Professional

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 Risk Management

Introduction
What is software risk?
Risk categorization
Why is it important?
Risk management process
Types of risk

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 Introduction
• Risk Management is identifying, evaluating, and mitigating
risk to an organization and drawing up plan to minimize
their affect on a project.
A systematic process of evaluating the potential risk that may
be involved in a projected activity or undertaking
• It’s a cyclical, continuous process
• Need to know what you have
• Need to know what threats are likely
• Need to know how and how well it is protected
• Need to know where the gaps are

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 What is software risk?
• Risk is an expectation of loss, a potential problem that may
or may not occur in the future.
• It is generally caused due to lack of information, control or
time.
• A possibility of suffering from loss in software development
process is called a software risk.
• Loss can be anything, increase in production cost,
development of poor quality software, not being able to
complete the project on time.

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 Definition of Risk
• A risk is a potential problem – it might happen and it might not
• Conceptual definition of risk
• Risk concerns future happenings
• Risk involves change in mind, opinion, actions, places, etc.
• Risk involves choice and the uncertainty that choice entails
• Two characteristics of risk
• Uncertainty – the risk may or may not happen, that is, there
are no 100% risks (those, instead, are called constraints)
• Loss – the risk becomes a reality and unwanted
consequences or losses occur

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Risk Categorization – Approach #1
1. Project risks
• They threaten the project plan
• If they become real, it is likely that the project schedule
will slip and that costs will increase
2. Technical risks
• They threaten the quality and timeliness of the software
to be produced
• If they become real, implementation may become difficult
or impossible
3. Business risks
• They threaten the viability of the software to be built
• If they become real, they jeopardize the project or the
product

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Risk Categorization – Approach #1
(Cont.)
• Sub-categories of Business risks
• Market risk – building an excellent product or system that
no one really wants
• Strategic risk – building a product that no longer fits into
the overall business strategy for the company
• Sales risk – building a product that the sales force doesn't
understand how to sell
• Management risk – losing the support of senior
management due to a change in focus or a change in
people
• Budget risk – losing budgetary or personnel commitment

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Risk Categorization – Approach #2
1. Known risks
• Those risks that can be uncovered after careful evaluation
of the project plan, the business and technical
environment in which the project is being developed, and
other reliable information sources (e.g., unrealistic
delivery date)
2. Predictable risks
• Those risks that are extrapolated from past project
experience (e.g., past turnover)
3. Unpredictable risks
• Those risks that can and do occur, but are extremely
difficult to identify in advance

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 Why is it important?
Risk affects all aspects of your project–your budget, your
schedule, your scope, the agreed level of quality, and so on
Increase probability of positive event.
Reduce the occurrence of negative event

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 Risk management
• Risk management is concerned with identifying risks and
drawing up plans to minimize their effect on a project
• A risk is a probability that some adverse circumstance will
occur
• Project risks affect schedule or resources
• Product risks affect the quality or performance of the
software being developed
• Business risks affect the organizing, developing or procuring
the software.

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 Risk Management Process
The Fundamental steps of risk management process are:
 Risk identification
(Identify project, product and business risks)
 Risk analysis
(Assess the likelihood and consequences of these risks)
 Risk planning
(Draw up plans to avoid or minimize the effects of the risk)
 Risk monitoring
(Monitor the risks throughout the project)

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Risk Management Process

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 Risk Identification
 May be a team activities or based on the individual
project manager’s experience
 A checklist of common risks may be used to identify risks
in a project
 Technology risks.
 People risks.
 Organizational risks.
 Requirements risks.
 Estimation risks
 Assets

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 Risk Analysis
 Assess probability and seriousness of each risk.
 Probability may be very low, low, moderate, high or very
high.
 Risk consequences might be catastrophic, serious,
tolerable or insignificant.
 Assessing Potential Loss
 Percentage of Risk Mitigated by Current Controls
 Risk Determination
 Likelihood and Consequences

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 Examples

Likelihood and Consequences 1

Likelihood and Consequences 2

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 Risk Planning
 Analysis and decision making to implement risk
management.
 Appropriate to size and complexity of the project.
 Stakeholders will be involve in planning risk
management.

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 Risk Monitoring
 Assess each identified risks regularly to decide
whether or not it is becoming less or more probable.
 Also assess whether the effects of the risk have
changed.
 Each key risk should be discussed at management
progress meetings.

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 Types of Risk
There are different types of risks that may be associated
with projects.
 Schedule risk
 Cost risk
 Quality risk
 Scope risk
 Resource risk
 Customer satisfaction risk

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Thank you!

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