|Risk Management (RSKM)||
|The CMMi easy button concept and disclaimer
Disclaimer: The opinions expressed here are the authors
and do not express a position on the subject from the
Software Engineering Institute (SEI) or any organization
or SEI Partner affiliated with the SEI.
The concept of The CMMi easy button is to be able to
jump start SQA software professionals in establishing an
effective Software process Improvement (SPI) framework that is based on CMMi theories and best practices.
CMMI, CMM, and Capability Maturity Model are registered
in the U.S. Patent and Trademark Office.
CMM Integration, SCAMPI, and IDEAL are service marks of
Carnegie Mellon University.
|Causal Analysis and Resolution (CAR)||Configuration Management (CM)||Decision Analysis and Resolution (DAR)|
|Integrated Project Management +IPPD (IPM+IPPD)||Measurement and Analysis (MA)||Organizational Innovation and Deployment (OID)|
|Organizational Process Definition +IPPD (OPD+IPPD)||Organizational Process Focus (OPF)||Organizational Process Performance (OPP)|
|Organizational Training (OT)||Product Integration (PI)||Project Monitoring and Control (PMC)|
|Project Planning (PP)||Process and Product Quality Assurance (PPQA)||Quantitative Project Management (QPM)|
|Requirements Development (RD)||Requirements Management (REQM)||Risk Management (RSKM)|
|Supplier Agreement Management (SAM)||Technical Solution (TS)||Validation (VAL)|
|Risk Management (RSKM) purpose and introductory notes|
|Specific Goals and Practices|
|Specific Goal 1 (SG 1) Prepare for Risk Management (SP 1.*)|
|SP 1.1 Determine Risk Sources and Categories||SP 1.2 Define Risk Parameters||SP 1.3 Establish a Risk Management Strategy||.|
|Specific Goal 2 (SG 2) Identify and Analyze Risks (SP 2.*)|
|SP 2.1 Identify Risks||SP 2.2 Evaluate, Categorize, and Prioritize Risks||.||.|
|Specific Goal 3 (SG 3) Mitigate Risks (SP 3.*)|
|SP 3.1 Develop Risk Mitigation Plans||SP 3.2 Implement Risk Mitigation Plans||.||.|
|Generic Goals and Practices|
|Generic Goal 1 (GG 1) Achieve Specific Goals, Generic Practices (GP 1.*)|
|GP 1.1 Perform Specific Practices||.||.||.|
|Generic Goal 2 (GG 2) Institutionalize a Managed Process, Generic Practices (GP 2.*)|
|GP 2.1 Establish an Organizational Policy||GP 2.2 Plan the Process||GP 2.3 Provide Resources||GP 2.4 Assign Responsibility|
|GP 2.5 Train People||GP 2.6 Manage Configurations||GP 2.7 Identify and Involve Relevant Stakeholders||GP 2.8 Monitor and Control the Process|
|GP 2.9 Objectively Evaluate Adherence||GP 2.10 Review Status with Higher Level Management||.||.|
|Generic Goal 3 (GG 3) Institutionalize a Defined Process, Generic Practices (GP 3.*)|
|GP 3.1 Establish a Defined Process||GP 3.2 Collect Improvement Information||.||.|
|Generic Goal 4 (GG 4) Institutionalize a Quantitatively Managed Process, Generic Practices (GP 4.*)|
|GP 4.1 Establish Quantitative Objectives for the Process||GP 4.2 Stabilize Subprocess Performance||.||.|
|Generic Goal 5 (GG 5) Institutionalize an Optimizing Process, Generic Practices (GP 5.*)|
|GP 5.1 Ensure Continuous Process Improvement||GP 5.2 Correct Root Causes of Problems||.||.|
Risk Management practices are deeply embedded into most CMMi process areas, for example Project Management. It is, however, the Risk Management process area that describes an evolution of these specific practices to systematically plan, anticipate, and mitigate risks to proactively minimize their impact on the project. That is the essence and focus of Risk Management (RSKM) is to understand the nature of software production risks and to mitigate those risks. All risks, under RSKM, are:-
Risk Management (RSKM)
A Project Management Process Area at Maturity Level 3
The purpose of Risk Management (RSKM) is to identify potential problems before they occur so that risk-handling activities can be planned and invoked as needed across the life of the product or project to mitigate adverse impacts on achieving objectives.
Effective risk management includes early and aggressive risk identification through the collaboration and involvement of relevant stakeholders, as described in the stakeholder involvement plan addressed in the Project Planning process area. Strong leadership across all relevant stakeholders is needed to establish an environment for the free and open disclosure and discussion of risk.
Risk management must consider both internal and external sources for cost, schedule, and performance risk as well as other risks. Early and aggressive detection of risk is important because it is typically easier, less costly, and less disruptive to make changes and correct work efforts during the earlier, rather than the later, phases of the project.
Risk management can be divided into three parts: defining a risk management strategy; identifying and analyzing risks; and handling identified risks, including the implementation of risk mitigation plans when needed.
As represented in the Project Planning and Project Monitoring and Control process areas, organizations may initially focus simply on risk identification for awareness, and react to the realization of these risks as they occur. The Risk Management process area describes an evolution of these specific practices to systematically plan, anticipate, and mitigate risks to proactively minimize their impact on the project.
Although the primary emphasis of the Risk Management process area is on the project, the concepts can also be applied to manage organizational risks.
Related Process Areas.
Refer to the Project Planning process area for more information about identification of project risks and planning for involvement of relevant stakeholders.
Refer to the Project Monitoring and Control process area for more information about monitoring project risks.
Refer to the Decision Analysis and Resolution process area for more information about using a formal evaluation process to evaluate alternatives for selection and mitigation of identified risks.
Specific Practices by Goal
SG 1 Prepare for Risk Management
Preparation for risk management is conducted.
Preparation is conducted by establishing and maintaining a strategy for identifying, analyzing, and mitigating risks. This is typically documented in a risk management plan. The risk management strategy addresses the specific actions and management approach used to apply and control the risk management program. This includes identifying the sources of risk; the scheme used to categorize risks; and the parameters used to evaluate, bound, and control risks for effective handling.
SP 1.1 Determine Risk Sources and Categories
Determine risk sources and categories.
Identification of risk sources provides a basis for systematically examining changing situations over time to uncover circumstances that impact the ability of the project to meet its objectives. Risk sources are both internal and external to the project. As the project progresses, additional sources of risk may be identified. Establishing categories for risks provides a mechanism for collecting and organizing risks as well as ensuring appropriate scrutiny and management attention for those risks that can have more serious consequences on meeting project objectives.
Typical Work Products
Risk sources are the fundamental drivers that cause risks within a project or organization. There are many sources of risks, both internal and external, to a project. Risk sources identify common areas where risks may originate. Typical internal and external risk sources include the following:
Subpractice 2: Determine risk categories.
Risk categories reflect the “bins” for collecting and organizing risks. A reason for identifying risk categories is to help in the future consolidation of the activities in the risk mitigation plans.
The following factors may be considered when determining risk categories:
SP 1.2 Define Risk Parameters
Define the parameters used to analyze and categorize risks, and the parameters used to control the risk management effort.
Parameters for evaluating, categorizing, and prioritizing risks include the following:
Typical Work Products
Consistently used criteria (e.g., the bounds on the likelihood and severity levels) allow the impacts of different risks to be commonly understood, to receive the appropriate level of scrutiny, and to obtain the management attention warranted. In managing dissimilar risks (e.g., personnel safety versus environmental pollution), it is important to ensure consistency in end result (e.g., a high risk of environmental pollution is as important as a high risk to personnel safety).
Subpractices 2: Define thresholds for each risk category.
For each risk category, thresholds can be established to determine acceptability or unacceptability of risks, prioritization of risks, or triggers for management action.
Examples of thresholds include the following:
Subpractices 3: Define bounds on the extent to which thresholds are applied against or within a category.
There are few limits to which risks can be assessed in either a quantitative or qualitative fashion. Definition of bounds (or boundary conditions) can be used to help scope the extent of the risk management effort and avoid excessive resource expenditures. Bounds may include exclusion of a risk source from a category. These bounds can also exclude any condition that occurs less than a given frequency.
SP 1.3 Establish a Risk Management Strategy
Establish and maintain the strategy to be used for risk management.
A comprehensive risk management strategy addresses items such as the following:
Typical Work Products
Risks are identified and analyzed to determine their relative importance.
The degree of risk impacts the resources assigned to handle an identified risk and the determination of when appropriate management attention is required.
Analyzing risks entails identifying risks from the internal and external sources identified and then evaluating each identified risk to determine its likelihood and consequences. Categorization of the risk, based on an evaluation against the established risk categories and criteria developed for the risk management strategy, provides the information needed for risk handling. Related risks may be grouped for efficient handling and effective use of risk management resources.
SP 2.1 Identify Risks
Identify and document the risks.
The particular risks associated with conducting the project using integrated teams should be considered, such as risks associated with loss of inter-team or intra-team coordination.
The identification of potential issues, hazards, threats, and vulnerabilities that could negatively affect work efforts or plans is the basis for sound and successful risk management. Risks must be identified and described in an understandable way before they can be analyzed and managed properly. Risks are documented in a concise statement that includes the context, conditions, and consequences of risk occurrence.
Risk identification should be an organized, thorough approach to seek out probable or realistic risks in achieving objectives. To be effective, risk identification should not be an attempt to address every possible event regardless of how highly improbable it may be. Use of the categories and parameters developed in the risk management strategy, along with the identified sources of risk, can provide the discipline and streamlining appropriate to risk identification. The identified risks form a baseline to initiate risk management activities. The list of risks should be reviewed periodically to reexamine possible sources of risk and changing conditions to uncover sources and risks previously overlooked or nonexistent when the risk management strategy was last updated.
Risk identification activities focus on the identification of risks, not placement of blame. The results of risk identification activities are not used by management to evaluate the performance of individuals.
There are many methods for identifying risks. Typical identification methods include the following:
Cost, schedule, and performance risks should be examined to the extent that they impact project objectives. There may be potential risks discovered that are outside the scope of the project’s objectives but vital to customer interests. For example, the risks in development costs, product acquisition costs, cost of spare (or replacement) products, and product disposition (or disposal) costs have design implications. The customer may not have considered the full cost of supporting a fielded product or using a delivered service. The customer should be informed of such risks, but actively managing those risks may not be necessary. The mechanisms for making such decisions should be examined at project and organization levels and put in place if deemed appropriate, especially for risks that impact the ability to verify and validate the product.
In addition to the cost risks identified above, other cost risks may include those associated with funding levels, funding estimates, and distributed budgets.
Schedule risks may include risks associated with planned activities, key events, and milestones.
Performance risks may include risks associated with the following:
There are other risks that do not fall into cost, schedule, or performance categories. Examples of these other risks include the following:
Risks to a project that frequently are missed include those supposedly outside the scope of the project (i.e., the project does not control whether they occur but can mitigate their impact), such as weather, natural or manmade disasters that affect continuity of operations, political changes, and telecommunications failures.
Subpractice 3: Review all elements of the work breakdown structure as part of identifying risks to help ensure that all aspects of the work effort have been considered.
Subpractice 4: Review all elements of the project plan as part of identifying risks to help ensure that all aspects of the project have been considered.
Refer to the Project Planning process area for more information about identifying project risks.
Subpractice 5: Document the context, conditions, and potential consequences of the risk.
Risks statements are typically documented in a standard format that contains the risk context, conditions, and consequences of occurrence. The risk context provides additional information such that the intent of the risk can be easily understood. In documenting the context of the risk, consider the relative time frame of the risk, the circumstances or conditions surrounding the risk that has brought about the concern, and any doubt or uncertainty.
Subpractice 6: Identify the relevant stakeholders associated with each risk.
SP 2.2 Evaluate, Categorize, and Prioritize Risks
Evaluate and categorize each identified risk using the defined risk categories and parameters, and determine its relative priority.
The evaluation of risks is needed to assign relative importance to each identified risk, and is used in determining when appropriate management attention is required. Often it is useful to aggregate risks based on their interrelationships, and develop options at an aggregate level. When an aggregate risk is formed by a roll up of lower level risks, care must be taken to ensure that important lower level risks are not ignored.
Collectively, the activities of risk evaluation, categorization, and prioritization are sometimes called “risk assessment” or “risk analysis.”
Typical Work Products
Each risk is evaluated and assigned values in accordance with the defined risk parameters, which may include likelihood, consequence (severity, or impact), and thresholds. The assigned risk parameter values can be integrated to produce additional measures, such as risk exposure, which can be used to prioritize risks for handling.
Often, a scale with three to five values is used to evaluate both likelihood and consequence. Likelihood, for example, can be categorized as remote, unlikely, likely, highly likely, or a near certainty.
Examples for consequences include the following:
This evaluation is often a difficult and time-consuming task. Specific expertise or group techniques may be needed to assess the risks and gain confidence in the prioritization. In addition, priorities may require reevaluation as time progresses.
Subpractice 2: Categorize and group risks according to the defined risk categories.
Risks are categorized into the defined risk categories, providing a means to look at risks according to their source, taxonomy, or project component. Related or equivalent risks may be grouped for efficient handling. The cause-and-effect relationships between related risks are documented.
Subpractice 3: Prioritize risks for mitigation.
A relative priority is determined for each risk based on the assigned risk parameters. Clear criteria should be used to determine the risk priority. The intent of prioritization is to determine the most effective areas to which resources for mitigation of risks can be applied with the greatest positive impact to the project.
SG 3 Mitigate Risks
Risks are handled and mitigated, where appropriate, to reduce adverse impacts on achieving objectives.
The steps in handling risks include developing risk-handling options, monitoring risks, and performing risk-handling activities when defined thresholds are exceeded. Risk mitigation plans are developed and implemented for selected risks to proactively reduce the potential impact of risk occurrence. This can also include contingency plans to deal with the impact of selected risks that may occur despite attempts to mitigate them. The risk parameters used to trigger risk-handling activities are defined by the risk management strategy.
SP 3.1 Develop Risk Mitigation Plans
Develop a risk mitigation plan for the most important risks to the project as defined by the risk management strategy.
A critical component of a risk mitigation plan is to develop alternative courses of action, workarounds, and fallback positions, with a recommended course of action for each critical risk. The risk mitigation plan for a given risk includes techniques and methods used to avoid, reduce, and control the probability of occurrence of the risk, the extent of damage incurred should the risk occur (sometimes called a “contingency plan”), or both. Risks are monitored and when they exceed the established thresholds, the risk mitigation plans are deployed to return the impacted effort to an acceptable risk level. If the risk cannot be mitigated, a contingency plan can be invoked. Both risk mitigation and contingency plans are often generated only for selected risks where the consequences of the risks are determined to be high or unacceptable; other risks may be accepted and simply monitored.
Options for handling risks typically include alternatives such as the following:
For example, in the case of an event that disrupts continuity of operations, approaches to risk management can include the following:
Adequate consideration should be given early to technology demonstrations, models, simulations, pilots, and prototypes as part of risk mitigation planning.
Typical Work Products
Risk level (derived using a risk model) is a measure combining the uncertainty of reaching an objective with the consequences of failing to reach the objective.
Risk levels and thresholds that bound planned or acceptable performance must be clearly understood and defined to provide a means with which risk can be understood. Proper categorization of risk is essential for ensuring appropriate priority based on severity and the associated management response. There may be multiple thresholds employed to initiate varying levels of management response. Typically, thresholds for the execution of risk mitigation plans are set to engage before the execution of contingency plans.
Subpractice 2: Identify the person or group responsible for addressing each risk.
Subpractice 3: Determine the cost-to-benefit ratio of implementing the risk mitigation plan for each risk.
Risk mitigation activities should be examined for the benefits they provide versus the resources they will expend. Just like any other design activity, alternative plans may need to be developed and the costs and benefits of each alternative assessed. The most appropriate plan is then selected for implementation. At times the risk may be significant and the benefits small, but the risk must be mitigated to reduce the probability of incurring unacceptable consequences.
Subpractice 4: Develop an overall risk mitigation plan for the project to orchestrate the implementation of the individual risk mitigation and contingency plans.
The complete set of risk mitigation plans may not be affordable. A tradeoff analysis should be performed to prioritize the risk mitigation plans for implementation.
Subpractice 5: Develop contingency plans for selected critical risks in the event their impacts are realized.
Risk mitigation plans are developed and implemented as needed to proactively reduce risks before they become problems. Despite best efforts, some risks may be unavoidable and will become problems that impact the project. Contingency plans can be developed for critical risks to describe the actions a project may take to deal with the occurrence of this impact. The intent is to define a proactive plan for handling the risk, either to reduce the risk (mitigation) or respond to the risk (contingency), but in either event to manage the risk.
Some risk management literature may consider contingency plans a synonym or subset of risk mitigation plans. These plans also may be addressed together as risk-handling or risk action plans.
SP 3.2 Implement Risk Mitigation Plans
Monitor the status of each risk periodically and implement the risk mitigation plan as appropriate.
To effectively control and manage risks during the work effort, follow a proactive program to regularly monitor risks and the status and results of risk-handling actions. The risk management strategy defines the intervals at which the risk status should be revisited. This activity may result in the discovery of new risks or new risk-handling options that can require replanning and reassessment. In either event, the acceptability thresholds associated with the risk should be compared against the status to determine the need for implementing a risk mitigation plan.
Typical Work Products
After a risk mitigation plan is initiated, the risk is still monitored. Thresholds are assessed to check for the potential execution of a contingency plan.
A periodic mechanism for monitoring should be employed.
Subpractice 2: Provide a method for tracking open risk-handling action items to closure.
Refer to the Project Monitoring and Control process area for more information about tracking action items.
Subpractice 3: Invoke selected risk-handling options when monitored risks exceed the defined thresholds.
Quite often, risk handling is only performed for those risks judged to be “high” and “medium.” The risk-handling strategy for a given risk may include techniques and methods to avoid, reduce, and control the likelihood of the risk or the extent of damage incurred should the risk (anticipated event or situation) occur or both. In this context, risk handling includes both risk mitigation plans and contingency plans.
Risk-handling techniques are developed to avoid, reduce, and control adverse impact to project objectives and to bring about acceptable outcomes in light of probable impacts. Actions generated to handle a risk require proper resource loading and scheduling within plans and baseline schedules. This replanning effort needs to closely consider the effects on adjacent or dependent work initiatives or activities.
Refer to the Project Monitoring and Control process area for more information about revising the project plan.
Subpractice 4: Establish a schedule or period of performance for each risk-handling activity that includes the start date and anticipated completion date.
Subpractice 5: Provide continued commitment of resources for each plan to allow successful execution of the risk-handling activities.
Subpractice 6: Collect performance measures on the risk-handling activities.
Generic Practices by Goal
GG 1 Achieve Specific Goals
The process supports and enables achievement of the specific goals of the process area by transforming identifiable input work products to produce identifiable output work products.
GP 1.1 Perform Specific Practices
Perform the specific practices of the risk management process to develop work products and provide services to achieve the specific goals of the process area.
GG 2 Institutionalize a Managed Process
The process is institutionalized as a managed process.
GP 2.1 Establish an Organizational Policy
Establish and maintain an organizational policy for planning and performing the risk management process.
This policy establishes organizational expectations for defining a risk management strategy and identifying, analyzing, and mitigating risks.
GP 2.2 Plan the Process
Establish and maintain the plan for performing the risk management process.
This plan for performing the risk management process can be included in (or referenced by) the project plan, which is described in the Project Planning process area. The plan called for in this generic practice would address the comprehensive planning for all of the specific practices in this process area. In particular, this plan provides the overall approach for risk mitigation, but is distinct from mitigation plans (including contingency plans) for specific risks. In contrast, the risk mitigation plans called for in the specific practices would address more focused items such as the levels that trigger risk-handling activities.
GP 2.3 Provide Resources
Provide adequate resources for performing the risk management process, developing the work products, and providing the services of the process.
Examples of resources provided include the following tools:
Assign responsibility and authority for performing the process, developing the work products, and providing the services of the risk management process.
GP 2.5 Train People
Train the people performing or supporting the risk management process as needed.
Examples of training topics include the following:
Place designated work products of the risk management process under appropriate levels of control.
Examples of work products placed under control include the following:
Identify and involve the relevant stakeholders of the risk management process as planned.
Examples of activities for stakeholder involvement include the following:
Monitor and control the risk management process against the plan for performing the process and take appropriate corrective action.
Examples of measures and work products used in monitoring and controlling include the following:
Objectively evaluate adherence of the risk management process against its process description, standards, and procedures, and address noncompliance.
Examples of activities reviewed include the following:
Review the activities, status, and results of the risk management process with higher level management and resolve issues.
Reviews of the project risk status are held on a periodic and event-driven basis, with appropriate levels of management, to provide visibility into the potential for project risk exposure and appropriate corrective action.
Typically, these reviews include a summary of the most critical risks, key risk parameters (such as likelihood and consequence of the risks), and the status of risk mitigation efforts.
GG 3 Institutionalize a Defined Process
The process is institutionalized as a defined process.
GP 3.1 Establish a Defined Process
Establish and maintain the description of a defined risk management process.
GP 3.2 Collect Improvement Information
Collect work products, measures, measurement results, and improvement information derived from planning and performing the risk management process to support the future use and improvement of the organization’s processes and process assets.
Examples of work products, measures, measurement results, and improvement information include the following:
The process is institutionalized as a quantitatively managed process.
GP 4.1 Establish Quantitative Objectives for the Process
Establish and maintain quantitative objectives for the risk management process, which address quality and process performance, based on customer needs and business objectives.
GP 4.2 Stabilize Subprocess Performance
Stabilize the performance of one or more subprocesses to determine the ability of the risk management process to achieve the established quantitative quality and process-performance objectives.
GG 5 Institutionalize an Optimizing Process.
The process is institutionalized as an optimizing process.
GP 5.1 Ensure Continuous Process Improvement
Ensure continuous improvement of the risk management process in fulfilling the relevant business objectives of the organization.
GP 5.2 Correct Root Causes of Problems
Identify and correct the root causes of defects and other problems in the risk management process.
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