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Types of Risks in Software Projects

March 14, 2008

Are you developing any Test plan or test strategy for your project? Have you addressed all risks properly in your test plan or test strategy?

As testing is the last part of the project, it’s always under pressure and time constraint. To save time and money you should be able to prioritize your testing work. How will prioritize testing work? For this you should be able to judge more important and less important testing work. How will you decide which work is more or less important? Here comes need of risk-based testing.

What is Risk?
“Risk are future uncertain events with a probability of occurrence and a potential for loss”

Risk identification and management are the main concerns in every software project. Effective analysis of software risks will help to effective planning and assignments of work.

In this article I will cover what are the “types of risks”. In next articles I will try to focus on risk identification, risk management and mitigation.

Risks are identified, classified and managed before actual execution of program. These risks are classified in different categories.

Categories of risks:

Schedule Risk:
Project schedule get slip when project tasks and schedule release risks are not addressed properly.
Schedule risks mainly affect on project and finally on company economy and may lead to project failure.
Schedules often slip due to following reasons:

  • Wrong time estimation
  • Resources are not tracked properly. All resources like staff, systems, skills of individuals etc.
  • Failure to identify complex functionalities and time required to develop those functionalities.
  • Unexpected project scope expansions.

Budget Risk:

  • Wrong budget estimation.
  • Cost overruns
  • Project scope expansion

Operational Risks:
Risks of loss due to improper process implementation, failed system or some external events risks.
Causes of Operational risks:

  • Failure to address priority conflicts
  • Failure to resolve the responsibilities
  • Insufficient resources
  • No proper subject training
  • No resource planning
  • No communication in team.

Technical risks:
Technical risks generally leads to failure of functionality and performance.
Causes of technical risks are:

  • Continuous changing requirements
  • No advanced technology available or the existing technology is in initial stages.
  • Product is complex to implement.
  • Difficult project modules integration.

Programmatic Risks:
These are the external risks beyond the operational limits. These are all uncertain risks are outside the control of the program.
These external events can be:

  • Running out of fund.
  • Market development
  • Changing customer product strategy and priority
  • Government rule changes.

These are all common categories in which software project risks can be classified. I will cover in detail “How to identify and manage risks” in next article.

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