As a result of the industrial accidents events of 2010 and 2011, there is a heightened sense of awareness of the need for greater scrutiny of operations.  The industry is responding in all the usual ways, with a greater focus on safety, work processes, training, etc.  What is missing is a new governance model.  The Asset/Equipment Integrity Governance (AEIG) model developed herein addresses this gap.

The importance of strong governance with is implication of strong shareholder rights can not be overstated.  Management is an agent of the owners.  As such it has the fiduciary responsibility to not just be the custodian of shareholder value but to maximize that value.

Sarbanes-Oxley drove a new level of shareholder rights in the aftermath of the debacles at the beginning of the century.  As we enter the next decade, operational concerns are now taken to the same level.

AEIG is the new governance model that extends investor concerns of the last decade to the needs of the current owners.  Moreover, while comprehensive, it is a model that management can implement quite readily.  This document provides interested parties with a detailed roadmap for a sustainable AEIG model that will add significant shareholder value.

The AEIG model is based on four pillars;

• Maturity Level
• Portfolio Management
• Policies & Procedures
• Criticality

Moreover it is built on the Asset Maturity Model (Appendix I) approach to asset portfolio management and the Compliance Management triumvirate (Appendix II).

Owners are demanding hired management to be held to a high standard going forward.  Moreover, society is intolerant of future major industrial catastrophes.  The AEIG construct with its implementation guidelines described in this work provides the framework of a solution that can be implemented across multiple industry sectors.

AEIG captures all aspects of organizational governance as extended to the supply chain and operations/production processes.  It provides management with a quantifiable approach that incorporates the subjective knowledge of the organization and other constituents into a singular model

Transparency, strong management, viable products/services are key performance indicators in the global markets.  However, all of these metrics must be demonstrable.  Sarbanes-Oxley addressed transparency, customers ascertain product/service viability, and management strength is subjective.

Strong governance demonstrates a strength of purpose.  AEIG takes governance to the next level and demonstrates to investors a level of transparency and management capability hitherto unknown by many in corporate America (by extension rest of the world).

Senior executive should challenge their organizations to review, adapt and implement AEIG.  Another perspective - before society implements AEIG for them.

The above is taken from the Executive Summary of the author’s 2011 copyrighted paper, Asset/Equipment Integrity Governance: Operations - Enterprise Alignment - A Case for Board Oversight.

This Webinar will provide attendees with additional insight into the current environment and trends around organizational governance and risk management. 

Dr. Scott Shemwell CEO KnowledgeOps

Zurich Financial Services Group (Zurich) is a leading multi-line insurance provider with a global network of subsidiaries and offices in Europe, North America, Latin America, Asia-Pacific and the Middle East as well as other markets. For more information about Zurich’s business in North America, go to http://www.zurichna.com/zna/media/news-releases/archive/boilerplate.htm