Premium
5.4.2 A Solution to the Risk Management / Innovation Dilemma
Author(s) -
Cogliandro J.A.
Publication year - 2001
Publication title -
incose international symposium
Language(s) - English
Resource type - Journals
ISSN - 2334-5837
DOI - 10.1002/j.2334-5837.2001.tb02351.x
Subject(s) - risk management , ingenuity , dilemma , computer science , risk analysis (engineering) , operations management , process management , management science , business , engineering , management , economics , mathematics , geometry , neoclassical economics
Risk management is a proven, accepted form of control for large, multi‐faceted technical development programs; however, it may be ‘detrimental’ to some or all of these programs due to inaccuracies in its mathematical and cultural basis. We hypothesize that Risk Management is inappropriate for many programs; particularly small projects, technology development and insertion programs, and R&D projects. Risk management can also hinder ingenuity and promote mediocrity in larger programs, especially during the critical concept exploration and preliminary design phases. In short, a modified version of Risk Management is proposed. This new version is directly linked to the strategic goals of the organization; it is designed to foster innovation without sacrificing robust design and good program management. The method is called Strategic Risk Management and is also known as Three Dimensional Risk Management (3DRM“©®, Pat. Pend.). It uses a newly constructed risk consequence chart designed to correct the flaws in today's risk management programs and is easily applied to existing risk programs or developed in new programs. Each point on the likelihood/consequence curve is numerically linked to the organizations goals, tactics, and strategies, and is program phased, hence the third dimension. In effect, 3DRM creates three totally new risk management quadrants organized by phase, and maintains the traditional curve as quadrant three. A powerful graphical summary view is also presented, which highlights the juxtaposition between the risk level and expected return of each item, and overlays the original goals of that item. In the following pages we will attempt to quantify several of the assumptions behind the statements above while proposing a modified form of Risk management for use in all programs, large and small, conceptual and mature. ‐Author's note: This paper is written for the risk management professional and assumes a basic knowledge of risk management; including identification, consequence and likelihood setting, mitigation planning and tracking. Our desire is not to dismantle any currently implemented risk management program or preclude a future program, but to offer the possibility of amending and improving the process.