The Agile Approach to Risk Management

Instructor: Lucinda Stanley

Lucinda has taught business and information technology courses, has a PhD in Education, and a master’s degree in business education.

In this lesson we will review the basics of Agile project management and then explore how the Agile process itself efficiently addresses risk management.

Agile Basics

Say you are part of an Agile team that's about to develop some software for a client. You're pretty sure you know how to design the program, but what about the risks? When should you and your team be doing risk management so the unexpected doesn't become a big problem?

Remember that Agile is a framework with an iterative or cyclical process that speeds up completion of software design, learning design, and project management.

What does that mean you might ask? The Agile team works on a project in segments, known as sprints. The sprints are worked on independently, which allows for a high degree of collaboration with multiple experts. The process follows phases:

An Agile team breaks up a project into segments called sprints

  1. First, they analyze the project and come up with essential tasks.
  2. In the development phase the project is divided into segments and a decision is made about which segment should be started first.
  3. In the implement phase the segments are worked on in an iterative manner, meaning the team members can go back to the development phase as often as necessary until the project is completed. Each segment is tweaked and perfected before it becomes part of the end product.
  4. The final stage is to put it all together and evaluate the end product asking: Does this meet the needs of the initiator?

Agile Process
Agile Process

This iterative process is fast and efficient and makes for a well-rounded project.

Risk Assessment and Management

In most project management frameworks there is a clear understanding that risk assessment and management is a big part of the initial process. Project managers make lists of every possible thing that might happen unexpectedly whether it is a positive (opportunity) or a negative (threat) to the completion of the project.

At first glance the Agile framework may seem like it doesn't have a precise place for a risk management component. But actually, the Agile process is much more efficient in handling risks. Let's look at some of the reasons for this:

  • Sprints: the fact that Agile uses the short iterations or sprints to build the end product in sections means that risks are handled in each sprint and therefore on a much smaller level than the whole project.
  • Focus: By concentrating on each sprint or segment separately, the Agile team has a clearer vision of what might cause hiccups in each individual segment.
  • Automation: Once a sprint has been completed, the processes used in one sprint can be reused in another sprint. This automates the process so that risks discovered and addressed in one sprint should not show up in subsequent sprints.
  • Frequent deliverables: Because the Agile team meets regularly with the project initiator, they are able to discuss how closely the project is aligning with the desired end product and any deviations can be addressed.

No Formal Risk Management?

So, is there no formal risk management? Well, not exactly. Risks are identified within each sprint and are addressed in the next sprint. There are a couple of tools Agile teams use to help them keep track of risks: the risk register and the risk burndown chart.

  • The risk register lists the potential risks and their likely impact on the project.
  • The risk burndown chart is used to visually see when the risk is becoming less of an issue.

The job of both of these tools is to provide a list of identified risks, arrive at a number for the probability that the unexpected issue might happen, what it would mean in terms of loss in days to project completion, and how many days the project might be exposed to the risk. Here are some simple steps used to create a risk register or risk burndown chart:

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