Operational Risk Software: A New Product Architecture Emerges
Ask someone what operational risk means and you will get a hundred different answers depending on the industry and context. The term has been most widely used in the banking and insurance industries where it has specific meaning in relation to the difference between actual financial losses and expected financial losses caused by a lack of risk controls. That’s not the focus of our research into operational risk. We’re looking at risks at the level of physical operational assets such as container ports, railway depots, chemical plants, natural gas pipelines and retail stores.
As part of operational excellence initiatives, there needs to be a specific focus on identifying risks and controlling those risks. This goes hand in hand with operational efficiency but requires a different lens. Asset owners, like the VP of Offshore Production for a firm like Energy XII, can improve their performance by better controlling risks on their rigs. This could involve implementing digital permit to work software from a provider like eVision which facilitates real-time risk control or creating a barrier management model using RiskPoynt’s software which provides an overall framework for risk management across a portfolio of offshore rigs.
Controlling risks at industrial assets is not a new challenge. So why the sudden interest in this area? Put simply, digital technology is making it possible to significantly reduce risks and thereby increase production. The key point is that it’s not about eliminating negatives in the way incident management software aims to capture data on injuries and accidents to improve safety afterwards. Done right, operational risk software keeps plants running more smoothly for longer because maintenance can be completed more quickly, permits approved without long delays and shutdowns truncated. At the Verdantix Europe summit, APM Terminals explained how they are tracking the location of workers and containers in ships to provide a 3D image to crane operators so they can move containers without imperilling the workers in the bowels of the ship. That’s real-time operational risk management.
Succeeding in this market will require a product architecture that can quickly assemble static data such as the blueprint of a container ship, batch data such as the volume of containers on a ship and real-time data such as the location of port workers into a schema where each object can be intelligently linked to the others. To do this cost effectively will require graph database technology from vendors like Datastax, neo4j and OrientDB. As the APM Terminals example indicates, the operational risk software will then need the capability to build risk models in the context of unique assets and the activities taking place around that asset. This will require digital twin models of assets.
Risk management for a container port doesn’t require a digital twin with details on mechanical engineering. It just needs sufficient information for workers undertaking high risk activities to better identify and control the risks. This implies a presentation layer designed to suit the information needs of specific user groups. A crane operator could have a heads up AR display showing the location of port workers who are hidden from visual line of sight. The port workers themselves could receive proximity warning signals from the same system in the form of a wearable flashing light or siren. Whilst EHS software tackles some aspects of operational risk, the combination of a relational database with a workflow engine won’t meet the bulk of usage scenarios for operational risk management.