FMEA Part 3 - How to mitigate project/process risks and lower your FMEA RPN Score
Introduction
In this article we will discuss how to mitigate project/process risks and lower your FMEA RPN scores. Properly done, it can be an invaluable tool to help mitigate risks early on in a project or help fix an existing process.
RPN scoring allows you to quantify the risk of a failure mode. If you can pinpoint your biggest risks early on, you can prioritize their mitigation and mitigate them before process go-live. This will benefit your program later on down the line because it ensures that all efforts are focused on the most important issues, rather than being spread across all possible issues.
RPN scoring is also a way to measure how effective your mitigation strategies have been at reducing risk during development. You will be able to tell if a particular strategy has helped with reducing risk, or if it has not been effective at all (or if there was no need for implementing this type of strategy in the first place).
Risk mitigation efforts are critical for bringing projects and processes online
Risk mitigation efforts are critical because they should help eliminate errors at their source proactively. In the case of a product, this means that risks have been mitigated before it gets released on the market or for financial processes, goes “live” in a production environment. For example, if you’re developing a product and there is a risk of it being damaged during shipping, then mitigating that risk is an obvious item that needs to be baked into your project plan.
Mitigation can also help prevent project delays by identifying issues early and preventing them from snowballing into bigger problems later in the life cycle. By taking these steps now instead of waiting until after problems arise, you can keep yourself from having costly delays due to lack of communication between stakeholders (e.g., designers vs developers).
Consider the people, process, and systems that impact the RPN of any given failure mode
[People] can make mistakes and act against their training or beliefs at any time—even if they have prior experience doing something correctly! People can also leave their roles. If you have a dependency on a particular person, that should be addressed.
[Processes] need documentation so everybody knows what steps need to be taken in order for work products to be properly completed on time without issues. Even with good documentation, the underlying process might be designed poorly.
[Systems] need testing before being deployed into production environments. See below for some additional thoughts on proper testing.
For process risks, look for solutions that actually fix the problem, not just controls to identify them.
It’s important to look at risk scores from the perspective of HOW they will be lowered. It is very easy to focus on detectability, but you likely want to reduce your severity and occurrence scores.
Controls are not a solution; they are only used as a detection tool by someone who already knows there is a likelihood an issue in the first place (e.g., an audit). Always think about addressing the root cause!
For project risks, mitigation actions often focus on beefing up detectability before go-live.
For projects, robust new system/process testing plans are critical.
The testing environment must mimic the real-world production environment effectively. Ask your IT leader about this.
Managers often underestimate how long and intensive testing really is. Properly resourcing the testing phase of a project is critical.
Real use-cases are also critical. The testing plan must mirror what will happen during a quarter close, or any other live financial process. In an ideal world, IT should not be coming up with the use-cases. The Finance team will work with the tool after it is in production should design the test cases.
Establishing project governance and beefing up testing resources prior to go-live are often seen on mitigation plans for complex programs. If your project doesn’t meet with management on a regular basis to discuss the status of your project and if there are no testing resourcing identified upfront, those are two huge red flags.
Communication breakdowns are often at the root cause of financial process risks
Governance is an area where companies need improvement; this includes both governance structure and processes within those structures (e.g., review sessions). Review sessions can help mitigate risks by making sure action plans get executed properly or changes are made when necessary—they also help monitor whether or not people are following their own processes (which are often incomplete due to lack of training).
A little governance goes a long way. Governance is about setting up the right review sessions with the right people, which will ultimately result in better communication, less rework and ultimately lower FMEA RPN scores.
Back to the template!
With all of that as context, take a look at your top risks in your FMEA template which you filled out previously. Do the following:
Brainstorm the action items you feel will best reduce the RPN score for the highest risks
Summarize them in the Actions Recommended column. For projects, the best actions often result in a proactive change to the project plan or requirements.
Put a specific name of the person responsible for the making the action happen. That person must know their name is on this sheet! Don’t generate more risk by creating a surprise for them.
Drop in some preliminary new Severity, Occurrence, and Detectability scores in the template to the far right. Once the actions have been actually taken, you will need to validate these scores.
Conclusion
The takeaway is that risk mitigation is an important tool for reducing the severity, occurrence, and detectability of failure modes. Whenever you have a high RPN score, consider what risks could be mitigated by implementing solutions earlier in your program lifecycle.
Determining how to mitigate risks in your processes and projects is critical. Apollonian Consulting is here to help you through the process to make sure the output of this exercise is actionable and value-add. Click HERE to easily schedule a session with us.