Understanding Asset Related Risk: a three part series

In this weeks post Darrin Wikoff shares the first of of a series on criticality.
Although most asset management processes are based on managing risk, many organizations fail to fully understand the meaning behind an “asset criticality” ranking.  Most asset management professionals will tell you that the “critical” assets have the greatest impact on the plant’s mission, be it production rate, quality of product produced, or cost per product produced.  Acting under this mindset alone, most professionals overlook the single most important characteristic that makes each asset “critical” in the first place.  Through proper construction of criticality analysis models, you will be able to illustrate what management plan enhancements must be made in order to effectively control or mitigated asset-related risks.
WHAT’S IN THE NUMBER?
The first step in setting up a criticality analysis model is to define those characteristics that will be used to analyze each asset.  These characteristics should cover a wide range of business attributes, such as:
•    Customer impact – how do non-conformances impact your customer?
•    Safety and environmental impact – What’s the potential for a regulatory non-compliance?
•    Ability to isolate single-point-failures – Do you have a workaround in place in the event of failure?
•    Preventive Maintenance (PM) history – How much is your organization spending trying to control known risks today?
•    Corrective Maintenance (CM) history – How much have you spent recovering from non-conformances?
•    Mean-Time-Between-Failures (MTBF) – How often does a non-conformance occur?
•    Probability of failure – How likely is it to occur again in the future?
•    Spares lead time – When spares are needed, are they easy to obtain?
•    Asset replacement value – What will you spend to replace the asset if the risk can’t be managed?
•    Planned utilization rate – Is this asset something you really need?
Each characteristic should then be weighted to identify significance – what’s most important to the business within the Asset Management Strategy.  The greater the scale the easier it will be to accurately identify “critical” assets, however, the total score possible should not exceed 100, at a minimum.  By setting a limit of 100, you are re-enforcing the “weight” of each characteristic.
Next week we will look at "What can be learned from the Number?"