• Risk Management
• ship building

Shipbuilding industry is exposed to several different risks from different sources. Especially in the fixed-price operating model, the business risk is formed already at the early phase. The management of these risks can be improved by expanding the perspectives of risk identification and analysis, and by integrating risk management activities into daily operations.

The company’s risk management processes are not necessarily as efficient or beneficial as the company would like, despite the processes meeting the standard requirements. Risk management processes may remain a separate activity outside the rest of the management system, in which case the process may be perceived as heavy and extra work, in which only a few people from the company participate. The perspective of risk management may also remain narrow in the company, if the process is not created to take the entire organization into account. What measures would be possible to develop the company’s risk management more comprehensively in these areas?

Comprehensive perspective

The perspective of risk management can be expanded, for example, by guiding the identification of risks with different classifications. Risk categories can be tailored to the company’s needs and classified under larger top-level categories. In this development work, several categories were tailored to the company’s needs, and the following were selected as top-level categories:

• Strategic risks

• Damage risks

• Operational risks

• Financial risks

In addition to classification, the comprehensiveness of risk management could be developed by analyzing risks that are relevant to the company. In the shipbuilding environment, project phase and process were found to be important targets. The purpose is to analyze after identifying the risk, in addition to the causes, consequences and observability, in which project phase and/or process the risk appears.

Everybody along by integrating

In order to achieve the desired level of efficiency by expanding the perspective, the group of participants in risk management had also expanded. In this development work, there was found no reason why risk management should not belong to every member of the company’s organization. The information flow of risks was defined and described how the risk travels up to the company’s management team when needed. Identification of risks was included in everyone’s responsibility.

Comprehensive risk management can be a challenge in a large organization. In the development work, this challenge was solved by integrating risk management as part of the existing management system, daily activities and processes. Existing meeting practices and seasonal plans play a key role in the integration of risk management into the management system. To support operations, a few new roles were created for risk management and a software solution was tested.

The right risks at the right time

When risk management was made more comprehensive and expanded to the entire organization, the number of identified risks was found to increase, making managing and remembering them at the right time a challenge. It was found that risks should be identified in a timely manner according to the need, so that they would be remembered in a timely manner, as Pietiläinen writes ”Every new crisis causes concern until we forget it and start worrying about the next one” (Pietiläinen 2015, 11).

With customized analyzed items and classifications, the risk management tool became a more efficient and easier to manage. In shipbuilding, the project phases are linked via a schedule, when the linking of risks to a certain project phase made it possible to review the risks for each project phase in a timely manner.

Actions for the development of comprehensive risk management in a nutshell:

• Risk classification
  • Supports comprehensive risk identification
• Analysis tailored to the need
  • Right risks at the right time
• Integration into the management system
  • Light process in daily basis
• Everybody along
  • The valuable expertise and knowledge of the entire organization

Comprehensive risk management process development is a cultural change that takes time. Although these actions support comprehensive risk management, it will not succeed without people’s competence and communication.

References

Pullinen, S. 2024. Comprehensive Risk Management, development work in shipbuilding industry – Theseus, Turku University of Applied Sciences.

Gigerenzer, G., & Pietiläinen, K. 2015. Riskitietoisuus: Miten hyviä päätöksiä tehdään. [Risk awareness: How to make good decisions] Terra Cognita.

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