Risk Analysis is the procedure for detecting and analysing prospective matters that could give a baleful impact on business enterprises, so basically it is a component of risk management and the review of the risks associated with a specific circumstance.
Risk analysis is playing a significant role in addressing the concerns of industrial jeopardy. In the automotive industry, risks that remain unidentified can proceed to a loss in the aim of productions as well as safety measures. This article aims to analyse the risk over time for the automotive industry.
What Are Companies Doing In India?
In India, researches are going on related to the risks in the automobile industry. Many tools have been developed for the detection and solving problems related to risk in the industry. Research like the risk assessment using Bayesian Networks for the automotive industry in India was proposed for analyzing the vulnerability of the automotive industry.
Maruti Suzuki India Ltd. faced a big fall in domestic sales of passenger cars this year whereas, on the other hand, Mahindra and Mahindra Ltd. reported to have a fair rise in the same.
It has been reported that from the month of April to September 2018 the production of automobiles has increased 13.32 percent year-on-year to reach 16.65 million units.
The Indian govt. set up National Automotive Testing and R&D Infrastructure Project (NATRiP) centres as well as National Automotive Board to promote growth and managing the risks in the industry since 2015. The “Make in India” campaign was launched in Sept 2015 that was initiated by India’s Prime Minister Narendra Modi for investment, innovation and supporting skill development programmes.
According to a report on July 2018, it is stated that the automobile industry in India is constituted of 7.1% of India’s Gross Domestic Product (GDP) and approximately 29 million people are being employed.
In the year 2017, India ensued as the 4th largest manufacturers and 7th largest manufacturer of commercial vehicles in the world. So, basically, the risk level is rising up day-by-day. Preventive measures are being taken by Govt. as well as automobile industries.
The Need For Risk Analysis In Automotive Industry
Firstly, manufacturing cars is not an “easy” business and the competition is too savage. The automotive industry has entered in a new era that leads towards the electronic and self-driving cars. In the automotive industry, risks that remain unevaluated may result in loss of production targets, vehicle recalls which may cost a lot to the industry perhaps resulting in a doomsday for the industry. There are three basic types of risks that the automobile industry is facing hard these days. Some of the most prominent factors it needs to oversee are:
Consumer’s constant urging: The demand for cars is growing aggressively along with the need for different types and specific demands for discrete geographies. For instance, India is no longer seating in the back row since the car manufacturers are manufacturing cars that are affordable for middle-class families.
Economic risks: With the ups and downs in the economic graph, the sales adversely vary in the automobile industry. There are times when the cost of making cars is higher than the profit by selling them.
Risk of disruption: The competition is no longer easy for the industry nowadays. With the upcoming manufacturers along with the modified technologies and possible user-friendly manners, already made some manufacturers feel like left behind.
For the prevention of these risks, the industry should focus on the risk management efforts where the root of the risk can be evaluated and controlled. RCSA (Risk Control Self Assessment) is an authorising method through which the management and staffs of an industry can easily distinguish and evaluate risks and allied controls.
One can improve the percentage of risk management by following four measures, mainly safety measures, the quality of the manufactured product, obsolete in nature, security measures.
Safety measures: For instance, automakers may be forced to shut down their machines due to lack of the safety reasons needed but immediate safety measures can make the machines keep running in a good manner.
Quality of the manufactured product: This is the one thing that should never get abandoned. The value and complexity of the product should always be kept in mind. It is to make sure that the employees are prepared with the skills that are necessary to maintain and ensure the quality of the product.
Obsolete in nature: This nature can lead to the downfall of the productivity as well as industry. The best approach to avoid this nature is to keep updated with the mainframe of day-to-day life.
Security measures: The risk and vulnerabilities should be understood clearly to implement security measures. Trusted vendors are the ones to be worked with in this regard. Before making the contract with any vendor, one should keep in mind about the safety and security policies that the vendor is providing.
Lastly, we may not prevent every possible risk that may come up in the industry. But as it is said “Prevention is better than cure”, it is better not to be obsolescence and anchorage these measures from the very beginning.