The risk pyramid for new product development: An application to complex aerospace hardware

Abstract

All new product developments are inherently characterized by risk, as a result of various uncertainties that surround them. Risk assessment techniques can be used to help clarify these uncertainties, as a basis for systematic decision making and organizational consensus. This article develops the risk pyramid, a new approach to risk assessment that dynamically combines concept assessments with multi-dimensional risk evaluations. William Souder and David Bethay illustrate the use of the risk pyramid with an application to SPACEHAB, a commercial space habitat module designed to enhance NASA's manned space program. The application illustrates the utility of risk assessment in general and the risk pyramid in particular. The results demonstrate how formally following the risk pyramid approach can potentially enhance the quality of new product decisions.