Root Cause Analysis - Chapters Site
Root Cause Analysis:The Essential IngredientLas Vegas IIA ChapterFebruary 22, 2018
Agenda Overview ConceptGuidanceRequired SkillsLevel of EffortRCA ProcessBenefitsConsiderationsPlanning Information GatheringFieldwork RCA Tools and TechniquesReporting 5 C’sScreen 2 of 65
OVERVIEW
Root Cause Analysis (RCA)A root cause is the most reasonably identified basic causal factor or factors,which, when corrected or removed, will prevent (or significantly reduce) therecurrence of a situation, such as an error in performing a procedure. It is alsothe earliest point where you can take action that will reduce the chance of theincident happening.RCA is an objective, structured approach employed to identify the most likelyunderlying causes of a problem or undesired events within an organization.Screen 4 of 65
IPPF Standards, Implementation Guide, and Additional GuidanceIIA guidance includes: Standard 2320 – Analysis and EvaluationImplementation Guide: Standard 2320 –Analysis and EvaluationAdditional guidance includes: PCAOB Initiatives to Improve Audit Quality– Root Cause Analysis, Audit QualityIndicators, and Quality Control StandardsScreen 5 of 65
Required Auditor Skills for RCACollaborationCritical ThinkingCreative ProblemSolvingCommunicationBusiness AcumenScreen 6 of 65
Level of EffortThe resources spent on RCA shouldbe commensurate with the impactof the issue or potential future issuesand risks.Screen 7 of 65
Steps for Performing RCA0402Formulate andimplementcorrective actionsto eliminate theroot cause(s).Identify thecontributingfactors.0103Define theproblem.Identify the rootcause(s).Screen 8 of 65
Steps for Performing RCARisk AssessmentRoot Cause Analysis1.Objective1. Problem2.Risk(s)2. Root Risk Response3. Recommendation/Management Action PlanScreen 9 of 65
Benefits of RCARCA benefits the organization byidentifying the underlying cause(s) of anissue. This approach provides a longterm perspective for the improvementof business/control processes. Withoutthe performance of an effective RCAand the appropriate remediationactivities, an issue may have a higherprobability to reoccur.Screen 10 of 65
RCA ConsiderationsPrior to performing RCA, internal auditors should anticipate potential barriersthat could impede the effort and proactively develop an approach for handlingthose circumstances.Resistance FromManagementSkill SetsIndependenceTimeCommitmentSubjectivityScreen 11 of 65
PLANNING
What Is a Process?A process is generally defined as aseries of steps or actions performed toachieve a specific purpose. Thecomponents of a process, including acontrol process are: Screen 13 of 65
Tool: SIPOC DiagramA SIPOC diagram is a high-levelprocess map that provides asystematic way to analyze anddescribe the input and outputrelationships of process steps.It provides a graphical representationof the interrelationships of activities ofthe suppliers and customers andfocuses on the interrelationshipbetween those creen 14 of 65
Tool: SIPOC DiagramScreen 15 of 65
Steps for Creating a SIPOC Diagram1345In the processcolumn, map the5 to 7 majorprocess steps insequence.Brainstorm thekey outputs andcustomers foreach majorprocess step.List the keyoutputs of eachstep of theprocess in thecorrespondingrow/column.Identify thecustomers thatwill receive theoutputs and listin thecorrespondingrow/column.Brainstorm thekey inputs andsuppliers foreach key outputidentified.List the keyinputs for eachkey output in thecorrespondingrow/column.Identify thesuppliers thatprovide theinputs and list inthecorrespondingrow/column.Review thecompletedSIPOC to verifyall keycomponents arecompleted/addressed.Determine theareas of focus.678910Clarify the startand stop of theprocess.2Screen 16 of 65
Tool: FMEAFailure modes and effects analysis (FMEA) is asystematic tool used to evaluate a process andidentify where or how it might fail, and toassess the relative impact of the failure. Similar to a risk and control matrix in internalauditing.Failure modes are any errors or defects in aprocess design, especially those that affectthe intended function of the process, and canbe potential or actual.Effects analysis refers to studying theconsequences of those failures.Screen 17 of 65
FMEA – Failure PrioritizationFailures are prioritized according to: How serious their consequences areHow frequently they occurHow easily they can be detectedScreen 18 of 65
Example – FMEA WorksheetIdentify failure modesand their effects2Identify causes of thefailure modesand controls5Rate ability todetect8Calculate RPN andprioritize9Determine andassess actions10Screen 19 of 65
Steps for Performing an FMEA1. List the key process step.2. Identify what could go wrong in that step (potential failuremode).3. Identify the possible consequence(s) (potential failureeffect).4. Assign a severity rating.5. Identify the potential cause of a failure mode.6. Assign an occurrence rating.7. Document the present controls in place that prevent failuremodes from occurring or detect the failure before it reachesthe customer of the process.8. Assign a detection rating.9. Calculate the risk priority number (RPN).10.Recommended actions are planned to lower high-RPN(high risk) process steps.Screen 20 of 65
Severity RatingDescription of icalRecoveryDurationOrganizational &Operational ScopeReputational Impact onStakeholders (i.e.,customers, shareholders,employees)Impact on ValueWhat Would it Taketo Recover? 200MIrrecoverableEnterprise-wide;Complete inability tobusiness operationsenterprise.Complete loss ofconfidence in all 3groups.Collapse of marketAcquisition or RecoverableLong Term24-362 or more divisions;Significant, ongoinginterruptions tooperations within 2 ordivisionsSustained losses in 2 orstakeholder groups. 50% reduction incapitalization, accessing 2 billion liquidity reserve.2 or more changessenior leadership,restructuring,changes to strategic1 or more division(s);Moderate impact withinmore division(s).Moderate loss in 1 or morestakeholder groups. 25% reduction in marketcapitalization,minimal operating cashmaintenance of 2 billionreserve.1 or more changessenior leadership,significant changesoperating plans andexecution.1 division;Limited impact within 1Limited to minor/short1 stakeholder group.Miss forecast(s) and/orRefinements oradjustments toplans andEBIT4/5/6High RecoverableShort Term12-242/3Moderate 50MTemporaryless than 12months)1Minimal 20MMinimal Impact
Occurrence RatingScoreOccurrence RatingPercentage9/10Very high (failure is almost inevitable) 90%7/8High (repeated failures) 90%Moderate (occasional failures) 60%Low (relatively few failures) 30%No known occurrences on similar processes 10%4/5/62/31
Detection RatingScoreDetection Rating9/10Failure will be passed onto customer7/8Low4/5/6Moderate2/3High1Certain – Failure will be caught by controlDescriptionControls are non-existent or have major deficiencies andintendedLimited controls in place, high level of risk remainsKey controls in place, with significant opportunities forControls properly designed and operating, with opportunitiesidentifiedControls properly designed and operating as intended
FIELDWORK
RCA Fieldwork Tools and TechniquesSimple techniques such as inquiry and observation are useful fordetermining the root cause in many of the issues to be analyzed.More elaborate RCA tools and techniques should be reserved for situationswhere the benefit outweighs the cost.Examples of these types of tools and techniques include: The 5 WhysFishbone diagramFault tree analysisPareto chartScatter diagramCause and Effect MatrixBusiness Process RCAScreen 25 of 65
Tool: The 5 Whys The 5 Whys is a questions-asking technique usedto explore the cause/effect relationshipsunderlying a particular problem, with the goal ofdetermining a root cause of a defect or problem.By repeating why five times, the nature of theproblem as well as its solution usually becomesclear.Ask "why" and identify the causes associated witheach sequential step towards the defined problemor event."Why" is taken to mean "What were the factorsthat directly resulted in the effect?"Screen 26 of 65
The 5 Whys – Questions-Asking MethodThe following examples demonstrates the basic process ofthe 5 Whys: The vehicle will not start. (the problem)The battery isdead.(first why) The alternator isnot functioning.(second why)The alternatorbelt has broken.(third why)The alternatorbelt was wellbeyond its usefulservice life andnot replaced.(fourth why)The vehicle wasnot maintainedaccording to therecommendedservice schedule.(a root cause)Changes inprocurementpractices.(fourth why)By the fifth “why,”the internal auditorshould haveidentified or beclose to identifyingthe root cause.The worker fell. (the problem)There was oil onthe floor.(first why)A broken part.(second why)The part keepsfailing.(third why)Screen 27 of 65
The 5 Whys Analysis – Jefferson Memorial ExampleProblem: The stones of the Jefferson Memorial are eroding! Why are they eroding?o Why are the stones washed so often?o A large number of birds come around to eat the abundant foodsupply of little black spiders.Why are there so many little black spiders?o There are so many bird droppings on the stones.Why are there so many bird droppings?o The frequent washing of the stone.To eat the millions of little midges around the memorial.Why are there so many midges?oAt dusk they turn on the lights at the memorial. Midges are attractedto the light and dusk is their optimum time to mate.Solution: Turned on the lights one hour later and the midgesdisappeared.Screen 28 of 65
The 5 Whys – TechniquesThere are two primarytechniques used toperform the 5 Whysanalysis: The 5 Whys can be usedeffectively in conjunctionwith the fishbonediagram and fault treeanalysis toolsA hierarchical tableformat – Comprised ofcreating a table in eithera Word document or anExcel spreadsheet5 Whys TableTeam: ABC Internal Audit DepartmentDate: February 1, 2017Issue: The stones of the Jefferson Memorial are eroding.ProximateCause1. Why?Why are theyeroding?1. ReasonThe frequentwashing of thestone.IntermediateCauses2. Why?Why are thestones washed sooften?3. Why?Why are thereso many birddroppings?RootCause4. Why?Why are there somany little blackspiders?2. Reason3. Reason4. ReasonThere are somany birddroppings on thestones.A large numberof birds comearound to eatthe abundantfood supply oflittle blackspiders.To eat the millionsof little midgesaround thememorial.ProposedSolution5. Why?Why are there somany midges?At dusk they turnon the lights at thememorial. Midgesare attracted tothe light and duskis their optimumtime to mate.Turn on the lightsone hour later andthe midges willdisappear.Screen 29 of 65
Challenges with The 5 Whys Technique Solely using the 5 Whys approach can lead toa very linear thought process, where theauditor mistakenly assumes there is only onetrue root cause to an issue, and that ifsuccessful in finding that root cause, theproblem will be permanently solvedo Multiple Root Causeso Solving the Problem CompletelyScreen 30 of 65
Tool: Fishbone Diagram Fishbone diagrams are causal diagrams that help you visually display the manypotential causes for a problem or an effect. When utilizing a team approach to problem solving, there are often manyopinions as to the problem’s root causes. The fishbone diagram facilitatescapturing these different ideas and stimulating the team’s brainstorming onroot causes.Screen 31 of 65
Steps for Creating a Fishbone Diagram1.2.Start with stating the problem.3.Write the categories of causes as branches fromthe main arrow.4.Once you have the branches labeled, beginbrainstorming possible causes and attach them tothe appropriate branches.5.6.Write sub–causes branching off the causes.7.Finalize the fishbone diagram by reviewing andgetting consensus on the true root cause(s) of theproblem.Brainstorm the major categories of causes of theproblem.When the group runs out of ideas, focus attentionto places on the chart where ideas are few.Screen 32 of 65
Fishbone Diagram – Usage TipsTips for using fishbone diagrams include: State causes, not solutionsShow relationship between causesTest the causal relationships by startingfrom the smallest bone and connectingeach potential cause with the words “mightcause”Take note of causes that appear repeatedlyReview each major cause categoryCircle the most likely causes on thediagram.Screen 33 of 65
Fishbone Diagram – Root Cause Summary TableThe results of the fishbone diagram exercise can be summarized in a root causesummary table capturing each root cause noted by category and inserting thecorresponding management action plan alongside.Issue: XXXCausal factor #1Description:XXXXCausal factor #Man2Description:XXXXCausal factor Causal factor #CategoryCategoryMethods4CategoryMeasurementDate: XXXManagement Action Plan XXXXXXXXXManagement Action Plan XXXXXXXXXManagement Action Plan XXXXXXXXXManagement Action Plan XXXXXXXXXScreen 34 of 65
Tool: Fault Tree AnalysisCash account doesn’treconcileFailure EventShortage in cashaccountFirst level causeORBank errorAccountingerrorSecond levelcausesFraudORSkimmingThird level ssureFourth levelcausesCash accountant notrequired to take vacationCash accountant passedover for promotionCash accountantpurchased expensive carin anticipation ofpromotionFifth level causesScreen 35 of 65
Steps for Performing a Fault Tree Analysis1.Begin constructing the Fault Tree by stating theproblem/issue/undesired event, placing it in the first box, andlabeling it the Failure Event.2.The audit team brainstorms the immediate causes of theproblem/issue/undesired event and determines whether anOR gate or AND gate should be applied.3.Evidence is gathered by the audit team to confirm the pathsto follow for OR gates and continue to build out the tree,along with AND gate paths as well.4.The above process continues down through each level untilall relevant causes are identified the root cause(s) arereached.5.The audit team evaluates the Fault Tree and develops actionplans corresponding to the root cause(s) determined.Screen 36 of 65
Root Cause Measurement/Prioritization (Data Analytics) While traditional internal auditmethodologies have served theprofession well for decades, thosemethodologies are now being updatedand refined to incorporate data analyticsin order to successfully leverage itspotential.Data analytics are being are embeddedinto every single stage of the auditlifecycle, i.e., risk assessment, planning,fieldwork, and reporting. Additionally, theuse of data analytics techniques are beingconsidered core to many Internal Auditdepartments’ strategy and vision.Screen 37 of 65
Tool: Pareto ChartThe Pareto Chart illustrates the Pareto principle, frequently referred to as “The 80/20Rule,” which holds that 20 percent of the population accounts for 80 percent of thesituation. The purpose of the Pareto chart is to highlight the most important set offactors or activities that most contribute to a problem or opportunity.Screen 38 of 65
Pareto ChartA Pareto Chart can be a useful measurement tool for the audit team in an RCA effort. Itcan focus their attention in the direction of the most important cause or causes to resolvein order to reduce or eliminate the problem. This is particularly helpful when the team is: Analyzing data aboutpotential root causes or thefrequency of problems.Dealing with many differentproblems and causes butwants to focus on the mostsignificant ones.Analyzing wide-reachingcauses by zeroing in ontheir individual componentsScreen 39 of 65
Steps for Creating a Pareto Chart1.Choose the problem and causes that will be compared/rank-ordered bybrainstorming, using a fishbone diagram.2.3.4.Choose the time period for the analysis.5.6.7.Devise an appropriate scale for your measurements.8.9.Calculate the subtotal of each category’s measurements.Collect the data.Decide on appropriate measurement for your data, e.g., frequency, quantity, cost, time,etc.Decide on the categories that will be used to group your data items.Create a bar for each category and add appropriate labels for each, placing the tallest onthe far left, descending to the smallest on the far right.Beginning at the top of the first category bar, draw a line showing the cumulativepercentage total reached with the addition of each cause category.10. Draw a line at 80% on the y-axis running parallel to the x-axis. Then drop the line at thepoint of intersection with the curve on the x-axis. This point on the x-axis separates theimportant causes on the left from the less important causes on the right.Screen 40 of 65
Tool: Scatter DiagramA scatter diagram is a type of diagram that displays pairs of data, with onevariable on each axis, to look for a relationship between them.Screen 41 of 65
Tool: Scatter DiagramScreen 42 of 65
Tool: Scatter DiagramScreen 43 of 65
Steps for Creating a Scatter Diagram1. Brainstorm potential causes and effects for the problem using afishbone diagram.2. Identify all potential pairs of cause and effect variables associatedwith the problem.3. Use existing data or collect new data regarding to what extentcauses contribute to the problem.4. Select the most likely pairs of cause and effect variables to verify.5. Draw a graph with the independent variable on the horizontal axisand the dependent variable on the vertical axis.6. Select the scales for the x and y axes.7. Plot the data by putting a dot for each pair of data where the x-axisvalue intersects the y-axis value.8. Determine if there is a relationship between the cause and effect,noting whether the points clearly form a line or a curve.Screen 44 of 65
Cause and Effect MatrixScreen 45 of 65
Steps for Creating a Cause and Effect Matrix1.List the outputs along the top section ofthe matrix.2. Rank each output numerically using anarbitrary scale.3.Identify all potential inputs or causes thatcan impact the various outputs and listthese along the left hand side of the matrix.4. Numerically rate the effect of each input oneach output within the body of the matrix.5. Use the totals column to analyze andprioritize where to focus your effortsScreen 46 of 65
Business Process RCAKey to business process RCA is to identify thefollowing: Cost and time driverso Reduce frequency of occurrenceso Reduce cost and time of eachoccurrence. Bottlenecks and resolveScreen 47 of 65
REPORTING
The 5 CsHere’s a mnemonic device for remembering thecomponents of audit observations: Condition (what is)Criteria (what should be)Cause (why)Consequence [Effect] (so what)Corrective action plans and recommendations(what is to be done)Screen 49 of 65
A Medical AnalogyThe fivecomponents ofaudit observationsare analogous tothe componentsthat medicaldoctors use.Medical TermExampleAnalogous Internal Audit TermHealthy State Absence of a coughTemperature of 98.6 FClear lung soundsCriteriaSymptom CoughFeverRattling in the lungsConditionDiagnosis Common coldPneumoniaLung cancerCausePrognosis Effect Feel sick for a weekBe seriously ill for several weekswith possible long-termconsequencesDeteriorate and die Drink fluids and restReceive antibioticsReceive cancer therapyRecommendations and Action PlansTreatmentScreen 50 of 65
ConditionCondition is the factual evidence that the internal auditor found in the courseof the examination (the current state). The condition answers the question:“What is?”When documenting the condition, ensure the following is included: When (i.e., how often)WhoWhatWhyScreen 51 of 65
CriteriaThe standards, measures, or expectations used in making an evaluation and/orverification (the correct state). The criteria answers the question: “What shouldbe?”Screen 52 of 65
Types of Criteria Policies and proceduresIndustry standardsRegulations and lawsOthersoooooooooComparable operationsKPIsBest or leading practicesMission, vision, and strategyBusiness planGoals or targetsCustomer surveysCompetitionBenchmarking studiesScreen 53 of 65
CauseCause is the reason for the difference between the expected and actualconditions. The cause answers the question: “Why?”Screen 54 of 65
Identify Causes Ask “Why do the conditions exist?”Identify proximate, intermediate, and rootlevels of cause.Identify which level of cause is actionable.Screen 55 of 65
Levels of Cause Proximate cause(s) – The action(s) or lack ofaction(s) that led directly to the conditionIntermediate cause(s) – The cause(s) (linearor branched) that led to the proximatecause(s); may be the actionable cause(s)Root cause – The underlying cause and maybe the actionable cause.Screen 56 of 65
Levels of EffectWhen you repeatedly ask “so what,” youmove through a series of effects: Direct, one-time effect on the processCumulative effect on the processCumulative effect on the organizationHigh-level, systemic effectScreen 57 of 65
Corrective Action Plans and RecommendationsGuidanceCommunications must include the engagement’sobjectives and scope as well as applicableconclusions, recommendations, and actionplans. “What is to be done?”Matching and Linking Root Causes Recommendation must address underlying rootcause(s) and resolve both the Condition and the CauseGoal is preventing problem recurrenceMultiple Root Causes There may be more than one root cause for an event ora problemFocusing on a single cause can limit the solutions setScreen 58 of 65
Types of Corrective Action Plans and Recommendations Condition-basedCause-basedRecovery-focusedScreen 59 of 65
Tying RCA Audit Findings to Planning DocumentationCondition:Customer does not receive orderCriteria:Cause:Failure on part of package delivery serviceEffect:Loss of future salesRecommendation:Research package delivery success rate before selecting delivery serviceScreen 60 of 65
Summary Condition Criteria Cause Effect Recommendations/Management Action PlansScreen 61 of 65
Recap OverviewPlanning Fieldwork Information GatheringRCA Tools and TechniquesReporting 5 C’sScreen 62 of 65
Action PlanScreen 63 of 65
Questions and AnswersScreen 64 of 65
Thank You!Screen 65 of 65
Scatter diagram Cause and Effect Matrix Business Process RCA RCA Fieldwork Tools and Techniques Screen 25 of 65 The 5 Whys is a questions-asking technique used to explore the cause/effect relationships underlying a particular problem, with the goal of
USING SAP ROOT CAUSE ANALYSIS & SYSTEM MONITORING FOR SYBASE UNWIRED PLATFORM 6 2. ROOT CAUSE ANALYSIS FOR SUP IN SOLUTION MANAGER After SMD Managed System Setup and Configuration, the Root Cause Analysis features of SAP Solution Manager Diagnostics are available in the Root Cause Analysis work center of SAP Solution Manager. Find further information about End-to-End Root Cause Analysis on SAP .
WHAT IS ROOT CAUSE ANALYSIS? 2 Root cause analysis (RCA), is a structural step by step technique that focuses on finding the real cause of a problem and deals with it. Root Cause Analysis is a procedure for ascertaining and analyzing the cause of problems, to determine how these problems can be solved or be prevented from occurring. 8.6.2014
"Fishbone" Diagram: Measures Top Primary Root-Cause Primary Root-Cause Second level Root-Cause Third level Root-Cause Fourth level Root-Cause Measures Education & Training To Recognize Fatigue Failure Of IRS Fatigue Management Systems Political Will Regulation & Policy Under-Reporting Hours Of Service (HOS) Recording Device
ROOT CAUSE ANALYSIS AND ACTION PLAN FRAMEWORK TEMPLATE The Joint Commission Root Cause Analysis and Action Plan tool has 24 analysis questions. The following framework is intended to provide a template for answering the analysis questions and aid organizing the steps in a root cause analysis
ROOT CAUSE ANALYSIS GUIDANCE DOCUMENT. 1. SUMMARY. This document is a guide for root cause analysis specified by DOE Order 5000.3A, "Occurrence Reporting and Processing of Operations Information."Causal factors identify program control deficiencies and guide early corrective actions.As such, root cause analysis is central to DOE Order 5000.3A.
The Problem with Root Cause Analysis Method A Method B Method C Method G Method E Method H Method J Method F Method D Method I No‐one can agree on "what is a root cause." Everyone says they do "root cause analysis,"yet everyone is doing something different!
It can be used on its own or in conjunction with the fishbone diagram analysis in moving from the chosen root cause to the true root cause. Simply ask Why 5 times starting with the effect of the problem. 5 Whys focuses the investigation toward true root cause
2013-11-05 Root Cause Analysis Beginner LISA 2013 Stuart Kendrick 16 Why No Root Cause? Why do I claim there is no such thing as a Root Cause? Consider the server which goes down; your monitoring system pages you; you investigate. Turns out the power supply died -you replace the power supply, the server reboots, everyone is happy again.
