Risk-Based Thinking (RBT) is a systematic method that assists organizations in identifying, analyzing, and managing risks and opportunities. 
It aligns with quality management standards like ISO 9001:2015 and promotes: 

• Consistent quality
• Improved processes
• Better decision-making

The core idea is to integrate risk management into every aspect of business operations.[/size]

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Risk Management Process Overview 
The process includes the following stages: 
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• Risk Identification
• Risk Analysis
• Risk Evaluation
• Risk Treatment
• Monitoring & Review

Each stage leads to Continual Improvement.

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1. Identify Risks & Opportunities 
Objective: Recognize potential risks and opportunities that may affect objectives, processes, and outcomes. 
Questions to Ask: 

• What could happen?
• How and where could it happen?
• Why could it happen?
• What is the impact or potential risk?

Tools Used: 
- PESTEL Analysis: External risks (Political, Economic, Social, Technological, Environmental, Legal). 
- SWOT Analysis: Internal and external risks (Strengths, Weaknesses, Opportunities, Threats).

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2. Analyze & Evaluate Risks 
Objective: Assess the likelihood and impact of risks to prioritize them. 
Steps: 

• Identify causes, contributing factors, and potential consequences.
• Assess likelihood and impact (severity).
• Determine risk rating (acceptable or unacceptable).

Tools Used: 
- Risk Matrix: Categorizes risks based on: 
   - Likelihood (Low to High) 
   - Severity (Minor to Catastrophic) 

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3. Dealing with Risks 
Objective: Use risk concepts to prioritize and respond to risks using the 4 T's Process: 

• Tolerate: Accept the risk without action.
• Treat: Address the risk to reduce its impact or likelihood.
• Transfer: Shift the risk to another entity (e.g., insurance).
• Terminate: Eliminate the risk by stopping the activity.

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4. Risk Register 
The Risk Register is used for documentation, communication, and continuous improvement. 
It includes: 

• Risk Identification
• Risk Description
• Severity and Occurrence
• Mitigation Plan
• Responsibility
• Residual Risk Level

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Summary & Example of Risk-Based Thinking 
Steps, Tools, and Examples:

Step No	Step	Tool	Example
1	Identify	PESTEL, SWOT, Brainstorming, FMEA	Identify machine breakdown risks
2	Analyze & Evaluate	Risk Matrix, Pareto Charts	Assess breakdown as high impact
3	Plan & Implement	Preventive Action, Contingency Plans	Implement maintenance schedules
4	Monitor & Review	KPIs, Audits, Dashboards	Track OEE to measure effectiveness
5	Document & Communicate	Risk Registers, Reports	Maintain risk registers and reports

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Key Takeaways 

• Identify Risks: Use tools like PESTEL and SWOT to identify risks and opportunities.
• Analyze & Evaluate: Use the Risk Matrix to prioritize risks.
• Respond to Risks: Apply the 4 T's (Tolerate, Treat, Transfer, Terminate).
• Document & Improve: Maintain a Risk Register for continuous improvement.

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