Series: Asset Management 101 – The Blueprint.
In Part 05, we found the “Golden Thread” that connects the boardroom to the front line. But here is the reality check: you cannot fix everything at once. No organisation in the world has an infinite budget or an infinite team.
This brings us to the most important question an Asset Manager must answer: Which asset do I fix first? we need to master the core principles of Asset Management Criticality and Risk. These tools allow us to move from guesswork to a data led prioritisation of our infrastructure.
What is criticality
Not all assets are created equal. Imagine you are managing a large hospital. You have two assets that both need a £5,000 repair:
- The air conditioning unit in the staff canteen.
- The backup generator for the Operating Theatre.
Both are “broken,” and both cost the same to fix. However, it’s clear the generator comes first. This is Criticality in action. Criticality is a measure of how much “pain” the organisation feels if that specific asset fails to perform.
High-criticality assets are often given “Gold Standard” maintenance regimes, while low-criticality assets (like a garden fence at a depot) might be managed with a “Run to Fail” strategy—meaning it is only fixed once it breaks, because the risk of failure is so low.
Note: Determining criticality often involves assessing safety risks, by following the HSE’s guidelines on risk assessment you can ensure legal compliance in the UK.
What is Risk?
In Asset Management, Risk isn’t just a vague “feeling” that something might go wrong. It is a mathematical calculation:
Risk = Probability X Consequence
The matrix below can aid in calculating your overall risk score:
| Likelihood / Impact | Minor (1) | Moderate (3) | Critical (5) |
|---|---|---|---|
| High (5) | 5 (Medium) | 15 (High) | 25 (Extreme) |
| Medium (3) | 3 (Low) | 9 (Medium) | 15 (High) |
| Low (1) | 1 (Low) | 3 (Low) | 5 (Medium) |
The Goal: Your Asset Management strategy should focus on moving assets from the ‘Extreme’ (Top Right) to ‘Medium’ or ‘Low’ through targeted maintenance and investment.
This approach aligns with the global standards set out in ISO 55000: Asset Management, which emphasizes risk-based decision-making.
In this formula, the following definitions are applied:
- Probability: How likely is it that the asset will fail? (Is it vibrating? Does it have a history of breaking?)
- Consequence: If it fails, how bad is the impact? (Does it cause a safety issue? Does it stop production? Does it leak chemicals into a river?)
By plotting every asset on a Risk Matrix, we move away from “who shouts loudest gets the budget” to a data-driven priority list.
Why “Impact of Failure” is the Key
As Asset Managers, we look at four main categories of impact when assessing criticality:
- Safety & Environment: Will someone get hurt, or will we cause an environmental disaster? (This always ranks highest).
- Operational: Does the whole factory stop, or just one small machine?
- Financial: How much will the repair cost, and how much revenue will we lose while it’s down?
- Reputational: Will this make the front page of the news?
The UK Perspective: Regulated Criticality
In the UK, regulators like Ofwat or Ofgem expect that organisations understand their “Critical Assets”. If a water company has a burst pipe, the regulator is inclined to ask: “Was this a critical main? If so, why didn’t your risk assessment catch it?”
Takeaways
Asset Management Criticality and Risk is a fundamental concept that is central to every decision you and your organisation will make, so remember:
- Prioritisation is Professionalism: You can’t be everywhere at once. Use risk to decide where you should be.
- Data Drives the Matrix: To know the “Probability” of failure, you need good maintenance records (which we’ll cover in Part 07).
- Criticality is Contextual: A pump in a fountain is low criticality; the same pump in a nuclear cooling system is high criticality.
Next Step: To build a Risk Matrix, you need facts. In Part 07, we move into The Data Foundation. We’ll explore why “Information” is just as much an asset as a piece of machinery, and why you can’t manage what you don’t measure.
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