What is risk management in software projects?

Risks are part of life, and however much we would like to eliminate them, we can’t. That doesn’t mean we cannot manage them. But what exactly does it mean to manage risks? Let’s take a closer look at risk management in software development!

‍Risk management in software development consists of gathering all the elements that could be considered a risk and factoring them into the planning. Risks include technical aspects such as difficulties and bugs and any personal problems that could delay the project, such as sickness or burnout.

Not being attentive to the risks could lead to losing time and money. This article will teach you everything you need to know about risk management in software projects. Let’s dive into it!

What is risk management in software development?

A software development project can entail many different risks. The project manager is responsible for analyzing the risks and providing planning according to them. The types of risk can vary.

‍Risk management in software development is the process of analyzing the risks, understanding the probability, and then planning possible solutions should the worst happen. This process is paramount when organizing the project.

When risks are not taken into account, the estimates and other projections can be faulty. Although we wished we lived in a perfect world where everything goes according to plan, it is not the case.

Problems will appear, and you will have to react to them. However, it is better to react when you already had an idea of what could go wrong. Risk management gives you the opportunity to prepare.

You cannot control the uncertainty of what will happen, but you can control how much uncertainty you are handling. This idea refers to the fact that even though there are unknown things, you can try to identify how many uncertainties there are. 

Let’s say you have a small box, and you don’t know what is inside. That is the uncertainty. And yet, given the size of the box, you know there isn’t a bike or an elephant inside. It is something smaller.

The same principle applies to risk management. You might not know exactly what the problem is, but you can draw conclusions from the context and the situation in which it could happen. If you manage risks this way, you can prepare and plan ahead.

Plus, you cannot control what will happen, but you can control what you will do. Picture this:

There’s a bullet coming your way. You cannot control the bullet. You can move to avoid the bullet. You can deflect the bullet. Or you can repair the damage done by the bullet. 

The bullet is the risk you are facing. The first step is to know the bullet is coming your way. After that, you can plan the best course of action. Or maybe, the only possible course of action. That is risk management.

Types of risks in a software project

‍There are many elements that could bring down a software development project. Here are the main risks in a software development project.

• Schedule Risk
• Budget Risk
• Technical Risk
• Outside Risk
• Operational Risk

Schedule risk

One of the most common problems in software development is that digital products are not delivered in time. Estimating tasks can be complicated. With that in mind, the time allocated to tasks can be flawed, and other risks can also delay the project.

Moreover, the schedule can vary considerably if the scope continues to grow.

Budget Risks

Many software projects go over budget, causing pain, discomfort, and frustration. In many cases, it happens due to an improper estimation of costs and time. However, there can also be mismanagements of budget and unexpected scope expansions. When these problems happen, projects can run out of budget.

Technical Risks

Even if you are working with a skilled and experienced team, there is a possibility that there are technical problems that hurt the project. High complexity in implementation can be one of the main reasons for this risk.

If you are adding new devs to a project or hiring a new team, you may encounter risks such as getting acquainted with the code or unseen technical issues left by the previous team.

Outside Risks

Imagine you are building a product that integrates with another platform or digital product. And suddenly, when you are about to launch, the terms and conditions of the other platform change, making your product obsolete. 

Similar changes such as government regulations or market fluctuations can also affect a development project.

Operational Risks

Some projects can suffer from a lack of communication and a lack of correct allocation of resources. Plus, there could be problems with task assignment and management, leading to graver problems in the project.

How do you manage risks in software projects?

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Risk management consists of three phases:

Risk identification

Risk assessment

Risk response

Risk identification

The first step is to identify the possible risks. You need to be aware of what could happen in order to prepare and include it in the plan. It is key to create a list of potential risks and use it for the assessment.

Risk assessment

This stage divides into a qualitative and a quantitative assessment. 

Qualitative assessment

Qualify the risk in the different types of responses (Qualitative Analysis)

• Avoidance/elimination: Eliminating the risk by looking for a different approach.
• Transfer: Getting rid of the risk by moving it elsewhere.
• Mitigation: Reducing the likelihood of the risk event from happening by developing a plan.
• Acceptance: Dealing with the consequences of the risk if they happen. Allowing the risk to exist.

Quantitative assessment

In this assessment, you need to determine how much will each of the risk events cost if they come to happen. Also, you need to assign a probability to each risk event. How likely is it for this situation to happen?

Risk response and monitoring

Once everything is defined, you can start creating the strategy to respond to risks and also a dashboard where you can keep track of them.

Wrapping up

Risk management is critical in ensuring the correct implementation of a project. If a project doesn’t take risks into account, it will most likely find troubles along the way. 

The risks will be there whether you plan for them or not, so why not be prepared? Work with a team who can manage risks and can explain them to you!

Why Bixlabs?

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At Bixlabs, we have a team of dedicated project managers with years of experience in risk management. Every one of our projects goes through the assessment process you read previously to ensure our partners have a higher chance of success and a better value for their money.

Sounds good? Give us a call!