The Top 7 Risks in New Product Development and How to Identify Them

If you’ve ever been a part of creating a new product then you know the process of bringing a new product into the marketplace is fraught with risk. According to some studies, the failure rate of new products launched in the market is around 40–45%. However, this rate can vary widely depending on the industry and the definition of “failure”. In this article on risk management, I’ll focus on the top 7 risks in new product development and specifically the questions you should ask yourself to identify risks as a product manager.

Risk Identification

Risk identification is the first step in the risk mitigation process and is the focus of this article. Later steps include risk analysis, prioritization, and response planning, but are outside the scope of this article. The following questions are crafted to help you as a product manager identify potential risks which could impact your new product.

Technical Risks:

• What technical challenges could we encounter during development?
• Do we have the necessary technical expertise to complete the project?
• Are there any new or unproven technologies that we are relying on?
• Could there be compatibility issues with other systems or software?
• What if the software doesn’t perform as expected or has significant bugs?

Project Management Risks:

• Are the project’s scope, schedule, and budget realistic?
• Do we have the necessary resources to complete the project?
• What if key team members leave or are unavailable?
• How might changes in project requirements affect the project?

Business and Market Risks:

• Is there sufficient demand for our product in the market?
• What if a competitor releases a similar product?
• How could changes in market conditions or customer preferences affect our project?
• What if our pricing strategy doesn’t work as expected?

Legal and Compliance Risks:

• Are there any legal or regulatory requirements that we need to comply with?
• What if we face legal action related to intellectual property, data privacy, or contracts?
• How might changes in laws or regulations affect our project?

Security Risks:

• What if our product is vulnerable to cyber-attacks?
• How secure is the customer data we handle?
• What if there’s a data breach?

Financial Risks:

• Do we have sufficient funding to complete the project?
• What if the project costs more than expected?
• How could changes in financial conditions (e.g., exchange rates, interest rates) affect our project?

Operational Risks:

• What if there’s a failure or downtime in our systems or infrastructure?
• Do we have a reliable supply chain and vendors?
• What if we face issues with product quality or customer service?

Conclusion

It’s important to remember that risk identification is not a one-time occurrence, but an ongoing process and mindset for product managers. As your project progresses new risks will surface and our job as product managers is to be ever-vigilant and reevaluate these questions with stakeholders. If you’d like to learn more about business and market risks you can check out this article on Unlocking Product-Market Fit: Key Steps to Validate Your Business Idea. Comment below with your favorite risk identification questions.