Embedding Risk Management into Product Development

Author:

Stup, Gretchen M, Minter, Anthony R, and Coffey, Harry C

Summary:

Abstract. Implementing a risk management program help to ensure the safety and efficacy of the product, can eliminate product inefficiencies, and even prevent product failure. Risk is the possibility that human activities or natural events will lead to consequences that affect success. Risk has three components: What could go wrong?; What is the probability of failing to achieve a particular outcome?; What is the impact of failing to achieve a particular outcome? There are six basic processes that answer the above questions: risk planning, risk identification, risk analysis, risk mitigation and tracking, risk contingency planning, and risk communication.

Risk planning is about being prepared to perform risk analysis, including the development of well-documented risk management processes. Risk identification begins with a highly trained team who use the outputs of the Risk Planning process to discuss the work scope and recognize the risks associated with performing various tasks. Risk analysis requires a team to estimate the probability of the risk event occurring, and the potential impact of the risk on the project’s quality, schedule, and cost. Risk mitigation and tracking helps to control the likelihood that the risk will happen, and eliminate or reduce the impact of the risks to the program. Contingency planning prepares for the event of high probability and/or impact of risks and has a plan of action for responding to an undesirable occurrence. Lastly, risk communications is initiated to keep continual communication with stakeholders throughout the entire time of the project.