4 Common Asset Management Risks and Recommendations to Avoid Them
Every organisation uses numerous assets, tangible as well as non-tangible, to conduct their day-to-day operations. Assets are crucial for operational continuity which ensures that the organisation reaches its intended objectives and can deliver products/services to the market in time. However, an organisation needs a specific set of practices to manage its various types of assets and ensure they are contributing well to organisational strategic objectives or purpose. Without appropriate practices, many asset management risks can arise resulting in operational inefficiency, increase in costs, production loss, downtime, and frustration among employees. Therefore, it is necessary that your business employ a systematic approach or practices to manage assets, reduce risks, and optimise their performance throughout their lifecycle.
This blog helps you know about the most prevalent risks to asset management and how you can act to prevent them.
4 Risks to Asset Management with Recommendations to Prevent Them
Lack of Knowledge of the Asset Base
Many organisations do not really know all the assets they own and operate and that results in risk of misplacement or loss. Often, due to this reason, many assets remain unnoticed and unused. Unknowingly, the organisation loses the value or returns of investments on those assets. Therefore, the first step to ensuring the management of assets is collecting information and keeping track of them. You need to create the evaluation criteria for classifying your assets and including them in your organisation’s asset base. You should also mention how each of the assets is going to work with your strategic plans and fulfil your objectives.
Improper Utilisation
For complexly designed assets such as heavy machinery, technology devices, or IT equipment, employees may lack an understanding of their functions or capabilities. As a result, those assets remain underutilised which adversely affect their ROI (Return on Investment) during their lifecycle.
The best way to deal with this risk is to find out what each of your assets is capable to do, understand their operations within their design range, and determine how to take them to the best efficiency point. Also, you should provide training to employees who use the assets or are in authority to operate them. With training, you can ensure that there are no skill gaps with the employees, and they can appropriately utilise the assets for the intended tasks.
Under Maintenance of Assets
When the assets are in the operational phase, organisations need to maintain them but that involves significant additional expenses. Since assets are huge in number and the costs for maintenance are mostly non-value-added, many organisations spend less on maintenance. This leads to under-maintenance of assets which affects their ongoing performance as well performance in the long run. Also, it can result in the risks of asset failure and further costs.
While maintenance of assets with cost optimisation can be a true challenge for your organisation, it is recommended to start with the most crucial assets. Prioritise your assets and determine their minimal maintenance requirements. Accordingly, you should then allocate resources (including employees) and costs to maintain them.
Loss of Stakeholder Confidence
Organisations need to manage their assets not just for their own benefits but also to retain the confidence of their multiple stakeholders. They have a considerable stake in your business or have invested in the assets and hence desire to see the assets adding maximum value to the business. Therefore, if you do not embed the best practices for asset management, they may lose confidence in your business. Loss of stakeholder confidence can affect the investments coming to your business and hence, your future expansion plans.
The best recommendation for preventing this risk is achieving the ISO 55001 standard which underlines the guidelines and practices for managing assets in organisations. It would demonstrate your best practices for maintaining assets and improving their performance consistently. So, it would help at gaining the confidence as well as trust of your stakeholders.
Key Takeaway
Your organisation can follow all these given recommendations for overcoming the asset management risks with a dedicated management system. It would strongly enforce practices across your organisation at all levels to efficiently manage all forms of assets over their lifecycle. Uniform and coordinated practices ensure that the assets perform efficiently towards the purpose of your business ensuring no risks and minimal expenses on their maintenance.
If you want to create and implement an asset management system for managing the risks, talk to our experts at Compliancehelp. We are a team of ISO consultants who can assist you in structuring your management system considering the specific types of assets used by your business. Contact our team!
