Risk analysis and management are a series of steps that help a project team to understand and manage uncertainty. “A risk is an unwanted event that has negative effect on the project.”
Identifying risk and draWing up plans to minimize their effect on the project is called Risk Management.
Proper risk management will require addition planning to evaluate difficulties of achieving project goals. Where there is the potential of risk, it may be necessary to spend more time in planning to assess the risk and reduce it
Categories of Risk
When risk 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 :
- Project Risk : Project risk threaten the project plan. That is, if project risks become real; it is likely that project schedule will slip and that cost will increase. Project risk identify potential budgetary, schedule, personnel, resources, customers and requirements problems and their impact on a software project.
- Technical Risk : Technical risk threaten the quality and timelines of the system to be produced. If the technical risk becomes a reality, implementation may become difficult or impossible. Technical risk identify potential design, impletimitation, interface, verification and maintenance problems.
- Business Risks : Business risk threaten the viability of the system to be built. Candidates for top five business risk are :
- building on excellent product or system that no one really wants.
- building a product that no longer fits into an overall business strategy for the
- building a product that the sales force does not understand how to sell.
- losing the support of senior management due to change in focus or change in
- losing budgetary or personnel commitments.
Risk item and recommends risk management techniques to address them :
- Personnel Shortfalls : Job matching, team, building, staffing with top talent, morale building, prescheduling key people, cross training.
- Shortfalls in externally performed tasks : Reference checking, award fee contracts, competitive design.
- Developing the wrong user interface : Task analysis, prototyping, scenarios.
- Unrealistic Schedules : Schedule estimation, design to cost.
- Straining Computer Science Capabilities : Cost benefits analysis, reference checking, technical analysis.
Risk Management Activities.
There are so many activities which are involved in risk management. All these activities are shown in figure below :
From all of these activities, some of which are as follows :
(a) Risk Identification : In this activity, the different type of risk such as projeCt, product and business type are identified, it is the first step of risk management. It discovers the all possible risk to the project.
After risk identification, risk prioritization is being done and the risk having very low probability are usually not considered.
Risk identification is carried out as a team process.
(b) Risk Analysis : In risk analysis, we analyse `fie seriousness of the identified risk and its probability of occurring. Risk analysis relies on the judgement and experience of the project manager. After analyzing the risk, a judgement must be made about the important risk which must be considered during the project.
(c) Risk Planning : After identifying and analyzing the risk, we have to solve it, for which we need some method or strategies. All the strategies are divided into three categories :
- Avoidance Strategy : In this strategy, the probability that the risk will arise will be reduced.
- Minimization Strategy : The main aim of these strategy is to reduce the impact of the risk.
- Contingency Strategy : There strategies means that, if the worst happens, we are prepared for it and have a strategy to deal with it.
(d) Risk Monitoring : Risk monitoring involves regular monitoring of the identified risk to check whether or not that risk is becoming more or less probable. The project manager monitors factors that may provide an indication of whether the risk is becoming more or less likely. The following factors can be monitored :
- General attitude of team members based on project preserves.
- Interpersonal relationships among team members.
- Potential problems with compensation and benefits.
- The availability of jobs within the company and outside it.
The project manager should also monitor documents carefully to ensure that each can stand on its own.