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Chapter 6Chapter 6Risk Risk

ManagementManagement

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Project RisksProject Risks

What can go wrong?What can go wrong?What is the likelihood?What is the likelihood?What will the damage be?What will the damage be?What can we do about it?What can we do about it?

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Risk ManagementRisk Management Reactive & Proactive Reactive & Proactive

Reactive Risk ManagementReactive Risk Management• mitigation and fix on failuremitigation and fix on failure• crisis managementcrisis management

Proactive Risk ManagementProactive Risk Management• formal risk analysis formal risk analysis • corrects the root causes of riskcorrects the root causes of risk• contingency plancontingency plan

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Risk Risk CharacteristicsCharacteristics

Loss Loss UncertaintyUncertainty Degree of changeDegree of change

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Risk Risk CategoriesCategories Project risksProject risks Technical risksTechnical risks Business risksBusiness risks

Known risksKnown risks Predicatable risksPredicatable risks Unpredicatable risksUnpredicatable risks

Generic risksGeneric risks Product-specific risksProduct-specific risks

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RISK

Risk Management Risk Management ParadigmParadigm

controlcontrol

identifyidentify

analyzeanalyze

planplan

tracktrack

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Risk Risk IdentificationIdentification

A risk item checklistA risk item checklist•Product sizeProduct size•Business impactBusiness impact•Customer characteristicsCustomer characteristics•Process definitionProcess definition•Development environmentDevelopment environment• Technology to be builtTechnology to be built•Staff size and experienceStaff size and experience

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Risk Risk IdentificationIdentification

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Risk Due to Product Risk Due to Product SizeSize

•• estimated size of the product in LOC or FP?estimated size of the product in LOC or FP?

•• estimated size of product in number of programs,estimated size of product in number of programs, files, transactions?files, transactions?

• • percentage deviation in size of product from percentage deviation in size of product from average for previous products?average for previous products?

• • size of database created or used by the product?size of database created or used by the product?

• • number of users of the product?number of users of the product?

• • number of projected changes to the requirementsnumber of projected changes to the requirements for the product? before delivery? after delivery?for the product? before delivery? after delivery?

• • amount of reused software?amount of reused software?

Attributes that affect risk:Attributes that affect risk:

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Risk Due to Business Risk Due to Business ImpactImpact

• • affect of this product on company revenue?affect of this product on company revenue?• • visibility of this product by senior management?visibility of this product by senior management?• • reasonableness of delivery deadline?reasonableness of delivery deadline?

• • number of customers who will use this product number of customers who will use this product

• • interoperability constraintsinteroperability constraints

• • sophistication of end users?sophistication of end users?

• • amount and quality of product documentation that amount and quality of product documentation that must be produced and delivered to the customer?must be produced and delivered to the customer?

• • governmental constraintsgovernmental constraints

• • costs associated with late delivery?costs associated with late delivery?

• • costs associated with a defective product?costs associated with a defective product?

Attributes that affect risk:Attributes that affect risk:

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Risks Due to the Risks Due to the CustomerCustomer

• • Have you worked with the customer in the past?Have you worked with the customer in the past?

• • Does the customer have a solid idea of requirements?Does the customer have a solid idea of requirements?

• • Has the customer agreed to spend time with you? Has the customer agreed to spend time with you?

• • Is the customer willing to participate in reviews?Is the customer willing to participate in reviews?

• • Is the customer technically sophisticated?Is the customer technically sophisticated?

• • Is the customer willing to let your people do their Is the customer willing to let your people do their job—that is, will the customer resist looking over your job—that is, will the customer resist looking over your shoulder during technically detailed work?shoulder during technically detailed work?

• • Does the customer understand the software Does the customer understand the software engineering process?engineering process?

Questions that must be answered:Questions that must be answered:

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Risks Due to Process Risks Due to Process MaturityMaturity

• • Have you established a common process framework? Have you established a common process framework? • • Is it followed by project teams?Is it followed by project teams?• • Do you have management support for Do you have management support for software engineering software engineering • • Do you have a proactive approach to SQA? Do you have a proactive approach to SQA? • • Do you conduct formal technical reviews?Do you conduct formal technical reviews?

• • Are CASE tools used for analysis, design and Are CASE tools used for analysis, design and testing?testing?• • Are the tools integrated with one another?Are the tools integrated with one another?

• • Have document formats been established?Have document formats been established?

Questions that must be answered:Questions that must be answered:

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Technology RisksTechnology Risks

• • Is the technology new to your organization?Is the technology new to your organization?• • Are new algorithms, I/O technology required?Are new algorithms, I/O technology required? • • Is new or unproven hardware involved?Is new or unproven hardware involved?• • Does the application interface with new software?Does the application interface with new software?• • Is a specialized user interface required? Is a specialized user interface required? • • Is the application radically different?Is the application radically different?• • Are you using new software engineering methods?Are you using new software engineering methods?

• • Are you using unconventional software development Are you using unconventional software development methods, such as formal methods, AI-based approaches, methods, such as formal methods, AI-based approaches, artificial neural networks?artificial neural networks?

• • Are there significant performance constraints?Are there significant performance constraints?

• • Is there doubt the functionality requested is "do-able?"Is there doubt the functionality requested is "do-able?"

Questions that must be answered:Questions that must be answered:

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Staff/People RisksStaff/People Risks

• • Are the best people available?Are the best people available?• • Does staff have the right skills?Does staff have the right skills?• • Are enough people available?Are enough people available?• • Are staff committed for entire duration?Are staff committed for entire duration?• • Will some people work part time? Will some people work part time? • • Do staff have the right expectations?Do staff have the right expectations?• • Have staff received necessary training?Have staff received necessary training?• • Will turnover among staff be low?Will turnover among staff be low?

Questions that must be answered:Questions that must be answered:

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Risk Risk EstimationEstimation

Establish a risk tableEstablish a risk table• Estimate the Estimate the probabilityprobability of occurrence of occurrence• Estimate the Estimate the impactimpact on the project . on the project .• SortSort the table by probability and impact the table by probability and impact..• Define a Define a cutoff linecutoff line..

Assessing Risk ImpactAssessing Risk Impact• NatureNature• Scope Scope • Timing Timing

Risk-exposure = risk-probability x risk-impactRisk-exposure = risk-probability x risk-impact

Risk assessmentRisk assessment• Risk referent level [rRisk referent level [rii, l, lii, x, xii]]

Risk strategy Risk strategy • Risk mitigation, monitoring, and management Risk mitigation, monitoring, and management

(RMMM)(RMMM)

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Building a Risk Building a Risk Table (1)Table (1)

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Building a Risk Building a Risk Table (2)Table (2)

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Risk Referent Risk Referent LevelLevel

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Risk strategies:Risk strategies:• Risk mitigationRisk mitigation• MonitoringMonitoring• managementmanagement

Risk Planning Risk Planning

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Risk Risk TrackingTracking

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Risk strategies:Risk strategies:• mitigation—how can we avoid the risk?mitigation—how can we avoid the risk?• monitoring—what factors can we track monitoring—what factors can we track

that will enable us to determine if the risk that will enable us to determine if the risk is becoming more or less likely?is becoming more or less likely?

• management—what contingency plans do management—what contingency plans do we have if the risk becomes a reality?we have if the risk becomes a reality?

RMMM RMMM

RMMM plan

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RMMM Plan RMMM Plan DocumentDocumentIntroductionIntroduction

• Scope and Purpose of DocumentScope and Purpose of Document• Overview of major risksOverview of major risks• ResponsibilitiesResponsibilities

Management Management Technical staffTechnical staff

Project Risk TableProject Risk Table• Description of all risks above cut-offDescription of all risks above cut-off• Factors influencing probability and impactFactors influencing probability and impact

Risk Mitigation, Monitoring, Risk Mitigation, Monitoring, ManagementManagement• Risk #nRisk #n

MitigationMitigation• General strategyGeneral strategy• Specific steps to mitigate the riskSpecific steps to mitigate the risk

MonitoringMonitoring• Factors to be monitored Factors to be monitored • Monitoring approachMonitoring approach

ManagementManagement• Contingency planContingency plan• Special considerationsSpecial considerations

RMMM Plan Iteration ScheduleRMMM Plan Iteration ScheduleSummarySummary

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Risk Information Risk Information SheetSheet(RIS)(RIS)