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Risk and opportunity management is a crucial component for any organization seeking to implement an effective quality management system. In this newsletter we will explore what this means and how to implement it in practice.

To use a metaphor, managing risks and opportunities is like being the captain of a ship sailing in uncharted seas. Risks are like unforeseen storms and hidden reefs - they can cause damage to the ship if not properly anticipated and managed. Opportunities, on the other hand, are like favorable currents and strong winds, which, if well taken advantage of, can speed up the voyage and lead to new lands full of promise.

The captain's role is not only to avoid dangers, but also to take advantage of favorable conditions to move forward on the journey. Thus, effective risk and opportunity management can be the difference between successfully sailing to new horizons or being adrift in turbulent waters.

Our succinct, to-the-point guidelines are:

• What is risk and risk management?
• What is Risk Mentality?
• What are the Quality principles related to Risk Management?
• Is it mandatory to implement risk management in a Quality Management System?
• How do you identify a risk?
• I've identified the risk and now how can I prevent it?
• How do you identify an opportunity?
• How can leadership help or worsen the situation?
• The team doesn't help. What are the behavioral difficulties related to risk management?

1 - What is risk and risk management?

Imagine risk as an unexpected deviation - for better or worse - arising from uncertainty. This uncertainty can stem from a lack of information, knowledge or understanding about an event, its probability and its impact. Risk is therefore an intersection between the potential severity of an event and the probability of its occurrence.

Risk management is about preventing problems in the long term so that, in the future, the organization is not constantly dealing with problems, but rather preventing problems from happening, and so it must be related to an approach to processes and non-conformities.

Tip: It is important to remember that risk management is cyclical and integrated with all aspects of quality management, requiring identification, action and continuous monitoring to prevent risks from reoccurring.

2 - What is Risk Mentality?

A central concept in ISO 9001 is the “risk mindset”, which is essential for an effective quality management system. It involves planning and implementing actions to deal with risks and opportunities in order to improve the effectiveness of the quality management system and prevent negative effects.

“Addressing risks and opportunities establishes a basis for increasing the effectiveness of the quality management system, achieving improved results and preventing negative effects” (ISO 9001, item 0.3.3)

3 - What are the Quality principles related to Risk Management?

Three principles are fundamental: Process Approach (managing risks that can impact the processes and results of the Quality Management System), Relationship Management (and adding value for stakeholders by managing quality-related risks) and Improvement (anticipating and responding to internal and external risks/opportunities to improve the organization's performance).

4 - Is it mandatory to implement risk management in a Quality Management System?

Yes, as stipulated in requirement 6.1 of ISO 9001:2015. The standard does not require a formally documented risk management process, but clear and organized documentation can be useful for: identifying new risks and opportunities, training new team members and providing a step-by-step guide to effective actions.

Tip: Focus on the requirements of the standard and simplify the processes related to risks and opportunities in the organization. In other words, the standard doesn't talk about Excel spreadsheets with macro, reports that nobody understands or procedures with dozens of pages.

5 - How do I identify a risk?

• Do a SWOT Analysis, a technique that is useful for identifying the Strengths, Weaknesses, Opportunities, Threats in your project or organization. The threats and weaknesses identified can point to potential risks.

• Bring your team together in Brainstorming Workshops and discuss potential problems that could arise in the course of the project or in the operation of the organization. Brainstorming allows people from different perspectives to identify risks that may not initially be obvious.

• Use a “What If?” Approach: Ask yourself and your team what could go wrong at each stage of the project or operation. This approach can help identify hidden risks.

6 - I've identified the risk and now how can I prevent it?

There are various strategies for dealing with risks, using preventive actions, such as: avoiding the risky situation, facing the risk in order to capture an opportunity, removing the source of the risk, altering its probability or consequences, sharing the risk or consciously deciding to retain the risk.

Tip: Just like corrective action, preventive action must have a person responsible, a completion date and an effectiveness analysis. 

7 - How do I identify an opportunity?

• As mentioned above for risks, SWOT analysis can also be useful for identifying opportunities, representing potential benefits that you can exploit.
• Be aware of emerging trends in your sector. Changes in technology, the market, legislation or industry practices can present new opportunities.
• Ask for feedback from your customers, employees and partners who can offer a unique perspective on potential opportunities. They may have ideas or insights that you may not have considered.
• Keep an eye out for opportunities for improvement, because the opportunity is not always about major changes, it can be as simple as improving an existing process that will lead to greater efficiency, lower costs or better customer satisfaction.

Opportunities can also be identified by adopting new practices, launching innovative products, penetrating new markets, attracting new customers, forming strategic partnerships, among other strategies aligned with organizational or customer needs.

8 - How can leadership help or worsen the situation?

Senior management must demonstrate leadership and commitment to customer focus, ensuring that risks and opportunities are determined and addressed. However, it is important to mention that leadership can also be the element that complicates the whole process.

Lack of clear guidance, indecision or lack of interest in identifying and mitigating risks can lead to a disorganized and ineffective approach. Furthermore, if the leadership does not promote a culture of openness and learning, where mistakes and risks are seen as opportunities for improvement, the team can become resistant or apprehensive about risk management.

9 - The team doesn't help. What are the behavioral difficulties related to risk management?

• Implementing risk management in the organization may require a change in mentality, from a reactive to a preventive approach. This can cause resistance from team members who are used to more traditional approaches.
• There may be a behavioural tendency towards complacency, especially if the organization has not experienced significant negative consequences of risks in the past. This can lead to an underestimation of potential risks; or it can be overlooked in poorly attended meetings.
• There can be a tendency for people to assume that risk management is the responsibility of a single person or department, which can result in negligence and a lack of engagement in the risk management process throughout the organization.

Phrases on the subject

“Man must create opportunities, not just find them” Francis Bacon - English philosopher, politician and writer

“History teaches us that new opportunities are born from the deepest moments of crisis” Giorgio Armani - Fashion Designer

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Risk and opportunity management is a key piece on the board of business success, and our team is ready to help you play this game with mastery. We understand that identifying, assessing and mitigating risks, while taking advantage of emerging opportunities, is essential for your organization's resilience and growth.

Our experts are equipped to guide your company through the complex process of risk management, from preliminary analysis to the implementation of effective strategies. In addition, we are able to help you recognize and capture opportunities that can drive innovation and business development. Contact us to find out how we can help transform today's challenges into tomorrow's achievements, ensuring that your company is always one step ahead in an ever-changing world.

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