Risk assessment process
Then, an in-depth analysis is carried out of the suppliers and sub-suppliers of critical
products. For this, Ericsson has developed a tool called Ericsson risk management
evaluation tool (ERMET). ERMET (Figure 8) evaluates many different issues in detail,
e.g. business control, financial issues, hazards in the surroundings (external as well as man-made); hazards at the site; and business-interruption handling. The tool is used to
analyze both internal and external suppliers. Internally, the tool will be used in
combination with contingency planning.
When using ERMET, corporate risk managers and SCR managers often work
together, as the tool is complex and requires knowledge to use. Often, a representative
from sourcing is brought in, who is responsible for the supplier contacts. Each sub-area
in ERMET is thoroughly evaluated by looking into different aspects (see Figure 9),
trying to quantify the risk by looking at impact (consequence) and probability. The
suppliers’ total risk situation, and their forecasted development, is then summarized
into spider-web diagrams. Those evaluations are done regularly and are used to follow
up improvements and action plans.
ERMET is mostly focusing on operational accidents and catastrophes and how to
avoid business interruption. Ericsson uses other tools to try to identify and assess more
strategic uncertainties such as shifts in products or product generations. When a risk
or uncertainty source has been identified, the SCR manager facilitates workshops
attended by different functional and business specialists where events are discussed
that could lead to risks. For each event causes are identified, so that preventive actions
can be developed. (This methodology is similar to FTA). The analysis and actions are
then summarized into special templates that are later used for follow-up and
monitoring of the risks (Figure 10).