Introduction to Life Cycle Risk Management Glossary

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Ariel Anthony
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1 Accept One of the five handling options. Accepting the risk means agreeing to take on the level of risk and continuing with the current program or project plan. Accepting is effectively the do nothing option. This option may be appropriate when the expenditures to handle the risk in another manner outweigh the consequence of the risk occurring, or if the likelihood of the risk occurring is so low that other options may not be needed. Concern As defined by AFPAM , a concern is a potential future event for which the cross-functional LCRM team cannot state a likelihood or consequence. Consequence Consequences are an assessment of the worst credible potential result of a risk expressed in terms of at least cost, schedule, and/or performance. To evaluate consequences of a risk, ask yourself, How bad can it reasonably get? Contingency Plan A Contingency Plan is a plan of action to be followed in the event a risk becomes an issue. A risk could become an issue either because your mitigation plan was not fully effective or because you chose to accept/monitor a risk and the risk materialized. Corrective Action Plan A Corrective Action Plan is a plan of action to be followed after the event has occurred. It is what will be done to return to the way things were, or how to recover from the event. Page 1 of 9

2 Handling Plan The Handling Plan develops or assesses options and courses of actions to help reduce the impact of the risks, if they occur, and/or to reduce the likelihood of the risk occurring. There are five handling options to choose from: accept, monitor, research, transfer, and mitigate. These options can overlap, and more than one may be needed to effectively address a risk. Impact The impact refers to how big and bad the result could be after the risk occurs to the program. Integrated Life Cycle Management (ILCM) ILCM is the overarching system of concepts, methods, and practices used by the Air Force to effectively manage systems from need identification through final disposal. ILCM must be applied to Air Force acquisition and sustainment activities. Issue An issue is when an event with negative consequence to the program has occurred or will certainly occur. Life Cycle Risk Management (LCRM) LCRM is the process of making smart decisions with regard to risks to achieve program goals and objectives within constraints. Likelihood Likelihood is an estimation of probability that a root cause will occur. Mishap Department of Defense defines mishap as an unplanned event or series of events resulting in death, injury, occupational illness, damage to or loss of equipment or property, or damage to the environment. Mitigate One of the five handling options. Mitigating the risk applies methods aimed at eliminating the risk, or reducing the likelihood and/or consequence of the risk. Page 2 of 9

3 Monitor One of the five handling options. Monitoring the risk means watching for changes, but not taking any immediate action. This option may be appropriate when the risk is unlikely to occur. Monte Carlo Simulation A quantitative assessment that is used to collect data through probabilistic simulations. Operational Risk Management (ORM) ORM focuses on managing risks for personnel and functions, including safety risks. ORM maximizes operational capability while minimizing the risks. Opportunity As defined by AFPAM , an opportunity is sometimes called a positive risk. In other words, an opportunity is a potential future event which has positive consequences to the program. PDCA Cycle A problem-solving process that can apply to risk management. PDCA is composed of four steps: Plan, Do, Check, and Act. Qualitative Qualitative assessments contain the analysis of more subjective data and usually are based on expert opinion. This type of assessment doesn t necessarily use numbers, but can be interviews or other more open-ended responses. Quantitative Quantitative assessments contain the analysis of numerical values, such as percentages. Quantitative methods include an estimate of error. Compared to qualitative assessments, quantitative assessments are usually more accurate and have better estimates of error. Research One of the five handling options. Researching a risk entails collecting additional information in order to make an educated decision about the risk or to reduce the uncertainty surrounding risk elements. Page 3 of 9

4 Residual Risk Residual risks are those risks that are left over after risk handling operations have been implemented. Risk As defined by AFPAM , risk is a measure of future uncertainties in achieving program objectives within defined cost, schedule, and performance constraints. A risk must have all of the following three components: 1) a future root cause; 2) a likelihood, as assessed at the present time, of that future root cause occurring; and 3) a negative consequence, if it occurs. Risk Analysis Risk analysis is the third step in the LCRM process. In this step, you determine how likely and how bad the risk can be to your program. For example, the risk could affect the cost, performance, or program schedule. Risk Handling / Mitigation Planning Risk handling/mitigation planning is the fourth step in the LCRM process. In this step, the program plans whether and how to reduce the impact or likelihood of the risk. Risk Identification Risk identification is the second step in the LCRM process. In this step, risks present in the program are identified. The risks could, if realized, affect any phase of the program life cycle. This step is constantly being done, continually identifying new risks as they appear or are discovered. Risk Management Plan (RMP) The RMP describes the strategy by which the program will coordinate and integrate its risk management efforts. The RMP should continually mature throughout the program s life cycle. Risk Management Planning LCRM begins with risk management planning, where a plan is created in order to document the risk management strategy, determine how the strategy will be executed, and identify what resources will be required. Page 4 of 9

5 Risk Mitigation Implementation and Tracking Risk mitigation implementation and tracking is the fifth and final step in the LCRM process. In this step, the handling plan is put into action. Once this plan is implemented, it is tracked to determine whether the plan is still an accurate and appropriate course of action as new knowledge is gained about the risk. The effectiveness of the program s risk management strategy is also assessed to ensure the resources applied to risk management are adequately helping the program meet its goals and objectives. Risk Statement Risk statements are part of the program risk documentation. Risks are stated in terms of the root cause. When writing a risk statement, take the following into consideration: Does the root cause occur in the future? Is the probability greater than 0% and less than 100%? Is there a negative consequence to the program goals and objectives? Root Cause A root cause is a potential event which, if it occurs, would affect the program. Stakeholder A stakeholder is a person or organization with a vested interest in the program s success. Threshold Thresholds are pre-identified measurements that can be used to inform you about whether and when to invoke risk handling options or a contingency plan. It is extremely important that you identify, in your individual risk handling plans and contingency plans, measurable, quantifiable thresholds that, when reached, trigger the need for action. Page 5 of 9

6 Transfer One of the five handling options. When the root cause of a risk is shifted elsewhere, this is called transferring the risk. Risk transfer does not seek to change the potential future root cause or the negative consequences; it seeks to shift the consequences away from the program. Trigger When the measurable/quantifiable thresholds are reached, it triggers the need for action. Weibull Analysis A quantitative assessment that is used to collect data through probabilistic simulations. Page 6 of 9

7 Acronyms ACAT Acquisition Category ACE Acquisition Center of Excellence ACTD Advanced Concept Technology Demonstration AF SEAM Air Force Systems Engineering Assessment Model AFI Air Force Instruction AFPAM Air Force Pamphlet AFPD Air Force Policy Document APML Acquisition Program Master List ATD Advanced Technology Demonstration CoP Community of Practice CTE Critical Technology Element DAU Defense Acquisition University DoD Department of Defense DODD Department of Defense Directive DODI Department of Defense Instruction ESOH Environmental, Safety, and Operational Health FAQ Frequently Asked Question GFE Government Furnished Equipment Page 7 of 9

8 HazMat Hazardous Materials ILCM Integrated Life Cycle Management IMP Integrated Master Plan IPT Integrated Product Team ISO International Organization for Standardization JCTD Joint Concept Technology Demonstration LCMP Life Cycle Master Plan LCRM Life Cycle Risk Management LCSE Life Cycle Systems Engineering LHA Logistics Health Assessment MIL-STD Military Standard MRA Manufacturing Readiness Assessment MRL Manufacturing Readiness Level MS A/B/C Milestone A / B / C ORM Operational Risk Management PDCA Plan Do Check Act PDF Portable Document Format PEO Program Executive Office/Officer PM Program Manager Page 8 of 9

9 PMBOK Project Management Body of Knowledge POM Program Objective Memorandum RI3 Risk Identification: Integration and -Ilities RM Risk Management RMP Risk Management Plan S&T Science and Technology SE Systems Engineering SEI Software Engineering Institute SEP Systems Engineering Plan SME Subject Matter Expert SPML Sustainment Program Master List T&E Test and Evaluation TRA Technology Readiness Assessment TRL Technology Readiness Level WBS Work Breakdown Structure Page 9 of 9

Programmatic ESOH Evaluation DoD Requirements & Expectations

Programmatic ESOH Evaluation DoD Requirements & Expectations NDIA Environment, Energy & Sustainability Symposium May 7, 2009 Mr. David Asiello Office of the Deputy Under Secretary of Defense (Installations