Top 5 Asset Management Risks

If the leadership are not engaged, systems will not receive the backing, support and ongoing funding that is vital...

Organisational planning and strategic guidance: Are they aligned to adopting an Asset Management focus?

Your organisation’s internally documented planning and guidance can also relate back to asset management. The best way for people to understand what you are thinking and the direction you wish to go is to keep a comprehensive log, so that everyone is understanding of your intent. The same goes for getting your organisation asset management ready.

Every organisation is different in how it structures policies, directives, plans, manuals, processes, procedures and even staff circulars or newsletters. These will most commonly be written in a format that is easily read and understood, and a mechanism will be put in place so as to inform the relevant people. This can be electronic, hard copy or both and should also be regularly updated to ensure the information remains relevant and up-to-date.  In doing so, this forms a reference point for employment agreements and training, on how your organisation does business. This also allows you to establish a sense of accountability. It really just makes sense!

Organisations should use whatever appropriate method to spread the message about the organisational approach to asset management being documented.  The key thing is that it reaches all employees, and is understood. For some, this may be an update or a slight modification of asset management practices that are already in place. For others, this may be a more significant undertaking that requires investment. The key is to determine what organisational planning and strategic guidance exist. This will allow you to ensure your team understands the direction you are pursuing and identify what the steps to adoption and successful implementation look like.

Depending on the size of your organisation and the complexity of equipment assets, the use of focused asset management policies, strategies, plans and SOP’s are useful tools that will guide your organisation.

Is the Asset Management system appropriate to your organisation – do you have one?

Systems and processes that are simple, targeted and well-understood drive efficiency. Of all the factors that drive effective asset management practices, the use of spreadsheets to manage assets is probably the best example of what we at AML strongly recommend you avoid. The curse of the spreadsheet is that it is most effective for the person who developed it. As a result, the expansion of its utility, longevity and onboarding by a broad number of users are key detractors. Spreadsheets that can perform asset management functions are rarely simple to anyone but the person who developed them. The result is that they are rarely targeted in the way they need to be and training and understanding them becomes far from straightforward.

So where do you turn?

Developing a good understanding of your business needs, and any future requirements, is something you may need assistance with. This also means you’ll need to be prepared to do some homework discussing this, or some online research.  Your asset portfolio (the number of assets you seek to manage), their movement across your organisation, the value and frequency at which you procure new assets, maintenance requirements and any software or hardware implications will all serve to guide the level of utility that your business will require.

Be prepared. While this is an investment by your organisation, it does not have to be overly expensive as there are a number of software packages that do a very effective job.  The real challenge is in showing the willingness, understanding and curiosity to introduce a system that will support your business needs, as well as deliver the information and support to your operations in order to drive efficiency.  While this may not happen overnight, if the culture of asset understanding is present, the determination and need for improvement will be the driving force in the adoption of a successful asset management system.

Data Capture – Is the environment savvy with data management?

So - you’ve done your research, you’ve introduced an asset system and your team is invested in improving asset management across your organisation.  It should all now magically happen, right? Almost.

In organisations that we have assisted, AML has utilised some very capable asset management systems, with a variety of performance-driven features. Their efficiency has meant that information flows can span across multiple facets of the business, all to support key decision-making, in close to real-time. So where is the risk?

The driving principle behind any system, asset management or otherwise, is that the system can only work as efficiently as the data that is entered.  Insufficient or poor data quality results in poor system analysis, and sadly, can lead to ill-informed decisions being made.

This raises the flag in regards to the training that is initially delivered when introducing an asset management system. Ensuring follow-up training and refresher courses covering new system functionality and case studies from across your business can help keep your team up-to-date with accurate data capture and entry.

Additionally, training must be delivered to anyone who uses the system or makes decisions based upon information from the system. It is important that senior and executive managers be included, and they should receive tailored training that is appropriate to their position. If the leadership are not engaged, systems will not receive the backing, support and ongoing funding that is vital to keep the entire organisation on track with your asset management plans.

Large Organisations: Retention of personnel with adequate skills / Small Organisations: Multi-tasking of individuals and retention.

 For many organisations, the stability of the workforce, including management, can be a concern. And while the pandemic certainly influenced this, it is not just a post-COVID issue. This is particularly important to note when you have bespoke systems in operation managing your valuable assets.

The good news is that a large number of asset management systems are user-friendly with the way they operate. The transition from one to another can be achieved without too much stress. 

Large organisations tend to have turnover issues within teams, meaning the retention of skills and understanding across a vast asset portfolio can be daunting to newcomers. Smaller organisations, on the other hand, tend to suffer from multi-tasking, leaving a single individual with many roles and responsibilities. One of which is overseeing the asset management system.

The bottom line is that it is important to be aware of the risk to your business, and to manage it appropriately. Possible strategies to cover this may include building redundancy into your system so that you have cover for absences.  Another possible strategy is to ensure management has hands-on training and can step in in order to lend some support. Conversely, your junior staff may also be trained to understand the higher and broader implications of their tasks within your asset management system.

If you have enjoyed this blog, please tell us about your experience with asset management systems, we would love to hear from you.

There are some other very important risks that gravitate to the above list from time to time.  Each of them can become very serious if not attended to and can easily overtake the risks we most commonly witness. These risks are most commonly data and data security related and are very much related to your overall ICT architecture, security systems, and processes. Be sure to subscribe to AML Advisory’s social media platforms (LinkedIn, Youtube & Facebook) to strengthen your understanding of asset management risks and keep making informed and evidenced-based decisions for your organisation.