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Project Risk Management and Risk Identification

A risk is a potential problem – it might happen or it might not. But, regardless of the outcome, it’s a really good idea to identify it, assess its probability of occurrence, estimate its impact, and establish a contingency plan.  Risk management is a series of steps that help a software team to understand and manage uncertainty. The first step in risk management is to recognize what can go wrong, called risk identification. Next, each risk is analyzed to determine the likelihood that it will occur and the damage that it will do if it does occur. Once this information is established, risks are ranked, by probability and impact. Finally, a plan is developed to manage those risks with high probability and high impact.

 

Software risk always involves two characteristics:

Ø  Uncertainty: The risk may or may not happen. There are no 100% probable risks.

Ø  Loss: If the risk becomes a reality, unwanted consequences or losses will occur.

When risks are analyzed, it is important to quantify the level of uncertainty and the degree of loss associated with each risk. To accomplish this, different categories of risks are considered.


Risk Identification

Risk identification is a systematic attempt to specify threats to the project plan (estimates, schedule, resource loading, etc.). There are two distinct types of risks for each of the categories that have been presented earlier: generic risks and product-specific risks.

®    Generic risks are a potential threat to every software project.

®    Product-specific risks can be identified only by those with a clear understanding of the technology, the people, and the environment that is specific to the project at hand. To identify product-specific risks, the project plan and the software statement of scope are examined.

One method for identifying risks is to create a risk item checklist. The checklist can be used for risk identification and focuses on some subset of known and predictable risks in the following generic subcategories:

®    Product size: Risks associated with the overall size of the software to be built or modified.

®    Business impact: Risks associated with constraints imposed by management or the market place.

®    Customer characteristics: Risks associated with the sophistication of the customer and the developer's ability to communicate with the customer in a timely manner.

®    Process definition: Risks associated with the degree to which the software process has been defined and is followed by the development organization.

®    Development environment: Risks associated with the availability and quality of the tools to be used to build the product.

®    Technology to be built: Risks associated with the complexity of the system to be built and the "newness" of the technology that is packaged by the system.

Staff size and experience: Risks associated with the overall technical and project experience of the software engineers who will do the work. 

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