Risky Business (part 1) - Risking It All (Page 2 of 4 )
Let's start with the basics. As Webster's Dictionary (http://www.webster.com/) simply puts it, a risk is "the possibility of suffering a loss".
As strange as this may sound, it's not difficult to ignore the latent causes of risks. Some of the many sources are:
* Changing user requirements * Incomplete specifications * Conflicting user participation * Lack of, or incomplete, understanding between project participants * Unsatisfactory testing of the product * Unrepressed changes in the project scope * Obsolescence * Cost and schedule overruns
These causes produce uninvited and detrimental effects, such as:
* Dissatisfied team members. * Budget and schedule explosions * Slippages and miscommunication between project participants * Damage to the firm's reputation
Based on this, it becomes possible to classify risks into the following categories:
* Conventional risks: These are risks encountered when an organization attempts to execute projects that are not best suited to their core competency - for example, a software development firm that specializes in banking software venturing into applications for the insurance sector.
* Erratic risks: These are risks that occur due to unexpected changes in the business situation, or in technology - for example, an application takes longer than expected to develop, and, in the interim, the technology used becomes obsolete.
* Project risks: These are risks associated with project management, and time and cost constraints - for example, a development team is halfway through a project when it discovers that some requirements have not been met, resulting in a sudden and rapid increase in expenses. Other examples of such risks involve unexpected departure of critical team members from the project, an absence of proper backup procedures, and an uncertain business environment.
* Commercial risks: These are risks related to the commercial environment - for example, improper evaluation of the target customer's requirements, which can result in a product that is too complex or expensive for consumers to handle.
Now, as cliched as it may sound, prevention is always better than cure...especially in the case of software application development, where the cure is never easy and almost always expensive. Luckily, help is at hand - software risk management now offers a structured, scientific approach to the problem of estimating risk so as to minimize its impact on your project.
Next: The Silver Bullet >>
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