| The fourth component of Enterprise Risk | | | | Next, the Risk matrix can be used to create a scale |
| Management (ERM) applications will be explored here. | | | | which quantifies the ability of an organization to |
| Six Sigma Training is an effective tool in all areas of | | | | identify risk sources and how able and willing they are |
| risk management, and there are eight basic elements | | | | to manage those risks. There are twelve points of |
| to cover throughout the process. So far, it has been | | | | risk assessed, which are numerically scored to |
| explained how Six Sigma Training and tools can | | | | determine which areas need to be the focus of risk |
| benefit Internal Environment, Objective Setting, and | | | | management principles. The final Six Sigma Tool that |
| Event Identification. The next principles of risk | | | | can aid an organization in assessing the risks that |
| management to be explored include: Risk | | | | they have is known as FMEA. Failure Mode and |
| Assessment, Risk Response, Control Activities, | | | | Effects Analysis is designed to help evaluate the |
| Monitoring, and Information and Communication. In | | | | actual risk of various steps within a process or plan |
| this article, you will learn about the effectiveness of | | | | within the organization. Potential failures and effects |
| Six Sigma Training in regards to Risk Assessment. | | | | are noted and numerically scored based on their |
| Risk Assessment within Enterprise Risk Management | | | | overall impact, and then potential causes are identified |
| can be addressed using three basic tools of Six | | | | and scored to determine how likely they are to |
| Sigma Training. Doing a risk assessment will allow any | | | | occur. |
| organization to predict and prepare for events that | | | | After these two events are scored, the as-is |
| could affect the organization's ability to meet | | | | controls and processes are scored numerically to |
| strategic and operational objectives. Six Sigma | | | | determine how well an organization can avoid, |
| Training involves three tools that can quantify | | | | mediate, or predict these potential failures. The three |
| methods of risk assessment for an organization. The | | | | scores of these Six Sigma Tools will be multiplied |
| first is the Cause-and-effect matrix, which can | | | | together, giving the organization a Risk Priority |
| identify critical parts of a process. It also gives | | | | Number (RPN). The Six Sigma Training and Risk |
| numerical scores to various parts of the process to | | | | Assessment tools are much more concrete methods |
| determine which create the greatest risks. The input | | | | for determining the risks an organization has than |
| is also scored, which refines the potential risk areas | | | | traditional methods that provided a qualitative analysis |
| even further. | | | | rather than a quantitative one. |