Solution Spotlight: Assess Asset & Failure Mode Risk

Organizations acquire assets to achieve their objectives.  These objectives are aligned to more than financial outcomes.  In the current market landscape, organizations must also consider objectives related to health, safety, environment, social in addition to financial requirements, and have assets in place to achieve those objectives.  According to the ISO 55000:2014 standard, “Effective control and governance of assets by organizations is essential to realize value through managing risk and opportunity, in order to achieve the desired balance of cost, risk and performance.” The ability of a given organization depends very heavily on how well it manages its assets. 

  

The first step in this process of governance is to determine the level of asset risk the organization is exposed to.  If assets are over-maintained, excessive materials, labor, and energy could be needlessly consumed and unnecessary waste is produced.  If assets are under-maintained, failures can occur, put people in harm’s way, exceed the organization’s budgeted impact on the environment and erode financial performance.  Asset Performance Management (APM) is the set of defined processes that produce a lucid and objective view of asset risk.  As the demand for climate-related financial disclosure increases, organizations will become increasingly dependent on APM to enable this critical part of their asset management system.