Risk management in product design and its 6 main stages

Consider a ticket-buying site as a product, what risks may arise in the design of this product? The complex user interface, confusing navigation, and slow site speed can be considered among the things that make the customer dissatisfied with the product.

Organizations manage these risks to increase user satisfaction and maximize the benefits of their products. Now, in this article, we will take a deeper look at risk management in design (risk management), and how to evaluate, reduce and manage it.

What is risk management in design?

It is better to understand risk management in product design more clearly and first define risk in product design. Risk in product design means that there may be something wrong or dangerous about the product and is calculated according to the following equation:

Risk = Likelihood x Impact

Likelihood refers to the degree of negativity of the result of a product, and Impact is the degree of severity of that result.

It is clear that no matter how well we know the user and their needs and have a detailed review of a product, we will still not have a perfect product. Therefore, there will always be a percentage of customer dissatisfaction. But if a plan is well evaluated before implementation, these risks will be smaller and their cost will be lower. This is where the issue of risk management comes in to reduce product damage and maximize its benefits for the customer and the organization.

6 main stages of risk management

Many frameworks have been defined for the risk management process, all of which can be summarized in the following 6 main steps:

  1. Determining the goals of the organization
  2. Identify potential problems
  3. Assessment of problems
  4. Develop risk mitigation strategies
  5. Decision-making about risk
  6. Assess and monitor risk mitigation strategies

1. Determining the goals of the organization

Creating and improving a product is time-consuming and costly. Therefore, no business makes changes in its product design without a goal. So the business must determine whether the goal and the risk are aligned or not. For example, consider an online business whose product UI/UX design aims to improve the checkout process. In this regard, making a transaction with one click can be a good plan; because it was in line with the goal and it is worth the risk.

2. Identify problems

Now that the desired risk is in line with the organization’s goal, we must also identify its problems. To identify the problems caused by this risk, we can use different sources such as qualitative research in UX, secondary research in UX, and quantitative research in UX.

Now keep the online business example in mind. The product design team must identify problems associated with one-click shopping. The problems of this proposed plan may include these 3 items:

  • Most customers buy quickly and randomly, which can lead to increased support costs.
  • Users worry about fraudulent transactions, which also increases support costs.
  • Customers are buying more but smaller packages, which will continue to increase shipping costs.

In this regard, the organization can use third-party data that determine the consequences of this plan. On the other hand, Competitive Usability Evaluations or comparing what works well or poorly on competitors’ sites may also be useful. This data gives the organization greater visibility and directs investment and UX strategy toward features that users need.

3. Assess design problems

As we mentioned earlier, risk in design is a combination of the probability of damage occurring and the extent of its impact on the product. Therefore, a more accurate assessment of the problems and their consequences should be done and not just a few vague ideas. Now, if we have information about the probability of the problem and the severity of its consequences, we can draw the risk associated with the proposed plan in a risk-assessment matrix and evaluate it better.

In the column of this matrix, the intensity of the risk impact is classified into 4 categories: very negative, negative, normal, and low. The row of this matrix also refers to the probability of risk occurrence and from left to right, the probability of occurrence is very high, high, sometimes, rarely, and never.

Now we can plot the default example on a risk assessment matrix to get a better understanding of the relative risk:

  • A: Increasing the number of random transactions
  • B: Increasing the number of fraudulent transactions
  • C: Increase in transportation costs

The organization assesses the probability of event A as high, but the severity of its impact is normal. On the other hand, the probability of case B happening now and then, but with negative impact intensity, and case C, with a high probability of happening, but with normal impact intensity, have been estimated.

Now, according to the drawn matrix and the data transfer of the example, we realize that all three cases A, B, and C do not have a small risk and by the way, their risk level is medium to high. But the mitigation measures that we discuss below may reduce the risk.

4. Risk reduction

Since the risk in product design is the product of probability multiplied by its intensity; therefore, the best way to reduce risk is to reduce any of the factors or, in the best case, both of the influencing factors in this equation. While proposals with very high and high risks should be mitigated, low risks may not require significant mitigation, especially if it takes a lot of time from the business.

The product design team considers risk mitigation strategies for all 3 cases:

  • Risk reduction strategy A (increasing the number of random transactions): providing the option to confirm and cancel the purchase, transfer customer order information to the packing center and ship the product after 24 hours.
  • Risk reduction strategy B (increasing the number of fraudulent transactions): establishing the requirement of authentication within 12 to 24 hours as a condition for one-click ordering.
  • Risk reduction strategy C (increasing shipping costs): enabling two types of shipping: immediate shipping and shipping with the next order.

Now, the organization must estimate the probability of occurrence and the intensity of the impact of each strategy and re-implement them in the matrix.

After proposing mitigation strategies, the UI/UX design team should reassess the risks. This will determine whether the risks are actually decreasing or are still too high.

5. Decision-making about risk

After presenting risk reduction strategies and minimizing the amount of risk, should those plans be implemented? Keep in mind that the low-risk plan does not mean that it is necessarily worth pursuing. It should be re-examined that the risk mitigation strategy is still in line with the main business objectives.

In the previous example, we could offer an additional click to confirm the purchase to reduce the chance of accidental purchases. But does this strategy have a positive effect on improving the payment process that was the goal of the business?

In general, it should be kept in mind that risk reduction strategies also have their implementation costs; therefore, organizations should also carefully examine the costs of these strategies

6. Assess and monitor risk mitigation strategies

Keep in mind that as plans change over time, risk mitigation strategies may become irrelevant or outdated. Therefore, previously identified risks are unreliable and may have disastrous results for users and businesses. In this regard, there is a need for the organization to re-evaluate past risks and risk reduction strategies.

On the other hand, it is necessary to remember one point: the risk of any project cannot be completely reduced. Some risks are completely out of control and some of them are impossible to predict.

Also, spending time deliberating on risks that are unlikely and out of control is counterproductive. Therefore, the best we can do in cases of external and uncontrollable risk is to monitor them frequently. We must ensure that we are aware of new risks quickly. On the other hand, we must adapt our plans in such a way that they are flexible against predictable risks.

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