Saturday, September 24th, 2016
Traditional and Agile methodologies have different approaches to Risk Management:
Traditional risk management (defined in the PMBoK, Prince II, CMMI and other frameworks) takes an event driven approach to risk. It seeks to model external variations that affect schedule, budget and scope on projects.
The model is simple:
- try to build a list of external events that might occur
- assess the impact and likelihood of occurrence
- assess the cost of mitigation options
- decide whether to mitigate (reduce chance of occurrence) or create a contingency plan (to recover in the event of occurrence.)
This model is created at the beginning of the project, next to the requirements document. Traditional (non-agile) project scheduling techniques treat all tasks homogeneously from a risk management perspective.
The application of Lean pull systems (kanban) and Real Options Theory in agile methods is providing new sophisticated means to manage overall business risk in technology projects and software delivery.
In every iteration, we can classify user stories heterogeneously according to:
- cost of delay (or failure): depending on the loss incurred due to late delivery, we can assign different colored sticky notes, or index cards allowing team members to quickly assess risk and pull the most important item through the system in a self-organizing manner.
- market risk: classified as commodity (or table stakes), differentiator, spoiler, and cost saver. Each category exhibit different risk of change (deletion from scope, or change in definition) due to market conditions during the lifetime of the project. This scheme mitigates the risk of rework (or waste) caused by changes in scope associated with changing market and business conditions.
Summing-up: Agile schemes provide methods that enable simple, fast, and often self-organizing approaches to maximize business value and manage risk throughout the project lifecycle.
These notes have been taken from:
- The post New Approaches to Risk Management.