Ten Steps to Address Risk Management As the world seeks to extricate itself from the worst financial crisis for many decades, many senior risk professionals and independent experts are asking about the roles, responsibilities, and limitations of risk management in the world’s financial institutions. Are the tools available to risk managers fit for the purpose? Is there appropriate expertise and leadership at a senior level to guide risk management? Do risk managers lack authority to rein in the excesses of risk-takers? Is there sufficient understanding of potential risk concentrations across institutions’ full range of operations?
“Managing Risk in Perilous Times: Practical Steps to Accelerate Recovery” is a new Economist Intelligence Unit report, sponsored by ACE, KPMG, SAP, and Towers Perrin, that explores current thinking about risk management and proposes 10 practical steps that financial institutions can take to strengthen their governance and management of risk.
• Risk managers must be given greater authority . Even if risk managers have the right tools, information, and expertise at their disposal, this counts for nothing if they do not have sufficient authority to escalate concerns and curb excessive risk-taking. To address this problem, senior executives should ensure that risk managers have appropriate stature within the organization, and that this is thoroughly understood by those at the sharp end of the business.
• Senior executives must lead risk management from the top . Leadership and tone from the most senior level is essential. There should be appropriate board oversight of risk, usually through the audit committee or a risk committee. The chief executive, as the “owner” of risk in the institution, must be seen to elevate the authority of risk management and build a robust, pervasive risk culture.
• Institutions need to review the level of risk expertise in their organizations, particularly at the highest levels. Financial institutions must be confident that they have sufficient risk expertise at the most senior level. Both executives and nonexecutives should have the tools and information at their disposal to understand the institution’s risk appetite and positions.
• Institutions should pay more attention to the data that populate risk models, and must combine this output with human judgment. No matter how sophisticated, models are limited by the quality of the data feeding them. Even with the best available data, no risk management tool should be used in isolation, and quantitative methods should always be backed up with qualitative approaches and the vital inputs of human judgment and dialogue.
• Stress testing and scenario planning can arm executives with an appropriate response to events. Stress testing must be integrated with the firm’s overall risk management processes, and mechanisms developed to ensure that the results are communicated to senior management in such a way that it is possible for them to formulate a clear response.
For further information and for a free download of the report, visit www.eiuresources.com/mediadir/default.asp?PR=2009032301 .
CMS Conference and Silver Anniversary The Coordinate Metrology Society (CMS) will host its 25th Annual Coordinate Metrology Systems Conference (CMSC), July 20–24, 2009, at the Louisville Marriott Downtown in Louisville, Kentucky. Each year, the CMS community convenes to learn about emerging technologies in the field. To commemorate its silver anniversary, the CMS has launched a new web site to better serve the informational needs of their growing membership.
The five-day conference, the largest such event for large-scale portable 3-D measurement, serves professional and novice users alike. The conference offers many educational opportunities, including white papers presented by expert users from leading companies and universities, informative workshops, user-group meetings, and a large exhibitor hall showcasing portable coordinate measurement systems (PCMMs), software, accessories, peripherals, and inspection- and measurement-service providers. The portable 3-D industrial measurement technology exhibited at the CMSC includes industrial photogrammetric solutions, laser trackers, laser radars, indoor GPS systems, laser scanners, laser projection systems, articulating arms, and more.
Quality Digest has been the sole media sponsor behind this unique conference for four years. It is the only portable 3-D measurement conference that fosters information-sharing amongst attendees and vendors.
For further information, visit www.cmsc.org .
Heart Failure—Is Your Hospital Certified? With the state of the economy, high unemployment, and the exorbitant cost of health care, it’s not unreasonable for heart failure rates to explode. But what about when it happens to you? Are you worried that the hospital you’re going to might not cut the mustard when it comes to quality care for heart failure patients? The Joint Commission, in collaboration with the American Heart Association, has already thought of that; therefore, the organizations have implemented a new Disease-Specific Care Advanced Certification Program in Heart Failure. This certificate of distinction recognizes hospitals that are making exceptional efforts to foster better quality of care and outcomes for heart failure patients.
“Achievement of certification signifies that the services at these organizations have the critical elements to achieve long-term success in improving outcomes,” says Jean Range, executive director of Disease-Specific Care Certification with The Joint Commission. “This certification demonstrates to the community that the care provided is effectively managed to meet the unique and specialized needs of heart failure patients.”
This new advanced certification program requires organizations to meet the following criteria:
• Meet the standards and performance measurement requirements under The Joint Commission’s Disease-Specific Care Certification program.
• Achieve and sustain for 90 days or more at least 85-percent compliance with the five achievement measures of Get With the Guidelines—Heart Failure, the American Heart Association’s hospital-based quality improvement program designed to close the treatment gap in cardiovascular disease.
• Collect data on Joint Commission core measures for heart failure and use this data in ongoing performance improvement activities.
Through the use of the standards and quality improvement tools, the advanced certification program promotes successful efforts in heart failure management, which include a standard method of delivering or coordinating care; implementation of evidence-based clinical practice guidelines; a secure and timely system for sharing information across settings and providers, which safeguards patient rights and privacy; a comprehensive performance improvement program that uses outcomes data to continually enhance existing treatment plans and clinical practices; and clinical practices that support patient self-management.
“By achieving recognition from the American Heart Association through our Get With the Guidelines—Heart Failure program, hospitals have demonstrated their commitment to consistently delivering reliable, effective and high quality care to their heart failure patients,” says Dr. Gregg C. Fonarow, chairman of the American Heart Association’s Get With the Guidelines steering committee. “The Joint Commission’s certification provides an important way for hospitals to distinguish themselves, and more important, it helps raise the bar for heart-failure care nationwide.”
For further information, visit www.jointcommission.org/NewsRoom/NewsReleases/nr_032309.htm .
The Society of Manufacturing Engineers, the world’s leading professional society supporting manufacturing education, recently completed its annual WESTEC event at the Los Angeles Convention Center. This four-day show, running from March 30 through April 2, featured more than 500 exhibitors and hundreds of great new products.
Now that WESTEC is in the rear-view mirror, manufacturers and those that provide the products and services that help them do their jobs better turn their attentions to SME’s 30th-
anniversary EASTEC show. Running from May 19 through May 21 at the Eastern States Exhibition Grounds in West Springfield, Massachusetts, EASTEC is expected to draw more than 14,000 attendees and approximately 600 exhibitors.
EASTEC 2009 is packed with exciting events. Economist Alan Beaulieu from the Institute of Trend Research will open the show with an address to executives and their top clients at an invitation-only breakfast presentation at the Basketball Hall of Fame in nearby Springfield. In addition, more than 500 local high school students will tour the exhibition hall and compete in a design competition as part of EASTEC’s Careers in Technology program. The show will also feature the Alternative and Renewable Energy Resource Center.
“We will be providing a variety of seminars on subjects such as ‘E-Design for Green Products,’ ‘Opportunities With the UMass Wind Energy Center,’ ‘The Positive Impact of Lean and Green on Manufacturing,’ ‘Money-Saving Efficiencies for Compressed Air Systems,’ and much more,” says Kimber L. Farrugia, senior show manager for SME. “Manufacturers will also get to spend one-on-one time with these experts to address their individual questions and objectives.”
For more information on EASTEC, including details about how to exhibit or attend the event, visit www.easteconline.com.
As access to capital and credit increasingly narrows for the manufacturing community, the need to quickly eliminate waste, reduce working capital, and increase cash flow are pivotal to survival.
TBM Consulting Group came up with an interesting approach to helping manufacturers adjust to the economic downturn: “Rapid Rightsizing,” a program that offers support in the form of lean SWAT teams, available for deployment on a global scale to companies in dire need. Using a mix of lean tools and tactics, the teams help clients identify and eliminate wasteful activity associated with working capital, underutilized labor or equipment, excess floor space, cost of poor quality, and energy consumption.
Each project ranges from 90–120 days and results in immediate, sustainable improvements, including reduction in raw material inventory, reduction in finished goods inventory, greater improvement in productivity, and a five- to 10-day reduction in accounts receivable days sales outstanding (DSO).
“The reality right now is that manufacturers are being forced to quickly resize their business due to the rapid constriction of consumer demand for all types of products and services,” says Bill Schwartz, executive vice president of TBM Consulting Group. “‘Rapid Rightsizing’ will allow man-ufacturers to maintain liquidity and profitability by shining a light on wasted costs they can’t see on their own.”
For further information, visit www.tbmcg.com .
Saving the lives of children who suffer from pediatric cancer and other catastrophic childhood diseases was the goal of InfinityQS when the company committed to donate $1 million to St. Jude Children’s Research Hospital.
“We chose to direct all of our charitable giving to a single organization so that we could maximize our impact,” says Michael A. Lyle, president and CEO of InfinityQS.
InfinityQS, a provider of SPC software and services to help manufacturers monitor, control, and improve the quality of their manufacturing operations, has already donated $250,000 of the $1 million commitment to support St. Jude’s groundbreaking research and lifesaving care since identifying the hospital as its sole charitable partner in 2005.
For further information, visit www.infinityqs.com or www.stjude.org .
Testing Labs for New Children’s Products The ANSI-ASQ National Accreditation Board, under the ACLASS brand, will begin accrediting testing laboratories under new Consumer Product Safety Commission requirements for the safe manufacture of children’s products. The Consumer Product Safety Improvement Act (CPSIA) requires that manufacturers and private labelers submit samples of certain children’s products for testing by an independent laboratory before those products can be imported, warehoused, or sold in the United States.
“Third-party testing is a crucial step in the process of assuring parents that the products their children use are safe. ACLASS accreditation demonstrates that a testing laboratory doing this important work is competent,” says Keith Greenaway, vice president of ACLASS. “ACLASS assessors have a high level of technical competence and effective communication skills that enhance the accreditation process and provide genuine value to our customers.”
The requirements apply to any product manufactured more than 90 days after the Commission has announced its conditions for conformance with a specific safety rule. The first item for action will address lead paint. The CPSIA requires that testing be conducted by laboratories accredited to ISO/IEC 17025—“General requirements for the competence of testing and calibration laboratories,” the international standard that defines how laboratories demonstrate that they operate a quality system, are technically competent, and are able to generate technically valid results.
The CPSIA also requires that accrediting bodies be recognized by the International Laboratory Accreditation Cooperation (ILAC), a global organization of laboratory and inspection accreditation bodies. ACLASS became a signatory to the ILAC mutual recognition arrangement in 2006.
For further information, visit www.anab.org/HTMLFiles/docs/CPSC.pdf .
Nicolette Dalpino is Quality Digest's news editor. Calleene Egan is Quality Digest's editorial intern.
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