ME 59700
Fall 2014
Introduction to Systems Engineering
Session 17
Dr. Dan C. Surber, ESEP
© Copyright 2013
Lecture Topics
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Risk Management Concepts
Techniques
Tools & Utility
Carry over to later phases
Risk Management Concepts
• Risk: “uncertainty that can cause us to fail.”
– 2 components
• LIKELIHOOD (Probability factor, Pf)
• SEVERITY (Consequence factor, Cf)
– Both are expressed in PER CENT, so they are LESS
THAN ONE
– their PRODUCT is the Risk Factor
• Mitigation: “set of steps to reduce Pf and Cf”
• Contingency: “what to do if MITIGATION fails”
• BOTH take resources and MIT needs to be on
the SCHEDULE with start and stop dates
Risk Management Concepts
• Probability factor (Pf)
– How likely is it that the cause of uncertainty
will be actually occur.
• Consequence factor (Cf)
– What is the severity of the outcome when it
happens.
Opportunity Concepts
• Opportunity: benefit that has feasibility.
– 2 components
• LIKELIHOOD (Feasibility)
• CONSEQUENCE (Benefit)
– Both are expressed as numbers greater than
1, and their PRODUCT is the Opportunity
Factor
• PURSUIT: a plan to take advantage of the
OPP and gain the benefit, but it costs
some resources to PURSUE
Opportunity Concepts
• Benefit (Bf)
– What is the benefit accrued to the program if
the opportunity is realized.
– What will it COST to pursue and capture this.
• Feasibility factor (Ff)
– How likely is it that this opportunity can be
achieved.
Risk Handling Methods
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Accept it
Transfer it
Manage it through mitigation
Monitor it
Don’t bring it into the active database but
save for possible future use
RM Techniques & Tools
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Spreadsheet in MS EXCEL
Database in MS ACCESS
SEI: http://www.sei.cmu.edu/risk/index.html
ARM, by Strategic Thought (SQL or Oracle)
http://www.strategicthought.com/riskmanagement/risksolutons/
• Prophet, a tool made by Hughes/Raytheon
• Risk Radar
http://www.iceincusa.com/16CSP/content/software/tools/r_radar/risk_rad.htm
• Other sources:
– http://www.asce.org/files/pdf/seminars/fixWYRICK.pdf
Utility of RM Tools
• Spreadsheet or Database
– Concept Phase
• Early identification (“If this happens, then the consequence to the
project/design is x, y & z.”)
• Best opportunity to “Design it out”
– Later Product Development Phases
• Technology on the CRITICAL PATH, but not the point of the project
• Management reserve must be used carefully
• Risks change with product life cycle phase
• Develop a RISK MANAGEMENT PLAN at the start of
the project
– Stakeholders & risk review board
– Document how you will rate & rank Risks & Opportunities
Summary
• Everyone on the team is a key to finding
risks and opportunities
• Identification is worthless without
prioritization & action
• Ignoring OPPORTUNITIES is leaving
money on the table & business at the mall
• Plan to mitigate, and have a
CONTINGENCY in case that fails
Tools & Utility
• http://www.sei.cmu.edu/risk/
• MS Access such as RISK RADARTM
• (ISO/IEC Guide 73)
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http://www.theirm.org/publications/documents/Risk_Management_Standard
_030820.pdf
• http://www.risk-opportunity.com/
• http://www.method123.com/risk-register.php
• http://www.wikihow.com/Develop-a-Risk-ManagementPlan
• http://www.mitre.org/work/sepo/toolkits/risk/ToolsTechniques/RiskR
adar.html
• Active Risk ManagerTM
HAZARDS
System Safety vs Project Risk
See SLIDES 17a.ppt