This paper presents a novel framework for evaluating risk in innovative product design and development, and a product development methodology for risk identification and management. We define “risk” as the exposure to the chance of an unsuccessful product development outcome due to ambiguity and uncertainty. We examine uncertainties in the company’s ability to identify, design, develop, manufacture, and market products that customers desire resulting in an acceptable return for the company. Based on a basic model of innovative product development, our framework identifies three dimensions of risk in product development: Envisioning Risk, Design Risk, and Execution Risk. The risk framework points out the criticality of the engineering design activity and of the interdependencies between all facets of the organization in executing innovative product development. This paper also presents a qualitative methodology, based on the risk framework, that may be used by development teams for identification of risk and eliciting risk management solutions.

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