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Risk Management Strategy

 

Overview

1. The first one is identification of risks. If the risks have not been identified they cannot be managed.

2. The next strategy is active risk reduction.

3. The third one is risk transfer, the residual product risks should be transferred to third parties. As no product can be absolutely safe, any risk reduction programme will leave residual product risks that have to be transferred afterwards.

4. The last strategy is risk retention. Some product risks will have to be retained within the company if they cannot be eliminated or transferred.

 

1. Identification of Risks

Important information to be notified:

Number of accidents

Dates

Source of complaints

Brand names

Trade marks

Identity marks of features

Countries of origin

Name of manufacturers or importers

Nature of hazard

Result of any tests

What action was taken as a result of the complaint in each case

HASS(Home Accident Surveillance System) : a test method of collecting information of product-related accidents

HADD(Home Accident Deaths Database) : deals with fatal home accidents compatible with that provided by the HASS for non-fatal cases.

The source of information will include:

- Direct consumer complaints either to local authorities or to the Consumer Safety Unit of the Department of Trade and Industry (UK government department)

- Voluntary recalls of products by manufacturers

- Warnings to the public about potentially unsafe products, issued either by the government, local authorities or by suppliers themselves

- Results of laboratory tests of suspect products

- Reports from enforcement authorities about potentially unsafe goods found in the market

There is a surprising lack of information with regard to which products are responsible for accidents. In UK and US there are well-established systems which record information on which products are involved in home accidents and provide raw data for regulatory and legislative bodies. The EEC and consumer organizations operate information exchange schemes on dangerous consumer products.

 

2. Risk Reduction

After identifying the product risks, risk reduction programmes for product design risks should be carried out.

There are no model answers to reduce products risks. Every company must develop its own strategy.

 

3. Risk Transfer

Transfer the residual risk. There will always be some residual risks. They can be handled by transferring them to third parties by mechanisms of insurance and contract conditions.

 

4. Risk Retention

Retain the remaining residual risks. The remaining residual risks have to be retained by the company because not all the risks can be reduced or transferred.

 

Sources:

  1. Abbott, H. (1992).Product risk management : how to plan and react.

 

Last updated on 28 MAR 2010