Risk management is topical in the physical asset management arena. AM experts and industry practitioners advocate the integration of relevant and purposeful risk management practices for the optimal utilisation of physical assets.
What is risk management?
Risk management is the identification, assessment and prioritisation of risks and the associated plans and actions to minimise the probability of occurrence and the negative impact that these risks might have on an organisation. This leads to the question: what is considered a risk? ISO 310001 defines risk as “the effect of uncertainty on objectives”, which means a risk arises from uncertainty related to financial markets, project failures, legal actions, accidents, natural disasters, business discontinuity, etc.
The effective management of an organisation’s risks is an essential part of business continuity. All risks can never be fully avoided, and some level of residual risk needs to be accepted. However, it is important that all risks should be isolated, defined and managed within financial and practical constraints.