There are two types of risks that need to be managed as part of a new product development project: project risks and design risks.
Project risks related to such things as:
Project teams need to identify and manage these risks throughout the development project. This is typically done by periodic meetings of the project team. It is important that this be done by the entire project team rather than just the project manager. Project team members from the different functional areas will each recognize certain risks that the other team member are not aware of.
One way to facilitate risk identification is to pre-populate a risk management template with common risks in new product development projects. This will help trigger thinking of various risks that could affect a project. However, it is important to get team members to also consider risks that may not be previously identified.
A next step is to get the project team to evaluate these risks in terms of the probability of the risk occuring and the impact of the risk if it did occur. We recommend a one to ten point rating system similar to that used with failure modes and effects analysis (FMEA). These two factors are multiplied together to produce a risk profile number (RPN) again similar to an FMEA. We suggest that any RPN of 15 or higher then be actively managed by taking setps to prevent or mitigate the risk. These mitigation or prevention steps should be documented and responsibility assigned for them.
An example of a project risk management template is shown below.
Design risks are factors in the product design that create risks due to:
These risks are best managed with failure modes and effects analysis. Both the Design FMEA and the Process FMEA will identify different sources of these risks in form form of failure modes and their effects. For more information, see the Failure Modes and Effects Analysis paper.