Operational Framework for Managing Risk Interactions in Product Development Projects

Risk management in the context of product development projects faces many difficulties: systemic risk is often omitted and interactions between risks are seldom present. To address these problems an operational framework is presented in this paper. This framework introduces the concept of standardized development task and process, risk event, risk factor and risk behavior. Standardized task and process enable propagation of risks from task to process level and they are modeled using system engineering approach (activity model). Risk interactions are modeled on task level and propagated to process level using inter-activity input-output relationships. Risk interaction model includes risk events, risk factor and risk behavior. Risk event defines the value of risk factors. This risk event – risk factor relation is modeled using Bayesian networks and expert opinions. Relationships between risk factors form risk behavior with included interactions. Mentioned relation is represented using Fuzzy Cognitive Maps. The main advantage of this approach is that this manner of addressing risk can be at the same time easier from the aspect of necessary data and more precise from the perspective of obtained results. Apart from the framework introduction, usage of the solution is illustrated with the academic example at the end of the paper.