In today’s global and highly competitive marketplace, every organization faces uncertainty and risk. This is the fundamental premise of the ISO 9001:2015 standard. It could be upside risk as to where a company is going to invest, how it will invest, and what type of business outcomes it expects to achieve based upon its investment risk profile. These are fundamental business model and market issues.
Upside risk focuses on opportunity where an investment can guarantee returns substantially above the firm’s rate to borrow money. Executive management hopes the upside opportunity can also be replicated and scaled globally so there are multiple opportunities to recoup the investment.
Upside risk can be a strategic decision. Upside strategic risk could entail the evaluation of mergers, acquisitions, capital investments, and other upside risk areas. But, upside risk can also entail operational excellence or project management decisions involving how to allocate resources to ensure the successful completion of a project.
Upside risk is a new concept in ISO 9001:2015 with which quality professionals may not be familiar. Most companies have an upside risk evaluation process, such as for capital investment, cash flow, mergers, and acquisitions. But, the challenge is these upside capital decisions are often made in an isolated fashion by senior financial managers focusing on a particular project or opportunity. Senior financial managers and quality professionals are not exposed to each other.
Lesson Learned: The basis of good decision making and operational excellence will be the ability to make better choices under uncertainty and constraints. The hoped for result is organizations will become more competitive and make smarter decisions given the regulatory, competitive, economic, and other forces that impact the organization. This means managing upside risks as well as down side risks
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:
