General Motors (GM) in the United States recalled more than 2.6 million autos due to defective ignition switches. And unfortunately the defective switch was linked to accidents that may have killed at least 13 people according to the Wall Street Journal (‘GM Board Forms Operational Risk Committee, June 12, 2014).
BOARD LEVEL RISK COMMITTEE
As a result, the GM board formed an operational risk committee to oversee vehicle safety, cyber security, and product quality standards. Let’s look at each of these. The US Security and Exchange Commission requires the reporting of material cyber risks. Vehicle safety has cost GM $1.7 billion dollars to repair 2.6 million vehicles, not to mention reduced market capitalization and repetitional risk losses.
The interesting point is why does the board oversees product quality standards? One reason why the GM board now has a focus on operational product quality is because it understands that the lack of adequate risk – controls can diminish the company’s reputation and lower its market capitalization. The oversight of operational risk hopefully would provide assurance to investors and other critical stakeholder that the organization knows how to protect and sustain enterprise value. Also, GM’s oversight, control, and operational risk discipline should drive continual risk improvement of its operational capabilities to meet customer requirements and comply with regulations.
So, a key question is how will ISO 16949, the auto quality management system standard, provide adequate risk management processes and tools to anticipate and effectively evaluate and ultimately manage quality uncertainties within GM?
The board now wants to know that operational risks and opportunities are systematically identified, assessed, and cost-effectively risk managed.
SO, WHAT HAPPENED?
The independent investigator was retained. And, the GM CEO denounced a “patterns of incompetence and neglect” to recall autos with the defective ignition switch. The objective is that the GM board and executives will now be more knowledgeable of operational and supply management risks.
So, this begs the critical question: What happened to GM’s quality organization during this period? And more importantly, what is the status of quality in other premier organizations?
Bio:
Greg Hutchins PE and CERM (503.233.101 & GregH@QualityPlusEngineering.com) is the founder of:
CERMAcademy.com
800Compete.com
QualityPlusEngineering.com
WorkingIt.com
He is the evangelist behind Future of Quality: Risk®. He is currently working on the Future of Work and machine learning projects.
He is a frequent speaker and expert on Supply Chain Risk Management and cyber security. His current books available on all platform are shown below:
