Your budget is affected from internal risks from any direction. Delving into the archives, the review of internal risks is as relevant now as it was then.
Oliver* worked as a quality controller for a large manufacturing company. Oliver was involved in checking the manufactured parts for compliance with engineering standards. Several other people worked in his department reviewing internal risks, and they worked in shifts.
A new order had arrived. The client presented several additional requirements for the quality of parts. Oliver and other quality controllers had to monitor compliance with these requirements and immediately report discrepancies to the production manager.
The quality check consisted of measurements of several indicators, each of which had tolerances for deviation from the standard.
The client’s quality requirements were very high, and the dimensional tolerances were tight. Several parts failed the client’s needs. After immediately reporting this to the head of the production and after readjusting the machines, work continued.
In the evening, Oliver’s colleague Charlie* took over. Oliver informed him of the defects he found and asked him to pay attention to verifying this indicator.
Oliver’s shift was ending, and his thoughts turned to meet his girlfriend as he had planned to leave a little earlier. Oliver started checking only a few tolerances that he thought were critical. Oliver decided to skip the hole diameter reading as it was never a problem before and was a large amount of detail, and he risked running late.
When Charlie took over from Oliver, he discovered that the hole diameter was not within specification. Charlie immediately reported this to the head of the production per procedure and diverted the questionable batch. Together they checked the equipment settings and found that the press head was loose, which led to the failure.
The head of the production said that this failure could not have given such a deviation during Charlie’s shift. With a high internal risk rating present, they then decided to retest other batches. They found that the last two sets had the same hole size defect.
In the morning meeting, all quality controllers were updated about the presence of defective parts.
At-risk was
- The business reputation,
- Capital investment in machinery,
- Contract Profit,
- Maintaining their Quality Standard achievement. This list goes on.
The Governance Manager had a controlled self assessment program for internal risk management. The program provided internal auditors support for quality standards but struggled to provide overall accounting risk valuations.
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*names changed.