Quality Progress - May 2013 - (Page 46)

StandardS OutlOOk BY Sandford LieBeSman World View Risk management is a must in today’s global economy the global economy has provided Risk and analysis organizations with many opportunities that Four types of risk worry an organization: didn’t exist even 10 years ago. On the other 1. Strategic risk is concerned with the ronmental standards and specifications. 4. Organizational risk is based on the organization’s structure and is found hand, the internet and extensive outsourc- inability to achieve high-level goals. To on two levels—the entity level and the ing from the United States to countries assess it, management should consider activity level. External factors affecting such as China and Mexico have “flattened” technology changes, creditors’ de- organizational risks include technology the Earth, presenting organizations with mands, competitors’ actions, economic developments, competition and new leg- many new risks. and political conditions, and customer islation. Internal factors are information needs. system processing, quality of person- The designers of the Committee of Sponsoring Organizations of the Tread- 2. Operational risk concentrates on fac- nel hired and changes in management responsibilities. way Commission (COSO) Internal Con- tors that prevent the efficient use of trol—Integrated Framework, the guidance resources. Factors include the manage- document commonly used to ensure com- ment system, customer satisfaction, analysis method is to determine the risk pliance to the Sarbanes-Oxley Act (SOX), the supply chain, revenue recognition, appetite and risk tolerance. This is neces- recognized as early as 1992 the importance natural disasters, information security sary so all who are part of the organization of risk management by including it as one risks and the logistical risks of home- can understand the risk philosophy. Risk element of the system of internal control. land security. appetite is the amount of risk—on a broad Now, ISO 9001 developers are including risk in the 2015 revision. 3. Compliance risk affects the ability to The first step in one particular risk level—an entity is willing to accept. Risk conform to legal and regulatory require- tolerance relates to the amount of risk There is an assessment process that ments. These risks focus on financial, acceptable for each of the entity’s specific can be used to manage risk to an organiza- environmental, health and safety, and objectives. tion’s objectives. The process consists of security factors. Government man- defining the objectives, specifying the risks dated environmental, health and safety to determine the risk level and manage to the objectives and defining methods of requirements cause concern because of the risks of concern. One key tool is an managing the risks. The objectives should the risk of fines, shutdowns or criminal organization’s set of financial and quality be measurable so the effect on them can prosecution. There is also a concern controls. A control is a tool that can be be determined. about conformance to quality and envi- used to identify and manage risks. These After this is decided, there are tools are especially important for using the COSO guidance to comply with SOX and will be important for certification to the next revision of ISO 9001. Financial controls are set up in accordance with generally accepted accounting principles. They provide reasonable assurance that transactions are recorded as necessary and include accurate maintenance of records. They also may be used to provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition or disposition of assets or other examples of fraud. Quality controls are built around qual- 46 QP • www.qualityprogress.com http://www.qualityprogress.com

Table of Contents for the Digital Edition of Quality Progress - May 2013

Up Front
LogOn
Expert Answers
Keeping Current
Mr. Pareto Head
Balancing Act
Avoiding an Avalanche
What Makes You Tick?
Mood Righting
Innovation Imperative
Quality in the First Person
Standards Outlook
Statistics Roundtable
Special Section: ASQ Enterprise and Site Members
3.4 per Million
Career Corner
Career Corner
QP Toolbox
QP Toolbox
QP Reviews
QP Reviews
One Good Idea
One Good Idea

Quality Progress - May 2013

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