General Motors announced a few months ago it was setting a Board level committee to provide continuing oversight over operating risk. Take a look at Risk Committee Charter. It points to the future of operational governance.
Why? GM had a recall of 2.6 million vehicles due to ignition switch problems. The defective switch was linked to accidents that may have killed at least 13 people.
We think that every publicly listed, large organization is or will be soon developing a board level operations risk committee. This is something that every operations excellence professional needs to know and be able to work with in the near future.
So, what’s the purpose of the Board level operations committee?
SCOPE OF GM’S RISK COMMITTEE CHARTER
The Board will review for effectiveness the company’s processes and procedures to address strategic operating risks identified by the Committee including:
- Operating aspects related to ensuring vehicle development safety and security.
- Evaluating and improving product quality.
- Ensuring employee and other persons’ health and safety at all facilities.
- Improving company and vehicle cybersecurity.
- Protecting the company’s access to and right to use key intellectual property (“IP”),
- Managing the supply chain, logistics and country level operating risks.
- Managing supplier and labor relations.
- Ensuring crisis preparedness and disaster recovery capability.
- Responding to any other strategic operating risk identified in the Risk Report and subject to the committee’s oversight and review.
HOW DOES THE RISK COMMITTEE FOCUS ON RISK?
The committee reviews the following with management:
- Developing the company’s risk governance framework.
- Setting the ‘tone at the top’ and risk culture.
- Developing the company’s risk tolerance, identification, assessment and risk management practices.
- Evaluation by management of strategic operating risks.
- Prioritizing risks and delegating risk responsibilities.
- Evaluating risk effectiveness.
- Communicating risks and their management to appropriate stakeholders.
So, do we think most/all large companies will develop board level operational risk oversight.
YES.
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:
