1. 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

2. 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 2
Life Science Risk Management
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3. Supply Chain Risk Management
Bill Coakley, MBA
Sr. Director, Supply Chain Management, SciClone Pharmaceuticals
Chairman, Sourcing Management Steering Committee, Bio Supply Management Alliance 3
Life Science Risk Management
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4. Project Risk Management
Linda Karr, MBA, PMP
Project Manager, Pharma Technical Development, Genentech
President, San Francisco Chapter of International Society for Pharmaceutical Engineering (ISPE) 4
Life Science Risk Management
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5. 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 5
Life Science Risk Management
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6. Industry Risk Management
Jane Lavine, MBA, CPCU, ARM, CFE
Life Science Risk Management consultant
Former VP, Life Science Practice, Marsh 6
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7. The Healthcare System
Life Science Risk Management
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8. The Healthcare Shuffle
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 Rx
Diagnosis
Interactions &
Alternatives
Biotechnology/ Pharmaceutical
manufacturer
Rx Delivery System
Provider
Life Science Risk Management
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9. The Life Sciences Biotechnology Pharmaceuticals Medical Devices
Diagnostics
Nutraceuticals
Animal Biologics
Distributors or Delivery System (e.g., Cardinal Health, McKesson, Amerisource-Bergen)
Healthcare Providers
Life Science Risk Management
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10. 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?
Life Science Risk Management
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11. What happens prior to the drugs getting to the pharmacy?
Audience question:
What happens prior to the drugs getting to the pharmacy?
Life Science Risk Management
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12. Project Risk Management in the Drug Development Pipeline
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13. Typical Drug Development Pipeline
Product/Process Development

14. Product/Process Development
Panel Question
At what point in the pipeline do you get involved and what is your role in managing risk?
Product/Process Development 14
Life Science Risk Management
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15. Panel Question
In your role, do you have the ability to pull the “andon” cord? 15
Life Science Risk Management
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16. Panel Question
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. 16
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17. Panel Question
What tools and techniques do you employ to identify risks? 17
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18. Project Risk Management in the Product Life Cycle
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19. PMI Risk Management Process

20. Pre-Launch: Commercialization Product Life Cycle
What inherent risks are addressed prior to product launch?
Product/Process Development
Life Science Risk Management
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21. Post-Launch: Commercialization Product Life Cycle
What steps do you take to mitigate risks post commercialization?
Product/Process Development
Life Science Risk Management
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22. Risk Management Tools and Techniques
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23. Risk Register - example
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24. Risk and Response Log - example
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25. Risk Map (source: Marsh)
Map Key
Clinical trials
Sales and marketing practices
Consumer satisfaction/Company reputation
Environmental compliance
Business Interruption
Employee health and safety
Contingent BI- sole source supplier
Intellectual Property Infringement
Transit/supply chain
International regulations

26. 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

27. Failure Mode and Effects Analysis - example
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 Number
Failure Item:
Potential
Severity 1
Occurrence 1
Current
Detection 1
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
Taken
People
of Failure
Instructor
Lack of Learning Transfer 2
Incompetent Presenters 3
Presenter Experience
None 10 12 60
Review of training results and prepare on weak items
Tim Salaver and Panelists
03/17/10
Materials
Lack of Understanding 4
Not Enough Time To Prepare 5
Mostly Developed Ahead of Presentation
200
Have Time to have Materials Proofed Independently
Time
Lack of Time To Fully Explain Content 9
The presentation is not comprehensive enough
Experience 72
360
Adjust materials to be covered or lengthen time
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.
If RPN 1 or 2 is more than 100 you must do an abatement plan.
Life Science Risk Management
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28. Workshop on Preparing an FMEA
Failure Mode and Effects Analysis is an effective tool in managing risks
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29. 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
Example FMEA Worksheet
Function
Failure mode
Effects
S (severity rating)
Cause(s) O
(occur-rence rating)
Current controls
D (detection rating)
CRIT (critical characteristic
RPN (risk priority number)
Recommended actions
Responsibility and target completion date
Action taken
Life Science Risk Management
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30. 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.
Example FMEA Worksheet
Function
Failure mode
Effects
S (severity rating)
Cause(s) O
(occur-rence rating)
Current controls
D (detection rating)
CRIT (critical characteristic
RPN (risk priority number)
Recommended actions
Responsibility and target completion date
Action taken
Life Science Risk Management
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31. Life Science Risk Management
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32. 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.
Example FMEA Worksheet
Function
Failure mode
Effects
S (severity rating)
Cause(s) O
(occur-rence rating)
Current controls
D (detection rating)
CRIT (critical characteristic
RPN (risk priority number)
Recommended actions
Responsibility and target completion date
Action taken
Life Science Risk Management
3/17/2010

33. FMEA Cause and Effect Diagram
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34. 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
Example FMEA Worksheet
Function
Failure mode
Effects
S (severity rating)
Cause(s) O
(occur-rence rating)
Current controls
D (detection rating)
CRIT (critical characteristic
RPN (risk priority number)
Recommended actions
Responsibility and target completion date
Action taken
Life Science Risk Management
3/17/2010

35. 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
Example FMEA Worksheet
Function
Failure mode
Effects
S (severity rating)
Cause(s) O
(occur-rence rating)
Current controls
D (detection rating)
CRIT (critical characteristic
RPN (risk priority number)
Recommended actions
Responsibility and target completion date
Action taken
Life Science Risk Management
3/17/2010

36. 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.
Example FMEA Worksheet
Function
Failure mode
Effects
S (severity rating)
Cause(s) O
(occur-rence rating)
Current controls
D (detection rating)
CRIT (critical characteristic
RPN (risk priority number)
Recommended actions
Responsibility and target completion date
Action taken
Life Science Risk Management
3/17/2010

37. 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
Example FMEA Worksheet
Function
Failure mode
Effects
S (severity rating)
Cause(s) O
(occur-rence rating)
Current controls
D (detection rating)
CRIT (critical characteristic
RPN (risk priority number)
Recommended actions
Responsibility and target completion date
Action taken
Life Science Risk Management
3/17/2010

38. 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?
Example FMEA Worksheet
Function
Failure mode
Effects
S (severity rating)
Cause(s) O
(occur-rence rating)
Current controls
D (detection rating)
CRIT (critical characteristic
RPN (risk priority number)
Recommended actions
Responsibility and target completion date
Action taken
Life Science Risk Management
3/17/2010

39. 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
Life Science Risk Management
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40. 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
Life Science Risk Management
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41. 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.
Life Science Risk Management
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42. 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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43. Q&A
Life Science Risk Management
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44. For more information, please send email to tim@biosupplyalliance.org
Additional Resources
APICS The Association for Operations Management (
Bio Supply Management Alliance (
International Society for Pharmaceutical Engineers (
Strategic Risk Management Council ( board.org)
Marsh Risk Consulting (
For more information, please send to
Life Science Risk Management
3/17/2010

45. THANK YOU FOR YOUR PARTICIPATION
Have a safe and risk-free drive home!!!