Mckinsey and Company published an article name “Digital Risk – Transformation of Risk Management for the 2020s.”.
This article is an investigation of this topic in the Banking Industry.
Please, let me give a summary of it.
The banking industry gets two benefits by implementing digitization.
- Cost reduction and,
- improving risk’s identification effectiveness.
The banking industry conducts hazards and risks assessment every day by risk management professional because of money investments and transactions.
Will digital transformation change process safety management?
Although the answer is YES, do not panic or get overwhelmed.
Also, they recommend addressing regulatory expectations in critical areas of your organizations such as process safety, communication, reporting, innovation or operational excellence.
It is essential to know what digital risk is; I quote from Mckinsey and Company “Digital risk is a term encompassing all digital enablements that improve risk effectiveness and efficiency—especially process automation, decision automation, and digitized monitoring and early warning. The approach uses work-flow automation, optical character recognition, advanced analytics (including machine learning and artificial intelligence), and new data sources, as well as the application of robotics to processes and interfaces. Essentially, digital risk implies a concerted adjustment of processes, data, analytics and IT, and the overall organizational setup, including talent and culture.”
I want to stress the last word of this definition “Culture.” Digital transformation and the identification of digital risk requires the organization to be innovative.
There are three steps to consider establishing before going to digitize your organization.
Firstly, the organization needs to assess what processes will go to the process. If there are some PSM covered processes, the specialist needs to evaluate the current state of the program.
Secondly, you need to collect data to make the change. The organization can follow this model:
Thirdly, the organization needs to create a very robust innovation culture. The fourth industrial revolution has four pillars; innovation is one of them. As you can see, it is not only technology; the organization must optimize and understand ideas.
Any innovated idea must go to the model described in the second step.
Moreover, the organization needs to establish a robust governance process.
By having all this information, the following question comes up:
Is it convenience to digitize your process safety program?
It is difficult to answer this question; however, your organization shall develop a strategic plan to assess the current state of your program.
The article mentions areas to assess according to the financial institutions. I am giving the areas to determine applicable to PSM.
- Environmental and Sustainability.
- Management of change.
For instance, the article recommends reviewing three aspects of your operations:
- Operations and processes.
- Data collection.
- Organization, and business model.
The three aspects apply for process safety as well.
In conclusion, we need to look at other industries such as financial institutions to avoid reinventing PSM.
We do not need to panic and get overwhelmed, the organization needs goals and action plans to assess the current state to adapt to the digital transformation, if required.
The fourth industrial revolution is not only technology. Innovation is a significant pillar of it. Therefore, the organizations which create a robust innovation culture, it will adapt quickly. Without this component, your digital transformation is at risk.
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