Risk Assessment and Management
Risk is increasingly involved as a component of organizational decision-making. Risk management needs to be ubiquitous within the organization, so that negative impacts can be reduced and opportunities can be leveraged in decisions at all levels. While risk probabilities are often classified in qualitative terms such as low, medium and high, another factor often incorporated is criticality. The combination of probability and criticality can be used relatively easily to establish decision-making priorities for assets. Risk management is integral to decision-making and thus affects all parts of the asset management framework. Risk management and assessment therefore is represented in the policies and processes for identifying, quantifying and mitigating risk and exploiting opportunities, as explicated in IAM’s “Asset Management — an Anatomy” version 3.
Contingency Planning and Resilience Analysis
This topic gained much attention in 2020 as organizations attempted to deal with the impacts of COVID-19. Resilience is defined as an ability to recover from or adjust easily to misfortune or change. It is described by the National Infrastructure Advisory Council (NIAC) as the ability to reduce the magnitude and/or duration of disruptive events. The NIAC also states that the effectiveness of a resilient infrastructure or enterprise depends upon its ability to anticipate, absorb, adapt to and/or rapidly recover from a potentially disruptive event. One way to improve resilience is through contingency planning. This area focuses on the processes and systems to see that an organization can continue to operate its assets to deliver the required level of service in the event of an adverse impact or maintain the safety and integrity of the assets, whether or not they are operating.
Asset Performance and Health Monitoring
Asset performance and health monitoring describes the processes and measures used by an organization to assess the performance and health of its assets using performance indicators. The indicators can be leading or lagging, and they may allow for the prediction of future asset performance and health as well as the assessment of current or historic performance. The term asset health is used in relation to measures that monitor the current (or predicted) condition or capability of an asset (or asset system) to perform its intended function by considering potential modes of failure. Clear criteria are required to understand when there is a deviation between the predicted and actual performance for an asset such that the need for appropriate remedial action can be evaluated. It is important that measures and associated targets align to the organization’s asset management objectives and strategy as described in a strategic asset management plan (SAMP) and provide feedback on, and understanding of, the assets. The SAMP defines the desired current performance, level of service and condition of assets.
Stakeholder Engagement
A stakeholder is a person or organization with a vested interest in an organization’s operations and performance. Stakeholders typically include investors, employees, customers, suppliers, communities, governments, regulators and others. Stakeholders hold an interest in outcomes, so if the outcomes are at risk, stakeholders are exposed to risk.
Stakeholder engagement is a critical but often undervalued activity. Often this involves finding ways to explain an organization’s plans and/or activities to its stakeholders rather than seeking input and directly engaging with them. The IAM describes this subject simply as the methods an organization uses to engage with stakeholders, but despite a simple definition, it is not a simple topic. Stakeholders include parties both internal and external to the organization. Potentially, each stakeholder can have an impact on how an organization performs, although some impacts are more obvious and more direct. The interests and expectations for an organization’s plans and activities may also vary or be directly in conflict between different stakeholders. Stakeholder engagement should support the effective management of assets, including incentives and processes for employees.
Management of Change
Ideally, asset management embraces continuous improvement, which means changing the way that things are done to make improvements. But if organizations are continually changing, the need to understand the impacts of those changes, communicate the changes and remove barriers becomes a core competency. This is what management of change involves. It is focused on technical changes and proactive elimination of risk associated with change, and it overlaps with configuration management. Change management, on the other hand, is focused on people and — as noted by the IAM — people do asset management.
In a world where the rate of change is increasing, both the management of change and change management will require increased focus for effective asset management organizations. In short, value comes from what gets used, not from what gets designed or built. Asset management is the coordinated activity of an organization to realize value from assets. Change is an instrumental part of those coordinated activities.