establishing a risk analysis adam caldwell v0, may 19, 2015

Establishing a Risk Analysis

Adam CaldwellV0, May 19, 2015

Biography• Adam Caldwell is ASQ Six Sigma Black Belt that is working for

Michelin, NA as a Project Manager focused on new technologies and tire lines for the NA market.

• He holds a BA in Elementary Education from Clemson University and a BS in Business Administration from Limestone College.

• He has over 15 years of manufacturing experience with roles that range from warehouse management to lean manufacturing in the vitamin industry, and industrial engineering to project management within the tire industry.

• Most importantly, he is married to Lara Caldwell and they raise two girls – Emma and Dana – on their small farm in Gray Court, SC.

Structure of Review• What is a Risk Analysis?• Phase 1: Identification

– Before the Meeting– Set the Stage– Risk Mitigation

• Phase 2: Quantification– Severity & Occurrence

• Phase 3: Treatment– Options for Treatment

• Closing Thoughts

Vocabulary

• Risk– According to Project Management Institute (PMI)

• uncertain event or condition that, if it occurs, has a positive or negative effect on the projects objectives.

• Risk Analysis– It is a methodical approach to Anticipate and Control the risk

associated with the proposed change.• Includes:

– Identification – what risk(s) are created– Quantification – how impactful is the risk(s)– Treatment – action taken to mitigate risk(s)

What happens in a risk analysis?

Three Phases of Risk Analysis Sessions

Phase 1Risk Identification

Phase 2Risk Quantification

Phase 3Risk Treatment

Before the Meeting

Who to invite to a risk analysis?Before the Meeting

Representatives “in” the process

Representatives “around” the

process

End User

Upstream

Downstream

Do the work

Maintain the process

Created the process

Points to Consider• Will anyone be calling in?

– Set up & share with invite• Have you meet with the team to review and update

the Risk Register with the risks already identified?– This must be complete prior to session

• Review the agenda and determine if you need to split it into multiple phases due to size of topic– If needed, first review should be to generate risks and

quantify; then bring back for treatment options

Before the Meeting

Meeting Agenda• Welcome– Purpose and Ground Rules– Review of Process Changes

• Known Risks– Industrial Risks, Customer Risks

• New Risks– Shop by Shop review based on proposed model– Interaction of new risks

• Quantify Risks• Known Investments

– Funding, Prototypes already in development, existing recommendations

• Treatment of Risks• Close meeting

– Review of location of information, next meeting (if necessary), actions

Before the Meeting

Three Phases of Risk Analysis Sessions

Phase 1Risk Identification

Phase 2Risk Quantification

Phase 3Risk Treatment

Before the Meeting

Set the Stage

Welcome• Agenda

– Share the structure of the session so everyone knows what is coming

• Purpose – Purpose of why the session has been called – Ex – ID risks for Process A, Treat Risks,

etc– We are not here to pass judgment on if the project should proceed– Post or write on a white board/flip chart a quick definition of risk types you are

seeking

• Ground Rules– This is a posted list of expectations during the risk generation – its all about behavior

• Review of proposed change(s) – Have a visual of the proposed change(s) as either a hand out or large print posted

on the wall– Be prepared to review what is “new”

• It is possible that something is only “new” at one of the intended sites

Set the Stage

Ground Rules1. Focus of this review is on the specified project, risks of other

projects will be redirected back to scope2. Treat others with respect – focus on the risk, not the person3. Place cell phones on vibrate – take calls outside; you will be

asked to step out if you do not.4. Share your thoughts on risks5. Some risks may be presented that should not be on the

register – save debate, filter will eliminate6. Be engaged & have fun

Set the StageExample

R2 / R3 Risk Analysis Product, Material, Process, Method

Quality Planning is the anticipation and control of the R2 and R3 risks.

• R2 Risks – Not achieving the desired Product Performance because of the impact of the Manufacturing Performance.

• R3 Risks – Impact of the Product Design on Industrial Performance.

QualityUniformity ArchitectureUniformity Correction

Process Capability

Material Volume

Width, Thickness, Placement

Cycle TimeDebit New MaterialsCure Time

Products

Set the StageExample

New Process Proposal• Include a visual of the design - CAD drawing, Process

Maps, Photos, physical mock ups, etc– Having a visual enhances the risk identification AND simplifies

communication

• Create a bullet list of what is “new”– Point out

• Quality of any material• Geom. Of any material• New components added• Changes to specifications• New process that it will be built upon

Set the Stage

Three Phases of Risk Analysis Sessions

Phase 1Risk Identification

Phase 2Risk Quantification

Phase 3Risk Treatment

Before the Meeting

Set the Stage

Risk Identification

Moving the Mind• The structure of the risk review should help

people move through different “rooms”

Risk Identification

Preparation Tire Building Curing After Cure

Site

“New” for Tire

Moving the Mind• The structure of the risk review should help

people move through different “rooms”

Risk Identification

Preparation Tire Building Curing After Cure

Site

“New” for Tire

Rubber

Steel

MAC/MAF

Group

MB2

Wet

Dry

Dual

Aspect

Unif.

Rect.

Textile

21

If you don’t like the rooms plan, think of the Fish Bone….

Risk

The 8 Ms (used in manufacturing)

Machine (technology) Method (process) Material (Includes Raw Material, Consumables and Information.) Man Power (physical work)/Mind Power (brain work): Kaizens, Suggestions Measurement (Inspection) Milieu/Mother Nature (Environment) Management/Money Power Maintenance

Risk Identification

Structure of Risk Identification

• Risk Leader can be the scribe for the session – but they can delegate this to another person if it they need to– Risk Register is not displayed while you are

collecting information– Scribe needs to be able to quickly flip to the

register to review

Risk Identification

Getting To the Risks• Three main methods to getting the ideas from the participants:

– Let them call them out as they have them, when the ideas slow, put them in a new “room”

• Drawback – one person can control the discussion causing you to have to intervene more often

– Set up a rotation – we are going to start on the left side of the room and get one risk per person, if you do not have one, say “pass”; when the ideas slow, put them in a new “room”

• Drawback – people get “tired” of waiting or do not want to just give one on their turn

– Use post its to capture the points and group linked risks together before putting into the register; when the ideas slow, put them in a new “room”

• Drawback – takes a bit more time to put the ideas on the post it then group

Risk Identification

Exercise: Select the types of risk that should be on R2/R3 Risks Register

• Plant does not experience with 20” tires

• Loading incorrect material on the Extruder

• The new material has poor performance on plant process

• Tooling will be delivered late

• Potential for an increase of changeover time due to the temperature shifts between material new material and other materials

Risk Identification

Risk Register

• Be as specific as possible when documenting the description of the Risk.

• Capture the Cause if it is known.

Risk Identification

Tips to stay on track

• Define up front the types of risks you are looking to identify– Chunk it up if it really is all risks

• Set your ground rules up to help – Let the rest of the room have input – if most agree

– keep it• If all else fails – record it and move on

– Quantification will help move it out of the way

Risk Identification

Three Phases of Risk Analysis Sessions

Phase 1Risk Identification

Phase 2Risk Quantification

Phase 3Risk Treatment

Before the Meeting

Set the Stage

Risk Identification

Risk Quantification

Quantify Risk

• For each Risk identified, you will need to provide two values:– Severity– Occurrence

• Why not detection?– Preference and need – use it if you feel it is needed

Risk Quantification

SeverityRisk Quantification

1 3 7 9

Non-conformity does not lead to an effect perceptible in the performance of the product.

It is probable that the customer will not be in a position to discover it.

Non-conformity can constitute a slight difficulty for the customer.

He/she can note a slight fall in the performance of the product

Discontentment of customer.

The customer will note a significant deterioration in the product performance.

Non-conformity with Regulations / Safety is not affected

Potential safety problem with or without warning sign before occurring

The impact on industrial indicators is not significant.

Minor Disruption

Some indicators of industrial performance are impacted.

Moderate Disruption

Some indicators of industrial performance are heavily impacted.

Major Disruption

Very high impact on a large subset of industrial performance indicators.

Failure to Meet Internal/External Safety and/or Regulatory Requirements.

De

sc

rip

tio

n

Risks 2

Risk 3

Severity Rating

Example

OccurrenceRisk Quantification

DescriptionProbability

of Ocurrence

Very High: Certain ≥ 1 in 10 9

High 1 in 50 7

Moderate: occasional occurrence under similar conditions

1 in 2,000 3

Low: relatively unlikely 1 in 100,000 1

Oc

cu

rre

nc

e R

ati

ng

Example

Three Phases of Risk Analysis Sessions

Phase 1Risk Identification

Phase 2Risk Quantification

Phase 3Risk Treatment

Before the Meeting

Set the Stage

Risk Identification

Risk Quantification

Risk Treatment

Which ones to treat?

• Once all the scores are tabulated, let the chart guide you to the ones that need treatment.– Set your own based on your business needs

9 27 63 81

7 21 49 63

3 9 21 27

1 3 7 9

Risk Factor

Non-Acceptable Risk Zone

Risk Zone requiring further review by Quality Planning Team

Acceptable Risk Zone

Example

Risk Treatment

Methods to Mitigate• For all risks in the Red, a method to Validate

and/or Mitigate the risk must be developed.

Risk Treatment

9 27 63 81

7 21 49 63

3 9 21 27

1 3 7 9

Risk Factor

Non-Acceptable Risk Zone

Risk Zone requiring further review by Quality Planning Team

Acceptable Risk Zone

Methods to Mitigate• For all risk in the Orange, additional study is

needed to determine if the Risk is acceptable

Risk Treatment

9 27 63 81

7 21 49 63

3 9 21 27

1 3 7 9

Risk Factor

Non-Acceptable Risk Zone

Risk Zone requiring further review by Quality Planning Team

Acceptable Risk Zone

Methods to Mitigate• For all risk in the Green, Risk is acceptable

Risk Treatment

9 27 63 81

7 21 49 63

3 9 21 27

1 3 7 9

Risk Factor

Non-Acceptable Risk Zone

Risk Zone requiring further review by Quality Planning Team

Acceptable Risk Zone

Methods to Mitigate• In all cases, this team is to come up with

methods to reduce Severity or Occurrence BUT it is up to the steering committee to approve the direction

Risk Treatment

Categories of Treatments

• Improvements or updates to the design• Changes to the material• Create a new process – Prototype projects• Implement a known – Investments • Review/challenge of requirements in specs

(internal and external)• Process changes leveraging work method

Risk Treatment

Validation of Treatment Plan• How do you verify your treatment is acceptable?

– Use your functional experts & company’s established practices

– Examples of established practices• Steering Committees set up with defined purposes –

technical direction, manufacturing spending• Standing Project Review Teams with set scope and

processes aligned with the overall flow of the process

Risk Treatment

Three Phases of Risk Analysis SessionsPhase 1

Risk Identification

Phase 2Risk Quantification

Phase 3Risk Treatment

Before the Meeting

Set the Stage

Risk Identification

Risk Quantification

Risk Treatment

Closing the Meeting

Steps to Close the Meeting• Review any open actions that are not captured in the risk

register. Assign an owner for those actions with due date.• High level review of the session

– We have completed the 1st review of the risks for project “x”. – If you did not make it all the way to Mitigation, set the stage

for what is next to come.• Set expectations for next steps

– Remind everyone of location of the register (include link in follow up email to those with actions)

– Identify when next meeting will be for a review on the Quantification or Treatment of the Risks

• Thank everyone for their participation and dismiss

Closing the Meeting

• Before the Meeting– Who to invite?– What to consider for the review?– Setting the agenda

• Set the Stage– Structure of the review– Set the stage for the review– Setting up the room for the review– Ground Rules for the participants

and the risks

• Risk Identification– Method to layout for drawing out

the risks– Keep people on the task – use the

Ground Rules

Closing Thoughts on Risk Analysis• Risk Quantification

– Have a pre-defined method for ranking Detection, Occurrence, and Severity element for the risk

• Risk Treatment– “Simple” treatments can be discussed and

recorded– Some treatments may not be readily

available – be prepared to establish additional sessions to treat

• Closing– Assigning actions– setting up the next steps if needed

Thank You!

• For additional information:

– Adam Caldwell, CSSBB– caldwelladam@yahoo.com– 864-420-8609

Appendix

The following are forms and templates that you are welcome to use as they are or as a guide to make your own.

ParticipantsRole Name Manager

Before the Meeting

Risk Register

Template of file:

Risk Identification

Blank Risk Analysis