Risky business: why your business needs Scaled Management Systems



How do formal management systems assist with the operation and improvement of your business?


The benefits of using formalised management systems are extensive. Correctly implemented, management systems can be used to improve efficiency, increase profit and reduce liability to legal, regulatory and consumer claims.


Without controlled processes and systems variations in manufacturing and services can lead to unhappy clients, injured employees, raw material waste, excess inventory, production or service delays and spiralling costs.


Fortunately, there are common themes and tools to assist you. Combined with understanding some basic definitions, the disciplined application of these tools is the key to success.


How do I determine the difference between contractors and employees?



Generally controlled and defined by the term ‘Contract for Service’, contractors are paid for the results achieved, set their own working hours to meet the contract’s specifications and supply their own equipment, machinery, methods, plant or tools to complete their tasks.



Generally controlled and defined by the term ‘Contract of Service’, employees receive regular payments based on the time they work and under the control of an agreement or award. Further, the employer provides the equipment, machinery, methods, plant or tools to complete their tasks.


How do the principles of documented management systems relate to the operation of our business?


Documented Management Systems


  • Procedures and records respectively provide the standard and proof against which the organisation can maintain, sustain and measure improvement.


  • Records are the ‘real-time’ evidence that a given task has been completed in accordance with standard work practices and allows for traceability of actions, activities, product and services.


  • The data can then be used in a number of ways but most importantly for monitoring trends and improving business performance.


  • Documentation and records also provide the evidence needed to demonstrate due diligence in any litigation.


“I’ve heard stories that there is way too much paper involved. Why?”


This statement is a common misconception and misinterpretation.

Well-designed business management systems aim to reduce complexity & duplication including the amount of paper used. And remember, the various standards state that management systems can take any form or be in any medium.


Irrespective of formal & documented management systems, if you are using too much paper it is probably a sign that your processes and systems are overly complex or have ‘in-built’ levels of duplication.


How do we determine the priorities of business exposures, hazards & risks?


What is a business exposure or hazard?


A hazard is anything with the potential to cause damage, harm, injury, illness or loss in our business. We often limit our thinking of hazards to personal injury. Thought about more broadly, business hazards exist externally to and within operations.


  • Competitors
  • Compliance (industry & regulatory)
  • Employee & Industrial Relations
  • Environmental
  • Financial
  • Legal
  • Occupational Health & Safety
  • Processes
  • Quality
  • Suppliers


Hazard Identification:

A common theme within risk management systems is hazard identification. That is, analysing our business processes and systems to clearly understand where our exposures are located.

All businesses carry differing levels of inherent and controlled (residual) risk. Understanding your business and processes in detail can help you to identify where the exposures are lurking, the type and size of threat they represent.


After having identified the exposures and hazards our businesses are exposed to it is important to assess their significance. Without assessment, managers may try and control all exposures and hazards simultaneously and this is neither financially viable nor physically possible.


Risk is a common word ‘bandied’ around and yet it has quite specific application and meaning. It is the ‘chance’, ‘likelihood’ or ‘probability’ that an event will occur while the exposure or hazard is present.

Despite popular belief, hazards and risks are not the same.


Risk Assessment

The method of risk assessment allows us to objectively measure the extent or size of the risk associated with each business exposure or hazard. Once all hazards have been assessed for risk level the data can then be ranked for significance. This facilitates a strategic approach and improves resource management.



Based on priority and significance each exposure or hazard and risk can be controlled using a hierarchy (menu) of control options.


So how do we make use of all this information?




It has been discussed that formal hazard and risk analysis uses a strategic approach to identify opportunities and weaknesses within business operations.


The collation and analysis of all data from hazard identification and risk assessment leads to logical conclusions about the most important priorities to be addressed. This can assist with business management planning and budgeting in order to progressively manage business exposures, hazards and risks.


Business management planning requires some discipline, practice and regular review. Plans are designed to be flexible and not ‘set in stone’ as both external and internal business conditions can change and planning needs to accommodate these changes.


However, make sure you can monitor or track:


  • What needs to be done to achieve the objective(s)
  • Who is going to complete the actions
  • When the actions are to be completed
  • How realistic the actions are
  • How easily the actions can be measured


Therefore, ensure that the objective and / or your plans are S.M.A.R.T –





Relevant and


Scaled Management Systems Details

Scaled Management Systems Details

    • Contact Kevin Stretton
    • Mobile 0438 859 314
    • Email Kevin@scaledmsystems.com
    • Address 78 Kingfisher Drive, Hewett, SA; 5118
    • Postal Address PO Box 1503, Willaston, SA; 5118

Please visit our website to review more ideas and services which can assist your organisation with risk management – http://www.scaledmsystems.com/business-improvement-services.html

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