HAZOP: The Cornerstone of Effective Risk Management

HAZOP

I’ve just read an article.

The first two lines scared the living crap out of me:

Dihydrogen Monoxide. It’s everywhere. It’s in our bodies, it’s in our houses, and it’s in the air we breathe.
If we consume too much of it however, we will die.

Critical Risk Analysis for Our Daily Lives, Harvard

As a self-confessed worrier, you can imagine what happened when I read that.

Sheer. Blind. Panic.

Until I read the next line;

Dihydrogen Monoxide is just the chemical name for water

Yes, I did feel silly. But it did get me thinking.

About ‘risk’ of all things.

Risk is everywhere, in everything we do.

As we’ve just read; there’s a risk of dying from drinking too much water. There’s a risk of catching coronavirus every time we leave the house. Risk of breaking an ankle slipping on spilled coffee at work. Risk of choking on a toast crumb.

So, given that everything in work and life is so risky, how are we able to work and live?!

Through managing the risks we face.

Which brings me to the point of this HAZOP post.

HAZOP (which stands for Hazard and Operability) is a way of managing risks. It’s a technique that identifies potential hazards and functional flaws in new or existing systems and processes.

To get to grips with how to manage risk with HAZOP, we’ll cover the following topics in this Process Street post:

If you need a little convincing, here’s a sneak peek of the free HAZOP Process that we’ve created. Check it out and get it for free below.

Pour yourself a glass of Dihydrogen Monoxide, and let’s get started!

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Basics of Enterprise Risk Management (ERM): How to Get Started

risk management framework

Organizations exist to create value for their stakeholders. By setting objectives, developing strategies, following through and continuously improving processes, value is created.

That’s the ideal situation, at least. In reality, it’s not always as simple as making a plan and sticking to it. There’s always the risk that certain events could affect the success of these plans.

It’s the job of management to make adequate preparations to ensure that systems are in place to continue hitting objectives, even when the beast of unforeseen circumstance rears its head.

Enterprise risk management (ERM) is a direct solution to these kinds of uncertainties, allowing management to oversee the continual creation of value on a complete, integrated, organization-wide level.

By utilizing an effective ERM system, you can rest assured that the organization will see a consistently high success rate in terms of hitting objectives and KPIs.

Stakeholders of all kinds, from customers, suppliers, government and regulatory bodies are all increasingly interested in how businesses are implementing ERM. A well-implemented ERM system could set the foundation for many high-quality, long-term client relationships.

Equally, not having a proper system for enterprise risk management could mean your business is perceived as less competent, and could even result in loss of clients and damage to brand image.

In this post, I’ll discuss:

  • Introduction to and basics of enterprise risk management
  • Benefits of a well-implemented ERM system
  • Core ideas of ERM
  • Examples of different ERM approaches
  • The enterprise risk management process
  • Implementing ERM
  • Automating ERM

To begin with, I’ll start by breaking down the full scope of an ERM system, and some basic definitions.

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