Monday, December 30, 2013

Risk Management: Using an Asset Management System to Create a Risk Management Strategy

In order to control costs and maintain your budget, you need to have a solid risk management strategy. Fortunately, you don't have to create a long, detailed plan in order for a risk management strategy to be effective. When you use an asset management system, you can track all of your assets, anticipate problems before they become major issues, and create a simple strategy that is easy for all of your employees to follow.

An asset management system allows you to track the condition of a variety of different infrastructure and equipment within your organization. The system compiles data to display details like the likelihood of failure, the cost of replacement, and the impact of failure. You can use all of this information to plan an air-tight budget for the future, as well as ensuring that every asset is properly taken care of.

When you begin using your asset management system, you'll create an initial assessment by categorizing each asset by the impact of failure and asset unavailability. This allows you to list your most critical assets and rate each asset's condition, likelihood of failure, and risk of failure. Working with your most critical assets first helps you refine your entire system, and once you have a risk management system in place, you can begin adding less critical assets.

Part of refining your system includes determining a time frame that allows you to plan for the future. For example, you may opt to track your organization's assets using a next-year and five-year parameter or you could use five-year and ten-year parameters. When you set parameters for your system it allows you to see the current condition of each asset, as well as create a future plan for routine maintenance. Routine maintenance is critical for every organization; it helps you fix problems consistently, eliminating unnecessary expenses in the future.

Your asset management system uses the condition of your organization's equipment to help you determine the likelihood of failure. Once the likelihood of failure is determined, consequence of the risk is determined and displayed using a simple very low-to-very high rating system. This information helps you determine which issues need taken care of immediately and which problems can be resolved at a later date.

Knowing what your risks and consequences are lets you develop a solid risk management strategy. For example, for some assets it may be better to focus on preventing the risk by completely routine maintenance, but other assets might have issues that will cost more money to repair than it will to accept the risk and create a contingency plan to follow if and when the risk occurs.


Ultimately, it's up to you to determine the best type of risk management strategy for your organization's assets. However, using an asset management system puts all of the information you need to develop a solid plan right in front of you. Not only does this make your job easier and save you time, but it saves your organization money in the long run.

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