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Global perspective of Operational Risk Gary Cohn once said, “If you don’t invest in risk management, it doesn’t matter what business you’re in, it’s a risky business”. Operational risk can be defined as the prospect of loss resulting from inadequate or failed procedures, systems or policies (Rouse, 2013). Operational risk is a normal factor for any industry, such risk are environmental, health, safety, quality and compliance (Littlefield, 2012). The biggest challenge will be to minimise those risks as far as possible. The graphs above shows how risk in different industry sectors varied during past couple of years for different countries. The Y-axis represents the expected default frequency (EDF) risk indices, which is used to measure risk in this case. As it can be seen, risk cannot be totally eliminated but it can be reduced. However, the latter is unpredictable and this is why a proper risk management system is important, to prevent such peaks as in the graph above.
Risk management is a process whereby potential harmful situations are identified, assessed controlled and reviewed in order to create a safer work place. This culture was recently implemented with the arrival of ISO 9001:2015, which focusses on risk management at the organizational level (Sousa, Nunes and Lopes, 2015). To build such effective management system, each area of the company shall co-orperate and the outcome of this collaboration will lead to achivement of sustainability, better performance of the industry, reduction in compliance cost and insurance premiums as well as better output product as a bonus.
This culture of risk management is not only adopted by large countries but also by Mauritius having some industries being certified with ISO 9001:2015. Companies such as Phoenix Bev, Ominicane and Gamma construction. Those companies are considered as leaders in their field and this is because of a good collaboraion form all the employees to implement and follow standards such as ISO 9001:2015 among more. Risk assessment forms part of the Occupational Safety and Health Act (OSHA) Management system. This international framework is used for emphasis in Mauritius and in line with the provision of the Act, the Ministry of Labour issued guidelines for emplyers to perform an effrective risk management at their repective workplace (Ministry of Labor, 2008). Shakeel Mohamed, minister of Labor at this time, encouraged on all stakeholder to make optimum use of the issued guidelines to keep a high standard of occupational safty and health prevailling at workplaces. Furthermore, the involvement of Mauritius in the risk management sector does not stop there.
There are actual companies that manages the risk of other businesses in any sector such as PricewaterhouseCoopers also known as PwC. PwC supports companies in the implementation and development of an environment risk management (ERM) framework across all sectors. This includes the process, “information and organisational capabilities underpinning effective ERM, and helping the enterprise to align the ERM with existing core business functions. ” (PwC, 2018). The Bank of Mauritius itself encourages the management of risk in Mauritius. Their board of directors has the prime responsibility to ensure that the country’s risk is managed effectively and efficiently (Bank of Mauritius, 2010). Risk is a worldwide issue for companies; a risky business will never attract investors. Even though many industries implemented ISO 9001:2015 and follow the risk management as well a proper OSHA guideline, risk is a very unpredictable thing and there are things that cannot be controlled such as the accident at Phoenix Bev where an engineering student fell from a roof of 7 meters during his industrial training there (L’Express, 2018).
On the other hand, there is the case where Terragen was not operating properly thus, both thermal stations of Omnicane had to compensate the amount of electricity produced by Terragen to sustain the grid. On this day, the two power station of Omnicane pushed the factories to their limits, having to contribute an extra amount of electricity and on that day, both of the plants tripped and part of the southern region of Mauritius blacked out for several hours. “Bigger risk lead to bigger outcome” That what Omnicane was trying to achieve, selling a larger amount of electricity and generating a larger profit.
However, the factories was able to handle such a load. One may think that it was impossible to know the outcome of such operation hence taking the risk was a viable option but nowadays, with the advancement of technology, such risk could have been avoided by the use of simulation software hence avoid the cost behind the repairs after the factories. Simulation and modelling is a modern way to learn and improve a process in order to reach an increasing efficiency, safety and environmental demands. Simulation became an important tool for decision-making for many industries. ASPEN, ChemCad, COCO, MATLAB are few among the long list of simulation software packages. Despite its widespread industrial implementation in the mining, construction, agricultural, healthcare and production sector worldwide (Designingdigitally, 2018), simulation is not a popular tool in Mauritius. Reasons for that may be the lack of knowledge since those softwares require a minimum amount of expertise and it may be the cost, as a budget need to be dedicated for the latter every year. However, the knowledge of some of the previous mentioned software are being taught at the University of Mauritius which might seem insignificant but will surely impact the processing world in a near future. This shows the willingness of Mauritius of stepping up.
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