PRODUCT Risk engineering services & solutions
3.1 PRA Product Risk Analyis
Extensive loss analysis learns that good Management of Change with Structured Product Risk Analysis is the main risk control provision to control the impact /consequences of Product risks.
The PRA-Product Risk Analysis has been developed from the ZHA (Zurich Hazard Analysis) to comply to all area’s and aspects of Product risks including:
* individual products and product modifications; product groups and processes from sourcing to supply
* management tool to analyse and understand the whole processing including complete product chain including hybrid solutions and complex organisations and ESG compliance vulnerabilities related to Product risks
* effective tool for analyse the potential recall and dismantling risks and incident management actions to control the impact of the recall/dismantling.
The PRA is a team based analysis by which risks are identified structurally whereafter the cause/trigger and the related loss scenario are assessed taken into account the consequences for 3rd parties.
The assessed scenario's are qualified by loss consequences/impact and loss probability and are mapped in a risk profile for risk prioritization. The PRA ends with the development of the main risk improvement by priority plus agreement who of the team will supervise the implementation.
The feedback of practical all participants is that the PRA is an effective process and a great method to operate over all discipline and business functions without barriers.
PRE has a broad experience with PRA lead and management and with the training of company’s employees for own team lead and facilitation.
New toolkit for PRA virtual application .
The new toolkit for PRA virtual applications has been developed for product modifications and/or relative straight forward products for the analysis by few experts either as end tool, or as preliminary/skeleton analysis.
3.2 RAP Risk assessment for products
The RAP Risk assessment for products assesses the Processing (activity) risk and Product risk control measures of the products of a company in relation to the Basic risk.The risk assessment includes the sections Loss scenarios and Risk improvement actions.
Loss scenarios with financial amounts are the 3rd dimension and valuable enrichment of risk assessment of products as some 70% of the product loss impact is due to (few) large losses.
The Core format is primary for an assessment at high level that requires limited on-site time, or for a Virtual-desk assessment.
The Full format is an in-depth on-site assessment that covers more (>double) risk conditions for Processing and Product risk control and includes an extended overview of loss scenario’s plus tailored risk improvement.
The RAP is an effective assessment process that can be implemented with limited preparation time and involvement of few employees of the company-product to be assessed. For this reason the Product risk engineering program is mostly started with one or more RAP’s. During the Product risk control process the PRA Product risk analysis is often replacing and/or combined with the (core) RAP.
3.3 Incident analysis and loss dbase
The perception that product losses cannot be predicted is absolute. Overall > 90% of the Product risks have happened earlier and:
> 10 % of losses have happened with similar loss conditions in own company plus
> 30% of losses have happened with similar loss conditions at peers/similar companies.
Many organizations claim that they can fall back on loss analysis, but these analysis and loss data mostly do not include:
+ the loss impact in monetary values
+ other consequences as health/safety
+ technical loss cause and contributing factors and/or effective risk control
In addition the loss data is not, or limited valuated.
The PRE loss analysis is a structured analysis method that covers various sections include technical causes; loss impact in monetary values and health impact plus recall/dismantling.The data that is extracted from the loss can be directly compared with thousands of other losses over all industries; products and regions.
The condensed loss data comprise of some 25 key loss data conditions and the full loss analysis of > 150 conditions for in depth analysis of individual and consolidated losses.
Example of risk control conditions for Recall & dismanling
3.4 Supplies vulnerability assessment for own products
Issues with the supplies/combination of incoming materials and suppliers that result in product deficiencies and claims contribute to 20% of all product losses (# and amount). For Value-Added Reseller as car manufacturers and domestic appliances the impact from supplies is some 35%.
The typical focus of Procurement/purchasing is on pricing and reliability of the supply, while quality conditions are often only one of the many other considerations.
Experience learns that for most products 5 to 10% of the supplies have a high vulnerability for the quality of the own product(s).
Focussing and control of the supplies with a (very) high vulnerability can reduce the supplier’s vulnerability by more than half.
For this a separate vulnerability assessment of the supplies for the own products needs to be in place.
Premium risk engineering has developed an assessment model and tool that can be applied for all kind of products and suppliers and is based on loss data and practical experience.
The assessments can made easy and quick in an Excel, or other format and comprises of 4 sections, namely:
* General info of supply
* Supply material assessment
* Supplier assessment
* Overall assessment in relation to supply volume (single sourcing etc).
Example of Overall assessment with part of Supplier assessment
The PRE supplier’s vulnerability assessment for own products can easily be combined with the supplier’s resilience vulnerability assessment for Business continuity and the ESG supply compliance assessment.
3.5 Incident and recall management
Not all product risks can be prevented, or reduced effectively by Processing safety or Quality controls, so companies need to be prepared to manage the impact of a faulty product and to manage the customer relationship and last but not least to learn from losses.
The PRA (see 3.2) is a very effective methodology to identity major incidents that can not be prevented, or controlled up front. In addition, the PRA helps to identify post incident risk control measures that reduce the consequence of a (major) incident.
A recall plan needs to be open/flexible and should be based on adequate preparation (see PRE one page Tickler list recall & dismantling planning and management).
3.6 Lessons learnt of incidents and losses
The key differentiator for successful and effective Product risk control is learning from losses and incidents.
The champions regarding Lessons learnt do not only review own losses and incidents, but also review losses of peers and implement improvement in case a similar incident could have happened with their own products.
One of the main prerequisites for lessons learnt is one central platform/dbase for customer feedback and incidents in line with the PRE structure for loss data.
Most insurers apply experience-based pricing and as consequence they increase the premium and enforce conditions after (large) losses. As these measures are not truly effective for them and their policyholders, they can better reward companies that really learn from losses (prevent re-occurrence) and abort contracts for customers that take no action.