- What are the risks in software development?
- How will the risks affect your project?
- What are the three milestones of risk management?
- What helps you identify risks during project implementation?
Software development is always risky since a lot of market segments are saturated with ready-made solutions. The creation of customized software for a specific business also requires a lot of analysis and research before proceeding to technical implementation.
Assessing risks is one of the essential tasks in the pre-production stage. What’s more, risk management in software development doesn’t end after the digital product launch, so we are going to share the experience of our Senior Project Manager Dmytro Liesov and explain how to deal with different kinds of risks in the application development process.
What are the risks in software development?
The risks in software development like any other type of business activity are the events that may or may not happen, and if they do they will affect the project development process, time, costs, specifics, and final results.
Why do we need risk management in software development? Reasonable risk assumptions (or risk management planning), their sound assessment, and the development of a response strategy allow the project to stay organized and flexible, and have a better chance of being released even if some of the risky events take place.
How will the risks affect your project?
There are three ways risks in software projects affect their outcome.
- Positive risks or opportunities. When talking about risks, one always thinks of negative events. However, there are also positive risks or opportunities like new ways to develop and grow the project. These events allow the project to reduce costs, increase value, become more competitive, and accelerate the time it takes to bring the product to market.
- Negative risks. In contrast, negative risks are events that have the potential to reduce the value of a project and increase its costs. Critical risks are part of negative risks and can be defined as events that jeopardize the overall success of the project, for example, if the use of applications for a certain industry was suddenly prohibited by law like some messenger apps that are now allowed in the United Arab Emirates.
- No risks. These are the standard events that are part of the development process and have no critical importance on the future project. They may be defined as those risks where we know that the specific event will occur or will not occur (i.e when there is no uncertainty of the risk occurring.)
What are the three milestones of risk management?
Risk management in software development projects is based on the three following milestones, each of which is aimed at helping you with reasonable software development risk assessment and software development risk management plan creation.
#1 Find the origins of the risks
At the first stage of software development risk analysis, you should find out what you are going to deal with, or to put it simply, it is necessary to identify the type and origin of the risk to come up with a specific response strategy.
Software development project risks are divided into four categories.
Technological. These are the risks related to the technical implementation of the project. For example, bad legacy code, technological debt, or the wrong choice of technologies are examples of this type of risk.
Operating. These are the organizational risks, for example, the risk of downtime because of long searches for specific specialists needed for the project creation. This can be classified as an operational risk.
Business. As for business risks, these are all kinds of positive and negative events that directly affect business growth and solvency. For example, if the company goes bankrupt because of debt.
External. External risks cover all the predictable and totally unexpected situations that may positively or negatively affect the business itself, and consequently the project it is working on. For example, the recent pandemic became one of the unprecedented and unpredictable negative external risks for the majority of businesses.
#2 Use a risk breakdown structure (RBS)
After the risks and their origins are identified, it makes sense to gather them into a holistic picture and get an all-encompassing impression of the environment in which the project will be created. A project risk management tool such as the Risk Breakdown Structure will be useful for this task.
Here is what it may look like.
|Your Project Risks|
|Type of risk||Technological||Operating||Business||External|
|The risky event||Changing project requirements||Taking a long time to assemble a development team||A change in business goals||The appearance of a competitive product|
|Risk evaluation (on a scale of 1-10)||7/10||5/10||3/10||1/10|
|Risk response strategy||Active acceptance||Delegation||Escalation||Active acceptance (i.e. looking for ways to make our product better than the competition) or passive acceptance (accepting the fact that our project will no longer be relevant)|
The main goal of this risk matrix is to define software development risks, reasonably evaluate them, and pick up the risk response strategies we discuss below.
#3 Choose your risk response strategy
There are six strategies you may be guided by as a part of your enterprise risk management program.
Strategy #1 Avoidance
As the name implies, in this case, we are trying to avoid a risky situation. For example, in order to avoid project delivery delays because of missed deadlines, we do everything possible to pick the right team and go with the right technologies from the very beginning.
Strategy #2 Mitigation
This strategy is used when the risks cant’ be avoided, but it is still possible to decrease their impact on the project development process.
Strategy #3 Delegation
In this case, we delegate the responsibility for risk monitoring and response plan implementation to a third-party. For example, if one of the leading developers on the team decided to stop working on the project, we outsource the search and onboarding of a new team member to a recruiting agency.
Strategy #4 Escalation
This strategy makes sense when there is no way to deal with the risk at the project level, so it should be escalated to a higher level to handle it.
Strategy #5 Active acceptance
In this case, we are directly involved in dealing with risky event consequences. For example, if the project requirements are suddenly changed, we actively adapt to these changes by attracting the necessary specialists, picking new technologies, and changing the course of the development process.
Strategy #6 Passive acceptance
We accept that there is no way out except for coming to terms with the risky event and accepting its consequences.
Read also: How AI is changing risk management?
What helps you identify risks during project implementation?
Risk assessment before project development is a step you cannot skip. However, you still need to stay aware of any risky changes during project development, because each of the risks we have listed above can arise at any time.
At the stage of direct product development, you need to return to your RBS matrix from time to time, review the risks that you have already identified, plus identify triggers for other risks, assess their severity and likelihood, and add them to your Risk Breakdown Structure.
Your software risk management plan must constantly be reviewed, analyzed, and updated in order for your project to have the potential for timely identification of risks and come up with the correct response.
Conclusion: What to do after launching the project
After the release of your product in the market, risk assessment is transferred to a completely different environment. At that time you need to pay close attention to customer values, habits and behavior patterns, market dynamics, and competitors' strategies. However, post-analysis of the risks you faced in the process of creating a project will also be extremely useful in the future.
After the product is released, go back to your risk matrix and determine which risky events occurred and which have not. Next, evaluate the effectiveness of your response strategies, and use those insights and practical experience when creating your next project.
Plus, don't forget that the Archer Software technical team is always here to help you at every stage of your solution development, so feel free to reach out to us anytime at firstname.lastname@example.org.