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Procedure: [Risk Management Proc. Title]

1. SUMMARY

1.1. The company has established, implemented and maintained this procedure for managing
risks and opportunities throughout the .
1.2. Responsibility and authority for this procedure are spread across various functions, and
defined within this procedure.
1.3. Note: this procedure has adopted definitions for key terms developed specifically by and
determined appropriate for its use within the unique requirements of its management
system. It does not adopt current ISO definitions, which has determined are not sufficient
for its use.
1.4. Note: the QMS documentation occasionally uses the term “opportunity for improvement”
when discussing internal audit findings or management review actions; that term does not
have the same context as the term “opportunity” used herein.
2. REVISION AND APPROVAL

Rev. Date Nature of Changes Approved By

[Rev [Procedure
[Date of
Number Original issue. Approver
Issue]
] Name]

3. DEFINITIONS

3.1. Risk: A negative effect of uncertainty.

3.2. Opportunity: A positive effective of uncertainty.
3.3. Uncertainty:A deficiency of information related to understanding or knowledge of an
event, its consequence, or likelihood. (Not to be confused with measurement uncertainty.)
3.4. Risk Assessment: a systematic investigation and analysis of potential risks, combined with
the assignment of severities of probabilities and consequences. These are used to rate
risks in order to prioritize the mitigation of high risks.
3.5. Risk Mitigation: a plan developed with the intent of addressing all known or possible risks
and preventing their occurrence.
3.6. FMEA (Failure Mode Effects Analysis): a specific risk treatment method which ranks
risks by probability and consequence.

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4. PROCEDURE: GENERAL

4.1. considers and manages risks and opportunities differently.

4.2. Risks are managed with a focus on decreasing their likelihood, and minimizing their impact if
they should occur.
4.3. Opportunities are managed to increase their likelihood, and to maximize their benefits if they
should occur.
4.4. Where risks and opportunities overlap, the best appropriate method for managing them shall
be ascertained, given the situation at hand. Elements of such “blended” uncertainties may
require methods which both address the negative risk and positive opportunity.
5. PROCEDURE: MANAGEMENT OF RISKS

5.1. Risks are identified as part of the “Context of the Organization Exercise” described in
[Context of the Org Proc. Title].
5.2. Additional risks may be identified by any employee at any time.
5.3. Each process is defined in detail through a [Process Definition Doc Title]. This
document includes the identification and mitigation plans for key risks associated with the
defined process. management reviews these risks and takes action to minimize them.
5.4. Risks identified as part of the Context of the Organization exercise defined in the procedure
[Context of the Org Proc. Title] and logged within the COTO Log. This indicates a rough
priority, as well as a selected risk treatment method.
5.5. The methods for risk assessments vary, but should always include a means of
identifying the risk under examination, and a description of the result of the risk
assessment.
5.6. Detailed methods may include FMEA (failure mode effects analysis), SWOT (strength,
weakness, opportunity and threat) or other tools. No single method is used for all risk
assessments; the tool selected should be the best tool applicable to that particular risk
analysis.
5.7. ISO 31010 provides guidance on the selection of risk tools.
5.8. Where FMEA style risk treatment is deemed optimal, an entry shall be made in the Risk
Register. When using the Risk Register, the following steps are to be followed:
5.8.1. Identifying the risk.
5.8.2. Identifying the process for which the risk most likely dominates.
5.8.3. Assigning a probability rating to the identified risk; this probability is comprised of
two elements: likelihood and previous occurrences. Each element is given a

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score from 1 (lowest risk) to 5 (highest risk). The final probability rating is the
average of the elements.
5.8.4. Assigning a consequence rating if the risk were to be encountered; this
consequence is comprised of five elements: eventual loss of contract; negative
impact on existing customers; inability to meet contract terms; any violation of
statutory regulations or law; impact on ’s reputation; and estimated cost of
correction. Again, each element is given a score from 1 (lowest risk) to 5
(highest risk). The final consequence rating is the average of the elements.
5.8.5. Calculating a final Risk Factor based on the equation:
PROBABILITY RATING x CONSEQUENCE RATING = RISK FACTOR

5.8.6. For risks with a final Risk Factor rating equal to or greater than the threshold set
in the Risk Register, management will decide whether to reject the subject due
to the risk, or accept the risks after the development of a risk mitigation plan.
The mitigation plan must be documented, either in the Risk Register or in
another document which must be referenced on the form.
5.8.7. Risks with a factor less than the risk threshold may be accepted without a
mitigation plan, unless otherwise directed by management.
5.8.8. The Risk Register also allows for setting a “warning” threshold range, where
risks that have a Risk Factor within that range are flagged as suggesting the
need for a mitigation plan, but such a plan is not mandatory.
5.8.9. The final column allows for entry of an estimated risk factor after mitigation,
which is an estimate on what the risk should be reduced to if the risk treatment
is successful.
5.9. If a risk includes a potential positive aspect, management may elect to conduct an
opportunity pursuit assessment on the positive aspect, as defined below.
6. PROCEDURE: MANAGEMENT OF OPPORTUNITIES

6.1. actively seek out opportunities which could enhance its financial viability and market
position. For example:
 obtaining new contracts
 obtaining access to new markets
 identification of new industries which may be served by
 development of new offerings that are within the scope of capabilities of
 streamlining existing processes to improve efficiency and reduce costs

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6.2. Opportunities are identified as part of the “Context of the Organization Exercise” described
in [Context of the Org Proc. Title]and as part of the corrective and preventive action
program described in [Corrective Preventive Action Proc. Title].
6.3. Discussing and analyzing opportunities shall be done by top management. If made part of
the management review activities, these shall be recorded in the management review
records.
6.4. To help determine which opportunities should be pursued, the Opportunity Register within
the COTO Logmay be used to conduct an “opportunity pursuit assessment.” This register
is similar to the Risk Register, but ranks potential positive opportunities by their likelihood of
success and potential benefit.
6.5. The opportunity pursuit assessment is conducted by:
6.5.1. Identifying the opportunity.
6.5.2. Identifying the process for which the opportunity most likely falls under.
6.5.3. Assigning a probability rating to the identified opportunity; this probability that the
organization can achieve the opportunity. It is comprised of two elements:
likelihood and previous occurrences. Each element is given a score from 1
(lowest probability) to 5 (highest probability). The final probability rating is the
average of the elements.
6.5.4. Assigning a benefit rating to assess potential benefits if the opportunity is won.
This is comprised of six elements: potential for new business; potential
expansion of current business; potential improvements in the organization’s
ability to satisfy regulatory or statutory requirements; potential improvements to
the quality management system; potential enhancements of ’s reputation; and
estimated cost of implementation. Again, each element is given a score from 1
(lowest benefit) to 5 (highest benefit). The final benefit rating is the average of
the elements.
6.5.5. Calculating a final Opportunity Factor based on the equation:
PROBABILITY RATING x BENEFIT RATING = OPPORTUNITY FACTOR

6.5.6. For opportunities with a final Opportunity Factor rating equal to or greater than
the threshold set in the Opportunity Register, management will decide whether
to pursue the opportunity through an “opportunity pursuit plan” or to abandon the
opportunity altogether. The opportunity pursuit plan must be documented, either
in the Opportunity Register or in another document which must be referenced on
the form.
6.5.7. Opportunities with a factor less than the opportunity target rating may be
abandoned outright, unless otherwise directed by management.

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6.5.8. The final column allows for entry of success result, once the opportunity has been closed;
this includes entries for abandoning the opportunity, failing to win the opportunity, and
three grades of success.
6.6. Analysis of any opportunity will generally result in one of the following possible
determinations:
 Pursue the opportunity
 Explore the opportunity in greater detail before proceeding
 Accept the opportunity, but under limited and controlled conditions
 Decline the opportunity, typically based on a high expected cost or low anticipated
benefit
If an opportunity includes a negative aspect, management may elect to conduct a risk
assessment on the negative aspect, as defined above.

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