Introduction:
Business organizations across manufacturing and service sectors seek to be smart, innovative and forward-looking as they grow their business and achieve value for their shareholders. They do so by embracing new technologies and management practices to achieve excellence in their industry. Product management is a key management function that closely guides the steps of a product lifecycle. From development, positioning and pricing, focusing on the product and its customers and what drives the product teams to ship better-designed and higher-performing products.
Product risk is the potential for products and services to suffer losses or perform much below expectations. The risk is managed by following standard risk management protocol, identifying, treating, controlling and monitoring risk as part of product management. Product management is a strategic function. Therefore, product managers are tasked with the mandate to determine the overall reasons for the product. They also communicate the product objectives and plans to everyone else in the organization.
What Is Risk Management?
Product management is a strategic role in the product development team focused on successfully executing the product life cycle.
What Are Product Risks?
Product risks are potential problems that could compromise and affect the product or service’s success.
Failure to identify and mitigate the risks associated with a certain product or service can negatively affect the entire business operations.
The common types of product risks are:
- Demand risk
- Operational risk
- Price risk
- Customer experience
- Quality risk
- Brand risk
- Inventory risk
- Reputation
- Compliance and regulations
- Product liability
We can broadly categorize product risks as:
- Strategic Risk: Strategic risk is the risk of not developing and building a product or product features at the right time, impacting the product’s ability to meet the performance expectations of the business organization and customer.
- Execution Risk: Executional risk analyzes the potential impediments and issues to the active part of product development – like the timeline for design and development, quality, delivery and pre-launch strategy.
What Is Product Risk Management?
Product risk management helps identify and mitigate risks, and it may involve the following introspection and strategies:
- Is there a prioritized roadmap?
- How distinct are the product or product features from those released in the past?
- Does the product design inspire confidence?
- Was testing adequate?
- Is the company using and tracking the right metrics?
- Is there a backup plan for the product?
The Role of a Product Manager
A key role of the product manager is product risk management. A product manager seeks to achieve intended results with a product or service. However, risk-taking is necessary to achieve results – like investment decisions and the timing of a product launch. The product manager is aware of the risk management implications and has clarity on using them.
Risk Management in Product Management
Risk management generally involves risk containment and mitigation. In product management, the risk is the possibility of a product’s failure to get market acceptance or a project’s potential to suffer loss. The product manager should be ready to deploy risk management strategies and actions during such scenarios.
It is important to integrate risk management into product management. The following steps can facilitate this process:
1) Identify the Risks: The risks may include customer, solution and competitor risks.
2) Diversified Product Portfolio: Balancing the risk by having a portfolio of products instead of focusing on just one product.
3) Market Segmentation: The importance of market segmentation in product risk management is apparent. It will help target particular products or services to the most likely segment to accept the product or service.
4) See Risk Management as a Continuous Process: Risk management is not a one-time action but rather a continuous process.
5) Develop a Risk Management Plan: A risk management plan should outline the ranking of risks and a plan of action that will be deployed in the risk materializing.
Conclusion:
Risk management is one of the most overseen factors in product management. Risks are real and are an integral part of any product or service that will be developed and marketed. It is the important role of the product manager to identify risk and develop risk management to deploy in the event of the risk materializing. Risk management is an integral part of product management that impact business operations. You can get your product management certification q to be successful in the future.
