Original Date: 09/14/1998
Revision Date: 01/18/2007

Raytheon Missile Systems Company (RMSC) established the Risk Management process as a proactive method to predict potential problems and risks, and effectively mitigate the risks by controlling the process, developing strategies, and addressing issues early in a program. This process enables RMSC to develop and deliver systems that meet customer requirements on schedule and within budget. Risk management is now a part of the monthly metrics required for all programs per RMSC’s IPA. In the past, RMSC used a reactive method, which often led to crisis management and insufficient time to implement the optimum solution.

Risk management begins with a basic process which is tailored to a specific program. The process relies on customer needs, lessons learned, expert opinions, and existing management guidelines to develop a specific risk management plan that retains the essential principles of the standard process. Risks are then identified, analyzed, and prioritized using various tools to address the differing aspects (e.g., cost and schedule simulations, process analysis, predictive identification). RMSC’s main tool is Risk Manager (based on Filemaker Pro with Risk Register and Risk Matrix components) for planning, ranking, and controlling risk. This tool is used to encompass all the risks and criteria found with other commercial and government off-the-shelf risk tools. Prioritization is achieved by determining the probability and consequence of occurrence in order to calculate a risk factor for every identified risk.

Once RMSC prioritizes the program risks, risk reduction begins. The company develops mitigation plans to reduce the risk areas, which are tracked and reported weekly in IPTs and other program events. Risk Manager can output a series of differing reports, including a one-page summary graphic that shows probability of occurrence versus severity of occurrence, and plots the top ten risks as high, medium and low. The Risk Management process continues throughout the life cycle of the program, with ongoing management of risks and identification of new risks being done at each stage of development.

At the start of the ESSM program, RMSC had erroneously estimated that an additional $45 million in funding would be necessary to complete the project. However, after implementing the Risk Management process and having the customer prioritize the requirements, RMSC was able to fulfill the ESSM program without additional funding. Since implementing the Risk Management process, RMSC significantly improved customer satisfaction as reflected in its 85% or higher (outstanding level) award fee rating across all programs. The Navy has also requested RMSC to use Risk Manager plots for all design reviews of the Standard Missile programs.

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