Operational Intelligence and Risk Management
Leading Indicators for Early Risk Recognition and Avoidance
Given the thousands of mechanical components and moving parts, innumerable organizational policies and procedures, and potentially dozens of regulatory perspectives; remaining ahead of it all and managing to full compliance is a formidable task.
And, while most organizations have instituted some manner of operational performance management based upon Key Performance Indicators, are the performance indicators and metrics being displayed actually providing the level of insights required? There is a difference between KPI’s and Key Risk Indicators (KRI’s) that provide for early risk identification and mitigation management. And, while your organization has achieved major improvements during the past decade or two, do facility upsets, outages, or incidents continue to occur?
Data Driven Truths and Reality
Thomas Redman explained in Data Driven: Profiting from Your Most Important Business Asset – August 19, 2008:
With a recognition of this trap, the crafting of robust capabilities that can effectively support both Operational Intelligence and Operational Risk Management by doing more than just presenting a value that has been agreed upon as ‘the truth’.
To accomplish both as the outcome of a single initiative, the solution must provide access to all the raw factors associated with the value on the dashboard. The solution must uniformly respect the needs of each functional group such that they can put the number in a context meaningful their role and particular accountabilities. This includes cross-functional transparency and the representation of all data over time; past, present, and most importantly the future.
Technology Induced Complacency
Today’s common practices have replaced time based static paper based reports with new Web based technologies to communicate a facility’s operational status. And, there is no shortage of software tools to create colorful dynamic dashboards. All of them providing an often very impressive display of key performance indicators and navigation capabilities that everyone expects from a browser based Web application.
But, does all the glamour of the dashboard and the slick graphics ensure that it is generating the most accurate insights about the future and what risks may well be developing? Where it can be found that the dashboards of business metrics, while eliminating the cut and paste publishing effort and providing a state-of-the-art look and feel, are still commonly no more functionally informative than the static paper based reports they replaced.
The impressive nature of a well-crafted Web presentation format can easily induce a level of complacency based upon the implied assumption that with all this technology in place, that a ‘green’ indicator truly means that all is good. When in fact that there are factors trending or scenarios developing that can represent significant avoidable risk.
Operational Risk Management
While an OI capability will present key indicators in a manner that clearly identifies the current state of the business, there is a more significant ROI opportunity available; Operational Risk Management. Where a well-crafted OI solution should focus its design on:
- Identifying and drawing a user’s attention using Key Risk Indicators to any current or emerging item or scenario that represents a risk to ensuring regulatory compliance, brand equity, or expected business performance; and,
- Providing broad cross-functional access to any and all information required to put the item or scenario into full context in a clear and meaningful manner.
Assuming this perspective on OI as an Operational Risk Management capability has generated significant benefits within numerous multi-national branded enterprises. And, we are anxious to share and discuss our experience in generating benefits through the practical application of proven technologies with you.
Bruce is a senior Oil and Gas professional with four decades of experience in delivering business benefits through innovative Information Technologies and over thirty years in the real-time process manufacturing industry.
Upon his retirement from Suncor Energy’s Colorado based operations where he managed their integrated ERP deployment and served in a leadership role supporting Suncor’s Operational Excellence program, he is now an Industry Consultant with IT Vizion.
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