Sustainability Risk Management Using Failure Mode Efeect Analysis: Evidence From Malaysia
European Journal of Molecular & Clinical Medicine,
2020, Volume 7, Issue 3, Pages 220-239
AbstractPalm oil industry in Malaysia has been in the limelight due to criticisms from various pressure groups on the severe sustainability issues as the results of palm oil productions and processes. Emerging sustainability issues expose palm oil industry to face the unprecedented set of sustainability risks. As such the identification of sustainability risks, the assessment of their impact, the development of sustainability risk management (SRM) to respond and monitor those risks are critical for organization in order to ensure company’s viability and survival in current business environment. Thus, this study intends to provide useful insights on the management of sustainability issues using risk management framework that includes risk identification, risk assessment and analysis, risk response, and risk monitoring. Questionnaires were distributed to operational managers in selected palm oil mills. Failure Mode Effect Analysis (FMEA) was employed to analyse the data. The findings reveal that sustainability risks are perceived as having major impact to business operations; they occur occasionally and are moderately easy to be detected. By assessing the impact of sustainability risks, an acceptable range of risk mitigation strategies can be assigned properly. This finding highlights the need for integrated sustainability risk management approaches to facilitate the development of effective sustainable strategies.
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