Risk management practices in product development companies

DS 91: Proceedings of NordDesign 2018, Linköping, Sweden, 14th - 17th August 2018

Year: 2018
Editor: Ekströmer, Philip; Schütte, Simon and Ölvander, Johan
Author: Schulte, Jesko; Hallstedt, Sophie I.
Series: NordDESIGN
Institution: Blekinge Institute of Technology
ISBN: 978-91-7685-185-2


Product development (PD) is inherently linked to taking and managing risks. For risk management (RM) to be truly effective, it cannot be treated in product development in isolation. Instead, a holistic perspective is required that recognizes and leverages the communication and connections between RM subdisciplines across the organizational hierarchy, including e.g. enterprise-, portfolio-, project-, and product RM. Therefore, the purpose of this study is (i) to investigate current RM practices on the strategic, tactical, and operational levels, and (ii) to increase the understanding of how RM sub-disciplines are connected and interact. To answer these questions, semi-structured interviews were conducted at two large multinational PD and manufacturing companies in Sweden. Also, based on previous research, a novel self-assessment tool was developed and tested to map areas of strength and identify improvement potential. The results show that RM processes are mostly formalized and systematic, but there is variation in the quality of performed RM activities. Qualitative support tools are dominating. The tools themselves are considered to be helpful, however, the challenge is to make people use them in value-adding ways. Other challenges and success factors include competence and awareness, culture, top-down demand for high quality RM activities and deliverables, a dedicated role with clear responsibility, and working early and continuously with RM. The importance of experience is stressed, however, no systematic way to work with lessons learned and knowledge sharing is in place at the companies. Risks are found to be primarily escalated bottom-up. The corresponding top-down flow constitutes of objectives, which ideally are cascaded all the way from company vision and strategy into product requirements. Through these findings, the contribution of this study is (i) providing detailed insight into current RM practices, not limited to the PD function, but considering a broader organizational context; and(ii) clarifying the role of goals and objectives for connecting RM on different levels

Keywords: Risk Management, Product Development, State of Practice, Case Study, Requirements Management


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