RISK MANAGEMENT JUNE 2019
SURVIVAL OF THE FITTEST
The results the latest DuPont Sustainable Solutions Operations Risk Management
Survey demonstrate the importance of managing the risks that threaten growth
BY NICHOLAS BAHR, GLOBAL PRACTICE LEADER, DUPONT SUSTAINABLE SOLUTIONS
Since its creation in 1984, the FTSE 100 has
changed beyond all recognition. Today,
only 28 of the original 100 companies
remain. Although some have been taken
over, many have failed to survive in any
form and others have dropped way down
the listing. Imperial College Business School cites
failure to anticipate or react to new technology,
changing customer behaviour or new competitors
as the main reason why larger UK enterprises die.
Clearly, fl exibility and adaptability are key to
survival, but poor management of risks is obviously
very damaging. Boeing’s stock price fell by more
than 11% in the wake of the 737 Max 8 crash on
10 March, BP’s share price plummeted by 54%
on the NYSE between 20 April and 25 June 2010
and although ICL, the company that owned the
Stockline Plastics factory which exploded in
Glasgow in May 2004, was not listed at the time,
it still faced a hefty fi ne. Large companies may be
able to survive such disasters, but how are most
companies currently managing the risks posed
by new technology, a fl ood of data, complex
international supply chains,
ageing assets, natural disasters,
trade wars, price pressure on
raw materials, and cybercrime?
The results of the 2018 Global
Operations Risk Management
Survey (http://bit.ly/orm-mfgmng)
by international operations and
risk management consultancy
DuPont Sustainable Solutions
(DSS) paint a mixed picture.
Despite growth predictions
of 3% for 2019 and 2020, the
UN Department of Economic
& Social Aff airs warns that
“the global economy is facing
a confl uence of risks, which
could severely disrupt economic
activity and infl ict signifi cant
damage on longer-term
development prospects”.
The results of the DSS survey,
however, show that many
executives are failing to prepare
suffi ciently for potentially
devastating risks because
declining or low Lost Time
Injury (LTI) rates lull them into
a false sense of security. While
78% of the executives surveyed
agreed that low incident rates
do not correlate to reduced risk,
almost as many (66%) admitted
to feeling safe when they saw
data indicating dwindling
incident rates or fi gures trending
towards zero.
The wrong fi gures
The fact that low incident
rates do not equate to ‘no
risk’ is repeatedly borne out
by industrial incidents. In
2018, Apple was forced to
halt production of its iPhone
8 for approximately two
Insu cient
risk awareness
can jeopardise
companies’
long-term future
34 www.manufacturingmanagement.co.uk
/orm-mfgmng)
/www.manufacturingmanagement.co.uk