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The Risk of Consolidating Critical Risks | Don’t Lose Granularity!

Are there people or roles within your organization who are making decisions about critical risks far removed from the critical risks that could be having a massive impact?

In a recent conversation with a frustrated risk manager, the perils of risk consolidation became glaringly evident. The organisation had meticulously identified 40 critical risks to their business, only to have some decision-makers advocate for consolidation and grouping of these risks, ostensibly in the name of efficiency and standardisation.

Among these risks was the crucial issue of tires and rims

A concern particularly pertinent in industries like mining where they have been associated with fatal incidents. The proposal to lump tires and rims under a generic category like “uncontrolled release of pressure” raised significant concerns. Within this catch-all category, the nuances and specificities of risks associated with tires and rims, including causes, consequences, preventative measures, and mitigation strategies, risked being lost.

What’s even more concerning?

Those championing this consolidation were not risk specialists but rather efficiency and cost specialists. This shift in focus from risk management to efficiency optimisation underscores a potentially dangerous trend. By prioritising efficiency over granularity in risk assessment, organisations run the risk of overlooking critical details that could have significant safety implications.

The ramifications for the site contemplating this consolidation are profound. They stand to lose the detailed understanding of risks that could inform targeted and effective risk mitigation strategies. However, this doesn’t have to be the inevitable outcome. It’s crucial for organisations to recognise the importance of maintaining granularity in risk management.

Instead of wholesale consolidation, a more prudent approach involves striking a balance between efficiency and risk management.

While there may be benefits to streamlining processes, it’s imperative not to sacrifice the depth of understanding necessary for effective risk mitigation.

This could involve advocating for the retention of specialised risk assessments for specific hazards like tires and rims, even within a broader risk framework.

Ultimately, the lesson here is clear: beware of the allure of risk consolidation. While it may promise efficiency gains, it could come at the expense of safety and thorough risk management. Organisations must remain vigilant and ensure that decisions regarding risk management prioritise effectiveness and safety above all else.

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