ISO 9001:2015 – Risk-Based Thinking

ISO 9001:2015 – Risk-Based Thinking

One of the key changes in the 2015 revision of ISO 9001 is to establish a systematic approach to risk, rather than treating it as a single component of a quality management system. In previous editions of ISO 9001, a clause on preventive action was separated from the whole. Now the risk is considered and included throughout the standard.  By taking a risk-based approach, an organization becomes proactive rather than purely reactive, preventing or reducing undesired effects and promoting continual improvement. Preventive action is automatic when a management system is risk-based. Risk-based thinking is something we all do automatically and often sub-consciously. for e.g, if I wish to cross a road I look for traffic before I begin. I will not step in front of a moving car. The concept of risk has always been implicit in ISO 9001 – this revision makes it more explicit and builds it into the whole management system. The risk is considered from the beginning and throughout the standard, making preventive action part of strategic planning as well as operation and review.  Risk-based thinking is already part of the process approach. For e.g to cross the road I may go directly or I may use a nearby footbridge. Which process I choose will be determined by considering the risks.  Risk-based thinking makes preventive action part of the routine.  Risk is often thought of only in a negative sense. Risk-based thinking can also help to identify opportunities. This can be considered to be the positive side of risk.  Crossing the road directly gives me an opportunity to reach the other side quickly, but there is an increased risk of injury from moving cars.  The risk of using a footbridge is that I may be delayed. The opportunity of using a footbridge is that there is less chance of being injured by a car. Opportunity is not always directly related to risk but it is always related to the objectives. By considering a situation it may be possible to identify opportunities to improve. The opportunities for improvement, a subway leading directly under the road, pedestrian traffic lights, or  diverting the road so that the area has no traffic. It is necessary to analyze the opportunities and consider which can or should be acted on. Both the impact and feasibility of taking an opportunity must be considered. Whatever action is taken will change the context and the risks and these must then be reconsidered.

Identify what your risks are – it depends on context

Example:

If I cross a busy road with many fast-moving cars the risks are not the same as if the road is small with very few moving cars. It is also necessary to consider such things as weather, visibility, personal mobility, and specific personal objectives.

Understand your risks

What is acceptable, what is unacceptable? What advantages or disadvantages are there to one process over another?

Example:

Objective:  I need to safely cross a road to reach a meeting at a given time.

• It is UNACCEPTABLE to be injured.
• It is UNACCEPTABLE to be late.

Reaching my goal more quickly must be balanced against the likelihood of injury. It is more important that I reach my meeting uninjured than it is for me to reach my meeting on time. It may be ACCEPTABLE to delay arriving at the other side of the road by using a footbridge if the likelihood of being injured by crossing the road directly is high. I analyze the situation. The footbridge is 200 meters away and will add time to my journey. The weather is good, the visibility is good and I can see that the road does not have many cars at this time.  I decide that walking directly across the road carries an acceptably low level of risk of injury and will help me reach my meeting on time.

The Main Objectives Of ISO 9001 to provide confidence in the organization’s ability to consistently provide customers with conforming goods and services and to enhance customer satisfaction. The concept of “risk” in the context of ISO 9001 relates to the uncertainty in achieving these objectives.

Plan actions to address the risks

How can I avoid or eliminate the risk? How can I mitigate risks?

Example:

I could eliminate the risk of injury caused by being hit by a vehicle if I use the footbridge but I have already decided that the risk involved in crossing the road is acceptable. Now I plan how to reduce either the likelihood or the impact of the injury. I cannot reasonably expect to control the impact of a car hitting me. I can reduce the probability of being hit by a car.  I plan to cross at a time when there are no cars moving near me and so reduce the likelihood of an accident. I also plan to cross the road at a place where I have good visibility.

Implement the plan – take action

Example:

 I move to the side of the road, check there are no barriers to the crossing. I check there are no cars coming. I continue to look for cars whilst crossing the road.

Check the effectiveness of the action – does it work?

Example:

 I arrive at the other side of the road unharmed and on time:  this plan worked and undesired effects have been avoided.

Learn from experience – improve

Example:

I repeat the plan over several days, at different times and in different weather conditions. This gives me data to understand that changing context (time, weather, the quantity of cars) directly affects the effectiveness of the plan and increases the probability that I will not achieve my objectives (being on time and avoiding injury). Experience teaches me that crossing the road at certain times of the day is very difficult because there are too many cars. To limit the risk I revise and improve my process by using the footbridge at these times.  I continue to analyze the effectiveness of the processes and revise them when the context changes.  I also continue to consider innovative opportunities:

• can I move the meeting place so that the road does not have to be crossed?
• can I change the time of the meeting so that I cross the road when it is quiet?
• can we meet electronically?

DEFINITIONS

ISO 9001:2015 defines risk as to the effect of uncertainty on an expected result.

1. An effect is a deviation from the expected – positive or negative.
2. Risk is about what could happen and what the effect of this happening might be.
3. Risk also considers how likely it is.

The target of a management system is to achieve conformity and customer satisfaction.

Explanation:

Risk is the possibility of events or activities impeding the achievement of an organization’s strategic and operational objectives. It is the volatility of potential outcomes. Risk can be defined by two  parameters

• Severity (This is the Seriousness of the harm)
• Probability (This is the Probability that the harm will occur)

Risk as Currently Stated in ISO 9001:2015

ISO 9001:2015 uses risk-based thinking to achieve this in the following way:

• Clause 4 (Context) the organization is required to determine the risks which may affect this. The organization is also required to determine its QMS processes and to address its risks and opportunities
• Clause 5 (Leadership) top management are required to commit to ensuring Clause 4 is followed. Top management is required to
  • Promote awareness of risk-based thinking
  • Determine and address risks and opportunities that can affect product /service conformity
• Clause 6 (Planning)  The organization is required to identify risks and opportunities related to QMS performance and take appropriate actions to address them
• Clause 7 (Support) the organization is required to determine and provide necessary resources (risk is implicit whenever “suitable” or “appropriate” is mentioned)
• Clause 8 (Operation)the organization is required to manage its operational processes (risk is implicit whenever “suitable” or “appropriate” is mentioned). The organization is required to implement processes to address risks and opportunities.
• Clause 9 (Performance evaluation) the organization is required to monitor, measure, analyze and evaluate the risks and opportunities.
• Clause 10 (Improvement) the organization is required to correct, prevent or reduce undesired effects and improve the QMS and update risks and opportunities.

ISO 9001:2015 subclause 4.4.1—QMS and it processes

“ The organization shall establish, implement, maintain and continually improve a quality management system, including the processes needed and their interactions, in accordance with the requirements of this International Standard. The organization shall determine the processes needed for the quality management system and their application throughout the organization and shall determine: organization shall: address the risks and opportunities as determined in accordance with the requirements of 6.1″

The organization must integrate the actions to address risks and opportunities into its QMS processes using the PDCA cycle. Not all processes of a quality management system represent the same level of risk in terms of the organization’s ability to meet its objectives and the effects of uncertainty are not the same for all organizations. Each organization is therefore responsible for the extent it applies risk-based thinking and the actions it takes to address risk, including whether or not to retain documented information as evidence of its determination of risks. 5.1.2—Leadership and commitment with respect to the needs and expectations of customers

ISO 9001:2015 subclause 5.1.1—General under leadership and commitment

“Top management shall demonstrate leadership and commitment with respect to the quality management system by d) promoting the use of the process approach and risk-based thinking;“

ISO 9001:2015 requires that when planning its QMS, the top management must implement and promote a culture of risk-based thinking throughout the organization to determine and address the risks and opportunities associated with providing assurance that the QMS can achieve its intended result(s); provide conforming products and services, enhance customer satisfaction; promote desirable effects and improvement; and prevent, or mitigate, undesired effects.

ISO 9001:2015 subclause 5.1.2—Customer focus

“Top management shall demonstrate leadership and commitment with respect to customer focus by ensuring that:
b) the risks and opportunities that can affect conformity of products and services and ability to enhance customer satisfaction are determined and addressed;”

This can be achieved by establishing process capabilities for each process from manufacturing and assembly to packaging and product delivery and installation. The computation of a simple indicator of process capability (Cp) or the adjustment of the process capability toward a specification (Cpk) would help managers quantify their process risk. The objective would be to achieve the highest economically feasible capability for each process, thus minimizing the risk of producing so-called unintended output.

6.1—Actions to address risks and opportunities

6.1.1 “When planning for the quality management system, the organization shall consider the issues referred to in 4.1 and the requirements referred to in 4.2 and determine the risks and opportunities that need to be addressed to:
a) giving assurance that the quality management system can achieve its intended result(s)
b) enhance desirable effects
c) prevent, or reduce, undesired effects, and
d) achieve improvement.”
6.1.2 “The organization shall plan:
a) actions to address these risks and opportunities, and
b) how to
1) integrate and implement the actions into its quality management system processes (see 4.4), and
2) evaluate the effectiveness of these actions.
Any actions taken to address risks and opportunities shall be proportionate to the potential impact on the conformity of goods and services and customer satisfaction.”

The organization must integrate the actions to address these risks and opportunities into its QMS processes using the PDCA cycle. Not all processes of a quality management system represent the same level of risk in terms of the organization’s ability to meet its objectives and the effects of uncertainty are not the same for all organizations.  Each organization is therefore responsible for the extent it applies risk-based thinking and the actions it takes to address risk, including whether or not to retain documented information as evidence of its determination of risks.  When planning its QMS, the organization must consider the risks and opportunities presented by external and internal issues as well as the needs and expectations of interested parties, relevant to its purpose and strategic direction, Means to address risks may include avoiding risk, taking a risk in order to avail an opportunity, removing the source of the risk, changing the likelihood or consequences, sharing the risk, or making an informed decision to retain the risk. Opportunities can derive from favorable circumstances that can lead to the use of new practices, launch new products, enter new markets, address new clients, reduce waste or improve productivity, grow relationships, use new technology, and other desirable and viable opportunities to facilitate the organization in achieving its strategic direction and enhance customer satisfaction.

9.1.3 – Analysis and evaluation

“The organization shall analyze and evaluate appropriate data and information arising from monitoring and measurement. The results of the analysis shall be used to evaluate: e) the effectiveness of actions taken to address risks and opportunities;”

Planning also requires monitoring and measuring these actions and gathering, analyzing, and evaluating appropriate data and information to determine the effectiveness of such actions.

9.3.2 – Management review Inputs

” The management review shall be planned and carried out taking into consideration:  e) the effectiveness of actions taken to address risks and opportunities (see 6.1)“

This planning must be periodically reviewed and updated as necessary when taking corrective actions or at management reviews. These actions must be proportional to the potential impact on the conformity of products and services.

10.2.1- Non Conformity and Corrective action

“When a nonconformity occurs, including any arising from complaints, the organization shall:
e) update risks and opportunities determined during planning, if necessary;”
One could do failure mode effects and analysis (FMEA) to show that the risk-priority number has decreased as a result of a process change. This would not be difficult to do but full of uncertainties because FMEA is based on subjective assessment.

Use of risk based thinking.

By considering risk-based thinking throughout the organization the likelihood of achieving stated objectives is improved, the output is more consistent and customers can be confident that they will receive the expected product or service.

Risk-based thinking, therefore:

• builds a strong knowledge base
• establishes a proactive culture of improvement
• assures consistency of quality of goods or services
• improves customer confidence and satisfaction

Use of Risk Register

The risk register or risk log becomes essential as it records identified risks, their severity, and the actions steps to be taken. It can be a simple document, spreadsheet, or database system, but the most effective format is a table.  A table presents a great deal of information in just a few pages. There is no standard list of components that should be included in the risk register. Some of the most widely used components are:

• Dates: As the register is a living document, it is important to record the date that risks are identified or modified. Optional dates to include are the target and completion dates.
• Description of the Risk: A phrase that describes the risk.
• Risk Type (business, project, stage):  Business risks relate to the delivery of achieved benefit;, project risks relate to the management of the project such as timeframes and resources, and stage risks are risks associated with a specific stage of the plan.
• Likelihood of Occurrence: Provides an assessment on how likely it is that this risk will occur. Examples are L-Low >30%)(, M-Medium (31- 70%), H-High (>70%).
• The severity of Effect: Provides an assessment of the impact that the occurrence of this risk would have on the project.
• Countermeasures: Actions to be taken to prevent, reduce, or transfer the risk. This may include the production of contingency plans.
• Owner: The individual responsible for ensuring that risks are appropriately engaged with countermeasures undertaken.
• Status: Indicates whether this is a current risk or if the risk can no longer arise and impact the project. Example classifications are C-current or E-ended.
• Other columns such as quantitative value can also be added if appropriate.

Risk-driven approach in  organizational processes.

Identify what risks and opportunities are – it depends on the context. For example, If I cross a busy road with many fast-moving cars the risks are not the same as if the road is small with very few moving cars. It is also necessary to consider such things as weather, visibility, personal mobility, and specific personal objectives.

1. Analyze and prioritize your risks and opportunities. What risk is acceptable, what is unacceptable? What advantages or disadvantages are there to one process over another? for  Example If  I need to safely cross a road to reach a meeting at a given time. It is UNACCEPTABLE to be injured. It is UNACCEPTABLE to be late. The opportunity of reaching my goal more quickly must be balanced against the likelihood of injury. It is more important that I reach my meeting uninjured than it is for me to reach my meeting on time. It may be ACCEPTABLE to delay arriving at the other side of the road by using a footbridge if the likelihood of being injured by crossing the road directly is high. I analyze the situation. The footbridge is 200 meters away and will add time to my journey. The weather is good, the visibility is good and I can see that the road does not have many cars at this time. I decide that walking directly across the road carries an acceptably low level of risk of injury and an opportunity to reach my meeting on time.
2. Plan actions to address the risks How can I avoid or eliminate the risk? How can I mitigate risks? For example, I could eliminate the risk of injury by using the footbridge but I have already decided that the risk involved in crossing the road is acceptable. Now I plan how to reduce the likelihood of injury and/or the effect of an injury. I cannot reasonably expect to control the effect of a car hitting me. I can reduce the probability of being hit by a car. I plan to cross at a time when there are no cars moving near me and so reduce the likelihood of an accident. I also choose to cross the road at a place where I have good visibility and can safely stop in the middle to re-assess the number of moving cars, further reducing the probability of an accident
3. Implement the plan – take action For example I move to the side of the road, check there are no barriers to the crossing and that there is a safe place in the center of the moving traffic. I check there are no cars coming. I cross half of the road and stop in the central safe place. I assess the situation again and then cross the second part of the road.
4. Check the effectiveness of the actions – does it work? For Example, I arrive at the other side of the road unharmed and on time: this plan worked and undesired outcomes have been avoided.
5. Learn from experience – continual improvement, For example, I repeat the plan over several days, at different times, and in different weather conditions. This gives me data to understand that changing context (time, weather, the quantity of cars) directly affects the effectiveness of the plan and increases the probability that I will not achieve my objectives of being on time and avoiding injury. Experience teaches me that crossing the road at certain times of the day is very difficult because there are too many cars. To limit the risk I revise and improve my process by using the footbridge at these times.  continue to analyze the effectiveness of the processes and revise them when the context changes. I also continue to consider innovative opportunities such as Can I move the meeting place so that the road does not have to be crossed? Can I change the time of the meeting so that I cross the road when it is quiet? Can we meet electronically?