Chapter 6 - Risk Analysis and Management

Overview

Risks are potential problems that might affect the successful completion of a software project. Risks involve uncertainty and potential losses. Risk analysis and management are intended to help a software team understand and manage uncertainty during the development process. The important thing is to remember that things can go wrong and to make plans to minimize their impact when they do. The work product is called a Risk Mitigation, Monitoring, and Management Plan (RMMM).

Risk Strategies

Reactive strategies - very common, also known as fire fighting, project team sets resources aside to deal with problems and does nothing until a risk becomes a problem
Proactive strategies - risk management begins long before technical work starts, risks are identified and prioritized by importance, then team builds a plan to avoid risks if they can or minimize them if the risks turn into problems

Software Risks

Project risks - threaten the project plan
Technical risks - threaten product quality and the timeliness of the schedule
Business risks - threaten the viability of the software to be built (market risks, strategic risks, management risks, budget risks)
Known risks - predictable from careful evaluation of current project plan and those extrapolated from past project experience
Unknown risks - some problems simply occur without warning

Risk Identification

Product-specific risks - the project plan and software statement of scope are examined to identify any special characteristics of the product that may threaten the project plan
Generic risks - are potential threats to every software product (product size, business impact, customer characteristics, process definition, development environment, technology to be built, staff size and experience)

Risk Impact

Risk components - performance, cost, support, schedule
Risk impact - negligible, marginal, critical, catastrophic
The risk drivers affecting each risk component are classified according to their impact category and the potential consequences of each undetected software fault or unachieved project outcome are described

Risk Projection (Estimation)

Risk Table Construction

List all risks in the first column of the table
Classify each risk and enter the category label in column two
Determine a probability for each risk and enter it into column three
Enter the severity of each risk (negligible, marginal, critical, catastrophic) in column four
Sort the table by probability and impact value
Determine the criteria for deciding where the sorted table will be divided into the first priority concerns and the second priority concerns
First priority concerns must be managed (a fifth column can be added to contain a pointer into the RMMM)

Assessing Risk Impact

Factors affecting risk consequences - nature (types of problems arising), scope (combines severity with extent of project affected), timing (when and how long impact is felt)
If costs are associated with each risk table entry Halstead's risk exposure metric can be computed (RE = Probability * Cost) and added to the risk table.

Risk Assessment

Define referent levels for each project risk that can cause project termination (performance degradation, cost overrun, support difficulty, schedule slippage).
Attempt to develop a relationship between each risk triple (risk, probability, impact) and each of the reference levels.
Predict the set of referent points that define a region of termination, bounded by a curve or areas of uncertainty.
Try to predict how combinations of risks will affect a referent level.

Risk Refinement

Process of restating the risks as a set of more detailed risks that will be easier to mitigate, monitor, and manage.
CTC (condition-transition-consequence) format may be a good representation for the detailed risks (e.g. given that <condition> then there is a concern that (possibly) <consequence>).

Risk Mitigation, Monitoring, and Management

Risk mitigation (proactive planing for risk avoidance)
Risk monitoring (assessing whether predicted risks occur or not, ensuring risk aversion steps are being properly applied, collect information for future risk analysis, attempt to determine which risks caused which problems)
Risk management and contingency planing (actions to be taken in the event that mitigation steps have failed and the risk has become a live problem)

Safety Risks and Hazards

Risks are also associated with software failures that occur in the field after the development project has ended.
Computers control many mission critical applications in modern times (weapons systems, flight control, industrial processes, etc.).
Software safety and hazard analysis are quality assurance activities that are of particular concern for these types of applications and are discussed later in the text.

Risk Information Sheets

Alternative to RMMM in which each risk is documented individually.
Often risk information sheets (RIS) are maintained using a database system.
RIS components - risk id, date, probability, impact, description, refinement, mitigation/monitoring, management/contingency/trigger, status, originator, assigned staff member.