Risk has two key elements
- An uncertainty
- An impact in terms of potential loss (if it happens).
Risk management is a continuous process. Risk management process involves following key steps: Identify risks Assess each risk Rank all risks according to their severity Plan for risk mitigation and contingency on the basis of outcome of step 3 Monitor each risk Control deviations (if any) from risk mitigation plan.
Risk identification is carried out at the beginning of every project. It is revisited during each project review on an ongoing basis for all residual risks and new risks. The identification of risk is highly project specific.
Any project has three key dimensions:
Risk assessment involves determining
- First risk indicator.
The uncertainty is the probability of occurrence of the risk. This probability can be determined either qualitatively or quantitatively.
Recommended to use 4 categories (to avoid middle point bias) such as 1-low, 2-medium, 3-high, and 4-very high. The quantitative measure is a normal probability scale measure from 0 to 1.
The impact can be determined in terms of its severity, preferably a value from 1 (lowest) to 4 (highest).
First Risk Indicator
The first risk indicator is earliest condition or event that signals risk turning in to a problem.
- A mitigation approach is developed for each risk, to either avoid or reduce the impact of risk.
- The responsibility to implement the mitigation strategy is assigned to a team member along with a target date.
- The actual execution of the mitigation plan is called risk resolution.
- A contingency plan is also developed to handle the situation when a risk turns in to a problem.
It involves regular tracking of risk resolution process and first risk indicator. The deviations in the risk resolution process are recorded.
Strategy to reduce deviation in the risk resolution process is developed and implemented.
Minimum Risk Documentation Format
||Unique Risk Identification Code
||Category according to the taxonomy
||Date on which the risk was identified
||Clear risk definition in “condition” and “consequence” format
||Qualitative or quantitative probability of occurrence
||Impact in terms of severity
|Exposure (Probability X impact)
||Product of probability and Impact
|First Risk Indicator
||Condition or event that indicates a risk turning into a problem
||Approaches to avoid or reduce the impact of risk
||Person(s) responsible for risk resolution
||Date by which resolution must be achieved
||Detailed plan to handle the situation when a risk turns into a problem.
||Risk resolution process tracking information
Benchmarking is a standard by which something can be measured or judged. They set a benchmark by marking a point of known vertical elevation
Three Types Of Benchmarking
- Internal Benchmarking
- functional Benchmarking
- Competitive benchmarking
It compares (critical-to-business) processes or products across the organization on key critical-to-quality parameters such as turn-around-time or cost.
It compares similar functions or processes with industry leaders in that area.
It focuses on direct competitors in terms of their products, services, processes, and customers.
Brainstorming is a technique to systematically generate ideas usually to handle a challenging situation, from a group of people by nurturing free-thinking. Some of the right challenges to address using brainstorming are problem solving, new design or new product development, and research & development.
A Pareto Chart depicts the frequency with which certain events occur. It is a bar graph where each frequency (or frequency range) is shown in a descending order of importance of data, from left to right. This is based on the Pareto Principle, also called 80-20 rule or rule of vital few.
Methods, Tools & Techniques are vital to the success of any Six Sigma project whether DFSS or DMAIC. Every stage of a Six Sigma project recipe requires a mix of these methods, tools & techniques.
Let us briefly review what do we mean by these keywords.
Method is a way of doing something in a systematic way. Here word “systematic” implies an orderly logical sequence of steps or tasks. A tool provides a mechanical or mental advantage in accomplishing a task. A technique is a specific approach to efficiently accomplish a task in a manner that may not be immediately obvious.
SIPOC is a high-level picture of the process that depicts how the given process is servicing the customer. Acronym for Suppliers-Inputs-Process-Outputs Customers.
Operational definition is the first step towards effective management. It helps us build a clear understanding of a concept phenomenon so that it can unambiguously measured.
Scenario (a) Requires the Use of DMAIC for process improvement
Define: Process goals in terms of key critical parameters (i.e. critical to quality or critical to production) on the basis of customer requirements or Voice Of Customer (VOC)
Measure: Measure the current process performance in context of goals.
Analyze: Analyze the current scenario in terms of causes of variations and defects DMAIC
Improve: Improve the process by systematically reducing variation and eliminating defects
Control: Control future performance of the process
Scenario (b) focuses on process design using Design For Six Sigma (DFSS) approach. DFSS Approach requires IDOV method
- Identify: Process goals in terms of critical parameters, industry & competitor benchmarks, VOC
- Design: Involves enumeration of potential solutions and selection of the best
- Optimize:Performance by using advanced statistical modeling and simulation techniques and design refinements
- Validate: Design works in accordance to the process goals.
Usually high up, who sponsors a Six Sigma project through the business. The first few Six Sigma projects may encounter some technical, political, or institutional obstacles in the business environment. It’s critical that someone is there to help the project and the project members overcome any obstacles and resistance.
This is a title for someone who is involved with a Six Sigma project “part-time.” They have a job with normal duties, added involvement in a Six Sigma project.
Does Six Sigma “full time.” Their entire work effort is focused on finding defects, wherever they might be, and eliminating them from the business processes. They move from department to department, heading Six Sigma projects.
Master Black Belts
This indicates the highest level of skill and training, sometimes designates an outside consultant who specializes in Six Sigma process improvements. These individuals provide training to others involved in process improvement develop an organizational culture that supports the implementation of Six Sigma.