Like any other project, risk management in software development, if left unmitigated, can derail the project or even lead to catastrophic failure.

Whether you are a big corporate, government agency, international organization, or a small startup, you should be actively engaged in risk management in software development.

You’d rather be safe than sorry. And if the Covid pandemic has taught us anything is that risk management is critical. Even though we can’t foresee everything, we can prepare adequately to manage risks.

Common risks include budget overruns, delays in project implementation, personnel issues, poor productivity, low-quality product, etc.

As a project manager, being aware of the risks, assessing them, prioritizing them, and having an action plan to mitigate them is essential.

This guide outlines the seven common types of risks we see in different types of software development and how to deal with them effectively.

What Is Risk Management in Software Development?


Risk management in software development is the process of identifying, accessing, evaluating risks, then limiting and mitigating them to ensure project success.

Any threat, explicit or implicit, small or big, internal or external that threatens the successful rollout of your product should be carefully analyzed and mitigated.

Everybody involved in the project is responsible for identifying these threats and communicating them to the project manager for further processing.

Risk management in software development involves the following tasks:

  • Identify

  • Classify and prioritize

  • Develop an action plan template to mitigate

  • Continuously monitor throughout the project life cycle

  • Implement the action plan if any threat materializes

  • Constant communication within the team to identify new threats

Importance of Risk Management in Software Development

Software development projects are complex undertakings often involving a big team and a huge budget.

However, the relentless pursuit of software development opportunities without adequately mitigating the risks involved can fail. Some project managers see risk management in software development and its attendant tasks as extra work and expense that doesn’t advance the core product development process.

This mindset is wrong and can prove to be costly if the project were to fail.

Adequate risk management in software development will:

  • Save money by cutting expenses associated with responding to unmitigated emergencies

  • Allow the development team to work faster by focusing on the core project, knowing that all risks are covered

  • Allows for a more accurate project estimate cost, without the risk of overrun costs due to unidentified risks

  • Builds the reputation of the company/agency by ensuring that software development projects go as planned

Simply put, we cannot overstate the importance of risk management in software development.

Types of Risks in Software Development and How to Deal with Them

1. Inaccurate Estimation Risks


It is a critical part of risk management in software development. We are constantly making estimates, but there is a risk of creating expectations that are not realistic.

Estimation in software development is primarily on the timeframes and the budget.

In terms of the timelines, the risk is mainly underestimating the time frames required for different iterations.

The mitigation to this risk would be thoroughly understanding the client’s requirements, communicating the same to the development team, and coming up with a realistic timeframe.

As a project manager or decision-maker, you should resist the temptation to pressure the development team to deliver on unrealistic timelines. The risk-reward analysis of doing this is not worth it. You run the risk of getting a low-quality iteration.

However, you also need to manage the customers and their expectations regarding delivering the software releases. Customers are known to be notoriously impatient, but they too should avoid their impatience materializing to a risk.

The greater risk would be underestimating the project expenses in terms of budget, which can easily lead to delays.

The mitigation on the front would be something like coming up with a contingency budget to cover any unforeseen expenses.

2. Scope Variation Risks


Among the biggest challenges that software developers face is scope variation. Changing requirements due to ongoing client and user feedback is a constant risk in software development.

It is a good thing on hand as it ensures that the final product is of sound quality and is helpful to the end-users.

However, from a risk management perspective in software development, it is a risk that can delay project implementation, introduce numerous uncertainties or even lead to budget overruns.

As such, it is a critical risk that needs analysis, tracking, and mitigation. The best way to mitigate against this risk is by having structured communication between the development team and the client/end-user.

The project manager is usually the link between the development team and the client.

The best practice is monitoring scope variations using a scope variation metric visible to both the development team and the customer.

The variation metric will serve as a tool to show how the scope variations have impacted the project in terms of budget and timelines. More importantly, it will help in prioritizing tasks.

3. End-user Engagement Risks


You cannot talk about risk management in software development and fail to address the risk involved with end-user engagement.

The end goal of software development is to develop a product that is useful to some people. If these people have any problems using the final product, then that’s a considerable risk.

End-user engagement is critical to the project’s success, whether the software is for external customers or internal.

Strong end-user involvement and engagement throughout the project life cycle ensure the final product is easily acceptable.

Achieve engagement through:

  • User surveys

  • Frequent releases

  • Minimum Viable Product (MVP) release

  • Beta testing

These mitigation strategies will hopefully ensure a smoother adoption phase.

4. Stakeholder Expectations Risks


There is always some stakeholder expectation risk in every software development project. Stakeholders in these projects are all people involved in one way for the successful completion of the project.

Of particular concern in mitigating this risk are:

  • End users

  • Customers

  • Investors

  • Development team

These groups will require a mitigation strategy to address their expectations before developing into a risk affecting the project.

5. Technical Risks


Technical risks in a software development project are generally those that impact the quality of the end product. These are things like poor code, support, integration issues, etc. These technical risks can have a severe negative consequence on the usability of the product. That’s why it’s necessary to address technical risk when talking about risk management in software development.

The thing with technical risk management is that they are not quickly noticeable during the development phase. They become apparent at the end of the process, which can make them challenging to correct.

Poor productivity among software developers is a technical risk. It mainly occurs in projects that have a long life cycle. Developers may lose motivation the longer the project goes.

There is also the risk that a long-term deadline is far away, and there is enough time to cover for any tasks not done.

Intense oversight of software iterations reduces technical risks.

Agile methodologies are particularly robust in maintaining productivity and motivation among the development team.

6. Human Resource Risks

While working with people, there is always a risk that someone may unexpectedly become unavailable. This person may be a vital member of the team, which has the chance of creating a knowledge gap.

The person may be from the development team or the client-side, actively involved in the project.

To mitigate this risk, proper documentation of every detail of the project is critical. Software development documentation is an active and continuous process.

Additionally, having contingency plans on how to onboard new team members should always be in place.

7. Communication Risks


Just like in any other project, a breakdown in communication during software development is disastrous. Constant and effective communication is essential to project success. A communication breakdown will lead to delays and lower productivity.

The whole team should be committed to the project to mitigate a communication breakdown risk. When we talk about the team here, we mean everybody from the project manager, developers, testers, customers, etc.

Regular meetings of all stakeholders are an excellent way to keep everyone engaged and communication flowing. The purpose of the meetings should be to appraise each other of the progress and expectations.

Common Risk Management in Software Development Strategies

Having discussed the seven most common risks in software development, let’s now look at some practical digital strategies to mitigate these risks.

1. Monitoring

Software risk monitoring is the active scrutiny of project activities to identify risks early enough and apply the correspondent action plan to mitigate them.

Project stand-up or meetings are an excellent time to identify emerging risks. Project reports, risk plans, status reports are also opportunities to evaluate if any trouble is materializing.

Risks are more likely to come up when deploying any changes or changing the scope than at any other time.

2. Risk Avoidance

It doesn’t sound like a good strategy, but some risks are not worth mitigating. It is best to avoid them altogether. If the risk is too big, has a very high probability of happening, or could be costly to mitigate, avoiding it may be the best option.

Small organizations/businesses or startups would benefit from this approach as some risks would wipe them off.

3. Risk Transfer


It is a strategy where you procure someone to deal with any risks on your behalf. This risk management strategy in software development is attractive to organizations/agencies with the resources to procure such services and concentrate on their core software development task.

Risk management in software development may take away precious time and focus from the core work. Therefore it makes sense to outsource to a professional whose only work is dealing with such risks.

This approach has the added advantage of speeding up the process.

Closing Thoughts

The ultimate objective of risk management in software development is to identify, track and mitigate all risks that could otherwise prevent successful implementation.

Agencies/corporates/startups should have a risk management framework for all their software development projects to achieve their goals.

The process of risk management in software development is continuous and applies throughout the life cycle of the project. Organizations with a robust risk management framework that guides all their software projects are more successful than those that don’t. That’s why it’s important to know how to select the right software development consultancy.

How Can DOOR3 Help?

Partnering with DOOR3 can help you develop a concrete threat model for your software project based on current software development trends. With industry expertise gained from various projects, companies better understand appropriate risk management strategies based on the project type and goals. Contact us today for risk management services in software development.\

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