LRP should be administratively controlled and managed to a lesser degree or with a more efficient technique than higher risk property.

The type and scope of control and management should be commensurate with the level of risk. The entity shall determine the level of risk using the following criteria:

Scarcity,

Technological obsolescence,

Lead time,

Standardization,

Criticality,

Sensitivity,

Dollar value,

Environmentally regulated,

National security/threat,

Schedule constraints,

Vulnerability,

Societal or personal safety, and

Contractual agreements.

Note 1—The listing in 4.2.1-4.2.13 is not all inclusive and may be supplemented by the entity.

The information received from conducting standard asset life cycle processes (LCP) for LRP may not provide sufficient value to the entity that is equal to or greater than the cost associated with performing the processes.

Entities should establish policies and procedures, based on certain criteria in determining whether all or selected asset LCP should be conducted for LRP.

The success of any entity is dependent in part on its operational effectiveness. To be effective entities should shift their focus from “risk avoidance” to one of “risk management.” The required processes and associated cost to eliminate all risk is prohibitive and contrary to producing timely, high-quality, and competitive products and services.

1.1 This practice covers the assessment of risk and management of low risk property (LRP).

1.2 This practice is directed at tangible LRP.

1.3 This practice does not promote mismanagement or dereliction of duty to protect property, nor protecting property unreasonably – to the extent that usefulness is impaired. This practice recognizes the constraints of materiality and costs versus benefits in the control and management of property.