It is essential to consider key commercial aspects at the start of the project. These include the market need, competition, overall project cost, availability of funding to get the product to market, and the overall schedule to ensure the market need can be met in a timely manner. Clarity on legal responsibilities is also very important, especially if the design is owned, or produced, by a third party.
A commercial risk assessment typically involves (i) identification of relevant business / project objectives, (ii) identification of risks (events) which may adversely impact on the achievement of business objectives, (iii) assessment of level of risk, i.e. how likely and how severe the risk may be, and (iv) evaluation of the risks against risk acceptance criteria to determine appropriate response actions to mitigate the risk.
Provides an at-a-glance overview of the risks identified on the sheet which highlights the total number of risks and identifies the number of risks at each criticality and risk mitigation level. The dashboard will dynamically update to track progress as the sheet content is changed.
Being clear on available funding and time to deliver the project are fundamental questions that need to be addressed in order to determine the overall commercial viability of the project. For this reason, the worksheet requires the development cost for the project/product to be estimated as fully as possible. This can be updated as the project develops, but should draw on the individual design, manufacture and testing cost estimates as they become available. The worksheet also provides opportunity to record any upfront funding that has been sourced, where this is provided from and if it is sufficient to cover the latest estimated development cost. It is important to identify the route to market in order to be able to formulate and communicate the planned approach, recognise and facilitate any engagement with potential customers and identify any barriers to entry. Finally, the financial sustainability of the business to be able to fund the project to completion is as important as the financial sustainability of the business to scale up manufacture to achieve the necessary product delivery requirements.
Identify how the product will add value to your business and the wider community. It may be a new product that will open up new markets, generate new sales and create new jobs. Alternatively, the technology may help retain or improve competitive edge thereby retaining existing sales revenues/profit and existing jobs. There may also be important added value related to environment and/or social benefits.
Added value can be quantified through an evaluation of the projected growth and profit of the product, and the number of related jobs created.
Understanding legal responsibilities for the product design, the manufactured product and for aftermarket support is essential, to ensure the relevant protection and funding are available to meet any potential claims that may arise. This protection is directly related to the required upfront funding and the financial sustainability of the business.
This is the core of this worksheet, where risks are identified, described, and evaluated. Each row represents one risk. The current status of each risk will be reflected in the dashboard.
A generic 5x5 risk matrix is used to assess the level of commercial risk. This includes 5 columns representing the levels of the risk consequence / impact severity. Generic examples of different commercial risk categories are provided on the worksheet (business, financial, and schedule), with example severity levels (negligible, noticeable, significant, major, and catastrophic). These example definitions can be modified to align with the type of business and business impacts considered.
The risk matrix also includes 5 rows representing the likelihood of the risk occurring. Generic examples of different likelihood levels are provided (Expected, Likely, Possible, Unlikely, and Unexpected). These can be modified to align with the business specific requirements.
The risk criticality matrix includes 5 default risk criticality levels (very low, low, medium, high, very high) with the risk criticality level for a specific risk likelihood and consequence severity combination determined from the corresponding cell colour on the risk matrix (i.e. red cells correspond to very high criticality). These risk levels and colours can be modified to align with the business specific requirements.
There are a series of steps involved in the process of identifying and evaluating risks:
Risk identification starts with understanding the business / project objectives. Check for consistency with the equipment requirements in the 'Requirements' worksheet. For each business objective, identify conditions, events or situations which could impact or prevent the business objectives being met, and report these in the 'Risk Description' column. There is a wide range of commercial risk categories that may need to be addressed and three example risk impact categories are provided: schedule impact (delays to project delivery), financial impact (project funding, commercial viability) and business impact (e.g. competition, security, reputation, etc.). Some identified risks may reference all three impact categories (e.g. use of a fraudulent part supplier may result in project delay, wasted money, and damaged reputation).
The risk matrix likelihood and severity values are used to evaluate each risk. The Risk Criticality will be automatically populated from these values based on the corresponding risk matrix cell. Note any assumptions made in assessing the level of risk.
Identify response actions to mitigate and control the commercial risk. This is particularly important for risks categorised as high or very high. The mitigated risk category column is used to understand the effectiveness of the mitigation action; consider the extent to which the mitigation action has reduced the likelihood of the risk occurring or the consequence severity, and from this identify the mitigated risk category. It is unusual for both the likelihood and the consequence severity to be reduced through the same action. Each mitigation action should be assigned an owner and target completion date, to ensure timely completion of the action. The Status column reflects the current status of the action.
There are various interactive and dynamic features on this worksheet:
