Risk Management is the continuous process of identifying, analyzing and responding to risk factors throughout the life of a project. The risk management starts at the beginning of the project and continues throughout the life of the project. At each stage of the project’s life, new risks will be identified, quantified and managed. Proper risk management is proactive rather than reactive and reduces the likelihood of an event occurring and the magnitude of its impact. Reactive risk management is often called as crisis management. The right balance in risk contingency is necessary; too much may make the project uncompetitive; too little contingency increases the chance of failure. Risk management is a responsibility of the project team and is driven by the project manager. In short, risk management is about anticipating uncertain events that are inherent to a project to optimize them for project success.
What is a Project Risk?
A project risk is an uncertain event that, if it occurs, has a positive or negative effect on the prospects of achieving project objectives.
Following aspects of the definition are especially important:
- Uncertain event: something may or may not happen, e.g. the temperature drops below a certain point making a chemical process impossible. If the risk materializes, it becomes an issue. Project Managers should track the project issues in addition to the risks in a separate log.
- Positive (opportunities) or negative effect (threats): project risk is not necessarily negative (increased costs, decreased quality, etc.); It can also be positive (new valuable product features due to the use of new technology or opening up a new market segment due to some project adjustments). The goal of risk management is to minimize the impact of project threats and seize the opportunities, allowing the project delivery on time, on budget and with the quality results.
- Project objectives: the project goals are at stake if a risk occurs. Severe negative risks can lead to the cancellation of a project whereas minor risks may slightly increase the completion time of a project.
Risk Management is also an important part of the pharmaceutical drug development projects (drug development plan), programs, and portfolio management. Assessing risk at the project, program and portfolio level, facilitates better decisions making, the creation of risk mitigation scenarios, and improved teamwork. Projects within a program or/and portfolio often have interdependencies, shared resources, and goals. Risk at the portfolio level can be shared and balanced across projects as a way of mitigating it. Risk assessment enables you to better understand and manage the portfolio as a whole. Projects can also be prioritized according to their risk level so that risk can be balanced and managed across the portfolio. By understanding the risk to both individual projects and portfolios, management can make better strategic decisions.
How to Apply a Risk Management in Drug Development?
Risk Management should occur at least once a year, in more dynamic projects I recommend to increase it to 2-3 times/year. The best manner for the project team to come together and enhance the understanding of the project is to organize the risk assessment workshop. Make sure the risks are documented in the project risk log. A risk log contains risk descriptions, clarifies ownership of the risks includes analyses on identified risk causes and potential effects.
- Identify the Drug Development Risks. This step starts with project team brainstorming session. The lists of possible risk sources are identified using project team experiences and knowledge. All potential risks are identified and then categorized and prioritized. The process of prioritization helps to manage the critical risks that have both a high impact and a high probability of occurrence. First, look at the various sources and categories of risks. There are many sources; below list can serve as a guide for the initial brainstorming of all development risks groups.
- Clinical Risks: availability of clinical FTE for a given project, clinical trial design, companion diagnostic and other medical devices, implications from relevant studies from comparators or competitors, implications from studies of the relevant comparator, human PK, clinical dosing, progress towards the demonstration of efficacy, safety and tolerability, etc.
- Clinical Operation: infrastructure for given project
- Clinical Pharmacology: results of clinical trials: ADME / PK in humans
- CMC/Manufacturing: clinical trial supply, infrastructure for manufacturing, manufacturing development, manufacturing process and API supply, GMP pharmaceutical development, process chemistry, sourcing and definition of similarity specifications, competitors in biosimilars, etc.
- Commercial aspects to support R&D
- Kinetics, Metabolism, and Elimination
- Drug Safety: pharmacovigilance, results of clinical trials, safety, and tolerability, treatment’s ineligible population
- IP/Legal and regulatory constraints, third-party patents, legal risks
- Project Management: capabilities and capacity/infrastructure, collaborations and partnerships, financial situation, operational hurdles, project history
- Pricing & Reimbursement, Health Economics & Outcomes Research
- Regulatory: clinical hold, data from past trials, GCP / GLP requirements, quality of submission dossier, number of pivotal studies, patient drop-outs, patient representation and treatment standards in targeted regions, pediatric clinical development, pre-pivotal trial meetings & general consultations with regulatory authorities, regulatory and ethical approval of proposed clinical study, BLA/MAA approval delays, unmet need, clinical relevance of data, etc.
- Research: biology and drugability of target, pharmacodynamics, pre-clinical infrastructure for given project, etc.
- Biomarker activities to support the development strategy
- Research & Clinical: concept/target validation, safety, tolerability, MoA of therapeutic agent, validation status of molecule class
- Safety Pharmacology
- Toxicology: general toxicology, immunogenicity, reproductive toxicology
- Other Risks
- Assess the Drug Development Risk. Understanding the nature of a risk is a precondition for a good response. Therefore, Risk Assessment facilitates the creation of more realistic project plans. Optimistic planning is the main reason for project failure. For projects, failure takes the form of budget overruns and missed deadlines. Risk assessment also improves teamwork by increasing candor and understanding within the project team. Before trying to determine the response to the risks, the project team must identify the root causes of the identified risks.
In drug development one should assess Risk Impact (e.g. low, medium, high), Risk Likelihood (e.g. of XX% chances of occurring), Time (e.g. delay of next milestone of X months), Cost (e.g. phase cost increase of < X% or < $XXXk), Resources (e.g. FTE increase of X%), Quality (e.g. minor, significant changes to TPP, drug development plan, market access or pricing strategy, etc.)
- Develop Responses to the Drug Development Risk. Risk Response to threats includes:
- Risk Avoidance: eliminating a specific threat, usually by removing the cause.
- Risk Mitigation: A systematic reduction in the extent of exposure (impact) to a risk and the likelihood of its occurrence. Also called risk reduction. It is the most frequent response type in risk management.
- Risk Acceptance: Accepting the consequences of the risk. It is often accomplished by developing a contingency plan to execute should the risk event occur.
Responses to opportunities are the reverse of the ones for threats. They will focus on seeking risks, maximizing them or ignoring them (if opportunities are not sufficient).
- Develop a Contingency Plan or Preventative Measures. Develop the tasks to manage the risk, should it occur, into contingency plans. Assign a risk owner for each risk identified. The risk owner is the person in your team that has the responsibility to optimize this risk for the project.
- Communicate Drug Development Risks. If you have a team meeting, make project risks part of the default agenda. This approach emphasizes the importance of the risk management and gives team members an opportunity to discuss existing risks and report new ones. Make sure the biopharmaceutical executive leadership is aware of the identified critical risks.
- Track Risks and Mitigation Plans’ Tasks. The risk log will help you to track risks and their associated tasks. Tracking tasks is a day-to-day job of the project manager.
- Risk Management…the What, Why, and How
- 10 GOLDEN RULES OF PROJECT RISK MANAGEMENT
- Risk Management in Drug Development Projects
- The Benefits of Risk Assessment for Projects, Portfolios, and Businesses