The business landscape is full of risks, and every department leader has unique ones that impact their daily tasks. For operations leaders, these include supply chain volatility, cybersecurity, fraud, and human error, to name just a few. However, they can overcome these issues with the proper risk management strategies.

Here are a few that every COO should keep in mind.

Common Risks and Proven Strategies to Overcome Them

Cybersecurity

Like almost every business landscape, modern operations are dominated by technology. AI supports data-driven decision-making and predicts equipment failure, IoT tracks real-time data on a product’s physical environment, and Computer Numerical Controls (CNC) automate manufacturing processes. While technology boosts efficiency, it also connects to a global web of risks and fraud.

So how can COOs overcome these risks?

• Investing in the Right Technology: Leaders should invest in secure features such as encryption, multi-factor authentication, endpoint security, etc.
• Spread a Culture of Awareness: COOs must determine the best strategies for identifying risks and vulnerabilities and preventing them from developing into bigger problems. Staff should also be educated on these strategies.
• Develop a Response Plan: Employees and leaders should go beyond merely preventing risks. They should develop plans to respond when incidents happen, to minimize damage.

Supply Risks

Operations need supplies to maintain productivity. However, various factors impact supply availability, including external global, economic, and political issues, internal problems within the supply company, and natural disasters. Though there may not be a way to avoid impact altogether, the following strategies will prepare your company for what’s ahead.

• Paying Attention to Global, Political, Economic, and Weather Trends: COOs can use technology to predict when a political, global, economic, or weather trend is likely to occur. They can order supplies accordingly, ensuring they have enough during shortages.
• Forming Close Vendor Relationships: COOs who form close relationships with vendors will be the first to hear about internal events that may affect supply availability, enabling them to take the appropriate action.
• Work with Multiple Vendors: COOs who work with multiple vendors will always have another company to turn to if one company experiences a shortage.

Human Error

Human error in operations can lead to low-quality output, product shortages, and poor customer service. While unavoidable, it can be minimized with the following techniques.

• Careful Training: A good training regimen should integrate a comprehensive approach, ensuring employees are prepared to handle the necessary tasks. It should include continuous learning to foster ongoing improvement. A positive work environment allows employees to ask questions and learn without fear of failure.
• Automation: Automation can minimize errors, but it also poses some risk. A balance of machines and human oversight typically leads to the best processes.
• Improved Systems and Processes: Teams will work out highly functioning systems by developing standard operating procedures (SOPs) using checklists and reminders and integrating mistake-proof designs.

Compliance Risks

Compliance is a huge factor in operations, impacting consumer and worker safety while mitigating risks. COOs can ensure they maintain compliance in the following ways:

• Employee Safety: Operations teams often operate in warehouses and work with heavy machinery that can pose safety risks. They can minimize risks by familiarizing themselves and their workers with OSHA regulations and using equipment and techniques that reduce injury.
• Consumer Safety: The products developed in operations must also be safe for consumers. Teams must prioritize safe designs that are free of hazards or risks. If risks are present, the product must include a consumer warning. Researching applicable standards and developing quality protocols also ensures safety.
• Audits and Monitoring: Safety regulations should be implemented, but audits and monitoring will help teams monitor risks and correct non-compliance issues.

System Outages

When systems go down, production can grind to a halt, negatively affecting the company’s ability to maintain profitability. Outages can be avoided with these strategies:

• Predictive Maintenance: This type of AI tells you when systems require maintenance so you can perform the necessary fixes before they turn into bigger issues.
• Invest in Cybersecurity: Cyber issues can cause systems to crash. Investing in secure technology and regularly updating systems can prevent problems and keep systems running.
• Use Back-Ups: Companies should always have a backup to turn to, whether that means pivoting to alternate systems when a crash occurs, or backing up information on the cloud or a physical device.

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