Risk Management in Systems Engineering: Identifying, Analyzing, and Mitigating Risks, Slides of Systems Engineering

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Risk Management

Objectives

• Risk Management

• Learn how to develop Risk Management Plan

• Apply Risk Management

• Understand the importance and implications

of Risk Management

Key Terminology

• Risk

• Mitigation

• Risk Management

• Risk drivers

Text book

• This material is presented in 5 pages of

Chapter 6

• Risk is considered Project Management and

integrated with Decisions.

• Other than considering Risk a SE function, and

integrating the project with Risk, the message

is the same.

Risk Management,

INCOSE Handbook

• Risk management, in the context of industrial Systems Engineering, is the recognition, assessment, and control of uncertainties that may result in schedule delays, cost overruns, performance problems, adverse environmental impacts, or other undesired consequences.
• There are two main branches of risk management:
  • Program risk management (PRM): the management of technical risks and task performance uncertainties associated with any development or production program, in order to meet performance, cost, and schedule objectives.
  • Environmental risk management (ERM): the management of environmental, health and safety risks associated with the production, operation and disposal of systems, in order to minimize adverse impacts and assure sustainability of these systems.

Currency and Significance

• Google search on “Risk Management”, quotes

included, results in 1.8 million hits. Much of

this is financial based. Much is consultants

selling RM, in part because it promises a lot

and is quite ambivalent.

Types of Risk

Risk Identification

Risk Screening Criteria

Part A: Technical Risk Screening Criteria Potential for Risk? No Low Yes TECHNOLOGY

1. New technology?
2. Unknown or unclear technology?
3. New application of existing technology?
4. Modernized/advanced technology in existing application? PHYSICAL INTERFACES or INTERFACE CONTROL
5. Multiple system interfaces?
6. Multiple technical agencies?
7. Interface with operating structures, systems, or components during installation? SAFETY
8. Criticality potential?
9. Significant exposure/contamination potential?
10. Any impact to the Facility’s Authorization Basis?
11. Hazardous material involved?
12. Process hazard potential?
13. Will hazardous materials inventories exceed the OSHA or Radiation Management Plan limits?

From: DOE Project Management Practices, Ch. 8

Risk Identification

Risk Screening Criteria, cont.

From: DOE Project Management Practices, Ch. 8

Part B: Project Risk Screening Criteria Potential for Risk? No Low Yes COST

1. Is the modification TPC greater than $4M? SCHEDULE
2. Project Schedule uncertainties or restraints that may impact project completion or milestone dates? PROCUREMENT
3. Long - lead items that may affect critical path?
4. Potential unavailable qualified vendors or contractors? PROGRAMMATIC INTERFACES
5. Significant transportation or infrastructure impacts?
6. Multiple project interfaces?
7. Multiple contractor interfaces?
8. Significant interface with operational facility? REGULATORY and ENVIRONMENTAL
9. Political visibility? (DOE, local government, Congress) OTHER (Define below)

Mitigation

• Mitigate: Cambridge

Dictionary

• to make (something) less harmful, less unpleasant, or less bad
• Mitigation is to take a

step to reduce either the consequences or the probability and hence the risk

Risk Level Matrix

Comments on Risk Level Matrix

• This is just a typical Decision Matrix for a

System Alternative

• Analysis gives quantitative results
• Typically just qualitative values are used
  • Discuss the pros and cons of both types of presentation

Risk Management Plan Outline, cont.

• 3.0 RISK MANAGEMENT PROCESS Planning……………………………………………………… - 3.1.2 Risk Identification. ………………………………………………………………. - 3.1.3 Risk Analysis ........……………………………………………………………… - 3.1.4 Risk Mitigation and Handling……………………………………………………. - 3.1.5 Risk Tracking, Reporting, and Closure…………………………………………… - 3.1.6 Risk Analysis Report ..............………………………………………………….. - 3.1.7 Trend/BCP…………………………………………………………………………
• 4.0 REFERENCES
• 5.0 APPENDICES

Appendices for RMP

See examples in DOE Project Practices page 237 on

5.1 APPENDIX A - TYPICAL RISK

MANAGEMENT DATA

5.2 APPENDIX B - INSTRUCTIONS FOR

TEMPLATE FOR INDIVIDUAL RISK

ASSESSMENTS

5.3 APPENDIX C - GUIDELINES FOR

CONDUCT OF RISK MANAGEMENT

ACTIVITIES

5.4 APPENDIX D - RISK SCREENING FORM