Navigating industrial risk management in the age of Industry 4.0

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Navigating industrial risk management in the age of Industry 4.0

Navigating industrial risk management in the age of Industry 4.0

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Jun 14,24

As industrial sectors embrace new technologies across their operations, the risks and opportunities to address them change. Recognising the possibilities and dangers of Industry 4.0 in risk management is the first step to making the most of it, says Emily Newton.

Navigating industrial risk management in the age of Industry 4.0

Industrial risk management has always been necessary, but what it looks like has evolved over time. This shift is particularly prominent amid the growing Industry 4.0 movement. As industrial sectors embrace new technologies across their operations, the risks and opportunities to address them change.

Despite this movement’s relative newness, 72 per cent of manufacturing organisations are actively implementing 4.0. Many have completed this rollout. As those figures rise, it becomes all the more crucial to consider how this digital disruption impacts risk management.

How Industry 4.0 improves industrial risk management

Industry 4.0 technologies can improve industrial risk management in several ways. The most straightforward is to make it easier to identify and measure hazards. Internet of Things (IoT) devices provide real-time data on operations that AI can analyze to highlight or quantify relevant risks.

Similarly, these technologies streamline the risk management process. Some hazards need frequent monitoring. For example, fire alarms require weekly inspections for some components and bi-monthly checks for others, leading to significant time loss. Automating checks through IoT connectivity reduces these timelines, enabling faster responses.

In addition to improving hazard monitoring, Industry 4.0 can address these risks more effectively than conventional methods. Robotics can handle hazard-prone physical workflows to eliminate the risk of repetitive strain injuries. IoT proximity sensors can alert workers of incoming vehicles to prevent collisions. Whatever the specifics, new technology is faster and safer than traditional alternatives.

Unique risks from Industry 4.0

At the same time, Industry 4.0 adoption can introduce new risks. Hazard management frameworks must adapt to these emerging threats to ensure organizations stay as safe as possible.

Cyberthreats are the most prominent risks stemming from Industry 4.0 technology. Manufacturing has become the world’s most targeted industry — experiencing 25.7 per cent of all cyberattacks in 2023 — because of this shift. IT/OT convergence opens heavy machinery to hacking when it was once impervious. Beyond that, industrial organizations are implementing digital technologies without knowing how or why to protect them, leaving them vulnerable.

Similarly, some Industry 4.0 initiatives introduce new regulatory concerns. Data collection may open some businesses to privacy laws that could result in hefty fines for noncompliance. AI and robotics adoption may result in labor issues and could fall under future regulations as legal frameworks evolve.

How to implement Industry 4.0 industrial risk management

Industrial risk management must adapt to Industry 4.0 in light of these benefits and potential issues. Here’s how businesses can use these new technologies in their hazard management frameworks while minimizing the risks.

1. Identify and quantify all risks

The first step is the same as in all industrial hazard management processes — organizations must identify their unique risks. AI analysis makes this much faster and more accurate but requires extensive data. Considering that 90 per cent of workers today express doubt over their project information, that can be challenging. Consolidating databases into a single source of truth and cleansing them before analysis can help.

After identifying risks, businesses must quantify them, assigning each a score based on likelihood and financial impact. Once again, AI makes this analysis more reliable. This quantification will help determine where to divert resources for more cost-effective fixes.

2. Remove risks where possible

As organizations review their risks, they should look for opportunities to remove them. Automating dangerous physical tasks is one way to do so through Industry 4.0. Broader changes like reshoring or diversifying material suppliers can also help.

Cyber-risks deserve attention, too. Hosting IoT devices on separate networks from more sensitive data and hardware can eliminate the threat of lateral movement. Restricting access privileges will minimize social engineering risks.

3. Install relevant monitoring systems

Next, businesses must continue monitoring their hazards to identify solutions and measure improvements. That means adopting the technologies that best support their specific monitoring goals.

IoT sensors are an excellent way to measure physical hazards like high temperatures, airborne contaminants or collisions with machinery. Automated network monitoring tools can gather data on cybersecurity risks and user trends. In any context, businesses must focus on the hazards they know are most relevant to them to help spread out the costs of tech implementation.

4. Improve data governance and security

It’s important to recognize that these data technologies can heighten dangers without proper protection. Consequently, thorough industrial risk management also means considering information governance and security.

Businesses must encrypt all data they collect and restrict it so only employees who must access it for their job can do so. It’s equally crucial to keep and encrypt backups of all mission-critical information. Data security also means extensive user training, as up to 95 per cent of cybersecurity issues result from human error.

5. Review risk management framework regularly

No industrial hazard management strategy is complete without regular review. Risks change as businesses evolve — especially amid widespread Industry 4.0 adoption. The only way to ensure ongoing safety is to reassess the organization’s risks and solutions at least annually.

These reviews should work through the previous four steps, taking any new threats and emerging technologies into account. Penetration testing can also help on the cybersecurity side of things, given that at least 46 per cent of organisations don’t have enough internal security staff to troubleshoot issues.

Advance your industrial risk management today

As industries evolve, so too must industrial risk management. New technologies can both help and hinder this effort. It all comes down to how organizations implement these innovations.

Recognising the possibilities and dangers of Industry 4.0 in risk management is the first step to making the most of it. Once businesses complete that step, they can capitalize on the positives while addressing the potential downsides for optimal hazard management.

About the author:

Emily Newton is a tech and industrial journalist and the Editor-in-Chief of Revolutionized magazine. Subscribe to the Revolutionized newsletter for more content from Emily.