step-by-step to make sure your business is robust today and will continue operating optimally in the future. The three types of risk are summarized as follows:
Short-term risk
Simply put, short-term risk refers to current holes in the process. This could be missing mapping or documentation, unclear work instructions, or conflicting processes. These issues directly lead to process diversions, quality escapes, and lost efficiency. Often, we see this in organizations where certain key people have most of the operating information in their heads, and knowledge is passed on from person-to-person rather that through a centralized process document. Short-term risks are responsible for compliance and governance problems and generally need to be addressed urgently.
Much like a leaking boat; once you can fix the holes in your process landscape, you'll find that your operations flow better; and having well documented processes puts your organization in a better position to identify areas of improvement.
Mid-term risk
If you have a reasonably organized process landscape without the aforementioned holes; congratulations. You're already better than most other companies. But how does your competition stack-up? Mid-term process risk analysis looks at areas where your stable processes might be outdated and could easily be improved with simple changes that do not require an entire process overhaul. For example, if users are emailing contracts internally for review and updates, implementing a document management system with contract approval workflows would essentially use the same process but make the system more efficient.
One way to look at mid-term process risk is to consider it as a competitive advantage. These are operational areas where you could easily improve your delivery lead time or cut back on overhead costs to give you the edge on your competitors. If you don't make these changes, then be sure that your competitor will be making them and that will leave you to play catch-up.
This is the realm of Digital Transformation.
Long-term risk
How often do you think about your operational processes when planning corporate strategy? For most C-level executives, the answer is rarely - and this leads to long-term process risks. Corporate strategy planning is looking 5 years, 10 years ahead and planning where the company will be and how it will grow. Are you going from a 200-person organization to a 1,500-person organization with presence in 5 new countries? Fantastic! How tragic would it be to make all those carefully planned moves in the market only to be bogged down by inefficient HR onboarding processes? What about the supplier-management workflows that now need to work in multiple languages and consider local contractual laws?
Long-term process risk analysis considers the strategic plan of the company and highlights the important business processes that will have to be updated in order to scale with the company's plan. This ensures that processes are updated proactively and are in place for each stage of growth, rather than reactively.
So as you can see, process risk analysis provides a succinct snapshot of your operations and is an integral part to your company's strategy. Silvermist Consulting reviews your current process landscape, provides recommendations, and can assist in implementing changes and training your team to the new processes. Call us to learn more.