Pragmatic risk assessment approach for product development

The paper proposes a practical assessment approach to estimate duration of the product development process incorporating risk management principles. Risk assessment, as a crucial part of risk management process, is a systematic process for estimating the risk level of previously identified and recognized risks. Currently, the best-known relationship in risk assessment is that risk level equals the product of two factors – likelihood and impact. The proposed approach treats these factors as random variables with triangular probability distributions in order to mitigate biases due to subjective risk estimation. Based on a literature review, the approach considers probability functions assigned to estimated values which together with Monte Carlo simulation avoid fixed single-point estimations and deterministic simulation issues. Relating this kind of assessment with previously established risk mapping on the product development process broadens insight about the influence of risk on the process metrics. Since, risk assessment is still mostly approached in terms of individual reasoning, intuition or previous experience, providing a practical method for assessing risks can enhance and facilitate the usability of risk management principles in product development companies. The proposed approach is illustrated using an example, which involves an automated car washing facility product development process.