We often pretend to have things under our control, specially the ones that are very uncertain in nature. It is the unknown that can hurt us most. We need to skillfully spot this situation as posing potential risks and initially document them in the risk management plan. At the beginning of the project, the impact of this situation is hardly felt as we do not feel the losses.

With the passage of time and the lack of vision and proper customer involvement, the potential threat to the project will surely rise. Uncertainty is an unavoidable characteristic of most software projects; however, reducing uncertainty has a cost.

It is mandatory to balance such costs against the potential cost we could incur if the risk is not addressed at all. We cannot avoid projects that incur a high risk factor. However, proactive risk management is necessary in such cases. Risk management makes sure we go into such projects as guarded as possible, so we know what kinds of things and where things could go wrong. Then we have done our part to make sure those factors do not work as hurdles in the final outcome of the project.

Why Should We Manage Risks formally and how does it help us?

In a typical contractual environment a lot is at stake. We just cannot have costs spiraling up and missing deadlines. A team approach allows the various project stakeholders to collectively address their shared risks and to assign responsibility for risk mitigation to the most appropriate individuals. Formation of a formal risk management team gives one a structured method and more visibility into threats and one can make sure one is always focused on controlling the most severest of risks first. Risk team members can pool their experience and identify opportunities to control most common risks through documentation and constant process improvement. This ensures that one can ensure that the risk management actions will be planned, prioritized, initiated and completed in a timely and effective manner. The risk Team should always build a checklist of risk items and mitigation strategies from multiple projects that can help future projects look for the loopholes. Constantly sharing what does and does not work to control risks across multiple projects helps projects avoid repeating the mistakes of the past.