Tag Archive for: risk management

Many products must go through a risk management process to ensure safety, but it’s the severity of the potential outcomes that vary.

For our customers creating products in heavily-regulated industries — such as automotive, medical devices, and aerospace — the consequences associated with not correctly mitigating risk puts lives in jeopardy. And there’s ample evidence that too many in these fields are still struggling to find a process that works.

Even while tougher safety regulations and standards are being enacted, product recalls are still soaring. In February and March alone, millions of vehicles were recalled due to quality issues. And, within the fourth quarter of 2018, recalls of medical devices spiked 449% to just over 161 million, which was the second highest quarter in at least 14 years.

These examples showcase why teams building complex products need a smarter way to identify the probabilities and severity of risks early so they can track and mitigate them throughout development. And while risk management is imperative, it can’t come at the expense of the speed of development; in fact, it should complement rather than hinder efficiency.

Earlier this year, we introduced Jama Connect™ Risk Management Center for medical device developers, and now we’re excited to announce that we’re opening it up to all our customers working within regulated industries with the introduction of FMEA templates.

The Jama Connect Risk Management Center was developed from best practices learned from our work with companies that deliver quality products in safety-critical industries. With the newly-updated Risk Management Center, development teams can participate in risk management techniques including Preliminary Hazard Analysis (PHA) and FMEA in accordance with ISO 14971 and IEC 60812.

As an overview, here are some common problems we’ve often seen around managing risk and how the Jama Connect Risk Management Center solves them.

Problem: Not sure how to implement a solid risk management process

Risk management is a daunting challenge, especially for startups vying to disrupt an entire industry. Whether it’s ISO 14971, IEC 60812, or beyond, many new companies aren’t sure where to start when creating a risk management plan to bring their products up to international standards and government regulations.

Solution: Pre-configured risk analysis templates and startup services

In Risk Management Center, users receive guided templates based on best practices like FMEA and ISO 14971, which helps remove the bulk of the guesswork.

For medical device developers, Jama also has a Professional Services division that can work directly with your team to provide the best possible start to your process in accordance with ISO 14971. Through training and consultation, they’ll help customize your templates in a way that matches your team’s risk management process so you can start managing and mitigating risks quickly while accelerating development.

Jama’s professional services dramatically speed time to value, so much so that one customer began developing medical devices in less than a week with our guidance.

Frost & Sullivan points to Jama Connect as a way to better manage risk for companies in regulated industries. Read the report.

Problem: Risk management process can be siloed

In many organizations, managing risk during development is painfully cumbersome, disconnected, and inefficient.

If you can imagine a company emailing gigantic Excel spreadsheets around to manage risks for large, complex products — whether its airplanes, automobiles, medical devices, or software that interacts with any of these elements — you can also envision the unintended errors that can manifest as a result.

Solution: Streamlined risk management

The Jama Connect Risk Management Center takes a strong, team-based approach, ensuring risk analysis is not done in silos and instead performed early, collaboratively, and continuously throughout development.

With your risks and requirements housed directly within Jama Connect, Risk Management Center helps you track both in a single place. And since the data in Jama Connect is updated in real time, you’ll always be working from the most recent version of any risk analysis. Invited individuals can simply log in to Jama Connect and participate throughout the development process.

Through this effort, risk management becomes a continuous and collaborative part of the development process saving you valuable time and rework cost.

 

Problem: Aligning teams around risk management

Throughout the frenzied pace of development, those charged with leading the risk management process at organizations can find it difficult to keep teams engaged and focused on reviewing risks. The issue often manifests itself in long, painful, cross-functional meetings, wherein risks are reviewed in detail.

By their very nature, cross-functional teams aren’t performing risk management full time. As a result, review meetings can become susceptible to the same problems all meetings are prone to: participants don’t prepare, precious meeting time is spent on what to focus on, and action items aren’t clearly identified or resolved. This type of disorganization can significantly extend the development cycle if risks are still discovered late in the design or commercialization phases – times when efficiency is most needed.

Solution: Centralized risk management activities

Lengthy meetings around risk management can be halved with the Jama Connect Risk Management Center. Throughout development, key stakeholders in the risk management process can be given select access to Risk Management Center.

These chosen team members can then easily and efficiently view and contribute to the risk analyses that matter most to their expertise and experience. Users also get the ability to easily bookmark, organize, and identify recently-viewed analyses so they can pick up right where they left off.

Organizations using dedicated requirements management platforms receive fewer warnings, recalls, fines, and production stoppages than those that don’t, according to Engineering.com. Get the full report.

Problem: Tracking accountability in risk management

If your team is still relying on spreadsheets when building complex products, that’s going to cascade into other problematic areas.

In the whirl of development cycles, it can be difficult to manage the multitudes of requirements and tasks, leaving teams with a sense of unease around whether or not they’ve properly tracked and mitigated all possible risks when it comes time to launch.

Solution: Visible risk tracking and mitigation

In Risk Management Center, you’ll have the ability to link risks to requirements and verifications to better manage development complexity and assess the impact of changes to ensure quality. This feature also allows you to easily track open risks and those that are still needing mitigations, effectively eliminating the chance something slips by your team.

When it comes time to prove compliance, risk analysis and plan elements can be easily exported to allow sign-off in another compatible document or management tool.

Learn more about Jama Connect Risk Management Center by downloading our datasheet or contacting your account manager.

Companies are facing intense pressures to bring complex products to market faster than ever. In addition, those delivering products in safety-critical markets must also create and execute against a risk management plan for expanding standards and regulatory oversight.

In these cases, inefficiencies and blind spots in the development process can lead to risk management errors which not only throw releases off schedule but can put lives in jeopardy.

To help raise awareness around these issues, prominent research and consulting firm Frost & Sullivan recently observed the product development landscape and its relationship to risk. The output is a recently-released brief, “Safeguarding Regulated Products Amidst Growing Complexity,” that spotlights Jama Connect™ as a remedy for ineffective risk analysis in product development.

Symptoms of Ineffective Risk Management

The Frost & Sullivan brief outlines the current competitive environment facing organizations producing products in regulated industries and makes the case that relying on outdated processes impedes success.

“Many businesses in these spaces have invested heavily over the years in their document-based systems to manage their product development process and are hesitant to upgrade to unknown technologies or solutions,” writes Frost & Sullivan. “These antiquated systems are often static and spreadsheet- or even paper-based. And while they may offer a (possibly false) sense of reassurance against the costs and risks associated with a live digital system, they end up creating more costs and causing more harm.”

As we’ve heard from many companies, performing requirements management and risk analysis through versioned spreadsheets and extensive meetings not only drains resources, slows development, and creates errors, but it’s just no longer an effective strategy when you need to build safe products quickly.

Gain a stronger handle on ISO 14971 — the FDA’s mandatory standard for risk assessment in medical devices — by grabbing our whitepaper.

Strengthening Collaboration During Development

One other notion dispelled by Frost & Sullivan is the idea that remote development teams can operate at maximum efficiency without a powerful, shared solution for centralized enablement.

For instance, with regulated companies, there’s too much at stake to leave issues around requirements, risk mitigation, and compliance up to emailed documents.

“A strong, platform-based solution can provide a virtual space in which different but interdependent teams can collaborate, key stakeholders can review and weigh in on decisions, and regulators can trace end-to-end compliance,” writes Frost & Sullivan. “It can also enable risk mitigation as an ongoing, semi-automated process that catches and integrates changing conditions. Such a solution can help ensure compliance across processes, functions and locations, as well as with product definitions and design, processes and test cases.”

Learn how how a Fortune 100 semiconductor company is meeting the challenges of developing automotive-related technology by downloading our case study.

A Better Risk Management Solution

For businesses still hesitant to invest in improvements to their risk management process, it’s not always strictly a question of budget. The move involves a change in mindset and executable process, according to Frost & Sullivan. For instance, tracking and managing risk needs to be an intrinsic, collaborative, ongoing part of the development process, and not something performed by a specialized team in a silo.

Some organizations, especially newcomers to regulated industries, may not even be sure where to start with complex standards like ISO 14971, let alone assembling a risk management plan. It’s in these cases you’re more likely to see a development team dig into a risk management framework in the later stages of development, potentially adding rework and cost when schedules and budgets may not allow for either.

Frost & Sullivan contends Jama Connect is worth a look for all organizations interested in mitigating product risk, as it can “provide risk management, collaboration, efficiency and regulatory compliance as aspects that strengthen, rather than complicate, each other.”

Whichever path a company chooses, what Frost & Sullivan make clear is that staying the course with an ineffective risk management process isn’t really an option at all.

“Teams will otherwise struggle to get their people up to speed, across the globe and across groups,” writes Frost & Sullivan. “A team-based approach… is the ideal solution in heavily regulated industries.”

Access the full Frost & Sullivan brief, “Safeguarding Regulated Products Amidst Growing Complexity” by downloading it now.

Compliance standards, especially those that involve relatively new functional safety elements, will likely add additional requirements to the development process.

For example, the increasing complexity and abundance of automotive electronic systems led to the creation of a functional safety standard called ISO 26262 in 2011. And to ensure that new electronic functions remain functionally safe in the industry’s rapidly evolving environment, the International Organization for Standardization (ISO) recently introduced a second edition of ISO 26262 in December 2018. Similar regulations for other industries abound: DO-178B/C for aerospace standards, and IEC 60601 and ISO 14971 for medical standards.

Common to all of these safety standards is a risk-based approach to determine the criticality and potential hazards associated with key system functions. The primary goal of these standards is to prevent the failure of a system or device that could cause injury, harm or death. If a failure is unavoidable, then the system should fail gracefully.

Watch our webinar: “Understanding ISO 26262 Compliance for Automotive Suppliers”

The Impact of Tools in Functional Safety

ISO 26262 complements good systems engineering practices by requiring that hardware and software safety concerns be addressed and documented in a systematic way throughout the development lifecycle. In the past, safety design was considered part of general requirements activity. But merely identifying and tracing requirements in the software and hardware teams is not enough. The common practice of hardware and software teams working in silos will not guarantee the level of safety coverage required by ISO 26262.

How can the problem be resolved?

One of the key things missing from the general approach to requirements are the traceability links between phases. Many tools do a great job of requirements management and traceability within a particular phase but provide a poor auditable trail for traceability between phases. The activities of comprehensive and complete lifecycle traceability become an auditing afterthought, to be finished after the project is completed. This is the result that ISO 26262 tries to avoid through documented attention to the development process, decision-making and selection of supporting tools.

And because functional safety is a top priority for so many of our customers, Jama went through the process of earning a certification from internationally recognized testing body TÜV SÜD. Jama Connect™ is certified as a fit-for-purpose software tool for development of safety-related products according to ISO 26262 (up to ASIL D), IEC 61508 (up to SIL 3), IEC 62304 and EN 50128, giving our customers confidence that the products they are building are safe to use.

Learn more about ISO 26262 and automotive electronics development.

Tool Implementation Strategies

Tool qualification depends upon how the tool is used, which in turn determines what impact it could have on safety. For example, depending upon its usage, can the tool introduce a hardware defect or software bug into the system? How the tool is used within a tool chain will also determine the probability that an error introduced by the tool will be detected.

A confidence level is assigned to a given tool, or a flow within a tool, based upon the probability that it will insert or cause an error, combined with the likelihood that the error will be detected during the development process. The importance of the tool confidence level is that it will determine the cost an organization must invest in tool qualification.

As with other standards, implementing the ISO 26262 process requires iteration of a number of basic steps:

  1. Determine the existing process and tools to answer the question “Where are we now?”: Review the current embedded hardware and software development processes and tool chains. Understand the application(s) to be developed and assign levels of confidence in terms of safety.
  2. Gap analysis to answer the question “Where would we like to be?”: Perform a gap or impact analysis to identify current challenges and process efficiency improvements – often done using model-based design techniques.
  3. Training and instruction: Provide design-for-safety training and instruction to address the previously identified gaps.
  4. Hands-on deployment support: Apply the knowledge gained in the previous steps to a specific pilot project. This will require assistance in a wide range of areas including requirements traceability, modeling, simulation, code generation, verification, validation, tool qualification and system integration.

Jama Software is the first SaaS and Agile vendor to be ISO 26262 fit-for-purpose certified by TÜV SÜD. Read more.

Alignment with Best Practices for Functional Safety

This holistic approach to functional safety exemplifies several key elements of good system engineering processes: collaboration, traceability, validation and verification (V&V), risk analysis and mitigation, and careful integration within the tool chain.

Watch our webinar, “Jama ISO 26262 Certification and Best Practices for Development,” to learn more about how teams creating products for any safety-critical industry can lower the costs and risks of complying with functional safety standards.

derailed-by-risks-02

Software engineers are eternal optimists. When planning software projects, we usually assume that everything will go exactly as planned. Or, we take the other extreme position: the creative nature of software development means we can never predict what’s going to happen, so what’s the point of making detailed plans? Both of these perspectives can lead to software surprises, when unexpected things happen that throw the project off track. In my experience, software surprises are never good news.

Risk management has become recognized as a best practice in the software industry for reducing the surprise factor. Although we can never predict the future with certainty, we can apply risk management practices to peek over the horizon at the traps that might be looming. Then we can take actions to minimize the likelihood or impact of these potential problems. Risk management means dealing with a concern before it becomes a crisis. This improves the chance of successful project completion and reduces the consequences of those risks that cannot be avoided.

During project initiation take the time to do a first cut at identifying significant risks. It’s possible that the risks will outweigh the potential benefits of the project. More likely, getting an early glimpse of potential pitfalls will help you make more sensible projections of what it will take to execute this project successfully. Build time for risk identification and risk management planning into the early stages of your project. You’ll find that the time you spend assessing and controlling risks will be repaid many times over.

What Is Risk?

A “risk” is a problem that could cause some loss or threaten the success of your project, but which hasn’t happened yet. And you’d like to keep it that way. These potential problems might have an adverse impact on the cost, schedule, or technical success of the project, the quality of your products, or team morale. Risk management is the process of identifying, addressing, and controlling these potential problems before they can do any harm.

Whether we tackle them head-on or keep our heads in the sand, risks have a potentially huge impact on many aspects of our project. The tacit assumption that nothing unexpected will derail the project is simply not realistic. Estimates should incorporate our best judgment about the potentially scary things that could happen on each project, and managers need to respect the assessments we make. Risk management is about discarding the rose-colored glasses and confronting the very real potential of undesirable events conspiring to throw the project off track.

Why Manage Risks Formally?

A formal risk management process provides multiple benefits to both the project team and the development organization as a whole. First, it gives us a structured mechanism to provide visibility into threats to project success. By considering the potential impact of each risk item, we can focus on controlling the most severe risks first. We can marry risk assessment with project estimation to quantify possible schedule slippage if certain risks materialize into problems. This approach helps the project manager generate sensible contingency buffers. Sharing what does and does not work to control risks across multiple projects helps the team avoid repeating the mistakes of the past. Without a formal approach, we cannot ensure that our risk management actions will be initiated in a timely fashion, completed as planned, and effective.

Controlling risks has a cost. We must balance this cost against the potential loss we could incur if we don’t address the risk and it does indeed bite us. Suppose we’re concerned about the ability of a subcontractor to deliver an essential component on time. We could engage multiple subcontractors to increase the chance that at least one will come through on schedule. That’s an expensive remedy for a problem that might not even materialize. Is it worth it? It depends on the downside we incur if indeed the subcontractor dependency causes the project to miss its planned ship date. Only you can decide for each individual situation.

Typical Software Risks

The list of evil things that can befall a software project is depressingly long. The enlightened project manager will acquire lists of these risk categories to help the team uncover as many concerns as possible early in the planning process. Potential risks to consider can come from group brainstorming activities or from a risk factor chart accumulated from previous projects. In one of my groups, individual team members came up with descriptions of the risks they perceived, which I edited together and we then reviewed as a team.

Following are several typical risk categories and some specific risks that might threaten your project. Have any of these things have happened to you? If so, add them to your master risk checklist to remind future project managers to consider if it could happen to them, too. There are no magic solutions to any of these risk factors. We need to rely on past experience and a strong knowledge of software engineering and management practices to control those risks that concern us the most.

Dependencies

Some risks arise because of dependencies our project has on outside agencies or factors. We cannot usually control these external dependencies. Mitigation strategies could involve contingency plans to acquire a necessary component from a second source, or working with the source of the dependency to maintain good visibility into status and detect any looming problems. Following are some typical dependency-related risk factors:

  • Customer-furnished items or information.
  • Internal and external subcontractor relationships.
  • Inter-component or inter-group dependencies.
  • Availability of trained and experienced people.
  • Reuse from one project to the next.

Requirements Issues

Many projects face uncertainty and turmoil around the product’s requirements. Some uncertainty is tolerable in the early stages, but the threat increases if such issues remain unresolved as the project progresses. If we don’t control requirements-related risks we might build the wrong product or build the right product badly. Either outcome results in unpleasant surprises and unhappy customers. Watch out for these risk factors:

  • Lack of a clear product vision.
  • Lack of agreement on product requirements.
  • Inadequate customer involvement in the requirements process.
  • Unprioritized requirements.
  • New market with uncertain needs.
  • Rapidly changing requirements.
  • Ineffective requirements change management process.
  • Inadequate impact analysis of requirements changes.

Management Issues

Although management shortcomings affect many projects, don’t be surprised if your risk management plan doesn’t list too many of these. The project manager often leads the risk identification effort, and most people don’t wish to air their own weaknesses (assuming they even recognize them) in public. Nonetheless, issues like those listed here can make it harder for projects to succeed. If you don’t confront such touchy issues, don’t be surprised if they bite you at some point. Defined project tracking processes and clear project roles and responsibilities can address some of these conditions.

  • Inadequate planning and task identification.
  • Inadequate visibility into project status.
  • Unclear project ownership and decision making.
  • Unrealistic commitments made, sometimes for the wrong reasons.
  • Managers or customers with unrealistic expectations.
  • Staff personality conflicts.

Lack of Knowledge

Software technologies change rapidly and it can be difficult to find suitably skilled staff. As a result, our project teams might lack the skills we need. The key is to recognize the risk areas early enough so we can take appropriate preventive actions, such as obtaining training, hiring consultants, and bringing the right people together on the project team. Consider whether the following factors apply to your team:

  • Lack of training.
  • Inadequate understanding of methods, tools, and techniques.
  • Insufficient application domain experience.
  • New technologies or development methods.
  • Ineffective, poorly documented, or ignored processes.
  • Technical approaches that might not work.

Outsourcing

Outsourcing development work to another organization, possibly in another country, poses a whole new set of risks. Some of these are attributable to the acquiring organization, others to the supplier, and still others are mutual risks. If you are outsourcing part of your project work, watch out for the following risks:

  • Acquirer’s requirements are vague, ambiguous, incorrect, or incomplete.
  • Acquirer does not provide complete and rapid answers to supplier’s questions or requests for information.
  • Supplier lacks appropriate software development and management processes.
  • Supplier does not deliver components of acceptable quality on contracted schedule.
  • Supplier is acquired by another company, has financial difficulties, or goes out of business.
  • Supplier makes unachievable promises in order to get the contract.
  • Supplier does not provide accurate and timely visibility into actual project status.
  • Disputes arise about scope boundaries based on the contract.
  • Import/export laws or restrictions pose a problem.

The second article in this series will describe the various activities associated with the practice of risk management and recommend the specific bits of information you should record about each risk you identify.

Also read Know Your Enemy: An Introduction to Risk Management, Part 2

Jama Software has partnered with Karl Wiegers to share licensed content from his books and articles on our web site via a series of blog posts, whitepapers and webinars.  Karl Wiegers is an independent consultant and not an employee of Jama.  He can be reached at http://www.processimpact.com.  Enjoy these free requirements management resources.

In the first part of this two-part series I described the value of managing risks formally on a software project and listed numerous common risks in various categories. This article describes the various activities associated with the practice of risk management and recommends specific information you should record about each risk you identify.

Risk Management Components

As with other project activities, begin risk management by developing a plan, perhaps using the risk management plan template available at www.ProjectInitiation.com. Small projects can include a concise risk management plan as a section within the overall project plan. Risk management consists of the activities illustrated in Figure 1 and described below.

Risk Assessment

Risk assessment is the process of examining a project to identify areas of potential risk. Risk identification can be facilitated with the help of a checklist of common risk areas for software projects, as I described in the first article in this series. Risk analysis examines how project outcomes might change with modification of risk input variables. In other words, just how could the risk harm your project.

Loss
Probability Low Medium High
Low

Low

Low

Medium
Medium

Low

Medium

High
High

Medium

High

High

 

Figure 2: Risk exposure is a function of probability and potential loss.


Risk prioritization helps the project focus on its most severe risks by assessing the risk exposure. Exposure is the product of the probability of incurring a loss due to the risk and the potential magnitude of that loss. I usually estimate the probability from 0.1 (highly unlikely) to 1.0 (certain to happen), and the loss (also called impact) on a relative scale of 1 (no problem) to 10 (deep tapioca). Multiplying these factors together provides an estimate of the risk exposure due to each item, which can run from 0.1 (don’t give it another thought) through 10 (stand back, here it comes!). It’s simpler to estimate both probability and loss as High, Medium, or Low. Figure 2 shows how you can estimate the risk exposure level as High, Medium, or Low by combining the probability and loss estimates.

 

Risk Avoidance

Risk avoidance is one way to deal with a risk: don’t do the risky thing! You might avoid risks by not undertaking certain projects, or by relying on proven rather than cutting-edge technologies when possible. You might be able to transfer a risk to some other party, such as a subcontractor.

Risk Control

Risk control is the process of managing risks to achieve the desired outcomes. Risk management planning produces a plan for dealing with each significant risk, including mitigation approaches, owners, and timelines. Risk resolution entails executing the plans for dealing with each risk. That’s when you actually control the risk. Finally, risk monitoring involves tracking your progress toward resolving each risk item.

Let’s look at an example of risk management planning. Suppose the “project” is to take a hike through a swamp in a nature preserve. You’ve heard the swamp might contain quicksand, so the risk is that we might step in quicksand and be injured or even die. One strategy to mitigate this risk is to reduce the probability of the risk actually becoming a problem. A second option is to consider actions that could reduce the impact of the risk if it does in fact become a problem. So, to reduce the probability of stepping in the quicksand, we might look for signs of quicksand as we walk and draw a map so we can avoid these areas on future walks. To reduce the impact if someone does step in quicksand, the members of the tour group could rope themselves together. That way if someone does encounter some quicksand the others could quickly pull him to safety.

Even better, is there some way to prevent the risk from becoming a problem under any circumstances? Maybe we build a boardwalk as we go so we avoid the quicksand. That will slow us down and cost some money. But, we don’t have to worry about quicksand any more. The very best strategy is to eliminate the root cause of the risk entirely. Perhaps we should drain the swamp, but then it wouldn’t be a very interesting nature walk. By taking too aggressive a risk approach, you can eliminate the factors that make a project attractive in the first place.

Documenting Risks

Simply identifying the risks facing a project is not enough. We need to write them down in a way that lets us communicate the nature and status of risks throughout the affected stakeholder community over the duration of the project. Figure 3 shows a form I’ve found to be convenient for documenting risks. It’s a good idea to keep the risk list itself separate from the risk management plan, as you’ll be updating the risk list frequently throughout the project. You can download an alternative template for your risk list from www.ProjectInitiation.com. This format includes essentially the same information that’s in Figure 3, but it’s laid out in a way that’s amenable to storing in a spreadsheet or as a table in a word-processing document.

ID: <sequence number or a more meaningful label>
Description: <List each major risk facing the project. Describe each risk in the form “condition – consequence.”>
Probability: <What’s the likelihood of this risk becoming a problem?> Loss: <What’s the damage if the risk does become a problem?> Exposure: <Multiply Probability times Loss.>
First Indicator: <Describe the earliest indicator or trigger condition that might indicate that the risk is turning into a problem.>
Mitigation Approaches: <State one or more approaches to control, avoid, minimize, or otherwise mitigate the risk.>
Owner: <Assign each risk mitigation action to an individual for resolution.> Date Due: <State a date by which the mitigation approach is to be implemented.>

 

 

 

 

 

Figure 3: A risk documentation form.

Use a condition–consequence format when documenting risk statements. That is, state the risk situation (the condition) that you are concerned about, followed by at least one potential adverse outcome (the consequence) if that risk should turn into a problem. Often, people suggesting risks state only the condition—“The customers don’t agree on the product requirements”—or the consequence—“We can only satisfy one of our major customers.” Pull those together into the condition-consequence structure: “The customers don’t agree on the product requirements, so we’ll only be able to satisfy one of our major customers.” This statement doesn’t describe a certain future, just a possible outcome that could harm the project if the condition isn’t addressed.

Keep the items with high risk exposures at the top of your priority list to focus your risk-control energy. Set goals for determining when each risk item has been satisfactorily controlled. Your mitigation approaches for some items may focus on reducing the probability, whereas the approach for other risks could emphasize reducing the potential loss or impact. With any luck, some of your mitigation strategies will help you control multiple risk factors.

Risk Tracking

As with other project management activities, you need to get into a rhythm of periodic monitoring. You may wish to appoint a risk manager for the project. The risk manager is responsible for staying on top of the things that could go wrong, just as the project manager stays on top of the activities leading to project completion. It’s a good idea to have someone other than the project manager serve as the risk manager. The project manager is focused on what he has to do to make a project succeed. The risk manager, in contrast, is identifying factors that might prevent the project from succeeding. In other words, the risk manager is looking for the black cloud around the silver lining that the project manager sees. Asking the same person to take these two opposing views of the project can lead to cognitive dissonance; in an extreme case, his brain can explode.

Keep the top ten risks highly visible and track the effectiveness of your mitigation approaches regularly. New risks might float up into the top ten as you gradually beat the initial list of top priority items into submission. You can drop a risk off your radar when your mitigation approaches have reduced the risk exposure from that item to an acceptable level. Don’t conclude that a risk is controlled simply because the selected mitigation action has been completed. Controlling a risk might require you to change the risk control strategy if you conclude it isn’t working.

A student in a seminar once asked, “What should you do if you have the same top five risks week after week?” A static risk list suggests that your risk mitigation actions aren’t working. Effective mitigation actions should lower the risk exposure as the probability, the loss, or both decrease over time. If your risk list isn’t changing, check to see whether the planned mitigation actions have been carried out and whether they had the desired effect.

Also, look for new risks that might arise during the course of the project. Conditions can change, assumptions can prove to be wrong, and other factors might lead to risks that weren’t apparent or perhaps did not even exist at the beginning of the project. Escalate risks that aren’t being controlled to the attention of senior managers or other stakeholders. They can then either stimulate corrective actions or else make a conscious business decision to proceed in spite of the risks.

Learning from the Past

We can’t predict exactly which of the many threats to our projects might come to pass. However, most of us can do a better job of learning from previous experiences to avoid the same pain and suffering on future projects. As you begin to implement risk management approaches, record your actions and results for future reference. The risks are out there. Find them before they find you.

Also read Know Your Enemy: An Introduction to Risk Management, Part 1

Jama Software has partnered with Karl Wiegers to share licensed content from his books and articles on our web site via a series of blog posts, whitepapers and webinars.  Karl Wiegers is an independent consultant and not an employee of Jama.  He can be reached at http://www.processimpact.com.  Enjoy these free requirements management resources.

 

 

Software engineers are eternal optimists. When planning software projects, we usually assume that everything will go exactly as planned. Or, we take the other extreme position: the creative nature of software development means we can never predict what’s going to happen, so what’s the point of making detailed plans? Both of these perspectives can lead to software surprises, when unexpected things happen that throw the project off track. In my experience, software surprises are never good news.

Risk management has become recognized as a best practice in the software industry for reducing the surprise factor. Although we can never predict the future with certainty, we can apply risk management practices to peek over the horizon at the traps that might be looming. Then we can take actions to minimize the likelihood or impact of these potential problems. Risk management means dealing with a concern before it becomes a crisis. This improves the chance of successful project completion and reduces the consequences of those risks that cannot be avoided.

During project initiation take the time to do a first cut at identifying significant risks. It’s possible that the risks will outweigh the potential benefits of the project. More likely, getting an early glimpse of potential pitfalls will help you make more sensible projections of what it will take to execute this project successfully. Build time for risk identification and risk management planning into the early stages of your project. You’ll find that the time you spend assessing and controlling risks will be repaid many times over.

What Is Risk?

A “risk” is a problem that could cause some loss or threaten the success of your project, but which hasn’t happened yet. And you’d like to keep it that way. These potential problems might have an adverse impact on the cost, schedule, or technical success of the project, the quality of your products, or team morale. Risk management is the process of identifying, addressing, and controlling these potential problems before they can do any harm.

Whether we tackle them head-on or keep our heads in the sand, risks have a potentially huge impact on many aspects of our project. The tacit assumption that nothing unexpected will derail the project is simply not realistic. Estimates should incorporate our best judgment about the potentially scary things that could happen on each project, and managers need to respect the assessments we make. Risk management is about discarding the rose-colored glasses and confronting the very real potential of undesirable events conspiring to throw the project off track.

Why Manage Risks Formally?

A formal risk management process provides multiple benefits to both the project team and the development organization as a whole. First, it gives us a structured mechanism to provide visibility into threats to project success. By considering the potential impact of each risk item, we can focus on controlling the most severe risks first. We can marry risk assessment with project estimation to quantify possible schedule slippage if certain risks materialize into problems. This approach helps the project manager generate sensible contingency buffers. Sharing what does and does not work to control risks across multiple projects helps the team avoid repeating the mistakes of the past. Without a formal approach, we cannot ensure that our risk management actions will be initiated in a timely fashion, completed as planned, and effective.

Controlling risks has a cost. We must balance this cost against the potential loss we could incur if we don’t address the risk and it does indeed bite us. Suppose we’re concerned about the ability of a subcontractor to deliver an essential component on time. We could engage multiple subcontractors to increase the chance that at least one will come through on schedule. That’s an expensive remedy for a problem that might not even materialize. Is it worth it? It depends on the downside we incur if indeed the subcontractor dependency causes the project to miss its planned ship date. Only you can decide for each individual situation.

Typical Software Risks

The list of evil things that can befall a software project is depressingly long. The enlightened project manager will acquire lists of these risk categories to help the team uncover as many concerns as possible early in the planning process. Potential risks to consider can come from group brainstorming activities or from a risk factor chart accumulated from previous projects. In one of my groups, individual team members came up with descriptions of the risks they perceived, which I edited together and we then reviewed as a team.

Following are several typical risk categories and some specific risks that might threaten your project. Have any of these things have happened to you? If so, add them to your master risk checklist to remind future project managers to consider if it could happen to them, too. There are no magic solutions to any of these risk factors. We need to rely on past experience and a strong knowledge of software engineering and management practices to control those risks that concern us the most.

Dependencies

Some risks arise because of dependencies our project has on outside agencies or factors. We cannot usually control these external dependencies. Mitigation strategies could involve contingency plans to acquire a necessary component from a second source, or working with the source of the dependency to maintain good visibility into status and detect any looming problems. Following are some typical dependency-related risk factors:

  • Customer-furnished items or information.
  • Internal and external subcontractor relationships.
  • Inter-component or inter-group dependencies.
  • Availability of trained and experienced people.
  • Reuse from one project to the next.

Requirements Issues

Many projects face uncertainty and turmoil around the product’s requirements. Some uncertainty is tolerable in the early stages, but the threat increases if such issues remain unresolved as the project progresses. If we don’t control requirements-related risks we might build the wrong product or build the right product badly. Either outcome results in unpleasant surprises and unhappy customers. Watch out for these risk factors:

  • Lack of a clear product vision.
  • Lack of agreement on product requirements.
  • Inadequate customer involvement in the requirements process.
  • Unprioritized requirements.
  • New market with uncertain needs.
  • Rapidly changing requirements.
  • Ineffective requirements change management process.
  • Inadequate impact analysis of requirements changes.

Management Issues

Although management shortcomings affect many projects, don’t be surprised if your risk management plan doesn’t list too many of these. The project manager often leads the risk identification effort, and most people don’t wish to air their own weaknesses (assuming they even recognize them) in public. Nonetheless, issues like those listed here can make it harder for projects to succeed. If you don’t confront such touchy issues, don’t be surprised if they bite you at some point. Defined project tracking processes and clear project roles and responsibilities can address some of these conditions.

  • Inadequate planning and task identification.
  • Inadequate visibility into project status.
  • Unclear project ownership and decision making.
  • Unrealistic commitments made, sometimes for the wrong reasons.
  • Managers or customers with unrealistic expectations.
  • Staff personality conflicts.

Lack of Knowledge

Software technologies change rapidly and it can be difficult to find suitably skilled staff. As a result, our project teams might lack the skills we need. The key is to recognize the risk areas early enough so we can take appropriate preventive actions, such as obtaining training, hiring consultants, and bringing the right people together on the project team. Consider whether the following factors apply to your team:

  • Lack of training.
  • Inadequate understanding of methods, tools, and techniques.
  • Insufficient application domain experience.
  • New technologies or development methods.
  • Ineffective, poorly documented, or ignored processes.
  • Technical approaches that might not work.

Outsourcing

Outsourcing development work to another organization, possibly in another country, poses a whole new set of risks. Some of these are attributable to the acquiring organization, others to the supplier, and still others are mutual risks. If you are outsourcing part of your project work, watch out for the following risks:

  • Acquirer’s requirements are vague, ambiguous, incorrect, or incomplete.
  • Acquirer does not provide complete and rapid answers to supplier’s questions or requests for information.
  • Supplier lacks appropriate software development and management processes.
  • Supplier does not deliver components of acceptable quality on contracted schedule.
  • Supplier is acquired by another company, has financial difficulties, or goes out of business.
  • Supplier makes unachievable promises in order to get the contract.
  • Supplier does not provide accurate and timely visibility into actual project status.
  • Disputes arise about scope boundaries based on the contract.
  • Import/export laws or restrictions pose a problem.

The second article in this series will describe the various activities associated with the practice of risk management and recommend the specific bits of information you should record about each risk you identify.

Also read Know Your Enemy: An Introduction to Risk Management, Part 2

Jama Software has partnered with Karl Wiegers to share licensed content from his books and articles on our web site via a series of blog posts, whitepapers and webinars.  Karl Wiegers is an independent consultant and not an employee of Jama.  He can be reached at http://www.processimpact.com.  Enjoy these free requirements management resources.