Top Risks for Operations Teams
Your company’s operations team keeps customers happy, employees operating at full capacity, resources flowing through the enterprise, and business owners satisfied. Like other departments within a corporation, operations teams face mounting risks and challenges in doing their jobs effectively and efficiently.
While no one data point will serve as a single magical metric telling you if you’re succeeding or not, tracking data – and then responding to the information you learn – is critical to organizational viability. Yet, most enterprises measure very little, and what they do measure frequently doesn’t matter.
Ask yourself: what makes a good metric? Does your current measurement system align with your organization’s goals? Do you know how to develop and test a measurement system from scratch? Decide what you want to measure and why. Then use the dashboard and other visuals to help your executive team understand the reality you have just measured.
2. Processing change readiness
If your organization is unable to weather change, it will not survive in the long run. Operations teams need to effectively implement the process, product, or service improvements quickly enough to keep pace with changing requirements.
In 2004, Blockbuster employed 84,300 people and owned 9,094 stores worldwide. Its brand was an icon in the American media industry. Six years later, Blockbuster filed for bankruptcy. Today, it is remembered as a cautionary tale of a company that failed to keep pace with changes in consumer behavior and new innovations, specifically the rise of cable-cutting and streaming services. The leader in streaming, Netflix, offered to sell its company to Blockbuster in 2000 for $50 million. Blockbuster said no.
3. Operational excellence
While bringing a company from concept to reality is hard, keeping one alive is even harder. Operational risk levels rise when companies employ ineffective operating practices or fail to clearly assign and enforce accountabilities. Good companies go bad when their customer focus or product focus so eclipses their organizational strength that their infrastructure can no longer support the weight of their vision.
Good operational risk management means building a skilled, organization-wide operations team and then resourcing and empowering that team in a way that fosters organizational excellence.
4. Lack of segregation of duties
The phrase segregation of duties refers to the policies designed to keep employees from accidentally engaging in errors or from purposefully committing a fraudulent act. This might mean having two or more employees open the mail, splitting up accounting processes between departments, and dividing asset management from paying expenses. Typically, an internal auditor makes sure this process is working. Segregation of duties offers several advantages, including internal controls, fraud detection, and preventing asset misappropriation.
When companies fail to segregate duties, they place themselves and their staff members at enormous risk up to and including criminal investigation.
In 2016, an office manager in Fitchburg, MA pled guilty to embezzling more than $1.3 million from her employer, a life science technology firm. The 47-year-old Dawnmarie Prince had carried out her embezzlement scheme for 10 years at the same company. Using her position as office manager, she took sole responsibility for all accounts payable. This allowed her to write checks from the company to herself or her son, forge her boss’ signature, and deposit the checks in her personal account.
Prince would then enter the amount of the check into the company’s software program and mark it as paid to a legitimate vendor. When the bank sent copies of the negotiated checks back, Prince – who also opened the mail – simply removed and discarded the copies. Lack of segregation of duties allowed Prince to establish and perpetuate her scheme for a decade.
Risk Management Strategies for Operations Teams
Although often working unseen, operations teams play a pivotal role in organizational success. Managing their risks allows companies to ensure that their corporate infrastructure is strong and can bear the weight of their products and customers. Resolver’s risk management software help companies ensure that they are accurately capturing, monitoring and controlling their risks.