Risk Management Tools, Techniques and Tribulations

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Risk Management Tools,
Techniques and Tribulations:


The Pain and Recovery in Life Sciences


Project Management Institute


SF Bay Area Chapter

Embassy Suites, Walnut Creek

March 17, 2010

Moderator








Tim Salaver, MBA, PMP, CSSMBB


Principal, Cornerstone Systems Solutions


President, Golden Gate Chapter of APICS The Association for
Operations Management


EVP, Operations and Technology, Bio Supply Management
Alliance


Director, Certification Preparation, PMI
-
SFBAC

3/17/2010

2

Life Science Risk Management

Supply Chain Risk Management








Bill Coakley, MBA


Sr. Director, Supply Chain Management, SciClone
Pharmaceuticals


Chairman, Sourcing Management Steering
Committee, Bio Supply Management Alliance

3/17/2010

3

Life Science Risk Management

Project Risk Management








Linda Karr, MBA, PMP


Project Manager, Pharma Technical Development, Genentech


President, San Francisco Chapter of International Society for
Pharmaceutical Engineering (ISPE)

3/17/2010

4

Life Science Risk Management

Enterprise & Operations

Risk Management








Chris Sam, MS, Risk Management


Executive Director, Craigshannock


Member, Risk Management Steering Committee, Bio Supply Management
Alliance


Executive Committee member of the Strategic Risk Management Council
of the Conference Board


Former Executive Director, Operations Risk Management, Amgen


25 years in energy industry, previously at ExxonMobil

3/17/2010

5

Life Science Risk Management

Industry Risk Management








Jane Lavine, MBA, CPCU, ARM, CFE


Life Science Risk Management consultant


Former VP, Life Science Practice, Marsh

3/17/2010

6

Life Science Risk Management

The Healthcare System

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Life Science Risk Management

7

The Healthcare Shuffle

3/17/2010

8

Life Science Risk Management

Patient’s Primary Care

MD Pocket PC

Gov. Health Agencies

Patient’s Pharmacy

Patient’s Medical Record

Lab Tests

X

-

rays

Pathology

Etc.

Patient’s Insurance

Provider Database

Interactive

Prescription

Database

Specialists

Referring MD

Compliance

Coverage,

Coding

&

Approvals

Orders

Orders

Rx

Diagnosis

Rx

Diagnosis

Interactions &

Alternatives

Patient’s Primary Care

MD Pocket PC

Gov. Health Agencies

Biotechnology/
Pharmaceutical

manufacturer

Patient’s Medical Record

Lab Tests

X

-

rays

Pathology

Etc.

Patient’s Insurance

Provider Database

Interactive

Prescription

Database

Interactive

Prescription

Database

Specialists

Referring MD

Compliance

Coverage,

Coding

&

Approvals

Orders

Orders

Rx

Rx

Rx

Diagnosis

Rx

Rx

Rx

Diagnosis

Interactions &

Alternatives

Rx Delivery
System

Provider

The Life Sciences


Biotechnology


Pharmaceuticals


Medical Devices


Diagnostics


Nutraceuticals


Animal Biologics


Distributors or Delivery System (e.g., Cardinal Health,
McKesson, Amerisource
-
Bergen)


Healthcare Providers

3/17/2010

9

Life Science Risk Management

Managing Risks Related to
Pharmaceuticals and Biotechnology


Tremendous Opportunity for Improvement in Healthcare


Electronic Medical Records Standardization Initiative


Driven By Department of Health


Bypassing Standards Bodies


Calling for Compliance by 2015


The Technology exists to Revolutionize Healthcare (not just
reform)


Save Lives


Reduce Costs


Improve Quality of Care


The Strategy and Relationships are mostly in Place


Risks remain high for the companies manufacturing the
drugs….WHY?

3/17/2010

10

Life Science Risk Management

What happens prior to the drugs getting to
the pharmacy?

3/17/2010

Life Science Risk Management

11

Audience question:

Project Risk Management in the
Drug Development Pipeline

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Life Science Risk Management

12

Typical Drug Development Pipeline

Product/Process

Development

Panel Question

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Life Science Risk Management

14


At what point in the pipeline do you get involved and
what is your role in managing risk?

Product/Process

Development

Panel Question

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Life Science Risk Management

15


In your role, do you have the ability to pull the “andon”
cord?

Panel Question

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Life Science Risk Management

16


In your specific role, how important are you in managing
risks to the patient? This question is important to note
because while the manufacturer does not have a direct
relationship to the patient, the quality of care is
dependent on the quality of the product.

Panel Question

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Life Science Risk Management

17


What tools and techniques do you employ to identify risks?



Project Risk Management in
the Product Life Cycle

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Life Science Risk Management

18

PMI Risk Management Process

Pre
-
Launch:

Commercialization Product Life Cycle

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Life Science Risk Management

20


What inherent risks are addressed prior to product
launch?

Product/Process

Development

Post
-
Launch:

Commercialization Product Life Cycle

3/17/2010

Life Science Risk Management

21


What steps do you take to mitigate risks post
commercialization?

Product/Process

Development

Risk Management

Tools and Techniques

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Life Science Risk Management

22

Risk Register
-

example

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Life Science Risk Management

23

Project #
Sponsor
Updated
ID
Risk
Description
Probability
Impact
Detectability
Importance
Category
Trigger
Event/Indicator
Risk Response
and Description
Contingency
Plan
Owner
Status
Date
Entered
Date to
Review
1
What is this
risk?
0
What act or event
initiates either the
risk occurrence or
precipitates the
response strategy?
How will you
respond to this
risk and what
actions will you
take to match
that response?
If the risk
becomes a
reality, what will
you do in
response, as a
backup, or
alternative/
Who
monitor
s this
risk?
2
0
3
0
Project manager
Project manager name here
Sponsor name here
Project artifacts
Location of project documents here
Date of update here
Risk Management Matrix (Risk Register)
Project
Project title here
Project # here
Risk and Response Log
-

example

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Life Science Risk Management

24

Project Stage
Project Team
Review Date
ID #
Prob
Impact
Team
Risk Event
Risk Impact
Description
Strategy
Risk Response
Plans
Risk Owner
<###>
<High,
Med,
Low>
<High,
Med,
Low>
<Identify the
team/sub-team
that is
responsible for
monitoring/man
aging identified
risk.>
<Briefly describe the risk event>
<Describe the
impact of the risk
event should it
occur. Provide both
qualitative
information and a
quantitative
estimate>
<Avoid/Mitigat
e, Active
Acceptance,
Passive
Acceptance>
<Describe what will
be done in an
attempt to avoid the
risk event or what
will be done to
mitigate the risk
event should it
occur. Include any
commentary as
needed.>
<Identify by name
and role the
individual that
owns the risk
event>
002
003
004
Project Identification
<Name of current stage>
Project Name
<Name of project>
<Name of assigned Project Team Leader>
Project Manager
Risk and Response Log
<Date of last review with team>
Purpose: To document, track and review risks throughout the life of the project.
A "risk" is an uncertain event or condition, which if it occurs, may have a positive or negative affect on a project.
Project Team(s)
<Name of project manager>
<Name of team or teams using log>

Map Key

1.
Clinical trials

2.
Sales and marketing
practices

3.
Consumer
satisfaction/Company
reputation

4.
Environmental
compliance

5.
Business Interruption

6.
Employee health and
safety

7.
Contingent BI
-

sole
source supplier

8.
Intellectual Property
Infringement

9.
Transit/supply chain

10.
International
regulations

Risk

Map (source: Marsh)

How to use the Risk Map


The dots represent a sample of risks associated with a life
science company


Each company risk profile is unique


The positioning of the risk dots is both qualitative and
quantitative analysis


The visual format is used to review the different risk
profiles and their relationship to each other


This tool can be used for a function or a specific process

Failure Mode and Effects Analysis
-

example

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Life Science Risk Management

27

If RPN 1 or 2 is more than 100 you must do an abatement
plan.

If RPN 1 or 2 is more than 100 you must do an abatement
plan.

If RPN 1 or 2 is more than 100 you must do an abatement
plan.

If RPN 1 or 2 is more than 100 you must do an abatement
plan.









































Title:

Risk Management Presentation



FMEA #:

1



















Product Name:

Professional Development Meeting



Originator:

Tim Salaver



















Process:

Awareness and development of RM tools



Issue Date:

3/17/2010



















Equipment:





Revision Date:





















Participants:

PMI



Type of FMEA:

P
-
FMEA



















Location:

Embassy Suites, Walnut Creek



FMEA Types:

System Design, Detailed Design, Process, Equipment



































* RPN
= Risk
Priority
Numbe
r



















Failure Item:

Potential

Potential


Severity 1

Potential


Occurrence 1

Current


Detection 1

Current


Detection 2


RPN 1*


RPN 2*

Recommended

Owner

Due

Action Results

Process

Failure

Effect(s) of

Cause(s)/

Control(s)

Containment

Action(s)



Date

Actions

Severity 2

Occurrence 2

Detection 3

RPN 3

Machine

mode

failure

Mechanism(s)

in place

in place







Taken

People





of Failure













Risk Management
Presentation

Instructor

Lack of Learning
Transfer

2

Incompetent
Presenters

3

Presenter
Experience

2

None

10

12

60

Review of training
results and prepare on
weak items

Tim Salaver
and Panelists

03/17/10









0

Risk Management
Presentation

Materials

Lack of
Understanding

4

Not Enough Time
To Prepare

5

Mostly Developed
Ahead of
Presentation

3

None

10

60

200

Have Time to have
Materials Proofed
Independently

Tim Salaver
and Panelists

03/17/10









0

Risk Management
Presentation

Time

Lack of Time To
Fully Explain
Content

9

The presentation is
not comprehensive
enough

4

Experience

2

None

10

72

360

Adjust materials to be
covered or lengthen
time

Tim Salaver
and Panelists

03/17/10









0





















0

0















0

If RPN 1 or 2 is more than 100 you must do an abatement
plan.

Workshop on Preparing an FMEA

Failure Mode and Effects Analysis is an effective tool in managing risks

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Life Science Risk Management

28

FMEA Process


Analysis of potential failure modes within a system for classification
by severity or determination of the effect of failures on the system


Widely used in manufacturing industries in various phases of the
product life cycle


Increasingly finding use in the service industry


Failure modes

are any errors or defects in a process, design, or item,
especially those that affect the customer, and can be potential or
actual


Effects analysis

refers to studying the consequences of those failures

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29

Example FMEA Worksheet

Function

Failure
mode

Effects

S
(severity
rating)

Cause(s)

O

(occur
-
rence
rating)

Current
controls

D
(detectio
n rating)

CRIT
(critical
characte
ristic

RPN
(risk
priority
number)

Recomm
ended
actions

Responsi
bility and
target
completi
on date

Action
taken

FMEA Terms


Failure mode

-

A failure mode is an event that causes a loss of a required function.


Failure effect

-

Immediate consequences of a failure on operation, function or functionality,
or status of some item.


Indenture levels
-

An identifier for item complexity. Complexity increases as levels are closer
to one.


Local effect
-

The Failure effect as it applies to the item under analysis.


Next higher level effect

-

The Failure effect as it applies at the next higher indenture level.


End effect

-

The failure effect at the highest indenture level or total system.


Failure cause
-

Defects in design, process, quality, or part application, which are the underlying
cause of the failure or which initiate a process which leads to failure.


Severity
:
-

The consequences of a failure mode. Severity considers the worst potential
consequence of a failure, determined by the degree of injury, property damage, or system
damage that could ultimately occur.

3/17/2010

Life Science Risk Management

30

Example FMEA Worksheet

Function

Failure
mode

Effects

S
(severity
rating)

Cause(s)

O

(occur
-
rence
rating)

Current
controls

D
(detectio
n rating)

CRIT
(critical
characte
ristic

RPN
(risk
priority
number)

Recomm
ended
actions

Responsi
bility and
target
completi
on date

Action
taken

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Life Science Risk Management

31

Step 1


Detect a Failure Mode


A worksheet needs to be created, which contains the
important information about the system, such as the
revision date or the names of the components. On this
worksheet all the items or functions of the subject should
be listed in a logical manner, based on the block diagram.


Describe the system and its function.


Good understanding simplifies further analysis.


Consider both intentional and unintentional uses.


A block diagram of the system needs to be created.


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32

Example FMEA Worksheet

Function

Failure
mode

Effects

S
(severity
rating)

Cause(s)

O

(occur
-
rence
rating)

Current
controls

D
(detectio
n rating)

CRIT
(critical
characte
ristic

RPN
(risk
priority
number)

Recomm
ended
actions

Responsi
bility and
target
completi
on date

Action
taken

FMEA Cause and Effect Diagram

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Life Science Risk Management

33

Step 2
-

Severity


Determine all failure modes based on the functional requirements and their
effects


A failure mode in one component can lead to a failure mode in another
component


Write these effects down in terms of what the user might see or
experience


Examples: degraded performance, noise or even injury to a user


Each effect is given a
severity number (S)

from 1 (no danger) to 10 (critical)


Prioritize the failure modes and their effects


Severity 9 or 10 actions are considered changes in design by eliminating the
failure mode

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Life Science Risk Management

34

Example FMEA Worksheet

Function

Failure
mode

Effects

S
(severity
rating)

Cause(s)

O

(occur
-
rence
rating)

Current
controls

D
(detectio
n rating)

CRIT
(critical
characte
ristic

RPN
(risk
priority
number)

Recomm
ended
actions

Responsi
bility and
target
completi
on date

Action
taken

Step 3
-

Occurrence


Detailed development section of the FMEA process


Necessary to look at the cause of a failure and how many
times it occurs


A failure cause is looked upon as a design weakness


All the potential causes for a failure mode should be identified
and documented


Examples of causes are: erroneous algorithms, excessive
voltage or improper operating conditions


A failure mode is given an
occurrence ranking (O)
, again 1

10


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Life Science Risk Management

35

Example FMEA Worksheet

Function

Failure
mode

Effects

S
(severity
rating)

Cause(s)

O

(occur
-
rence
rating)

Current
controls

D
(detectio
n rating)

CRIT
(critical
characte
ristic

RPN
(risk
priority
number)

Recomm
ended
actions

Responsi
bility and
target
completi
on date

Action
taken

Step 4
-

Detection


When appropriate actions are determined, test their efficiency


The proper inspection methods need to be chosen


How likely a failure can be identified or detected.


Each combination from the previous 2 steps receives a
detection number
(D)
.


Assigned detection number measures the risk that the failure will
escape
detection
.


A high detection number indicates that the chances are high that the failure
will escape detection, or in other words, that the chances of detection are
low.

3/17/2010

Life Science Risk Management

36

Example FMEA Worksheet

Function

Failure
mode

Effects

S
(severity
rating)

Cause(s)

O

(occur
-
rence
rating)

Current
controls

D
(detectio
n rating)

CRIT
(critical
characte
ristic

RPN
(risk
priority
number)

Recomm
ended
actions

Responsi
bility and
target
completi
on date

Action
taken

Risk Priority Numbers


RPN

=

S

×

O

×

D


Easy to determine the areas of greatest concern


Modes that have the highest RPN should be given the
highest priority for corrective action


Whenever a design or a process changes, an FMEA should
be updated


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Life Science Risk Management

37

Example FMEA Worksheet

Function

Failure
mode

Effects

S
(severity
rating)

Cause(s)

O

(occur
-
rence
rating)

Current
controls

D
(detectio
n rating)

CRIT
(critical
characte
ristic

RPN
(risk
priority
number)

Recomm
ended
actions

Responsi
bility and
target
completi
on date

Action
taken

Exercise


Can you determine the order of need for change in the
following three examples:


Severity (5), Occurrence (4), Detection (2) = 40


Severity (9), Occurrence (2), Detection (2) = 36


Severity (8), Occurrence (1), Detection (8) = 64



The correct order for action is
#2, #1, #3. Why?


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Life Science Risk Management

38

Example FMEA Worksheet

Function

Failure
mode

Effects

S
(severity
rating)

Cause(s)

O

(occur
-
rence
rating)

Current
controls

D
(detectio
n rating)

CRIT
(critical
characte
ristic

RPN
(risk
priority
number)

Recomm
ended
actions

Responsi
bility and
target
completi
on date

Action
taken

Next Steps


Eliminate the failure mode with severity of 9 or 10


Minimize the severity of other failure modes


Reduce the occurrence of the failure mode


Improve the detection (reduce the number)


Update the FMEA


At the beginning of a cycle


Changes are made to the operating conditions


A Change is made in the design


New regulations are instituted


Customer feedback indicates a problem

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Advantages


Improve the quality, reliability
and safety of a product/process


Improve company image and
competitiveness


Increase user satisfaction


Reduce system development
timing and cost


Collect information to reduce
future failures, capture
engineering knowledge


Reduce the potential for
warranty concerns


Early identification and
elimination of potential failure
modes


Emphasize problem prevention


Minimize late changes and
associated cost


Catalyst for teamwork and idea
exchange between functions


Reduce the possibility of same
kind of failure in future

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40

Sample BioPharma Case

presented by Chris Sam

Intro to Cp and Cpk (Measurements of process capabilities used in quality analysis.)


Cp
-

Inherent Process Capability


Note: in some industries this calculation is called pk.
This is the ratio of the Upper
Specification Limit minus the Lower Specification Limit to six sigma. It is denoted
by the symbol Cp.


Cp


=


(Upper Spec Limit
-

Lower Spec Limit)


6Sigma Actual


Cannot calculate Cp if specifications are one sided. In other words, if
specification only has an upper parameter specification limit or a lower
specification limit, Cp is ignored and only Cpk can be used.


Confusion about the difference between Cp and Cpk. The difference is in
calculating the actual sigma or standard deviation, either using an estimate, or the
actual calculations.


Terms are sometimes used interchangeable, even though they are not. the same.


Statistics IS a science, and as such, all theory should be able to be validated by
such peer reviews.


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41

Sample BioPharma Case

presented by Chris Sam


Introduction to FMEA software


You help to complete the missing information


Using Cp and Cpk analysis

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42

Q&A

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43

Additional Resources


APICS The Association for Operations Management
(www.apics
-
ggc.org)


Bio Supply Management Alliance
(www.biosupplyalliance.org)


International Society for Pharmaceutical Engineers
(www.ispe.org)


Strategic Risk Management Council (www.conference
-
board.org)


Marsh Risk Consulting (www.marshriskconsulting.com)


For more information, please send email to
tim@biosupplyalliance.org

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44

THANK YOU FOR YOUR PARTICIPATION

Have a safe and risk
-
free drive home!!!