Risks associated with physical asset management: a Literature review

Abstract

Accelerated physical asset operations in organisations are necessitated in order to sustain within the competitive business environment. These asset operations involve a number of risks. The management of risks associated with physical assets as well as their operations is an essential element of Physical Asset Management (PAM). Although there is a growing interest in PAM around world, a lack of consideration of risks associated with PAM is evident. However, it is believed that a proper understanding of these risks is essential for effective Physical Asset Risk Management (PARM). Accordingly, the aim of this paper was to review the existing literature to investigate the risks associated with PAM. A comprehensive literature survey referring data sources, and a subsequent desk study were carried out in order to achieve the above aim. The study identified thirty-five risks, which could be categorised under six (06) groups as 'physical failure risks', 'operational risks', 'risks associated with natural environmental events', 'risks associated with the factors outside the organisations’ control', 'stakeholders related risks' and the 'risks associated with different lifecycle phases of assets'. Giving a prior concern for the identified risks and reviewing the exposure level of each risk towards PAM will support the organisations to evaluate the risk levels and make decisions on risks mitigation. This will provide the organisations with a smooth operation of physical assets and numerous benefits associated with it.